Brian Grey Blog

The buzz about Zynga’s current revenue run rate or Playfish’s potential (uh, likely?) sale to EA overshadows the forces that are lining up to change gaming as we know it.

Specifically, the forces that are rapidly changing the biz:

Force 1: Production costs – measured in both dollars and time to market – are falling fast. The hits driven nature of the business is being replaced by an agile product development model, whether the big budget producers like it or not.

Force 2: The gaming OS is moving from client to server – and ultimately to the cloud like all computing. Over time this will erode the console-software cycle that has driven the video gaming business.

Force 3: A third screen – the mobile smart phone – is emerging as a major consumption point for games. The TV screen (via online access of course) will still be a must have experience, but mobile will continue to broaden the reach of gaming.

Force 4: Consumer application of what we think of as “games” will expand well beyond the domain of “gamers”. Areas from brain training to education will utilize games built up on the three forces above to enhance how they engage consumers.

It’s a small blurb for sure, but today’s Wall Street Journal highlights an interesting spat between old friends Microsoft and Apple.

The rift centers around Microsoft’s recent ad campaign that features everyday consumers walking around a Best Buy (or some similar big box consumer electronics retailer) in search of a PC for a really low price. Apparently, Apple takes exception at the characterization in the ads that the everyday consumers in the spots discount buying a Mac because they’re too expensive.

Well, I have to say I am surprised to see Apple responding to a competitor’s ad campaign — and a Microsoft campaign no less.

Hey, it’s not like those Mac vs. PC ads in which the PC is portrayed by the dorky nerd (is that redundant?) and the Mac is played by Mr. Urban Hipster Guy (who probably doesn’t have a job in real life) aren’t a bit unflattering to Microsoft. But I don’t recall hearing that attorneys from Redmond were calling Cupertino to complain about that characterization.

Now the WSJ blurb is not super descriptive as to Apple’s beef with Microsoft, but it appears to be along the lines of Apple taking exception to the claim that Apple laptops cost way more than a PC loaded with Microsoft’s award winning operating system.

Maybe in a recession there’s Marketing Law exception and competing on price is the way to go, but why would Apple even go there? How about the old adage “you get what you pay for”? My 3-year old Macbook pro still hums along like the day I bought it while my Dell laptop with XP gags and coughs its way with every reboot (thank goodness I have avoided Vista).

If Apple was being Apple they’d not waste time having their lawyers ask Microsoft to stop an ad campaign (particularly given how successful those requests usually are) and they’d apply their creative genius at parodying the spots somehow in ther Nerd vs. Cool Guy ads.

You know, something along the lines of showing the happy family trying to boot up their new PC laptop with their baby on their lap and then showing the kid heading out the door for college just as the desktop is fully loaded.

Remember, always compete on quality and performance, not on price.

Yesterday I spent most of my day visiting a company and taking part in their quarterly board meeting. What I love about the board meeting in the context of a startup is the mix of vision, strategy and detailed tactics that a diverse group of people discuss for generally three hours (or in our case yestetday a bit more than that).

On one level there is an anticipation around getting updated on the latest operating metrics of the company. Revenue, deals, customers, and other dashboard metrics that measure the progress the company is making in it’s core business under its current business plan. And the realization that what may have been considered part of the core business a couple months prior at the last board meeting may no longer be considered core – by either management or the board’s directors. Hopefully there is consensus on the topic of what’s “core”.

At the other end of the spectrum is the discussion around the long term strategic path and vision for the company. Questions need to be addresses like:

• “Where can the Company create a unique market offering?”

• “How big can this opportunity be for the Company?”

• “What does the Company need to do to make this vision a reality?”

Ultimately, the Ying and Yang of the board meeting is finding the right balance between these two agendas. In many cases companies are racing hard with heads down to get to profitabilty under their current model, and in today’s economic climate what board member doesn’t want that kind of focus? Conversely, everyone in the room wants to go after the big play and the path that hopefully leads to the bigger exit. So the board meeting becomes an art of balancing this near term Ying with the longer term Yang.

So how did yesterday’s meeting go? I will be honest, navigating a board meeting feels much more like an art than a science. More than once in yesterday’s session I felt both sides of my brain volleying back and forth, always mindful that there are more opportunities for any company to chase than there are time and resources to chase those opportunities, and that in that context there are real pressures to get to profitabilty as quickly as possible.

I look forward to the next board meeting where I can practice this art a bit more.

Leadership may indeed be one of those things that you just can’t describe.  You know, one of those “I know it when I see it” types of things.  A role that is part art, part science — but not necessarily something that can be defined by specific qualities or characteristics.

Well, to that I say hogwash (I really wanted to use another term here, but I think the foul language filter would have blocked it, and besides, it’s not often I have use for the term “hogwash” in a blog post).

There has to be a way to identify some characteristics that separate leaders from others, whether we think of these “others” as individual contributors (that HR friendly term for employees who don’t manage people) or managers (that other HR term for people who, well, manage other people, like individual contributors).

But let’s be sure to NOT use the term “leader” interchangeably with “manager”.  A leader is indeed a manager, but it doesn’t by default follow that a manager is a leader (feels a bit like one of those math properties doesn’t it?).  In fact, this seems to be a subtle point that companies, boards, and investors often overlook.  So with that premise, allow me to offer three distinct characteristics that separate leaders from managers.  Please feel free to add to my list — I am sure I will add to it over time!

1.  Integrity

Dictionary.com defines integrity as an “adherence to moral and ethical principles; soundness of moral character; honesty”.  If your manager doesn’t fit this definition on a personal level, he or she will never be a leader.  Managers who don’t act with integrity at all times set a tone for their groups or organizations — a tone that ultimately undermines what those groups or organizations represent in the eyes of employees, partners and customers.  Think back to two managers you’ve worked for in the past — one who you would say had integrity and one who lacked integrity.  Which of those two managers were you most committed to following?

2. Selflessness

Again, let’s start with Dictionary.com’s definition for selflessness as “having little or no concern for oneself, esp. with regard to fame, position, money, etc.; unselfish.”  In today’s society and ever evolving digital age, this may be one of the most difficult characteristics to exhibit as a leader.  Everyone has an ego.  Everyone yearns to be lauded for their achievements.  Everyone wants to be given credit where credit is due.  How else do you get to advance in this Andy Warhol world of fifteen minutes of fame otherwise?  Actually, the true leader knows that his/her job is to move the group or organization forward — and that the only way this happens is through the efforts of an entire team.  Nothing motivates the members of a team more than knowing that their efforts are valuable and that their successes will be rewarded (with more responsibility, autonomy and even money).  Conversely, nothing sucks the wind out of an organization’s sails faster than a manager who positions himself/herself as the sole brain, creative genius and decision maker within the company.

3. Vision

Integrity and selflessness are “must haves” for leaders.  They are the foundational blocks on top of which leaders can truly command the respect and support from their employees.  However, the component that enables a leader to take a team up the hill is vision.  Leaders need to be able to articulate a strategic vision for their group or organization that is bigger and bolder than simply making this quarter’s P&L.  Face it, employees over invest their time in an organization when there’s a real vision for how the company can become something really big and impactful.  Better yet, that vision should represent something that can be measurable, like being #1 or delivering a product or service offering that is unparalleled — and the vision should be built in large part by the organization’s collective genius and hoisted up at every turn by a high integrity and selfless leader.

These are three core characteristics of what defines a leader in my eyes.  I’d love to hear your list?  And rest assured that I’ll cycle back to this list and add a few others as I continue to spend time with both leaders and managers.

Growing up in Oregon I remember how adamant my dad was when it came to landscaping around our house.  His primary goal was to avoid having to mow a lawn at all costs.  I guess the fact that when he grew up he had to shove a push lawn mower around a pretty big yard left a negative yet indelible mark on him.  As a result, he opted for a barkdust yard covered with rose bushes, pine trees and other plants.

For me as a kid I never had to mow a lawn, yes.  But I can tell you that I spent a hell of a lot of time pulling weeds.  What I remember about those Saturday or Sunday weed pulling sessions was how some weeds were pretty easy to yank out, while others seemed to grow so fast and expansively that I never really could get ahead of them.  In some ways, “weeds” are a good metaphor for startups — maybe a way to think about how to assess startups in the current economic environment.

Take for instance the fact that some of the most successful weeds growing in our yard didn’t require us to water or feed them.  They just grew organically (no pun intended).  One could say that these weeds were very capital efficient.  A good lesson for startups today.  Get something going with your product and business concept with as little outside love and support as possible.  I personally love the stories of startups that took a few hundred thousand dollars of angel or friends & family money and were able to grow themselves in to a profitable business.  Maybe the folks at Survey Monkey fit this example?

Another characteristic of successful weeds from my Oregon days was whether a weed stayed low to the ground and expanded horizontally versus sprouting up vertically.  The most frustrating weeds to deal with were the ground huggers — they threw their roots down across a wide area, much like startups that grow fast by being applicable to a broad base of users or customers as opposed to a narrow or singular market.  Twitter is today’s marquee example of a weed that doesn’t have an overly complex root system (e.g. product feature set) but it appeals to an ever widening range of users and use cases.

And of course the most telling example of a successful weed was its persistence.  Some weeds I could yank out and pretty much know that I wouldn’t see them back around the yard ever again.  But the real sticklers were the ones that even after a full day of pulling them out came back within a couple days.  Startups need to be persistence in this way given that they’re always being yanked at by competitors and customers.  The teams that can take a few hits, pivot in a different direction and find a new patch of barkdust to grow in so to speak, are the weeds, I mean startups that are most interesting to back.

Maybe I should create a Facebook app called “If you were a startup company, why kind of plant would you be?”.  Anyone who answers:  “A weed”, might be worth meeting for coffee?

The highlight of the week for me had to be Kara Swisher’s onstage interview of Yahoo! CEO Carol Bartz at the AllThingsD Conference. It’s been no real secret that Carol was pretty fired up (to put it mildly) early on in her Yahoo! tenure about the “leaks” that helped fuel Kara’s insightful – and generally spot on – blog posts about Yahoo!.

So when Kara scored the Bartz interview for the afternoon panel at D on Wednesday this week it was a must attend for conference goers. I fully anticipated a defensive Carol, backed into a corner fending off Kara’s body jabs about how she was going to save Yahoo! from it’s death spiral. Oh, and at a minimum I projected the over/under at about 5 F-bombs from Ms. Bartz.

Now I have to say I was pretty impressed with Carol. Charmed I might say. She was witty, funny, sassy and brassy. She kept Kara moving around the proverbial ring, only allowing a glancing blow here and there. Certainly nothing that required her to retreat to her corner stool and yell: “Cut me Mick!”.

Even as Kara pushed Carol to the edge and even received for her efforts a complimentary “f@&k you” from the Yahoo! CEO, the crowd only roared with laughter. Smitten with every wry smiling glance she made, I really started to believe Yahoo! was on it’s way back. Heck, I could just sense the operational rigor that was being slathered over the company even as we all sat there in Carlsbad.

But then Carol lost me a bit. Right there at the D Conference, a Wall Street Journal affiliated event no less, she pulled out the front section of the Journal and turned it around to show the audience the full page Gatorade ad on the back page. She then asked why Gatorade was running this ad in print and not on Yahoo!. After all she stated, Gatorade couldn’t get any clicks on a newspaper ad but they could online.

And that’s when I realized there was more work to be done at Yahoo! by Carol and team. I suspect there are a number of reasons Gatorade preferred the WSJ ad over a Yahoo! ad:

- the creative was as a tall as a todler and when compared to a 300×250 ad online the brand impact was much bigger in print

- clicks isn’t what Gatorade was buying here – they want brand lift (see the point above)

- perhaps the sales process – including lead time and audience metrics – weighed in the Journal’s favor (in fact, Carol alluded to Yahoo! needing to be an easier media opportunity to buy for marketers)

Ultimately, I really liked Carol Bartz. And while the Gatorade example had a few holes in its thesis, I got the sense that she is more than equipped to patch them up in the months ahead. Or at least until somebody shows up with a ton of money as she alluded to near the end of the interview.

Yikes!  I haven’t posted on this blog in over two weeks.  What gives?

No, I haven’t been on an extended vacation, though it is fair to assume that the Grey Family trip to Mexico has been postponed for Summer 2009.  Looks like that trip to the water park in Santa Rosa is back on the docket!

Consider the last two weeks as a combination of being pretty busy meeting with interesting companies and people in the digital media space — all of which I can’t really be blogging about now can I?  Well, I guess according to the new Twittersphere world we live in, maybe I’m supposed to be life streaming everything I do in real-time?  Sorry, I have to draw the line somewhere — some stuff has to stay behind the firewall brother.

Ok, so what is on my radar these days?

Healthcare. I ran across another article today that pegs healthcare related spending in the U.S. at more than 17% of GDP and the expectation is that eventually it will account for the biggest slice of the economy.  Everywhere you look you can’t help but notice how overweight on average people are in this country and how much TV advertising bombards us with visual images of some of the most unhealthy and outright disgusting food options.  This is a topic that everyone should put on their short list of priorities to help address — starting with their own health.  Exercise more, eat less — starting now!

Sports. April was a great month.  Baseball starts — and the visuals strike me that the economy may be impacting attendance.  The pictures of all those empty seats at Yankee Stadium behind the hitter is a stark reminder that not everyone can afford literally hundreds (or thousands) of dollars to watch a ballgame.  On the flip side, the NFL Draft reminds us that in some instances sports continues to be immune to the macro economy.  Seems a bit incongruous that in a city where an entire industry is dying a slow death their team commits almost $42 million to an unproven quarterback.  Nice message Detroit.

Digital Media Business. I’m loving the never-ending game of musical chairs in the digital media space.  AOL makes the latest move as new CEO Tim Armstrong exits Greg Coleman (one of my former bosses when I was at Yahoo!) from his job running Platform-A after basically 3 months.  Then there’s News Corp. — bringing in Jon Miller as Chief Digital Officer and a new management team at MySpace.com, starting with a new CEO, COO and CPO.  Yahoo! and MSN have been active as well — even swapping some players so to speak.  Eventually all of the moves will be a net positive for the digital business.  Once all the new management teams get settled in they will be anxious to make a mark — and the fastest way to do that is through acquisition.  So if you are running a start up, keep your head down, build your audience and get profitable if you can.  A big media company may come knocking later this year.

Bet you thought I was talking about Dan Rosensweig didn’t you?  Nope, I haven’t circled back with Dan R just yet — I’m sure he’s working on his guitar work leading up to his new gig.

No, the Big Dan I’m referring to is my old Yahoo! pal Dan Finnigan — former head of Yahoo! Hot Jobs and current CEO of Jobvite.com.  Dan’s one of those guys who I always enjoy catching up with because I really admire people who know their business cold — and Dan knows more about the recruitment/career listings category than anyone I know.

He’s also one funny dude.  I actually think he may have missed his calling as a comedy actor!

From an investor perspective, meeting up with Dan reminded me how much “investing” is about making bets on people — particularly leaders.  When you find a smart, passionate leader who knows how to manage, that’s a really great place to start.  As a content guy, I don’t know diddly about Dan’s category, but he’s definitely the kind of CEO that every investor would love to place in one of their companies.

Go Big Dan!

Ok, I am supposed to be on Spring Break vacation with my family. Acutally, I am on Spring Break with my family, but since it’s been downpouring rain all day and my wife and daughter’s have parked themselves on the couch in front of the movie “Mama Mia”, I couldn’t help but grab today’s WSJ. I mean let’s be serious, my wife suckered me in to seeing this movie when it was in the theaters — no way I’m gonna sit through Pierce Brosnan’s singing a second time!

And what strikes my interest in today’s Journal? Well for starters the Opinion piece by James Freeman, “Is Silicon Valley A Systemic Risk?“, that tells a little tale about how now that Treasury Secretary Timothy Geithner is fully engaged in regulation mode, he is now targeting the Venture Capital sector.

You’ve got to be kidding me — is this where Obama’s Treasury wunderkid is going next?

How about having Geithner draw me a picture showing how venture capital investments over the last decade were in any way tied to the prime mortgage lending induced housing bubble or the speculative financial derivative game being played right under Timmy’s nose in NYC?

I don’t think there’s a drawing out there that would show this, but apparently we now need to regulate VC investments and protect willing investors in VC funds from having them all turn in to mini Madoffs. Wow, now this is starting to get a little scary.

From where I sit in Silicon Valley here’s what I see — and don’t see — daily:

I see startup companies being led by entrepreneurs — some as small as 2 guys working on code to some with more than 30 or 40 employees working to hatch an idea or build on a business that is operating in it’s early days of trying to fine tune it’s product and acquire a dedicated customer base.

I don’t see companies who are taking on debt (and if they do, it’s a working capital line of credit from Silicon Valley Bank as Freeman’s article points out) nor do I see companies enlisting support from politicians or politically charged entities like Freddie Mac, Fannie Mae or Moodys.

Why would Obama’s administration think regulating an investment sector that operates as efficiently as the VC model, and one that actually spurs innovation and new job growth in industries where the U.S. can lead (see “U.S. auto industry” for the opposite example here) is a smart use of the Treasury Department’s time.

How about Geithner’s gang stay focused on cleaning up the mess created by the banks, insurance companies and other real ponzi schemes, and let the VCs do what they do best: take on the risk associated with creating companies and jobs.

Ok, now back to my Spring Break!

Don’t ask me how or why, but for some reason I ended up at the broadcast network end of the TV dial this morning.  Toggling between David Gregory and George Stephanopoulos (whom my wife correctly asked “what did he do again that warrants him moderating one of these shows?”) a couple of things struck me that reminded me what  a dinosaur these shows are in today’s media environment.

First, these shows better never plan on making the switch to HD.  Anyone who has to see up close how much make up George Will is wearing or whether Arianna Huffington’s eyelashes are real, will certainly click off to another channel no matter how compelling the chit chat is about North Korea.

Second and most notable is the “fishbowl” feel that these shows have — especially in a digital media world that has rapidly moved to putting a premium on audience conversation.  The old school method of having a moderator like George and David leading a discussion with analysts and experts is way too antiquated.  Having Huffington on the Stephanopoulos panel seemed the most ironic.  Here is a pundit who has arguably embraced the new medium via her Huffingtonpost.com blog platform, yet on George’s panel she appeared as 2-dimensional and archaic as Will and the other two stooges on the set.

How about this for a programming idea for these Sunday political shows.

While they are taping the show, run it live online.  Suck in the Twitter feed — heck bring in the FriendFeed, Facebook Status feed and any other audience conversation that can be gleaned from the Web while the host and guests are actually talking on set.  Then, during the actual taping, have the host dip in to the “conversation” and use the vibe coming from the audience chatter to steer the discussion a bit.  Not entirely audience driven, but enough to make it feel like we’re not just watching the show as though we were waltzing through the Television & Radio wing of the Smithsonian Institute.

Now I might watch something like this — a show where George Will had to reply to what real people were saying about what he was saying about North Korea.  Actually, on second thought, I’d probably just watch the thing online while it was being taped so that I could contribute to the conversation live.  I’ve got better things to do than watch network television at 9 a.m. Sunday mornings!