What can we learn from Cassatt’s demise?

There’s an interview with former BEA co-founder Bill Coleman in Forbes about the last days of his company Cassatt.

Bill Coleman is now the founder and CEO of Cassatt Corporation, a San Jose based software maker focused on data center management.

When thinking about software companies, it’s hard to think of one that had such a good pedigree, so much funding ($100,000,000) and such a large market opportunity. Bill is a true Silicon Valley veteran, having had senior positions at Sun and then co-founding BEA (he’s the “B” in BEA). Other members of the management team are no slouches either.

But the interview is quite telling in what may have lead to Cassatt’s sad ending. And in a couple of cases, it’s surprising that a rock-star management team and sophisticated investors would get caught the way they did.

First off, I love the subhead of the article:

Software maker that vowed to topple giants hit by economy, slower sales–and giants.

It almost reads like a headline from The Onion. Reminds me a bit of the failed Cuil launch.  You know, the search engine, founded by some ex-Google folks, that stated it’s goal was to take out Google. Why do people think they can pick fights with and bring down industry giants? Maybe it gets you some press, but how much is that worth if your product or service doesn’t live up to the hype(rbole)? Time for a Product Management Axiom:

Nail it, then scale it!

Find a good meaty problem, solve it really well, make sure you know why people will pay for it (by actually getting people to pay for it!) AND then figure out how to scale it up and take out the big guys. Seriously, why get on a big competitors radar when you have no way of defending yourself against their attacks?

Bill has a few choice lines in the article. Here’s one:

“The big guys copied my story,” says Coleman.

Yeah, so… Isn’t that what the “big guys” always do? When the “little guys” innovate and create something potentially valuable, the “big guys”  either buy the little guys, or barring that, copy them.

Or barring that, the big guys spread FUD, until they can either copy them or buy them or buy one of their competitors, thereby copying them. That line sounds a bit too much like a high-tech version of “the dog ate my homework” excuse.

And then there’s this line:

“I thought I could give companies something radical that had a proven return on investment, and they would be willing to change all their companies’ computer policies and procedures to get that.

Huh?  Give companies “something radical” and they would be willing to “change all their policies” to buy Cassatt’s product? Who can give me examples of when this ever happened. I’m saying “examples” because it may have happened once, somewhere. But really, this line in the article shocked me.

Lesson for anyone who thinks this could possibly happen:

Change is a process, not an event

It’s another Product Management Axiom, and one no product manager or executive should forget.

Nobody, and I mean nobody, gets up in the morning and thinks, “I’m willing to change everything about how my business operates because a vendor has a really great product that could save me money.”

Seriously, what’s the risk/reward ratio here? Huge risk, and maybe a medium sized reward?  And the real cost, not just the cost of the software, is enormous.

I once worked on a product where the architecture and GUIs were radically changed in a major release. It was absolutely the right thing to do.

The architecture went from 2-tier to 3-tier and provided great scalability improvements for customers. Customers had been complaining about performance and scalability in the product. And the GUI changes were primarily driven by user requests for a more sophisticated workflow mechanism in the product. Overall customers loved the new product, but the biggest complaint about the upgrade had nothing to do with technology.

As one large customer said:

“It took us 2 weeks to upgrade and test the new release to ensure it was working properly. It took us one year to retrain everyone on how to use the new GUI and capabilities. Please don’t make that kind of change again.”

So in the end, what did Cassatt in had little to do with technology. In fact, what does most  high-tech companies in usually has little to do with technology. In Cassatt’s case, as in most cases, it has to do with underestimating their competition, not understanding the psychology of their customers and buyers, and compounded with what looks like a case of overconfidence by the management team.


New PM Resources Page

We’ve added a Resources page to the blog.

It is meant as a repo for useful groups, associations, forums etc. for Product Managers, Marketers and others interested in the topics we cover in the blog.

It’s far from absolutely complete…it could never be, so help us expand it further. If you know of a group or other resource we should add, leave a comment and we’ll look into it.

Also, don’t forget about our Events page.

Same request. If you know of any useful events for the PM/PMM community, leave a comment and we’ll add it.


Ideas for Twitter's Revenue Model – pt. 2

In part 1, I described some of the responses received from a survey I ran a couple of weeks ago asking readers for ideas on how Twitter could generate revenue. Some of those ideas included:

  • Advertising
  • Revenue share with carriers for SMS
  • per Tweet fees
  • Better analytics and social sphere recommendations (monthly fee)
  • Ask the expert (per question fee)

Here are some more suggestions made by people in the survey.


Categorizing your tweets/contacts – For about $5 per month, the ability to label/tag tweets by Friends, Family, Work, etc, so that it wasn’t just “everything is visible to everyone”.

[Saeed] – I’ve always wondered why Social Networking sites don’t allow me to collect my contacts and group them into my own categories, like those listed above. To me this is such a core capability it should be part of the base offering. In the real world, I certainly don’t speak to all my contacts identically so why should I be forced to do it online? If I only want to send a tweet to my local Toronto contacts, or my family, or a certain subset of my business associates etc. I should be able to do that.

I like this idea, but I wouldn’t pay extra for it personally. To me, it should be a core capability.


Enable micro-payments via Twitter – Allow you to make micro-payments to Twitter users / non Twitter users. Basically make a payment to anyone with an email address. Using Twitter’s user base and simple design, micro payments could not be easier. Why is it so hard to pay someone $5.00 on the spot when you don’t have cash ? With the explosion of the mobile web, a lot of users have access to Twitter, now you can provide a small fee based service to capitalize on a simple business that has not been implemented correctly on the Internet yet.There are no fees or charges for the person receiving payment. Charge $0.25 per micro-payment.

[Saeed] – I really like this idea. Anything to bring a secure, simple, cost-effective, P2P micropayment system would find a lot adoption. But perhaps there are regulatory or other reasons why such a system hasn’t already come into play. This capability is something that ANY Social Networking site could enable – Twitter, Facebook,  LinkedIn,  MySpace etc.

My bank here in Canada allows me to transfer funds to someone’s email address. Just paid back a friend in California some money I owed him using that mechanism. It was pretty easy to do but I had to log into my online banking system and go through a bunch of screens to do it.  So, the capabilities are there, some business just has to take the next step and make it dead easy — AND totally secure — to use.


Better tweet filtering – For about $5 per month, allow me to filter tweets. e.g. more from user 1, few from user 2 etc. Also implement a SILENT Stop Follow. I don’t want some folks to know I really think they are boring.

[Saeed] – Similar to categorizing your tweets/contacts, this to me is base functionality. Certainly a good Twitter client could implement better filtering very easily. OTOH, the SILENT Stop Follow is something Twitter needs to implement. But then, with good enough tweet filtering, you’d never have to see tweets from people you think are boring. Good suggestion, but on it’s own I don’t think it’s worth $5 per month.


Other ideas – Here are some other ideas that could be used for differentiating the service for paid and unpaid users.

  1. Premium users pay for reduced API throttling
  2. Premium users pay for a real-time, contextualized feed (ala friendfeed)
  3. Pay by # of followers (under 1k or 10k is free)
  4. Pay by # of people followed (under 100 or 1k free)
  5. Every 100th tweet you receive is a relevant advert (location, context, etc).

[Saeed] – All of these are good suggestions, bu IMHO, only #3 really could be chargeable. The value of followers is large. The value of following is small. i.e. if I follow 10,000 people what does that actually mean? Is there any meaningful way for me to actually comprehend 10,000 different tweet streams?

Having followers, like having subscribers to an email list has value, as it allows someone to broadcast their message out and then potentially have those messages retweeted, driving traffic to their website or just having people hear what they have to say. The problem though is that, like listservs and discussion forums etc. before Twitter, the cost of alternative solutions is very low, so it would be surprising if many people were willing to shell out anything more than a small, marginal amount to pay for followers.

Ashton Kutcher has well over 1,000,000 followers. All for free right now. Note that he only follows a couple of hundred people.

Demi Moore has about 800,000 followers. And she only follows a very small number of people.

Oprah Winfrey has well over 500,000 followers, but follows less that 50.

The list goes on and on. What would it be worth to these celebs if they had to pay for the following? And what about non-celebs like CNN (1,000,000+), New York Times (700,000+), The Onion (~600,000), Whole Foods (500,000+), Woot (500,000+) etc.

Twitter needs to find something of true value that people will pay for, not simply something like # of followers.

My Approach – So if I were the Twitter PM, here’s what I’d be thinking.

The base service MUST remain free. There’s no arguing that point.

Segment the users into some rational delineation of users. Look at the top 1000 and see what groupings and patterns can be found. Identify what value-added services these groups need or would pay for and use that as the basis for new offerings.

There are celebrities:  Ashton Kutcher, Demi Moore, Britney Spears, Shaquille O’Neil, Lance Armstrong, John Mayer and so many others. What do they (or more likely their staff) aim to do with it? What goals do they have when communicating to their fans via Twitter? Are there merchandising opportunities that could be enacted via Twitter?

There are news organizations: CNN, the NY Times, The BBC, The Onion, NPR etc. Same questions. How are they using Twitter and what benefits do they derive? Are there joint monetization strategies that could be enacted with these news orgs.

There are businesses: Whole Foods, Zappos, Woot, JetBlue etc. Again, same questions.

There’s a lot of segmentation possible and each group can be queried to provide insight into the benefits they see of Twitter and the kinds of value-add services they’d be willing to pay for.

Aside from some form of search advertising, I doubt there are too many strict horizontal, highly scalable revenue models that Twitter could exploit.  So a segmented approach is needed.

Beyond the audience of users, look at the ecosystem who use the API for extended clients, analytics etc. Do they get unrestricted free access to the API and all the services Twitter provides? What value are they deriving from the infrastrucutre? Is there a shared revenue/expense model that could be defined with those companies?

It won’t be easy. Facebook is still trying to figure out how they can generate sustainable revenue. But then who knows, maybe the PM team at Twitter will find something can turn Twitter into a real business — you know, one that has revenue AND profits, in addition to providing a very popular messaging service!


Ideas for Twitter's Revenue Model – pt. 1

Twitter logoThe survey I ran last week is now closed and here is a summary of the ideas and comments collected. Some are fairly traditional and some are rather novel. Take a look, see what’s interesting and leave a comment on which ones you like or dislike.

NOTE: My comments for each of the ideas are not criticisms of those ideas, but simply additional commentary and context.


Google and Microsoft logosAdvertising Revenue Model – Twitter should figure out a model where brand owners pay Twitter to get in front of all those eyeballs. Seems to be a very prevalent Ad driven model in todays economy.

[Saeed] Looks like Google and Microsoft are already all over this idea. Outside of advertising, there are a lot of options for Twitter. As Biz Stone said in a WSJ article recently:

…Twitter recently hired a product manager to oversee the development of commercial accounts. The accounts would offer users more features in exchange for a fee, but Mr. Stone says Twitter hasn’t set a launch date for them.


Wireless carriers logosRevenue Share with Carriers: Tie up with operators worldwide and crack a revenue share deal on the SMSs sent to Twitter. Most people who’re using Twitter from mobile would find this capability useful and since there would be just the regular charge there’s no mindset barrier to break.

[Saeed] – This is an interesting suggestion though I wonder what would convince carriers to give up revenue to Twitter that they can keep for themselves right now. Twitter is driving SMS traffic but has no control over the carrier the user has.

Other SMS related services charge those who create the SMS traffic (e.g. mobile marketing companies). Perhaps the idea could be reversed, where carriers provide specific Twitter packages and branded clients and then split the revenue back with Twitter.


stack of coinsPer Tweet Fees: Charge per tweet, leave following and view tweets free, or just charge per tweet from cell phones.  5 cents a tweet. Or if yearly it depends, If I was using it for promoting my business $250 a year, personally no more than $20 a year.

[Saeed] – Charge per tweet would be hard to justify given tweeting is free right now. On the SMS side there might be a possibility for some fees or packages similar to what the carriers provides for SMS.


Account Analytics and Social Sphere Recommendations: Track, monitor and analyze your twitter account for $5.99/month. Tell me how many followers I have over time, how many of them are talking with me, and with each other. Show me my social sphere as well as historically. Show me my reach, my depth, my breadth. Show me people I should follow because we know the same people and might be interested in each other. Give what you give now for free and charge for all the extras.

[Saeed] – These services are starting to emerge. TwitterCounter, Twitter Analyzer, TweetStats etc. are starting to provide this functionality as are firms that provide analytics (Omniture), but this is certainly an area where more can be done.

Perhaps users might pay 3rd parties for this, but it’s also something that Twitter could support as they are the platform owner. In the end, Twitter will have to play nice with the more established 3rd parties who provide more than simply Twitter statistics, such as reputation management and social media monitoring companies. Twitter is certainly the center of attention right now, but that won’t last forever.


Ask the Expert on Twitter: The ability to ask questions and receive answers from an individual or group within an industry who are designated as experts on Twitter. Would pay anywhere from $1-$10 based on the quality of the answers received. Would be useful to anyone who is searching for specific information that is not readily available via a Web search.

[Saeed] – This is an interesting suggestion. I guess both the question and the answer have be extremely short 🙂 or else the conversation has to leave Twitter and go elsewhere. Yahoo! Answers currently addresses this need for free, as does the Q&A on LinkedIn, as do many other services. Google Answers has been shut down but they were one of the pioneers who tried to enable a “pay-per-answer” service.


I’ll post other ideas submitted in the survey in my next post.  In the mean time, what do you think of these suggestions?


Related Post

Ideas for Twitter’s REvenue Model – pt. 2

Help the Twitter Product Manager

Twitter logoOnly a couple of days left before the survey ends.

The survey will close at 11:59 PM EST on Friday April 17, 2009.

Let’s face it, we ALL like FREE services. Twitter is currently free. But that won’t last forever. They have to start generating revenue to sustain themselves.

Help yourself and help the Twitter PM by coming up with some ideas on how Twitter can legitimately make some $$$.

I’ve created a short survey form that you can fill out with your idea.

TAKE THE SURVEY<<– Click here

I’ll collect all the data, publish the results back to the blog and also forward it to Twitter so they can start working through it along with all the other data they are collecting.

That’s it. So click on the link and help out a fellow PM.