Train Thoughts

I’m watching a YouTube video of Bill Clinton speaking to Harvard students.  He said, “I’d trade being President to be 21 again, I’d take a risk I could do it all over again.”

Man, he has confidence.  I wonder how many successful entrepreneurs would say the same thing.

There are some rumors running around that Yahoo is cutting its workforce by 20%.  It got me thinking about what’s the best bet to make when you are in a growth business, but not getting the traction you want.  First, cutting cost is easy to execute, although, most would agree that it’s not fun to tell someone that they no longer have a job.

But, I’ve always had questions about this strategy.  Is cost cutting too short sighted?  Will future growth be hurt.  I’ve heard the argument that any large company could cut 20% and be better off.  How do you know that you are cutting the inefficient 20%.  Is it possible that you are left with a smaller company, with improved short term profitability, but still have all the problems of an inefficient organization.

Perhaps there is some motivating force (They still have jobs) for employees that improves productivity after a layoff.  I don’t know.

Here are a few strategies I would consider in a large company that wanted to improve profitability over the long term.

1. Smaller teams with more ability to make their own decisions to improve speed.  In a software company I’ll take less planning and more engineers anytime.  For people that have moved out of engineering.  Move them back.
2. Make more products that don’t feed off the corporate tit.  For example, to make a product that gets five million visitors a month is easy for Yahoo because all they have to do is funnel the users from the homepage to the property.  At some point this doesn’t scale and you have to make products that develop their own audience.  I suggest to start and nuture projects for 2 to 3 years, but make them stand on their own.
3. Increase customer support.  Taking care of users goes a long way.  I’ve seen this expense be cut a bunch of times.  I always wonder, what would happen if we tripled or quadrupled what we spend on customer support.  What if you could call anytime you had a question and never had to wait more than two minutes for technical support.
4. Spend more innovating.  We’ve all heard of the Google 20% time.  Give the 20% you’re going to fire 100% and 2 years to create new profitable businesses.  Stick them in a room and say Go!  One of the most difficult things to extract the full value from employees is their creative juice.  How many times do people hear, it’s not a priority, we don’t have the resources, put it in the queue….the list goes on and on.  The truth is, in large complex organizations few people make the ultimate resource decision.  I don’t know if this will every change.  But giving small groups of people a charter of innovate and make a profitable business could really work.
5. Failing.  I  succeed and fail every day.  I try to learn from failures, even when it hurts.  I also tell myself, make sure you still are failing frequently enough.  When you stop taking risks, you stop failing and a lot of time your lack of failure can be your biggest demise.  I have lots of stories about failing, but our biggest failures have led to our largest successes.

So, when you are thinking if you should spend less, consider spending more.  Would the future be brighter?

It’s a pain to remember a bunch of different passwords. So it makes sense that people will use the same one over and over.  The problem is the security risk.  Especially if you sign up for all kinds of services like I do.

I have a simple password management technique.

Level one type of sites all get the same password.  These are services that I’ll probably never use again.

Level two services are things I tend to use a lot like personal email, RSS reader, blogging sites.  If someone got access to them it wouldn’t be a big deal.

Level three is what I use for banks and high security items.  This is a much tougher password and something I never give out broadly.

Sometimes it’s difficult to know what exactly made something that much better.  We are pretty fanatical about measuring things.  So it’s easy to know when something changes at Hubpages.com.  Everyday I check the number of Hubs created, the number of new users, and a chart of traffic over the last week.

Today is a record day on HubPages in terms of Hubs.  Almost 600 created, and over 1000 people signed up.  A year ago 44 Hubs were created and 21 people signed up.   So you get the idea of the kind of growth.

HubPages has been on a crazy pace lately.  Hubs a day have almost doubled over the last month, and new signups are way up.  Like I said, it’s hard to know exactly what made it grow so quickly.  The one thing we have done is made our editorial policies tougher.  We killed porn.  We made stricter policies about what types of content can be published on HubPages.

When we did these things, the number of new Hubs decreased, but traffic grew.  Now, the site really seems to be firing on all cylinders. Not only do we have over ten times the content coming in, the quality of the content is many X times better than it was a year ago.  Here are a few Hubs from some of my favorite authors that were published today.

• Living Locally
• Dehydration
• Kane and Lynch Cheats

HubPages.com has a similar business it appears as Google Knol. The idea is to create a hub on a topic. Hubs are content aggregation points that link to resources, contain videos and images, original content and comments from the community.

87% of our roughly 5 million monthly visitors come from search results. I suspect WikiPedia gets similar percentage of its traffic from search.

We’ve found three key components in this business. First is community. With many people writing on different topics, there needs to be a common ground for the good community members to participate together, even though they may write about different topics. Second is the promise of money. There is a huge range in how well content monetizes. Unfortunately, the best content doesn’t make the most money - part of this is a function of AdSense. For authors that care about revenue, it is similar to blogging in that it’s important to create content regularly to make a portfolio of content that spreads the risk around. With the right kinds of content, and enough posts, we see authors earn over $2K per month. The third component is moderation of content. Porn and spam can take over a site and put off quality participants. When we made the decision in July of 2007 to eliminate porn and add spam filters, our traffic decreased 40%. If unique visitors are the measure of success in this business, some competitors will be larger, but the ultimate damage to community and advertiser relationships can be significant. It will be interesting to see how Google handles these issues.