Mobile Phones: The new competitor for end-cap displays?

Bloomberg News has a fascinating story today on how we shoppers are increasingly turning to our mobile phones at checkout, and away from end-cap attention-getters such as magazines and candy.

At BigOven, we’ve seen this trend in our data.  Mobile usage has grown dramatically year-over-year, very much including activity happening inside the grocery store itself.  BigOven’s mobile usage now exceeds our web usage by a considerable margin.  It’s clear that finding recipes, looking at your menu plan if you have one, and reviewing your mobile grocery list is something that’s a useful activity the grocery store.

To advertisers wanting to get their message to consumers at checkout or anywhere in the grocery planning cycle, we invite you to consider partnering with BigOven and getting your message where shoppers’ attention already is – on their smartphone.  With over 8 million downloads of our award-winning recipe and grocery list apps, we reach millions of shoppers on-the-go and at-home when they’re making their list or reviewing it in the store.  See our Advertise with BigOven section for more information.

And, in case you missed it, here’s a related, fascinating “then and now” photo from NBC News from Vatican City.  Reminds me of a time at Microsoft when I heard Bill Gates say that “in technology, we tend to overestimate what will happen in one year, but underestimate what will happen over the course of ten years.”  What a difference five years makes.

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Photo credit:  Associated Press, NBC News

Private recipes can now be shared via special web address

shutterstock_108317762We’re pleased to announce another new feature for BigOven Pro members:  You can now selectively share any private recipe via a special web address. 

Private recipes are a feature of BigOven Pro, letting you add any and all recipes – even if you don’t want the general public seeing them.  They may be treasured heirloom recipes, or work-in-progress recipes, or recipes you’ve scanned from commercial sources and simply respect, as we do, that such recipes and photos should not be in the general BigOven public archive.  You may want them simply as notes to yourself. 

Sometimes, however, there may still be private recipes that you want to selectively share with a handful of friends or family members via email.  Starting today, you can. 

Here’s how.  Let’s say you’ve got a recipe you’ve added via RecipeScan – “Carmelized Red Onion Relish” — and you had it during the holidays.  It’s so good, you’d like to share it with a couple of other friends.  Simply click on the “email link” button in the upper left on any private recipe page on BigOven.com:

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Notice the lock icon – this means that the recipe is still private, but you can share a special coded link.  If you click it, you’ll be taken to a page where you can email the special link to friends or family:

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When they access the recipe with that special web address, they’ll be able to view, print out, add photos and review the recipe.  If they’re a BigOven Pro member, they can also make an instant copy of it, to add it to their grocery list, menu plan, or more. 

For all users without that special coded link, your recipe remains private; it won’t show up in BigOven general search (only for you, and only when you are logged in), and it won’t be accessible without the code.

Additional notes:

  • To help with security, BigOven adds a “noindex” tag to tell the search engines not to add it to their index
  • Cooks who get the coded link will not be able to add the recipe to a grocery list or menu plan without first making an instant custom copy of it (which is  Pro-only feature.)  However, they can still print the recipe, add comments and photos.
  • Private recipes will not show up in the public recipe search results for anyone other than you. 
  • Private recipes need to be shared one-at-a-time; the code is unique to each recipe.

You are in control of how public you’d like the recipe to be.  You can pin it on Pinterest, email the private URL to as many people as you’d like… but remember, anyone who has the special URL will be able to view the recipe.  Happy cooking!

The Web as Application Operating and Marketing System

Last month, I attended a Software as a Service two-day conference hosted by Madrona Venture Group here in Seattle.  There were some very good round-table discussions with the CEOs of NetSuite, Concur, and 37Signals.   


It really hit home for me how we’re in the midst of the creation of the Web Operating and Marketing System.  And this OS is “moving up the stack” every day, progressing from basic services to high-level application-layer services relatively quickly. 


The “stack”, in computer terms, is usually represented as a series of blocks, one on top of the other, signifying the layers of functionality.  The stack was largely confined to hardware and single-user input/output tasks for 25 years of the PC’s life.  It had a “silicon ceiling” if you will — the model was that the O/S would take care of talking to the devices and the hardware, and leave the application-level coding to the application developers, who would very rarely try to interconnect those applications.


But now, all of a sudden, the silicon ceiling is shattered, and thousands of startups and large companies alike are racing to engineer the next application and marketing layers of the platform.  This work is largely going on in parallel, not in series.  It’s being done not by a few monolithic companies, but thousands around the globe.



1970’s-90’s: The desktop PC stack


At the lowest level is the hardware.  Electrical signals can be sent into the CPU and other electrical signals come out.  The magic that makes a computer work is at the BIOS (basic input/output system) and the operating system.  The desktop PC operating system stack tackles things like writing to the display, disk input/output, temporary RAM storage input/output, connecting to peripherals like printers, mice, network adapters etc.  As it got more advanced, the screen writing and networking became far more sophisticated, but essentially, it was still dealing with basic I/O and memory management tasks.


OS’s are natural monopolies.  Why?  Consumers want powerful, inexpensive applications, and developers seek the largest market for their development efforts, since in most cases, they need to “bet” on an O/S to get the most power out of it.  As a result, economically, OS vendors receive great lock-in and network effects.


The Web Operating System will have similiar economics — those who do the best job serving as layers in the cloud can extract economic rents, though perhaps not if they become too commoditized through standards.  I believe that the application-layer services in the stack have a real opportunity to provide tremendous value to customers, and also build lasting businesses.



Today’s Web Operating System — The “Cloud” plus Marketing


There’s been a lot of talk in tech circles about “the cloud” — this is analagous to data-management, communication and application-layer operating systems available on-demand.



In the past 5 years, the Web has moved from simply providing web browsing and file-serving (simply fetching data from web servers) — to the next logical layers of the stack — the application layer.  What lives there?  Things like:


  • Social operating system services:  Single log-on, central address book storage, calendering, list management, instant messaging, etc.
  • Search
  • Image and video hosting, communication and manipulation
  • Financial services — accounting services, payroll services, ERP services, etc.
  • Secure, fast database storage and retreival
  • Monetization (advertisement, subscriptions, etc.)
  • etc.

Importantly, and new for most developers, is the fact that Marketing Networks are now becoming a significant decision early-on in the life of a company.  Should you write your business on Amazon.com Web Services?  Or Google’s App Engine?  Or Salesforce’s Force.com?  Or NetSuite’s platform?  Or Facebook’s platform?  Or go it alone?  What are the benefits and risks of each?


For developers of software-as-a-service (SAAS) applications, the decisions start to look a lot like the ones console videogame developers have been making for years.  Do I bet on the XBox platform or Nintendo’s Wii, or the nextgen Playstation?  If I do, what’s in it for me?  I might get some really great marketing and network-effects, but only if I’m a premier app.  To gain the most marketing and “bundled promotion”, I’ll need to write my game to be a flagship for Microsoft — I’ll need to show off particular differentiating features of that XBox network.  So too for Google’s App Engine, the iPhone, or whatever platform or device you’re writing for…


The Cloud is starting to come with marketing services and broad-reach networks.



Implications for Microsoft



Strategically, Microsoft needs to internalize that Search is just one of the functions of the Web Operating System.  The long-lost “Hailstorm” project actually had it right back in 2001.  Perhaps Microsoft isn’t in the brand position to build and power it, but it’s coming.


Microsoft knows how to build platforms, and platforms are being developed right now.  Why isn’t Microsoft the leader in free API’s for search?  Why isn’t it possible to look up an API on Microsoft’s site for just about anything you’d like — to manage subscription payments easily, to send money via email, to get a full Plaxo-like self-synchronizing address book for anyone in the world, etc.  Why the hell doesn’t Expedia (note, not Microsoft-owned anymore) or any other travel provider let me search and buy airline tickets through an API?


It’s not just about winning today’s search war.  Sure, it’s extremely vital, but in the end, the Web Operating System dominant players will be the ones with the most complete suite of easily “mashable” services and the highest lock-in of developers and users.  This, in the long-run, only holds together by delivering the highest value.  And ultimately, I believe application developers will force more and more API’s and openness of that system.  Microsoft and their value-network benefitted greatly from the PC operating system revolution, and was significantly better at courting developers than other OS vendors, but ultimately is being forced to be even more open.


The recent moves by Yahoo to open up their search (for both input and output) are an interesting foreshadowing of the next war ahead in the Web Application Operating and Marketing System.



FriendFeed(tm) Support now in Beta for BigOven.com

Today, BigOven.com became the first recipe sharing site to support FriendFeed(tm), a free, and rapidly-growing social network aggregation service. 

      

(Please send beta feedback here, thanks!)

What does this mean, and why is this useful?

About FriendFeed:  At the simplest level, FriendFeed shows you a single "stream" of all your web activity.  For instance, every time you post to your blog, it goes on your FriendFeed.  Every time you upload to YouTube, it goes on your FriendFeed.  Every time you upload to flickr, every time you use twitter… you get the idea.  It’s a single-stream announcement/discussion service.

My FriendFeed is here:  http://friendfeed.com/stevemur

You can subscribe to the ones you want, and leave the ones you don’t want at any time.  With FriendFeed, you get a single "streamed" view of your, or all your friend’s web activity — whether that’s posts on blogs, flickr photo uploads, YouTube video uploads, twitter messages, etc., and now BigOven activity.

You can subscribe to your friend and family’s streams, seeing their activity as it happens, seeing a single consolidated view of it all, and staying in touch with things they like and don’t like.  It’s rather like Facebook’s "what are my friends doing" feature, but on steroids.  It’s been broadened, to more of a cross-application, vendor-neutral version of it.

You can see my FriendFeed here:  http://friendfeed.com/stevemur, or one of the much more connected people around these days, journalist/blogger/opinion-maker Robert Scoble, at http://friendfeed.com/scobleizer.  Robert has recently written that now that FriendFeed has arrived, he’s blogging less, and FF is rapidly becoming the place he turns to in order to find out what’s happening on the net and amongst his friends.

The news is that starting today, BigOven.com, the social network about food with 92,000+ users, is part of the fun. 

Once you do a quick setup (only about 2 mins), every time you post a recipe, or upload a photo or a video, or rate a recipe highly with 4 or 5 stars, BigOven will automatically add it to your personal FriendFeed stream if you take just a moment to tell it to do so.  These streams can then be shown to your friends, placed on your blog, your Facebook profile, or many other places.   It’s a great way to alert friends and family when you do something interesting on the web.  FriendFeed is completely free. 

And it’s simple! 

1)  You’ll need a free FriendFeed account.  Get one here.

2)  After you’ve created FriendFeed account (and have a BigOven.com free membership), visit www.bigoven.com/friendfeed to tell BigOven which alerts to send on your FriendFeed.  Simply check the boxes you’d like to send.. that’s it!  (You can return to this page at any time either via the direct link, or your "My Settings" area, which can be reached from your chef page’s "Edit My Page" button.) 

(Note that BigOven never sees your FriendFeed username and password, only the "RemoteKey", which is public, and can be reset by you at any time.)

After you click "authorize", your friends will see your stream like this:

Learn much more about FriendFeed at C|NET.   

Microsoft should buy FriendFeed

In my final months at Microsoft in ’97, I tried (but ultimately failed) to convince the messenger group to acquire Mirabilis, a small Israeli software company behind the instant-messaging client ICQ. 

As product unit manager of the Internet Gaming effort at Microsoft, I noticed that ICQ was becoming a very popular (and growing!) first-stop for gamers to meet before launching a game online.  The whisper price of the company in ’97 was $90-100 million, which was too rich for the Messenger group at the time.  I thought the Messenger team at the time carried a bit of  a "not-invented here" attitude, which extended to our own internal game-matchmaking / instant-messaging tray-application, ZoneMatch.  (We would have been happy to implement ZoneMatch through messenger if they had an API.  But, like MSN subscription billing, that was forever being put off, and so separate product groups had to roll-their-own.) 

ICQ was acquired the following year (1998) by AOL for around $287 million.  By the end of ’98, it had surpassed 40 million members. 

Today, I look at the dramatic rise of FriendFeed, a very clever nexus-of-social-networking.  And I see many of the same things.  It’s in the right strategic position to become a viable challenger, perhaps, to Facebook for social interconnection.  With connections into Flickr, YouTube, blog sites, anything with an RSS feed, etc., they are developing a pretty valuable "traffic cop and more" foothold amongst people, and may someday soon hold richer "social graph" information than even Facebook.  Check it out soon, Microsoft!

Microsoft Gets It, at least XBox Live

How often have you read "Microsoft Gets It" in the technology press?  Well, they’re writing that about Xbox Live.  Microsoft is currently out-innovating and outselling Sony and Nintendo (and hell, even Apple) in this field of connected entertainment.

While I didn’t ever directly work on Xbox live, I feel like a founding father of sorts.  I have the great honor of founding Microsoft’s internet gaming effort in early 1996, and I planted many of the seeds for what would become Xbox Live.  The Internet Gaming team that I formed and led created Microsoft’s first matchmaking meeting space on the Internet, and introduced all of Microsoft’s v1.0 concepts around online matchmaking, score-management, online chat, tournament play, avatars and more, all more than a decade ago.  This gave Microsoft a terrific head-start in both operational knowledge and design knowledge, which I think has been pretty helpful in delivering its next-generation Xbox Live.

The story’s a long one, but I’ll try to make it brief.

I joined the games group in late 1995 from the CD-ROM division at Microsoft.  I’m not too much of a gamer, but I was very interested making a career transition from marketing to being more central to technology planning and development.  That is, in Microsoft-speak, moving from a lead product planning role to a group program management role.  The opportunity arose in Games, and I thought there were some interesting technical challenges there, and that I could both learn, and try to contribute there.  I also thought that games might be a great mixture of Hollywood and Silicon Valley.  That part was all true.  But it didn’t make me a gamer.  To this day, I’ve never owned a game console, and I hope to keep it that way, much as I enjoy playing them.

When I joined the games group, it was a very opportunistic set of products (MS Golf, Flight Simulator, and a pretty mediocre game for Windows 95 that was being worked on called "Hover", as well as an online Chess game being written for the non-TCP/IP, proprietary MSN 1.0 platform.)  Then there were the joint venture activities with Dreamworks SKG/Dreamworks Interactive.  Quite frankly, it all struck me as a pretty haphazard bunch of unrelated projects. 

The FlightSim group was generating strong and consistent revenue growth, and the games GM at the time had a strong plan to bring the third-party developers behind FlightSim and Golf in-house.  Good call.  As 1996 continued, I was struck by how the Internet could be used to create a matchmaking ground, and perhaps could be used to bring some unity and coherence to the titles.

When Bill Gates’ "Internet Tidal Wave" (.PDF) memo came out in May of 1996, it was a defining moment in the company, and each of us in our groups thought long and hard about what the Internet meant for our businesses.

At the time, I was a lead program manager for the Action & Strategy products at Microsoft (Fury3, Age of Empires, Close Combat and a few other titles).  I wrote a paper summarizing where I thought Microsoft should go in online gaming, and it quickly got Bill’s attention, as well as Rick Rashid, Patty Stonesifer, Nathan Mhyrvold and others in the company. 

I felt strongly that an online gaming platform was needed that provided matchmaking services, a place for people to meet to start games, avatars (later called "GamerTags"), share scores, and socialize.  I wrote that it was inevitable that whoever built such a place could monetize the platform through advertising, subscription revenues and add-on sales (both of entire games — download to purchase — as well as game add-ons).  Low-latency gaming was also something we looked at, but eventually decided against building (or acquiring) a large network.

This period of my life also included the single worst business meeting of my life.

Now, through my seven years at Microsoft, I was fortunate enough to participate in dozen or so meetings with Bill Gates.  And despite the reputation that Bill and Steve Ballmer both have in being difficult and abrasive in meetings sometimes, I can report that every single one of them was a very positive experience. 

However, my absolute low-point ever at Microsoft was when Nathan Mhyrvold, then leading advanced research activities for the company, stopped by to hear a presentation about our online games strategy.  Nathan has a well-earned reputation for sparks of sheer brilliance, but sometimes obtuse comments and just plain wrong-headedness.  For instance, there is a famous email exchange in which Mhyrvold tries to tank one effort inside Microsoft because, economically, it was based on taking a "vig" on each transaction, and that "no one can sustain a margin with that kind of business".  Far better, he argued, was investing heavily to create original content, like Disney.  The two products he was comparing?  Well, the one he wanted to kill became Expedia (built on transactions, later to go on to create over $8 billion in market cap and establish clear leadership in the online travel world), and the one he was championing was Slate (a noteworthy, perhaps even notable effort still but struggling to deliver a solid ROI). 

One former senior Microsoft executive summarized Mhyrvold this way: "Meeting with Nathan is just like smoking pot.  When you’re in it, you feel really smart, but at the end, you sometimes don’t really know what was said."

Back to my meeting with Nathan in the spring of ’96.  I had been on the job of building the online games business for Microsoft for only a couple weeks, and admittedly, I was still struggling for the right metaphor for the business model that would emerge.  I stumbled through a few points, drawing an analogy between what we were trying to build and increasingly narrowcast television channels — one for casual games, one for action games, etc.  The strategy was to build a platform where people can meet each other to play games, upload high scores, exchange voice chat, buy game add-ons, etc.   Mhyrvold peppered me with a few questions, several of which I didn’t even understand.  He later wrote a blistering memo (published to the whole company) about how group managers need to be better prepared, and drew on several incidents from that infamous meeting.   

I feel less bad about my performance, and was buoyed by Bill Gates’ comments to me at the end of a product review just six months later on the Internet gaming effort that Microsoft’s purchase of Electric Gravity was extremely inexpensive compared to what we got out of it.  Bill said it was a great purchase, perhaps one of Microsoft’s best in terms of Return on Investment, and I agree.  (I’m not at liberty to disclose what we paid for our purchase, but it pales in comparison to nearly all other Microsoft buyouts.)

Today, thanks to the great creative team that build it, the MSN Gaming Zone is the Internet’s largest place to play games, and a strategic asset for Microsoft that will allow it to extend into the living room.  I saw Charlotte Guyman (the former VP that I reported into for a few years at MSFT) at a coffee shop recently, and she told my wife, who she had met for the first time, that I was the guy who "saved Microsoft’s games group".  That’s a huge complement, but also I fear a huge exaggeration.  I definitely think I put some significant english on the ball at a critical time, but I wasn’t the prime player.  I do think I helped Microsoft think much more strategically about games, publishing, and developer relations, however, as well as lay out a solid version 1.0 effort in what would soon become the largest online game site in the world.  I did this primarily by pointing out some pretty obvious conclusions about how platforms play to Microsoft’s strengths, and Microsoft needed to either create a comprehensive platform for gaming, or exit the business.  Luckily for all of us, they chose the former.

The Arena* project that I led with a team of people from ’95-97 established many of the key platform and matchmaking concepts that have now been implemented and improved in XBox Live.  And I’m extremely gratified by the sense that in this area at least, the press is starting to recognize that Microsoft Gets It.  I’d argue that in online gaming, Microsoft gets it better than any other entity in the world.  Better than Sony, Apple, Linux, and all the other albatrosses Microsoft has had to tackle from a standing start.   XBox Live is laying a foundation for many more important services to come.

So, in addition to trying to set the record straight, I guess the purpose of my post is — don’t let people’s reputation or negative feedback sway you.  Sometimes, they’re just plain wrong and don’t have the full context.  Make it happen.

*"Arena" was the codename we coined  in 1995 for this project (it’s a place people go to play and watch games).  Arena launched as the "Internet Gaming Zone" in 1996.  The Zone was the first Web-based multiplayer matchmaking space, and now has millions of players from around the world.

Chris Caposella on your TV again, this time on his own terms.

The last time you saw my good friend Chris Caposella, it was the infamous Windows 98 beta demonstration with Bill Gates, below.   He had two minutes of literally worldwide fame, with the video appearing on CNN, ABCNews, CBS, NBC, BBC and many more networks. 

Say what you will about Microsoft; I’m obviously a pretty biased observer.

Chris himself is one of the brightest, funniest, most capable, yet sincerely modest guys I’ve ever had the pleasure of knowing.  He and I worked together for a couple years in the relational database group (Access, FoxPro) at Microsoft, and it was a real pleasure.  Smart guy; many laughs.  I think we even started at Microsoft in the exact same month and year (July of ’91).  I left Microsoft in 1997; he didn’t, and he’s now running the Office group at Microsoft as Corporate VP.  Here he is again with some great insights on business, with his usual modest aplomb, in a recent hour-long interview on the University of Washington’s TV channel. 

An Insider’s View of Sidewalk.com’s Rise and Sale

My friend Dave Chase has posted a great recap of Sidewalk.com’s rise and fall.  If you are interested in the Internet, Microsoft, or entrepreneurship in general, it’s well worth a read. 

On reflection, it’s fascinating to me how a company that is ostensibly very analytical in its decisionmaking (Microsoft) often ultimately makes major decisions based on product champions and forces of personality. (Or, regrettably sometimes, lack thereof.)

The Coming Demise of Vertical Online Classified Directories

A very popular (and heretofore viable) business model for the web from 1995 through today has been the "Classified Advertising" style model.  Here are the basic steps:

  • Pick a vertical where the search experience isn’t good, complete, or rich enough.  Ideally, it’s a niche where the things the Web does well add considerable value over offline substitutes.  (For instance, photos, ratings, sharing, audio, video, community, broad geographic reach, 24×7 access, dynamic pricing, interactivity — if these attributes add significant value to the experience, so much the better.)   Second, ideally, it’s a niche where the advertisers/sellers are willing to pay to get exposure.  Third, ideally, it’s a niche that has a very poor search experience due to fragmentation.
  • Create a data-driven website that welcomes all listers in your directory
  • Let them search by various criteria
  • Implement a pay-per-month or pay-per-year subscription model, perhaps a freemium model, to build out a directory.
  • Work feverishly on search engine presence.  It’s probably your bread and butter.
  • Build a brand to drive consumers to your slice of the market.  Be remarkable enough that current customers remember you as a better search experience and spread the word to others.

This is a perfectly fine business model if you started in the years 1995-2006.  In fact, I started such a business, VacationSpot.com, that did very well using this exact approach.

Started in my second bedroom in 1997 with just $250,000 in initial capital, we focused on building the world’s most complete vertical directory of vacation rentals — villas, condos, cabins, etc.  Our primary source of revenue was in selling monthly and annual listings to property owners and managers.  Our secondary source of revenue was booking services, through proprietary reservation systems we were building for clients.

We acquired five companies, raised $13 million and sold the company to Expedia just three years later for about $90 million in Expedia stock.  Now, VacationSpot.com had about $11 million in the bank at the time it was sold, and it was roughly breakeven on the classified advertising part of the business, while the transaction side of the business was still very much in "investment mode".  Expedia went on to more-than quintuple its stock price over the ensuing five years, providing a solid positive return to all investors, and an astonishing 2000%+ ROI for the earliest investors over a 7 year period, thanks largely to Expedia’s meteoric market-cap growth from around $900 million in 2000 to over $8 billion in adjusted market cap by 2007.   

Times have changed… somewhat.  If you’re in 2007, and you’ve got a relatively static classified-ad-driven business that is dependent upon search engine presence and annual listing fees, consider ringing the cash register now.  Because the game that you’ve optimized your business for is about to change.

The good news is that it’s not too late to sell.  Venture investors are still forking over great sums for classified-ad-style businesses, ones that I consider to be far easier to create (and far more sensitive to the whims of search engine giants) than supplier-technology plays like Escapia and Adventure Central (Fair disclosure — I’m Chairman of the former, Director of the latter.)

At VacationSpot.com, we were working on both types of projects — the consumer-facing classified-style directory and the back-end software.  Time and time again, we saw outside investors relating to what consumers see, and what was generating our current revenue — the listings site — and downplaying or ignoring the far harder, but far-more-strategically-important (IMO) back-end reservation platform that was underway.  In 1997, most of our property managers used dialup at best to reach the Internet, and we were handicapped greatly by this lack of broadband penetration.  And quite frankly, our technology solution just wasn’t as robust, complete, or high-quality as we needed to fully satisfy in that area — it required dual entry of reservations, since it served as an adjunct to their reservation desk.  It was an "Extranet", and often fell out of synch with the true state of the world.

In 2007, there are still many classified players out there building presently-strong businesses with this model:  HomeAway.com, YachtWorld.com, and RentClicks are just a few of them.  They have nice cashflow, (apparently) nice repeat listing business, and growing search engine presence.  What’s not to like?

In fact, HomeAway.com was the single largest venture deal done in 2006.  HomeAway is VacationSpot.com 2.0 — it’s a rollup of several classified advertising directories in the vacation rental space, offering marketing/listing/search-engine-presence services largely for the rent-by-owner market.  HomeAway’s most recent financing was on an eye-popping valuation north of $300 million.  Sure, the classified advertising has historically generated nice cashflow, and you can talk yourself into that business recurring well into the future.  But consider what happens whent the search engines change the game.   And they will. 

Another tact here — compare the $18 billion spent by consumers renting vacation homes every year with the estimated 5-10% of that which is spent advertising vacation homes.  Which is likely to grow faster — advertising spend on the Internet, or vacation rental bookings on the Internet?  I believe the first dollars to move to the Internet were the ad dollars, and transaction dollars are now following.

Most scarily for the classified ad players, the search engine players are working feverishly to structure their underlying data, and structure the search.  In other words, they are prepping today to pick off the classified categories, vertical-by-vertical.

Consider this:  Google, Yahoo, MSN and others are reaching the end of their first-generation approach, and the next generation will include support for increasingly structured searches.  In v1.0, search engines intelligently analyze the world’s HTML pages, the pages that link to them, the relative quality of linking, etc. to come up with terrific URL’s for you to look at when you type in various text in the search box. 

But I think what people really want when they go to Google and type in, say, "Maui condo for rent" is actually a list of Maui condos to look at, with narrow-down tools that ask the major-filter questions like "When do you want to go?", "How much do you want to spend?", and "A/C?  Pool?  Beachside?"  etc., together with photos and relevant listings in-situ.  The search engines are structuring data and structuring search in search’s next generation.  You can see it today on Google when you type in "San Francisco real estate", or "Seattle rental home". 

Where does that leave the classified advertising players, whose business models are predicated upon the fact that they provide a better search experience because they are domain-specific?

In the travel category, the reason I’m involved with companies like Seattle’s Escapia Inc. and Adventure Central Inc. is that I firmly believe that the future bodes well for those infrastructure providers that can accurately answer the questions:

  • "What is available that meets my criteria for the following date range?"
  • "How much is it?"

The classifed-advertising players are ultimately on Google, Google Base, Craigslist, Yahoo, and MSN’s railroad tracks.

I’ll leave you with this exercise:

  • Take any city pair, let’s say "Boston Seattle", and type it into Google
  • Notice what you get on the page that Google returns.
  • In your mind, fast-forward the videotape 3 years.
  • What do you get?  Where does the data come from that shows up on your "optimal result page" for searches like "spring break Maui condo"?  Who owns the most valuable asset in that future world — is it the classified advertising players, or the suppliers who can truly answer the question from an original-source standpoint?

Further reading:  "Google’s Structured Data Play"