Search, discovery and marketing

 

"However vast any person’s basic reading may be, there still remain an enormous number of fundamental works that he has not read"

Italo Calvino

Erasmus is said to have been the last person in Europe to have read everything. He lived just at the point that printing took off, and so it was in his lifetime that it ceased actually to be possible to have read everything. Some time later there was presumably also a last person to have heard of every book, or every book worth reading - in the 18th century, perhaps. Then, sometime in the past few decades, it also became impossible to have heard every good song. It is still possible, just, to see every good film, but the so-called 'golden age of television' means it's harder and harder to watch all the great shows. 

This is not a problem of search or availability, but a problem of too much availability, and of course the internet magnifies this a thousand-fold. Paradoxically, the internet makes it possible to get anything you've ever heard of but also makes it definitively impossible to have heard of everything. It allows anyone to be heard, but how do people hear of you?

The first attempt online was Yahoo's directory - an editorial home-page and a directory of every single website, organized by category. This sounds like a joke now - "there was a website that listed every single website that there was". Yahoo actually worked pretty well when there were 20,000 websites, just as a book shop with 20,000 titles works pretty well. But the Yahoo directory peaked at 3.2m sites and at that that point it definitely didn't work - you can't possibly scroll past that many entries (though it lingered on in a half-life until Marissa Mayer shut it down this year). And in the meantime, Google invented PageRank, coming at the problem from an entirely different direction. Suddenly, search worked, and that seemed like the answer. 

Today, app stores look a lot like the Yahoo of 20 years ago, and they don't work for the same reasons - you can browse 20,000 apps but not a million. Hierarchical directories don't scale. And so while it's easy to make a list of things that Apple and Google should fix on their app stores, that misses the point - it's like making a list of ways that the Yahoo home page should have been better. You might have been right but the answer was still Google. (I suspect that the same applies, just a little, to the current moves towards app search and deep linking, incidentally. PageRank uses the signal of links between pages - the ability to link of itself is only half the picture.) This is one reason mobile messaging apps are so hot - because they might become acquisition and discovery channels. 

However, I think our preoccupation with the problems of apps and app stores and with the ways that they broke Google masks a deeper issue - that Google didn't really solve the problem either. Or rather, it moved the problem. Google is very good at giving you what you're looking for, but no good at all at telling you what you want to find, let alone things you didn't know you wanted. Like Amazon, it's essentially a passive product (which is why Now is so interesting). It relies on waiting for you to find out what you want somewhere else, in some other way, and then it gives it to you. No-one complains that ‘I put my book on Amazon and no-one can discover it there’, but that’s really no different to saying ‘I put my app in the app store and no-one can discover it there’, or indeed 'I made a web page and no-one came'. 

So Google moved the problem from 'I want to find this and can't' to 'yes, but what do I want to find?' That is, 'What should read next?', 'what lamp would I like?' or 'where should we go on holiday next weekend?' are not valid search queries. And that's just for problems you know you have - the most interesting businesses are often things you'd never given any thought to. What search would you do that would tell you about Lyft, Instacart, Pinterest, AirBnB or Evernote if you had no idea that they existed?  (This prompts the question, indeed, of what didn't or couldn't work before 2007 because search was the dominant model.)

One of the clearest places to see this problem of ‘too much’ is Yelp. I’ve been fascinated by how many companies are effectively trying to unbundle Yelp, despite that fact that (unlike Craigslist) it’s a modern technology company that does most of the things one would expect it to. But where people unbundling Craigslist generally try to peel off a category and deliver a modern experience, the people going after restaurant listings are often doing so with constraint. That is, instead of giving you every single restaurant that’s within 2 miles and that lots of people liked, they give you 10 restaurants. YPlan gives you one, and just one, thing to do tonight. People are attacking crowdsourced universal scale with constraint, curation and personal preference. 

Looking at these companies, it strikes me that actually, saying that ‘Yahoo’s directory didn’t scale’ misses the point. What we’re really seeing is a trade-off between two problems. You can have a list, solving discovery and recommendation, but once the domain gets big then your list is either unusably long or partial and incomplete (and perhaps uneconomic to maintain). Or you can have a searchable index of everything but you’re on your own working what’s good and finding things you didn't know to search for. Time Out is an interesting attempt to sit in the middle of that scale - enough coverage to be quasi-universal, and to promise something good nearby wherever you are, but also enough curation that you don’t just get 5,000 listings all with five stars.  ProductHunt is an attempt to use community to surface quality at scale, as is Pinterest (both are a16z investments). In contrast, Canopy uses hand-curated selections on Amazon. The question for all of these: do you filter crowdsourcing down enough to get quality, or scale up editorial to get coverage, or you give up on coverage and do a purely curated product? 

One answer is that the machine will scale to solve the problem - you aggregate the opinions of the many (Yelp), or data about your purchases (Amazon) or perhaps you yourself (Google Now). Amazon’s failure to do this reliably makes me hesitate (one suggestion it gave me is above - I collect these), but more deeply, there are some questions, again, that just do not make good text search queries. I can ask Amazon for Owen Hatherley’s new book on Communist architecture and it’ll find it, and Google will give me reviews. But if I ask them “what should I read next?” then you quickly fall into the uncanny valley between data mining and the 'real', HAL 9000 AI that we don't actually have yet. That is, a machine can learn that I like architecture and history books, but that’s not the same as knowing that I will buy Owen Hatherley’s book but never Jacqueline Yallop’s book on Victorian utopian model villages, and we're not quite there yet. 

You can also see this challenge right now in both books and fashion. Amazon, after 20 years of ruthless execution, still only has under a third of the entire print books market. Most people buy most of their books in physical retail, because book shops are not just relatively inefficient end-points to a physical logistics network, but also filters and recommendation platforms. They’re high-latency but also high-bandwidth. Fashion, meanwhile, is going online very fast, but not through Amazon. Rather, dozens of companies are circling around the right models or recommendation, curation and discovery.

So, perhaps, a split might be:

  1. There is giving you what you already know you want (Amazon, Google),
  2. There is working out what you want (Amazon and Google's aspiration),
  3. And then there is suggesting what you might want (Heywood Hill). 

Perhaps this is just the next step in retail. Amazon let people in one-bar towns buy products that could only previously be had in big cities, but it doesn't let you shop the way people can shop in big cities - once you understand that physical logistics is a very small part of what shopping means (this can be hard to spot if you've only ever lived in the suburbs of the South Bay). Buying and shopping are not the same thing. That's what the new generation of internet retailers are trying to do - to scale curation instead of catalogues. 

This is also, very obviously, what Apple News and Apple Music are trying to do. Each of them approaches a data set in which the default answer is a million options and a search box. Each asks the question: "how do we take a commodity in a database (web pages, music tracks) and layer curation and recommendation in ways that are more usable and friendly than just giving people a search box and pushing them out of the door?" It's not as though this is a solved problem anywhere else. RSS (which actually powers Apple news) failed as a consumer technology  and following a magazine or musician on Facebook means you won't see more than one in ten of their posts (and I don't choose my friends for their taste in music, or book reviews). And you can't Google for 'what do I read next? I hesitate to declare that this can't work. 

Another strand here, which really does take us back to the beginning, is that I always thought the most useful part of Flipboard (now the last man standing of all the iPad news aggregators that followed the iPad launch, and superficially similar to Apple News) is not any of the formatting or design but the built-in directory of sites. If you want to see 15 sites about basketball, or typography, or hats or makeup, where would you find such a list? Yahoo did that once, and so did link rolls and web rings or, in another way, del.icio.us. (It's funny how many people keep trying to rebuild Yahoo - it didn't work out that well for Yahoo itself). Tumblr today provides one route into this, if you invest the time in surfing the topics, as does Pinterest. But you don't get that from Facebook or Google. 

Of course, once you give up on a universal search and a universal store - that is, Google and Amazon - as the only answer, then you've moved the problem again. There's an old Soviet joke that a man walks into a shop and asks “You don’t have any fish, do you?" And the shopkeeper says “No, we’re a butcher - we don’t have any meat. The shop next door is a fishmonger - they don’t have any fish”. So: where do you want to be hard to find? Do you want to be one of a million listings in Google or the app stores, or do you want to be one of ten or 100 listings in a carefully curated selection - but where that selection is one of a million listings in Google or the app store? 

All of this takes us to marketing. I sometimes tease my Xoogler colleagues by suggesting that if PageRank Really Worked, SEM wouldn't exist - if the links were always the right answer then no-one would click on search advertising. (Larry Page is fond of asking challenging questions, but that might be one step too far.)  Until then, though some companies can make it entirely through organic search or Facebook virality, most cannot. (Indeed, very often the mere fact that you've made these channels work for acquisition means they stop working, since your link advantage gets arbitraged away by imitators or Facebook decides you're taking just a little too much of the newsfeed.) For the rest of us, that means marketing. In effect, by removing all other constraints, the internet makes advertising more important than ever. 

Presentation: Mobile is eating the world

This is an updated version of a presentation I first gave last autumn: the macro view of how mobile is changing the technology industry, the internet and the broader economy, here with slides and an accompanying talk track as I presented it to our limited partners earlier this month. 

US tech funding

I spent some time in the last few weeks with my colleagues Morgan Bender and Scott Kupor going through the state and history of US tech funding. It's pretty easy to point out that the current situation bears little resemblance to 1999 or 2000. This time it's different. But then, it's always different - what's going on now? 

Update: we also did a podcast talking though these issues. 

What are you afraid of?

As a company moves from insurgent to incumbent, and gets big and complex and involved in lots of different things, it tends to end up with lots of different objectives, tactics and strategies. At that point, trying to understand it from outside, it can be useful to think not about what it's trying to do but what it's afraid of. This company want to do lots of things, but what's the existential threat? What does it want not to happen? What scares it, late at night?

For Google, the fear is around reach. Google is a data company, and a machine learning company, and everything it does is about reach - reach to get data in so that it can understand everything better, and then reach so that it can serve that understanding out to the users. And so Android exists partly to enable the expansion of the mobile internet, but also, and more fundamentally, to ensure that no-one (meaning first Microsoft and later Apple) would be able to block Google from reaching those users, both to give them each results and to see what they are doing. Google is afraid of going blind. 

For Apple, I'd suggest the fear is that the developers leave. This is what happened in the 90s and it was a key part of the company's near-death experience (and arguably Apple only survived because the web made the lack of Mac apps matter less as a reason to buy a computer). Once developers start leaving you're in a vicious circle that's very hard to reverse (this is where Windows Phone is now). Today the iOS ecosystem is smaller than Android in absolute users and downloads, but has 7-800m live device, which is three times the size of the PC install base in 1995, and twice as much app store revenue per user as Google Play. More importantly, perhaps, the users are highly concentrated in key locations - Chase isn't going to abandon its iPhone app because there are 500m Android users in China.  So right now the ecosystem looks sustainable, but that could change. Developers can leave. That's Apple's existential fear.  

This is a useful lens to apply to the announcements at WWDC and IO. Google, this year in particular, always seems happier and more comfortable talking about the great stuff it can do with its own unmatched cloud intelligence - Now on Tap, for example. Losing that intelligence is what Google's afraid of. Apple is happiest talking about the new platforms and technologies that it wants developers to use - Apple Pay, iBeacons, Extensions or App Search. And losing that developer adoption is what Apple's afraid of. 

The (lack of) app store metrics

Apple and Google both give headline statistics of how well their respective app stores are doing, generally at their summer developer conferences. These are rounded numbers at scheduled events and they're not always comparable, but they do give us a sense of what's going on.  

Last summer, at their developer events, both Apple and Google gave numbers for the money they had paid to developers in their respective app stores: $5bn in the previous 12 months for Google Play and $10bn for the iOS App Store. Given Android has double the user base of iOS, this meant that the average iOS user was worth around 4x the average Android user in app store revenue. 

This year Apple gave the same number - $10bn (more precisely, it gave a cumulative figure of $30bn this WWDC versus $20bn last WWDC). The lack of growth may be partly due to rounding but still implies that people are spending less on average, since the user base is still growing.  Google gave no number at Google IO but it gave one earlier in the year of $7bn. It looks as through Play is growing faster than iOS and might overtake it this year (unless Apple is rounding down very aggressively - certainly the uneven shape of the graph in 2013 is due to rounding).  

Screen Shot 2015-06-13 at 11.47.31 PM.png

Since Google Android has close to double the number of users, this implies that the average user is spending perhaps half as much as the average iOS user - a change from 1/4 a year ago but still a big gap. 

Meanwhile, this was the first year since 2013 that we could compare downloads.

Google Play had 50bn app downloads in the last 12 months and iOS had 25bn, with Play appearing to be growing faster. Since, again, Play has more users, this implies roughly the same downloads per user on Android and iOS. 

Incidentally, these numbers show annualized consumer spending on apps of around $25bn, and 75bn apps downloaded in the last 12 months. 

12 tablet apps

Tablet apps, after an explosion of excitement when the iPad was first launched, are in something of a lull. It's hard to make money, the install base is flat (or, more precisely, the base of tablets that are not generic black plastic devices that never install apps is flat) and attention has shifted firmly back to the smartphone.

Yet there is still some great work being done, and great content and experiences to be had. The larger screen can show a full website in a way that a smartphone cannot, yes, but there is also scope for native tablet apps to do things that you would struggle to achieve with either a smartphone app or a website, whether that's content display, interaction design, input methods or even just distribution. So, here's an entirely personal selection of 12 that I'm always glad I have. 

(Fiftythree, which makes Paper, is an a16z portfolio company. The app is great.)

The future is mobile and apps, except that it isn't.

There are two charts that capture a lot of the way we think about mobile today. In the first, we see that mobile devices are approaching a majority of traffic, and in the second, that a large proportion of all web traffic (a majority in the USA in this instance) and the vast majority of mobile traffic is coming from apps rather than the web. 

However, if you're not careful you can get quite the wrong impression from these. 

First, look at where people actually use their devices. 

This is a picture that you see in all the relevant data (use of cellular versus wifi data, for example) - most use of 'mobile' devices happens at home or at work, or sitting down in a coffee shop - at any rate, not just while you're walking down the street or queueing at a shop. People use their mobile devices everywhere, and mostly, that actually means when they're sitting down. The fact that the IBM data above, like much 'mobile' data, actually includes tablets, is something of a clue - people obviously use tablets sitting down. But that's true of smartphones too. 

When we talk about designing for mobile use, we tend to talk in terms of building experiences that people can see in brief moments while they glance at their phone, because they're queuing or walking or waiting for a lift or whatever. By extension, that means that 'mobile' can - no, should - be a subset of the full experience. But actually, people do do that but they also, increasingly, spend half an hour burrowing though the web or into an app, while they're sitting at home, even with a laptop in reach. So the mobile experience needs to be complete. That might, paradoxically, mean that your total experience might need to be edited, to fit, but it's dangerous to pick a subset of your offer and put just that on mobile - it might be your only touch point. Conversely, one could argue that in some cases it's the desktop experience that should be a subset of the mobile one. 

Second, about that app share of use. The great majority of app use is of course Facebook and YouTube, and in fact, app use of the internet overall is highly concentrated into a relatively small number of highly successful apps. If one looks at how people use the web on the desktop, though, you see something very similar. Most people have perhaps 10 or 20 web sites that they visit regularly in a conscious, directed way - they type the URL or click a bookmark or (most likely) search for the service name. Everything else they get to though social or search. And on mobile, most people, again, have perhaps 10 or 20 services that they use regularly - except that on a smartphone those are apps. And everything else they get to through search or social - except that social happens as a web view inside the Facebook or Twitter app and so counts as 'app use' as well. 

That is, there's a very fat head to the distribution of use on both mobile and desktop, and on mobile that goes to apps while on the desktop it generally remains within the web browser. Apps unbundle the top services into their own apps. But the dynamic for everything else has changed less - it's still on the web, mostly. As I wrote here, if people have a relationship with your service such that they'll want to put your icon on the home screen - if they'll make a conscious choice to go to you - then you should have an app as well as a website. If you're in that category then everything has changed relative to the desktop internet. But if not, then the web, search and social are still most of the story. Hence, one of the interesting trends at the moment is the attempt to bridge the web with native, non-web experiences. We see that with Google Now and Facebook Messenger (desktop sites where you place an order while signed into Facebook can send messages to you in Messenger) and with a lot of what Google is thinking with Chrome. That's not really here just yet, though.