Disney - Power of Pricing

Today's my first day back at Disney World after 5 years. Yes, my kids remembered. As much fun as it is, I'm impressed by how Disney has priced it's product. They have set things up so that families are induced into spending their time their to the exclusion of anywhere else. In fact, because it's done so well, it's a win for everyone.

Check out the chart below which represents our family of six:


We have 6 days on the ground. When we got here, we thought we'd do 4 days in Disney then 2 between the beach and Kennedy Space Center - or maybe Universal. Well, maybe that won't happen.

As anyone can see, after the 3rd day, it really doesn't make a difference if you go 3 days or 10. You will pay the same to get in regardless. (not including parking, food, Disney stuff). Now if you want to hop parks, that's an extra $45 per person. Not really a big deal when you are talking about 6 days and your once in 5 years Disney vacation. They've made that easy - employ that option only if you want to - any time - no stress for now if you want to pay less.

So what have they done? They've basically made going to the competition - Sea World, Universal, or wherever - more expensive and more of a hassle. They've also made a family's vacation less stressful. Normally, as a Parikh (read super thrifty family), we would be planning our day in detail, coming in early, optimizing Fast Passes and then staying late into the night. Eat quickly so you don't miss a ride or show - go, go, go! Now we can take it slow - let the kids play by the water fountain, toy with the new interactive stuff, look at the pretty lights on the street. Hey, we were only going to spend 4 days to cover each park, now we can do 6. Disney keeps us in and mesmerized - subtly getting us to buy more of their goodies and spending more at their restaurants. Of course, we buy every form of their movies anyways.

This has come with some additional complexity. The tix expire after 14 days (unless you pay more) and cannot be transferred (your fingerprint is tagged to the pass). This kills the "cheap ticket" secondary market and does not force us to save those passes forever. No more guilt for forgetting the damn pass from 4 years ago. Also, Disney can book all the revenue now and not have to hold it in reserve giving them greater certainty.

Now Disney is probably leaving some money on the table as this amounts to $34 per person per day, but we are more likely to avoid the "long hellish wait" ride today and come back tomorrow. We are more likely going to refer others because we'll be happier. We are less likely check out the competition. We are actually going to think that we got a "deal" from the Mouse House. And, we may even come back before another 5 years.

Patriots 16-0!

While on vacation at Disney, I was fortunate enough to catch the big 16-0. During the first half, this was a pretty even game - though the Giants led at halftime. It was when the Giants went up by 12, that things were looking scary. Eli and team were running up and down the field at will. They were stopping the normally prolific Pats.

Then something happened. Though I had a feeling of dread, I felt that they would turn it around. If they truly were a Super Bowl caliber team, then that is what greatness is all about. You don't have the luxury of always being ahead. Circumstances like a kickoff return touchdown or a dropped pass can put you behind. In the Giants' case, it was just good aggressive play.

The Patriots must have felt the same way, because they turned it around. Brady found his passing touch, the offensive line held their opponents, and the receivers found their slots. Having Watson back allowed for the short inside option. Welker and Faulk played the slot and Brady found them. You could feel the energy as the Patriots narrowed it to 5 with 12 minutes to go. The defense held the Giants to a quick 3 and out by heavily blitzing Manning. A few possessions later, Brady threw that 2nd bomb for the pivotal touchdown with little real time remaining for 2 scores.

This truly is the mark of greatness - when both the offense and defense step it up to take out a strong playoff team that was playing for the spoiler in what normally would be a meaningless game. This is actually good for the Patriots. They know that they will have to play 60 minutes to win. Sometimes, the defense of a high scoring team settles a bit, but this one knows that they will have to make the big play, like Hobbs' amazing sideline interception. They can't too cocky, because they did not blow them away.

I remember this with teams like Minnesota and St. Louis where over-reliance on a high scoring offense ruined their chances in the playoffs. You have to be strong on both sides of the ball.

Belichick never let his team get ahead of themselves. He treated each week as a mini-season. Never worry about 16-0, just about winning the next game. Similarly, he will not allow this team to get caught up with thinking they have won the Super Bowl today. He will have them break down the film and critique each error. Moss will not get away with the silly end zone celebration. Harrison will not get away with stupid personal fouls for trash talking or late hits. Great leaders find a way to focus their team on the next goal - not on uncontrollable distractions.

What should have been a meaningless game became important because it was for the coveted 16-0 record and pride on the other side. Both teams played well. These are great life lessons. It's important to always be on your toes. Never get down on yourself if you are behind - stay confident and cool under pressure. Draw deep inside to learn and find a way to win. The best know how to do it. Others just have excuses.

Can't wait till the playoffs.

Bought a Mac - Wore Black

To commemorate the purchase of my first Mac, I wore all black today. Our home PC died either via fried motherboard or for some other reason, so I thought there's no better time than now to try out a Mac. Since I didn't want to spend a whole lot, I bought the Mac Mini. My initial experience has been... very cool.

Apple has really thought through the whole experience from the retail outlet to install and setup.

At the store, friendly and knowledgeable people guide you to understanding the product to making the whole purchase easy. They carry little handhelds that allow you to do it on the spot. They answered all my questions about the differences between the Mac and Windows world. While it may cost a little more to run Windows apps, it seemed worth the try. Having the store for what is a missionary sale is genius. Remember the failure of the Gateway store. The Apple store integrates with the brand experience and just makes you feel comfortable. You know you can ask questions or even attend one of their free sessions - very clever.

After getting them to put in some more memory, I bought a wireless keyboard and mouse. The concept of going completely wireless was very cool, so what the hell, I went for it. It was very clever product design to bake Bluetooth and WiFi into the system.

The install process was ridiculously easy. Connect power and the monitor and turn it on. I had to fill in some forms for registration but the system found the mouse, keyboard and home wireless network. There was really nothing much to do.

Now I did encounter one problem. For some reason my password was not in the system correctly (hard to screw up a password verification). So it required a tech support call. This was also very easy and handled very well by a knowledgeable tech support person from the US. I don't ever remember Microsoft or Dell being so easy to work with. The fix was relatively easy and I was off and running.

Even the box is cool. The packaging is well done - minimalist, yet classy. It's just like the iPod, you can see the refinement at every step. The system itself looks nice. It's amazing how much functionality is in what is essentially a large paperweight. No big system with loud fans and heat blowing out. Just a little box that is simple, cool and attractive to look at. There a slot for a DVD and that's it.

Very quickly we were off and running. I couldn't help but be impressed by the interface, speed and easy to use functionality. Figuring out the Safari browser was easy as was many of the preinstalled apps. For some reason, browsing seems faster on Safari than on Firefox on my Dell laptop. The little remote control on the Mac mini was also cool. I love how the thing goes to sleep to save power and then easily wakes up at the click of a button or move of the mouse. My laptop is a pain by comparison.

For some reason, the viewing experience is cleaner and inviting. It's hard to explain because the functions are different. It's something I wrote about in the Blackberry article. There's a higher sense of refinement in the product in the way windows open and close, how the Dashboard appears, or in changing preferences. The fonts are cleaner and dash is very clever in presentation. In the Windows world, it is cryptic and a bit scary because you could actually do something to mess things up. In the Mac world, it seems so easy and painless.

The true proof in the pudding will be if all the apps run without reboot and the system functions flawlessly. Everything I've heard is encouraging thus far. Instead of MS Office, I'm actually going to try the Apple apps.

So far this is fun. As a marketer, I love the integrated brand experience at every touchpoint. It is so clean, refined and tasteful. They make spending money easy. Maybe the Microsoft universe has something to worry about. Maybe the days of getting away with poor quality and unreliability are numbers. Imagine not having apps that crash daily or force you into doing wasteful things like archiving because of design flaws. This is more than 20 years after the first PC.

If I can get reliability and great functionality with having an issue with apps maybe we'll move the whole company over.

Treo Follow Up - Poor Quality Hits the Bottom Line

Today's Headline in Bloomberg

"Palm Forecast Misses Estimates as Customers Defect (Update4)

Dec. 18 (Bloomberg) -- Palm Inc., the maker of the Treo e-mail phone, forecast a wider loss than analysts had estimated after customers defected to the BlackBerry and iPhone. The shares plunged 11 percent in late trading."

Now this article attributes the losses to the following, "Palm has trailed BlackBerry maker Research In Motion Ltd. in updating product design."

I don't think so. This is not a feature thing. The latest version of the Treo has more features than the top of the line 8830. The issue is reliability and refinement. What's refinement? Read a Consumer Reports auto review. You know when you have it vs. when you don't. In Blackberry's case, it is that the features work as expected. When you are using voice dialing, it works. If you need to flip to speakerphone, there's no issue. Email is clean and synchs beautifully with your desktop. You are given options on how you might contact someone. Even though you can't jump by touching a point on the page, you are willing to sacrifice that for a screen that doesn't get dirty. Moreover, the damn thing never freezes while you are typing a message.

See, Palm has to spend a lot of money on marketing it's products. They are not getting positive word of mouth from their existing products. They need to suck people into a feature comparison and hope they are not dumb enough to talk to other people. Palm also has to hope the cell phone store salespeople keep quiet when someone is looking - even though it is in their incentive to have happy customers. In a market where margins are razor thin, spending extra money on marketing to acquire new customers without retention is a loss machine.

Then Palm goes totally low end with the Centro with the worst of all carriers - Sprint. At least in their case the user does not know who to blame poor quality service on. It's like putting 2 bad tennis players together to make a good doubles team - good luck.

I just used my Blackberry 8830 on a round the world trip. Whether I was in Germany, India, Thailand or Singapore I had email, web and voice access. If I had problems, I called the Global Support line and they fixed it quickly. Most of the time, it was in obscure locales where the phone needed to differentiate carriers. The best part was that I could be IM with my son while on a bus in Thailand. I was in touch with my clients and team everywhere - very cool.

Bottom line: build quality and reliability for long term profitability.

Why We Got the Blackberry - and Dumped the Treo

A week ago, we went over to the Verizon Wireless store to pick up the Blackberry for each member of the US team. I made the decision to take people off their existing plan and phones for a simple reason - quality and control. I wanted to make sure each person could be connected to the clients and the company at all times. We needed a mobile experience where everything worked seamlessly - no reboots, bad voice quality or botched data transfers. We had already gone to an Exchange hosting service to ensure reliable email delivery and integrated calendaring. Up till now everyone had a different phone, different service and individual patterns of access. Now it was time to complete the circle.

Because our team is around the world and our clients are dispersed around the country, time in the office does not reflect a true workday. Work can take place in the middle of the night or early in the morning. If the client has an issue, you need to know right away and respond quickly. We could not afford to waste a moment or give the client a poor connection. Since we are responsible for spending client money, they needed to be assured that the team was on top of things regardless of the situation. There was no excuse for a Client Manager to be out of the office and not receive a critical client email.

This was important after the Treo 700p nightmare that I went through. Great features, poor execution. Reboots happened every day because the damn thing froze all the time. Sometimes, the Treo would reboot when I was in the middle of a call. The Bluetooth connection was uneven. It was maddening and that was even after all the integration and improvement that I got when we implemented the Good Technology software and service. It was as if the people at Palm jammed a bunch of features in to make them look good in product comparison, but they forgot that if the phone is unreliable, you tend not to value the feature. This was the old Microsoft way - fill up the data sheet but don't worry about quality.

Reliability is an expensive investment and difficult to quantify, but people are willing to pay for it. This is what I have seen with the Blackberry 8830 - no crashes, no reboots and amazing integration. Great spell correction, decent voice dialing and just a lot of little touches. Voicemail dialing was preprogrammed. I didn't have to figure out the pauses before auto entry of the password, it gave multiple options in terms of how to contact a person, and the screen is fantastic. As much as I miss the camera, I especially like the idea of getting data access wherever I go around the world. This phone works with GSM and CDMA. Let's also not forget the huge number of free apps for the Blackberry. It makes things a lot easier - from the weather app to Google Maps to Facebook Mobile. I'm still learning all the things I can do and customize. Right now, I'm testing the Jawbone headset because my voice just doesn't carry with these headsets - just didn't get the deep voice genes :).

RIM focused on the needs of the business user with their product and service design. Palm was focused on competing with Microsoft CE and couldn't make up its mind on the business user or the consumer. Their OS is not built for reliability. Quality is worth paying for as is easy integration and functionality. It's not easy to sell, but just ask the guys at the store which phone gets the complaints - it's pretty easy. Email integration is critical for the business user, especially the ability to synch with Exchange & Outlook. That combined with the higher quality Verizon network means that my team is available everywhere.

Our Client Managers were especially happy about the 4 GB memory for their photo and music files as well as the ability to tether with their PC - that means connect their PC to the Net all the time. Then there's the Bluetooth headset and all the accessories. I want them to have fun. That means they're enjoying their job and they're connected - all the time.

This is part of the evolution of the company. When we first started, it was all about keeping burn to the absolute minimum while we figured out our business. Now that we have high profile clients and a proven model, we need to have the highest quality and efficiency possible.

Some people would say that now work is 24 hour. I say it has made work more fun because you can get things done anywhere.

Because communication is more reliable. I'm able to get more done and call more people. That's a good thing for me and Position2.

RIM gets it - execution matters...

Red Sox Win the World Series!

What an amazing day! Watching the Red Sox sweep the Rockies for the second World Series in 4 years. This team was absolutely fantastic to watch. There was not any of the paranoia of the 2003 where every win was too good to be true. The 2007 was stacked with great veterans and with never-say-die rookies. So glad I got to see future greats like Ellsbury, Pedroia, Youkilis, Matsusaka, Okajima and Papelbon combined with stars like Lowell, Beckett, Schilling, Ramirez and Ortiz. Hell, even Lugo and Drew came through. Francona and Epstein, thanks for putting together and running a dream team that made this season super fun to watch. These are one of those times to treasure, because you may never see your team in the World Series for a long time - much less win in 2 sweeps.

Now, time to get some rest. This stuff takes a lot out of you!

Red Sox Win!!!

Right now there's no better time to be a New England sports fan. The Patriots are dominating, the Celtics are stacked and now the Red Sox come back from behind - to go to the World Series! Today, the whole family was on edge. The game was so close, a nail biter, until the 7th. Ellsbury was a absolute spark plug. The Pedroia gets up to bat and pow! A 2 run homer. I was sitting there with Sanju and Arjun and told them with absolute certainty, "He's gonna get a homer." And Pedroia delivered - a rookie. It just goes to show that experience means nothing - it's what's in your head and heart. The young guys delivered for the Red Sox - Pedroia, Youk, Ellsbury, Papelbon and the unbelievable Beckett. What an amazing team.

It's better that this team came back from being down. They will have something to draw from when the chips are down. It will be the thing that should make them stronger against the Rockies.

Another 4 to 7 games of baseball. Woo hoo!

Union Stupidity

For over 20 years, US auto industy has been in decline. Part of it is due to poor product development and quality. Part of it is an inflexible work force. Now, while the US-based auto companies are reeling from a decision not to build fuel efficient cars, the unions are striking again. The unions are concerned about continued job losses and want job guarantees. GM is concerned about a $1500/vehicle health care cost differential due primary to a small work force carrying a large retired base. In trying to deal with the union in the past, GM management has acceded to stupid measures like the Jobs Bank where union workers are paid to sit around.

Meanwhile, Japanese auto companies continue to grow, with Toyota overtaking GM. They are growing worldwide and in the US. Because the transplant work force is not unionized, the US players are at a disadvantage. The Japanese get great flexibility with labor.

It's time to change the game - grow the pie rather than slicing it. Working with the union should not just be about greater leverage vs. the employer, it should confer advantages. Things like a trained workforce, greater management of benefits payouts, greater retention of skilled labor, etc. Unions should act like partners rather than adversaries. Now GM's supply chain will grind to a halt, throwing thousands, with suppliers, millions out of work. Toyota will chug along, GM will lose a tremendous amount of money.

The unions cannot erase past poor decisions, but at least they can find a way to make their companies more competitive.

Paint My Fence

Do you remember the Tom Sawyer story about how he got neighborhood kids to paint his fence for free? Tom made it look so fun, they were dying to do it. In fact, they paid him to do his work. I couldn't help but have a smile on my face today as Manju from our company got visitors to our SES booth to paint our fence. Around us, people we giving away pen, toys and iPhones. However, the crowd around our booth came in to learn about our services, buy a book and have an invitation to a free (for now) Search Engine Marketing Seminar.

We ended up selling a ton of books and overbooking the seminar. People are truly hungry for this info especially in bite sized chunks. For us, we get to educate the community and get more highly qualified prospects - people who see clear value for them. We are OK with sharing our knowledge because deep experience and execution matter more. Because of our infrastructure, people could never afford to compete whether inhouse or as an agency. If they walk away with something that helps them well then we have a better image. This can only help in a highly connected region.

Before, we would give away books to those who were "qualified" but since when did you ever read a book that was given to you for free? How many of you actually go to the library? So go ahead, give away your pens, yoyos, shirts and doo-dads. Most people will simply give them to their kids or throw them away. Come to our booth and get yourself a book at the 30% off list and signed by the author!

Now the money off the book did not make us very much money compared to the cost of the show, but it was a classic trade-on. Viral or Web 2.0 marketing is about getting others to paint your fence. In this case Manju at Position2 was the clear winner.

Search Engine Strategies - The San Jose Bash

Just came back from Google Dance - a massive party done up like the bashes of the Bubble Days - dancing, karaoke, beach volleyball, food, beer, wine and free T-shirts. Oh, and you could also talk to various Google engineers about new offerings. There were even party crashers that even went out of their way to get SES badges so they could get in. Why be a wedding crasher, when you can be a corporate bash crasher? It was fun to soak it up with Microsofties and Yahooligans at their competitors expense... though I'm sure someone at Google is justifying that as a show of dominance or invitation to join.

The SES show was better than in previous years, specifically in terms of the research data and the multimedia SEO content. Last year, tagging and social networks were all the rage. Now it's old news. Google Universal is all the rage given how it will change the look and feel of search engine results as well as what we do with SEO. The Golden Triangle is breaking to the "E". It goes to show you that the game is not really over. As much as Google is dominant now, with broadband media taking shape, it does not mean that it will retain dominance. Hell, I even met a company putting together an "answer machine" based on chaos theory. If only the founder could explain it like Charlie Epps in NUMB3RS.

Based on last year, I did not really see this as a show about getting any leads, but I'm told we received quite a few. I saw this as a way to stay ahead of the curve, get sources for our upcoming books & seminars, and establish our brand firmly in the Bay Area. Little did I know that Manju would actually offer our book, Insider SEO & PPC, for sale. By selling it instead of giving it away, people realized its greater value. Moreover, as part of our education effort, we also promoted our upcoming Search Engine Roundtable in Santa Clara on August 30th. Yeah, it's free - for now!

I'll be writing a lot more about the specific sessions I found interesting, but this is a golden time for anyone to be doing something on the web. For those who want to break through with media or run an SEM agency (good luck doing all this inhouse), these are exciting times.

Position2 Rolling

The progress continues at Position2 with some excellent new client sign-ups. Our new bid management tool is showing excellent results for our clients. Check out new sites that have just gone live with Clubspaces and ResponseLINK - our designers, developers and SEO team have done a terrific job.

Rush Concert - With Son

Today, like many who lived their music days I went to the Rush concert at Shoreline Amphitheater. There were many like me - many gray haired and balding - but enjoying every second of "Freewill" or "Subdivisions." We did, of course, sit down during parts to rest our feet.

Arjun, my 11 year old son, had a blast. He's an old soul who enjoys Papa's music. We listen to "Rush's Greatest Hits" on the stereo. So, like me, he knew the old ones from "2112" and "Hemisphere's," but really not much past "Grace Under Pressure. " Of course, we had a blast during "Tom Sawyer," "YYZ," and the mega Neil Pert solo.

It's kind of funny... I never would have dreamed of going of a concert with my father. He was from India, so he didn't relate to rock n' roll. We're very close, but there's this generational distance when it comes to culture. I wonder if I'll deal with the same adolescent rebellion that I put my father through, because this kid actually likes the same things I like.

What a dream that would be.

How a Well Connected Industry Gets a Free Ride

I love the business of business, especially entrepreneurship. However, nothing is worse than a free ride on our tax money. In the NY Times article, "Energy Bill Aids the Expansion of Atomic Power Plants," there's a little known provision tucked into an energy bill that has government guarantees for the nuclear power industry. Essentially, the "Department of Energy would be allowed to guarantee 100 percent of the loans and up to 80 percent of the total cost to build a reactor." That's to the tune of $25 billion!

What? So utilities get guaranteed loans. No risk for them. Pay too much, pick the wrong technology, overestimate the market - hey no problem. We the taxpayer will take care of you. All of us entrepreneurs have to schlep on bended knee to investors and banks who assess their investments based on risk. But the nuclear industry gets a free ride. How wonderful is this? Be an industry exec and get paid a lot to take no risk.

I'm all for incentives and sometimes a subsidy if it is in the national interest. Nuclear is a part of the energy equation - especially in a carbon threatened world. However, this is absolute bunk.

No risk, no return - last I checked that's the difference between business and government. If companies like GE and Exelon need a free ride, then there should be a price for it. If you need a government guarantee to do business, then you need to take a government salary. Or you need to give up a commensurate amount of equity warrants to the Social Security trust fund. If the taxpayer is going to fully guarantee a loan to build a reactor, then there needs to be equity upside for the risk the taxpayer is taking in return for our risk and the lower interest rate from lenders.

Now don't start me on how big money has bought our politicians...

Sicko

I had the opportunity to watch Sicko during vacation. It was very interesting to see Michael Moore's treatment of a subject that affects so many personally and is also now 1/7th of the US economy. What is very striking is how so many are caught up in denial of coverage and reimbursement. This is contrasted with the examples of Canada, UK, France and Cuba where medical coverage is free and in the movie - effective for the citizenry.

I was fired up enough about the film to do something about it. Given that so much of the US economy is intertwined in healthcare, it is unlikely that the single-payer government run system will actually take place anytime soon. But something is coming from my company that will enable Americans to get better care at lower costs - you'll see in the next 6 months.

Lou Dobbs the Demogogue

While working I had the unfortunate opportunity to listen to Lou Dobb's immigration demogoguery about Hillary Clinton's "ties to India" due to work with the Congressional Indo-American causus. He makes it sound like the Indians (italics for emphasis) are stealing jobs from Americans for getting H1B visas. And, oh many of them, stay. Last I checked, getting an H1B confers no citizenship rights, but you still have to pay US taxes. Many of these Indians have graduate level educations in science and engineering and stay to create new American businesses. Hey, they could just stay in India and start the businesses there. What is worse is the way he says Indian, like it's some kind of slur like a conservative saying "liberal."

Oh, by the way, after the attack on Clinton in the trailer, it was pointed out that almost 37 Senators and 118 Congressmen are the Indo-American caucus equally split between Republicans and Democrats. Yes, it is a good idea to align with a successful ethnic group and a large, fast growing democracy.

Let's be real Lou, globalization is all around you, being a curmudgeon is getting old.

How to Force Pop Ups

It's interesting how 2 properties like the nytimes.com and boston.com (Boston Globe) both are owned by the same parent, yet one makes more off of me than the other. Due to the quality of the writing, the nytimes.com gets a lot of more of my viewing time, yet I see more of boston.com. Here's why, I allow pop-ups from boston.com because they have cool slide shows and polls of the Red Sox and Patriots. It's not video, but I get to interact with the content, I enjoy seeing how Ortiz gets a 'B' for a .321 average vs. Pedroia an 'A' for a .315 average (it's all because Ortiz doesn't have 20 home runs). With the NY Times, there's no compelling reason. With Boston.com, they have in-depth coverage of my favorite teams, so I'm willing to put up with those ridiculous expanding ads and fly-ins. I actually don't mind it as long as they keep giving me detail about Youk and Pedroia.

I have all the necessary ad blocking software in Firefox, Norton, and a spyware package.

So there's the lesson of the day: you too can push your way into the users face if your publication can produce compelling content in a useful format.

US Trade Deficit Marketing

Anyone who follows business and news constantly hears about the fast growing US trade deficit with the world. We are led to believe that this is a consequence of a highly developed post-industrial economy. Given the growth of China and its labor cost advantages, it is only natural that goods would be produced there and shipped to the US. Consumers benefit through lower prices and generally increase their skills to a more service-oriented economy.

While this makes some logical sense, the data does not support this point of view. Go to the last page of the Economist (July 7, 2007) and look at some of the tables:

Country Current Account GDP Budget Balance
($ bil) (%) (% GDP)
United States -803 -6.0 -1.4

Japan +187 +3.4 -4.4
Germany +168 +4.9 +0.3
Britain - 93 -3.2 -2.8

Those are large developed economies. Now some fast-growing ones...

China +250 +8.1 -1.3
India - 10 -1.8 -3.3
Russia + 87 +5.7 +2.4

Oh yes, and here's the big winner...

Saudi Arabia + 95 +21.4 +16.6

The US has gone for a creditor nation to a debtor nation. Imports exceed exports. There's a significant budget deficit because the deficit does not include future Social Security and Medicare liabilities. Meanwhile developed economies like Germany and Japan have fund inflows greater than it's deficit. Look at the numbers. They are fully developed nations that are net exporters. Unlike the US, they have retained their manufacturing prowess. The US is a great economy - still the greatest and most innovative in the world, yet it is ceding its advantage due to it's twin deficits. For now, trading partners are balancing US accounts by purchasing Treasury bills. However, the US cannot rely on this forever. When countries lose interest, the US will need to keep it's interest rates artificially high to attract foreign investment. That will hurt US businesses and consumers.

The above data shows that great economies do not need to run deficits of any type. It also shows that fast growing developing economies do not necessarily need to run large surpluses. However, those with large surpluses like China and Saudi Arabia can exert pressure on the countries they have their money in.

So don't buy into the marketing. The US can do much better.

SEM Rountable at Norwest Venture Partners

On Thursday we gave a 2 hour seminar to Norwest Venture Partners' portfolio companies on the shift to search engine marketing and how to win with SEO and PPC. We were pleasantly surprised by the level of interest. We had to have 2 sessions with execs looking to use the medium to build traffic, leads and sales in a results oriented manner. We are now talking to a number of folks who want additional information.

I'm going to take this to other of my VC friends as there's a lot that VC companies can do to get attention in new, emerging or even mature markets using SEM. Traditional notions of brand have changed dramatically to attributes. The web is truly a democratizing place. With the change coming with Google Universal Search, there is much that companies can do to win. Same with PPC - it's changing all the time. We're actually beta testing new optimization techniques with the majors.

We'll be posting many of the slides and the audio from the presentation. Look out for them!

Microsoft Agrees to Change Vista to Accomodate Google

Today Microsoft agreed to change MS Vista to accomodate other desktop search engine's like Google's Desktop Search. Microsoft's version will remain but will allow the user to have another search engine there. They will also publish info on how to improve performance.

It's interesting how Google is exerting it's power to influence the DOJ to move so quickly to force this change. At a $160 bil market cap and through smart lobbying, Google has emerged in Washington as a force to be reckoned with.

If only they spent their effort improving the rudimentery Desktop Search. Try using it. It does not have the features of the search engine like concept based search or even spelling correction. You have to have an exact match for it to turn up any results. If you move a file in Outlook, the Index is not updated. It is cool that it looks at web based Gmail in addition to your desktop, but it still does not designate if a file is attached to a result - a major way of differentiating hundreds of similar sounding files. There are no filtering mechanisms. If you are using the tool for email search, you are better off carbon copying all your mail to Gmail and then using it exclusively.

While I have not tried Vista based search, I'm hopeful that Microsoft has taken advantage of this. The technology to do this well is over 10 years old. We at AltaVista did a better desktop search than Google has today. The problem is that we did not promote it like we could have with a pay the supplier sort of model.

In any case, this is definitely a way that Microsoft could slow and maybe turnaround its decline in search market share. I'm sure that Google will not sit back forever and wait.

Semel Resigns

In a breaking NY Times article, Semel resigns as Yahoo's CEO and is replaced by Jerry Yang, a Yahoo co-founder. This is not surprising as Yahoo was having a difficult time with revenue growth and cultural issues (see Brad Garlinghouse's Peanut Butter memo).

As a search marketing agency, seeing Yahoo adrift is not something to celebrate. The populace is better served when there is real competition in the marketplace. Having Google dominate is not good for the user, media or for Google itself as the desire to innovate dimishes with growing share. This happens regardless of who is in charge.

There are many reasons behind this, but there's an exodus mentality in the once highflying company. People feel strangled by a culture that has stifled innovation and is living the blame game. From my experience in a company that strayed from its core strength, AltaVista, I can tell you that search needs to be managed differently than a content site. You can't let the business guys run a search site. Super smart, passionate engineers are more important. It is an area with incredible investment, where developmental impacts are difficult to quantify and assess. Yet, each small improvement cumulatively improves the experience.

Doing competitive rack-ups is a waste of time as well, because features don't really matter. 95% of searches are web searches so you need to really understand what users are looking for and have measurement tools that analyze activity in detail from inputs like the toolbar. Then you need a process whereby that analysis informs the engineer about improvement they can make to this n-level product development beast.

You need to think super long term. Quarter to quarter revenues are not really of any value. For example, it is more important for an ad to lend value to the natural search results on the page than for the company to pump short term per page revenues. You need to pump money in for a long period before you see an impact.

This is what Google has successfully done - focus on the engineering and invest for the long terms. Because Yahoo's management was more media-oriented, it has had a difficult time. Hopefully, this change will allow Yahoo to regain its footing.