Partial Transcript Below of the Panel and Q&A session - Courtesy of Avery Cohen
Web 2.0 and How It Can Promote Your Business: Chicago MIT-EF March, 2009
Web 2.0 and How It Can Promote Your Business Chicago MIT-EF: Jason Fried (37 Signals), Harper Reed (Threadless), and Howard Tullman (Flashpoint Academy) Talk About Social Media and Your Business
Chicago MIT-Enterprise Forum, Tuesday, March , 2009
Introductions
Fried's 37 Signals provides personal and business productivity tools through a Software-as-a-Service model. Fried describes this as "freemium," basic versions of the tools are available for free, and people can buy enhanced services.
Reed is CTO at Threadless, which uses a "crowdsourcing" model to produce t-shirt designs. Each week, there is a competition of designs and the winning designer gets his shirt made, some cash and store credit percentage of sales. They have developed a community of designers and consumers over the past ten years.threadless t-shirt
Howard Tullman is CEO of Flashpoint Academy is an entrepreneur in the field of education. Tullman says that properly run, education can be productive and profitable.
What is Web 2.0?
Fried: The Web 2.0 concept emerged in 2004 – 2005, as a buzz-word centered around user generated content and small team development. There was a Web 2.0 aesthetic: gradients, pastels, and reflections.
Reed: All of our products and content are developed by our community.
Fried: We are very focused on small business tools, all are web based. Our products do a few things, do it well, and get out of the way.
Tullman said he sees Web 2.0 as being search driven, with the next step from there being user generated content.
Further reading: see Tim O'Reilly's definitive 2005 article.
37 Signals & Threadless: Web 2.0 Practitioners
Fried was concerned that one aspect of Web 2.0 was business models. He pointed out that 37 Signals and Threadless represent two profitable web-based companies. Reed said that's because they offer something for sale, an important step toward profitability.
Fried pointed out that their "freemium" model (a term coined by Fred Wilson, VC from Flatiron Partners) starts with free services and adds paid modules. "Start free, then charge." Basecamp, a collaborative project management tool to help organize stuff you might otherwise email, has 3 million users. The majority of their customers only use free services, the minority is paid and they are profitable.
Reed described the relationship between Threadless and its community. Many of the Threadless designers have grown up with the company. They have interacted with the customer community. The interaction between customers and designers has resulted in sales of 100K shirts per month, one million registered users and 200K active users. Their community recommends new features and helps identify bugs as they enhance the software that runs the site and design tools.
Web 2.0: Beyond the Web Site
Reed had a presentation showing how Threadless uses other sites as opportunities for interaction. They have found that their community likes to interact with the Threadless development team. One of the Threadless team, Charlie, has a video blog on Vimeo, where he will have a video blog entry and results in interactive discussions in comments.
Reed pointed out a competitor's advertisement on the Threadless video page on Vimeo, a competitor that is owned by Viemo's parent company. Which may explain that while 37 Signals was kicked off of Vimeo for posting "commercial content", Threadless is allowed to post new video content that talks directly about the company, its products, designers, and community.
Threadless also uses Flicker to promote their site and products through user-generated content. Customers get a point, worth about $1.50 in store credit, for every picture posted on Flickr of someone wearing a Threadless t-shirt.
Web 2.0: Twitter and Customer Service
On Twitter, Threadless was "somehow put on the 'suggested users list'" and in two weeks went from 9,000 followers to over 150,000 followers. These people receive messages from Threadless in their Twitter message stream.
37 Signals has been on Twitter for a few months and figures they have around 11K followers (Fried has 8.5K at this writing and the Twitter account 37signals has 13.3K).
The value of Twitter is that its search mechanism is open and real-time. This gives access to what people are saying right now. It creates an opportunity to quickly respond to people, and they will respond to your postings.
A quick response is most effective at winning people over. Tullman talked about the value of "fixing" the situation when a customer has a bad experience. The staff at Threadless hangs out on Twitter, monitoring the term "threadless", and responding when appropriate.
When asked by an audience member about the term "community", and if it is "a real community" or just another buzzword, the panelists acknowledged, in jocular fashion, that the term has become a Web 2.0 buzzword. They also illustrated that there is substantial value that comes from the interactions between consumer and supplier. 37 Signals gains insight into how their products are being used. Threadless has developed a thriving and successful community of designers, along with a very loyal consumer base. Consistency of interaction and sales indicates that there is a value to the "community" these companies have developed.
Other Web 2.0 Tools
Both 37 Signals and Threadless use Campaign Monitor for Newsletters. They like Survey Monkey as a low-cost source of customer attitudinal data. Reed likes Google Apps for collaboration outside Basecamp. Both are making use of Google Analytics and Fried's team is using Google Web Site Optimizer.
None of the companies on the panel has a dedicated analytics team, nor do they employ a Social Media manager. These duties fall to the team to pick up organically in the course of their other duties. For example, monitoring Twitter conversations becomes a part of everyone's job at Threadless, and Reed gave an example of how he got a call from one of their warehouse managers over a weekend, informing him that a feature on the site was broken.
This speaks to the scale of the ventures presenting. When asked by the audience what potential they see for automating the interpretation of semantic data from social media, it was not on their map. For these companies, interacting with the audience is one of the most important part of their business models, but is so ingrained into the corporate culture that there is not a formal process for these interactions.
The Next Big Thing
Tullman asked "What's the Next Big Thing" and Fried took exception. Our industry is too focused on change. He recommended that people focus on things that don't change. Chasing "The Next Big Thing" leads people to lose sight of what is important and successful in their business. Two constants for or his web-based applications: Speed and Ease of Use.
What Are You Investing in?
Fried said that they are not focused on new products, but are improving speed and integrating a suite of their products. Reed said that they invest in their users, focusing on their users and developing use cases that describe the users' needs.
The Threadless parent company "Skinnycorp" has built a new site http://nakedandangry.com/, where they make products like handbags and umbrellas using patterns created by their design community. He discussed the challenges of expanding to new products, that their core competency was in developing software, but expanding product lines has meant sourcing products from China, working on product quality issues, and managing longer lead-times for the supply chain.
