Rob Dolin's Blog

Thoughts on technology, politics, non-profits, and their intersections; and food

Goldman Sachs resignation letter, misalignment of incentives, and implications for $AAPL $FB $GOOG and $MSFT

Today’s New York Times ran a resignation letter from a (now former) employee of investment banking giant Goldman Sachs.  Twelve-year employee Greg Smith describes his reason for leaving:

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

This misalignment of incentives between what is best for Goldman Sachs clients / customers and what makes the firm the most money seems to be the problem; and the firm has swung too far toward making itself money instead of doing most right by their customers.

Looking at some of today’s tech titans like Apple ($AAPL), Facebook ($FB), Google ($GOOG), and Microsoft ($MSFT), there seems to be similar potential for this misalignment to warp priorities.  Consider:

  Product users Who pays
Apple Mac, iPhone, iPad, and iPod users Same
Facebook 800 million + social networking users Advertisers
Google Hundreds of millions of search users Advertisers
Microsoft Hundreds of millions of Windows users Same

Apple and Microsoft are companies that make and sell products.  Whether it’s hardware + software (Apple) or software (Microsoft), these companies make products that the users pay money to own and use.

Facebook and Google are companies that sell the attention of their users to advertisers.  Their users pay no monetary cost to use the service.  The cost (and profit) comes from advertising revenue.  While it would be ideal for these advertising-funded web services to remember that they only can sell advertising if they have users, James Whittaker suggests that in the user vs. advertiser battle at Google, the customer is losing:

The Google I was passionate about was a technology company that empowered its employees to innovate. The Google I left was an advertising company with a single corporate-mandated focus.

Considering the current challenge monetarily free web services face of pitting their revenue stream (advertisers) vs. their true customers; I wonder if a launch of web services where customers pay for the service rather than advertisers paying for the service could help to right this misalignment.  The key challenge seems to be: How much would you pay for Facebook or Google; or what about Twitter or your blog? 



Filed under: Technology

Why I was so impressed with “The Story of Us: Five Years Ago Today” video from @BarackObama

Regardless of how you feel about President Obama, take a minute or two to watch this video that his digital team launched about a month ago:

What impressed me so much about this video was how the Obama campaign’s digital team used Outlook, YouTube, Twitter, Tumblr, and the Facebook timeline as background / context for photos and video from the past five years. 

Filed under: News and Politics, Social Networking, Technology

Vision vs. Analysis: Apple’s Steve Jobs vs. Microsoft’s Steve Sinofsky

InfoWorld’s Woody Leonhard wrote last week comparing design techniques used by the late Steve Jobs at Apple and Windows Division President, Steve Sinofsky, at Microsoft:

But Sinofsky’s approach to design and that of Steve Jobs couldn’t be more different.

Jobs started with the germ of an idea and obsessively whittled away at it until he felt good about the end product: No focus groups. No user labs. No marketing input. No users telling him what they wanted, or why or how. He had a vision and he brought it to fruition.

Sinofsky, on the other hand, is a master at assembling and dissecting information about the way a product is used. Few people realize it, but he’s been the driving force behind a Microsoft internal product called Watson, the source of the "telemetry" that he’s fond of citing in the Building Windows blogs.

As Windows 8 becomes more broadly available, it will be very interesting to see if visionary design as embodied by Apple’s Jobs and the iPad will maintain its high share of the tablet computer and netbook market or if data-driven designs of Microsoft’s Sinofsky and Windows 8 will win in the marketplace.

In some ways, I wonder how appropriate the comparison is to political campaigns.  Is Jobs a brilliant producer slick mail and TV; or is he as shoot-from-the-hip consultant?  Is Sinofsky of the new breed of analytical campaign managers who employ the latest academic research or are his methods too poll-driven?  It will be an exciting race to watch.

Filed under: Technology

Rob Dolin on Twitter

%d bloggers like this: