Project: Liftoff

The new Facebook timeline: it’s gorgeous, it’s interesting, it’s… bound to fail. Why? Because it’s about Facebook listening at its users, not listening to them. For a long time, Facebook has been barraged with requests for privacy controls. If you’ve ever been involved in product design, you’ve heard requests like these too: clear, concrete feature requests from users who know your product well and who are valuable customers for you. You must always ignore these reasonable, specific, actionable requests. I call them “coffeepot toothbrush” requests, as in “please put a toothbrush charger on my coffeepot, so that I can do all of my morning stuff at once.” Seems reasonable, right? Except the user has misdiagnosed themselves: they think they’re trying to “do their morning stuff.” I’d say they’re trying to “get clean, so that they can be seen by other people” and also “get energy, so that they can drive to work and then do work.” The feelings that are associated with “clean” and with “energy” are completely opposite here: fresh peppermint toothpaste, and then smoky, earthy, hot coffee: the one will ruin the other. It’s not that the two needs are unrelated — they are related, and that’s why they’ve been conflated. They’re just necessarily separated, because of their context. Facebook has heard a lot about the need for privacy controls; it also has an internal vision of Facebook truly being someone’s data manifestation of their life. These appear related, but, again, have different contexts. So Facebook has misdiagnosed the cause of user requests: users don’t want privacy controls — although it’s reasonable Facebook would try to supply them, since what Facebook can bring is controls. Users want privacy because the various people they know need context. Some people have context for what they see, some don’t; and context is a big, difficult thing to provide. Context isn’t a category, it’s not a control, it’s not even privacy — it’s related information. If you keep seeing pictures of me drinking booze on Facebook, you might think: oh, he’s an alcoholic! Let’s not hire him. Or, if you spoke to me that week, you might know: oh, he went to a single-malt scotch tasting, because he occasionally enjoys one single glass of scotch in the evening! It’s hard to know, if you haven’t spoken to me lately. Privacy controls are a simple, clear, specific, actionable replacement for context: with a privacy control, I can simply hide the photos of me at the tasting so that I don’t have to explain to you whether or not I’m a drunk who’ll pass out on my desk at work. That’s a lot easier than showing you a long history of me not drinking too much and enjoying a scotch now and then! Privacy controls are Facebook’s coffeepot toothbrush. And, when you match that coffeepot toothbrush with your wider vision that you can manifest someone’s life in data, well, you confuse yourself with LinkedIn. And then you create the Facebook Timeline.

With the headline-grabbing launch of the iPad, much of the coverage has taken a short paragraph off to mull on the effect of Apple’s new toy on Amazon’s Kindle. That’s the wrong question; they should really ask what the iPad will do to Amazon. Sure, the iPad may kill the Kindle, but, as Obi-Wan said at the moment of his death to Darth Vader, “if you strike me down, I shall become more powerful than you can possibly imagine.” Amazon put the Kindle out there to die, and they will be happy if its time is now. To understand this you need to look deeper at the process of product development at Amazon and ask why that process could have resulted in a product like the Kindle. After all, Amazon moves product around the country, and occasionally makes some Web- or cloud-based software; it’s not a computer manufacturer. Digging a little into their financials, we see shipping costs trending somewhat upwards (you wonder how much of that they eat with Amazon Prime), and value of inventory climbing as they built focus on having products in-stock for immediate delivery. Inventory also means investment in warehouse space, which Amazon specifies in their 2008 financial statements is both owned and leased. Amazon would approach the idea of creating a new product by looking particularly at:

1. What could increase their overall sales
2. What could offer a higher profit margin
3. What could decrease their costs, especially variable costs

One approach that could clearly achieve goals 2 & 3 was to switch to delivery of digital product via the Internet, rather than hard product via shippers like UPS and FedEx. Switching to digital delivery offers higher margins and lower costs by essentially removing all variable costs, replacing them with modest fixed costs that can be distributed across a large number of products sold. Amazon took to this approach with verve, launching both the Kindle and their MP3 store in 2007. The MP3 store had a fairly simple, obvious model: get the tracks in the hands of the consumer, because the consumer already has the ability to store and play them. The same was not true for books; few people at the time owned book readers. And that wasn’t likely to change. Back in 2005 I worked on a e-book reader project; a big reason that didn’t go forward was the very high cost of the e-ink screens you’d ideally like to read a book off of (high as in, just the screen would cost as much as an iPad). That price problem wasn’t going to change without somebody buying those screens in bulk, which just wasn’t happening at the time. Thus the genesis of the Kindle is clear: Amazon wanted to decrease its costs and increase its profitability by moving to digital delivery for books, but that wasn’t possible without a reader, which wasn’t possible without a lot of people buying readers first. This is the classic chicken-and-egg problem that’s bedeviled many an entrepreneur. But Amazon had an advantage: Amazon is rich. They could solve the problem by taking any initial losses required to build volume and the market themselves, considering those as investments in future profitability. So they made the Kindle. And now the idea of owning an e-reader is commonplace. Publishers have responded: many titles are available in a digital format via Amazon.com. And that means they don’t need the Kindle anymore. After all, they’re not a hardware company, they’re a sales and shipping company. The iPad has delivered the culmination of Amazon’s plan: the wide market availability of devices that can read e-books. Now it’s just left to Amazon to become the preferred distribution channel of those books for consumers. (That’s where the money is, as Apple proved with iTunes.)