In a past life, I worked on the social news feed for a number of Microsoft products including the Messenger Social feed in Hotmail & Messenger and most recently the People app in Windows 8. When I worked on these products, we strongly believed in the integrity of the user experience and so never considered the social feed as a canvas for showing users ads.

Thus I read a pair of recent posts by Dalton Caldwell, founder of, with some interest. Dalton wrote about the recent moves that both Twitter and Facebook are making to ensure that the social feeds on their sites become a great canvas for showing ads.

In his post Understanding Like-gate Dalton writes

The best ad is indistinguishable from content

We can expect to see Facebook deemphasizing traditional advertising units in favor of promoted news stories in your stream. The reason is that the very best advertising is content. Blurring the lines between advertising and content is one of the most ambitious goals a marketer could have.

Bringing earnings expectations into this, the key to Facebook “fixing” their mobile advertising problem is not to create a new ad-unit that performs better on mobile. Rather, it is for them to sell the placement of stories in the omnipresent single column newsfeed. If they are able to nail end-to-end promoted stories system, then their current monetization issues on mobile disappear.

In his post Twitter is pivoting Dalton writes

Predicting the future

In this paradigm, Twitter’s business model is to help brands “amplify their reach”. A brand participating in Twitter can certainly distribute their content for free and get free organic traffic, but if they want to increase their reach, they need to pay.

It’s no accident that this sounds exactly like the emerging Facebook business model. As discussed in that link, algorithmically filtered primary feeds are vastly easier to advertise against vs unfiltered feeds. The issue for Twitter is that Facebook already has a far larger userbase which is already trained to read an algorithmically filtered feed.

In a twist, I wouldn’t have predicted a few years ago it is now a regular occurrence for both users of Facebook and Twitter to see ads in their feeds. Twitter has gone as far as effectively crippling new Twitter apps to ensure that every Twitter user gets an ads-heavy unfiltered Twitter experience. The reason for this is straightforward. Both companies have sky high expectations from investors as evidenced by Facebook's $100 billion valuation it has failed to meet and Twitter's $8 - $10 billion valuation on $100 million in revenues. The challenge for both services is that investors are expecting Google-like returns on investment but neither of these companies have a Google-like business model.

The problem with ad supported online businesses is that for the most part their business models suck. In a traditional business, if you focus on building a great product or service that provides an excellent customer experience then you will be making money hand over fist. In most ad supported online businesses, your business is selling your product’s audience as opposed to the product itself. That means if you want to make more money you have to pimp out your audience often in disrespectful and intrusive ways to eke out that extra dollar.

The one place where this is different is online search (i.e. Google’s primary business). In the web search, the ads aren’t just indistinguishable from content but in the most lucrative cases, the ads are better than the content. As an example take a look at these searches

Since we may get different results, I’m including a screenshot below

There are 8 ads in this screenshot and 2 search results. However instead of being irritated as I would be if the ratio of ads to content was 4:1 in a YouTube video or Facebook feed, the ads are actually more relevant than the organic search results. This is the holy grail that Twitter and Facebook are trying to achieve.

As Dalton points out, Facebook has already socialized its users to the notion that brands will post commercial messages to the feed. In addition, brands have grown so entitled to it then when asked to pay for them since they are ads, they get outraged. However Facebook has been boiling this particular frog for a while. Facebook encourages advertisers to create Pages and users to like Pages so that they can stay connected to the brands they care about. Content in your feed from people and brands you don’t follow snuck in under the aegis of showing you content your friends interacted with. Finally not only has Facebook had promoted posts for brands for a while, they now also allow users to promote their personal posts to friends for $7 a pop.

Without really thinking about it much, we’re halfway to a future where a significant percentage of the content of your Facebook feed is paid. Since the posts go through the same ranking algorithm as your regular feed, they are more likely to be relevant to you than the traditional ad products that Facebook and other online properties are known for today. When the goal is to be entertained, do you really care if that viral video of the day being shared via a friend is a paid impression or not? 

Twitter is playing catch up here but if they don’t, the flop that was Facebook’s IPO will look tame in comparison.

Note Now Playing: Macklemore & Ryan Lewis - Can't Hold Us Feat. Ray Dalton Note


November 13, 2012
@ 01:38 PM

I’ve had about four hours of sleep but can’t seem to go back to sleep. There’s a pain of loss that feels like a death in the family and I hope writing this down helps in some way of dealing with it.

Yesterday it was announced that Steven Sinofsky is leaving Microsoft. As someone who considered Steven to be a role model of executive leadership and a source of my faith in the future of Microsoft this is a big shock. Part of me acknowledges that change is a natural part of life and nothing lasts forever but this is still a difficult incident to digest. Steven was a leader who understood how to leverage the strengths of an organization to build world class products while protecting the organizations from its inherent self defeating nature. As the saying goes a group is its own worst enemy.

When I think about Steven Sinofsky’s leadership style, I’m reminded of Joel Spolsky’s guide to interviewing which has the following succinct description of a great hire

In principle, it’s simple. You’re looking for people who are

  1. Smart, and
  2. Get things done.

That’s it. That’s all you’re looking for. Memorize that. Recite it to yourself before you go to bed every night. You don’t have enough time to figure out much more in a short interview, so don’t waste time trying to figure out whether the candidate might be pleasant to be stuck in an airport with, or whether they really know ATL and COM programming or if they’re just faking it.

People who are Smart but don’t Get Things Done often have PhDs and work in big companies where nobody listens to them because they are completely impractical. They would rather mull over something academic about a problem rather than ship on time. These kind of people can be identified because they love to point out the theoretical similarity between two widely divergent concepts. For example, they will say, “Spreadsheets are really just a special case of programming language,” and then go off for a week and write a thrilling, brilliant whitepaper about the theoretical computational linguistic attributes of a spreadsheet as a programming language. Smart, but not useful. The other way to identify these people is that they have a tendency to show up at your office, coffee mug in hand, and try to start a long conversation about the relative merits of Java introspection vs. COM type libraries, on the day you are trying to ship a beta.

People who Get Things Done but are not Smart will do stupid things, seemingly without thinking about them, and somebody else will have to come clean up their mess later. This makes them net liabilities to the company because not only do they fail to contribute, but they soak up good people’s time. They are the kind of people who decide to refactor your core algorithms to use the Visitor Pattern, which they just read about the night before, and completely misunderstood, and instead of simple loops adding up items in an array you’ve got an AdderVistior class (yes, it’s spelled wrong) and a VisitationArrangingOfficer singleton and none of your code works any more.

One of the interesting problems that faces a large software company is that it is very easy to become full of smart people that don’t get things done and then institutionalize this behavior by crowning them software architects or some equivalent. Steven’s leadership style encouraged a process and organizational structure, which you can read about in his book One Strategy: Organization, Planning, and Decision Making, that encourages getting stuff done by limiting the ability of the organization and people within the organization to take up positions where they strayed far from the goals of shipping a valuable product on time and within budget.

There are lots of people who disagreed with his philosophy and approach but it is hard to argue with the results of his efforts. Under him the team that shipped Windows Vista turned around and shipped Windows 7, the big ass table became one of Oprah's favorite things and one that’s close to home is that a mish mash of confusing consumer synchronization products became SkyDrive.

The way things get done in Steven’s organizations is so straightforward it hurts. You spend some time thinking about what you want to build, you write it down so the entire team has a shared vision of what they’re going to build and then you build it. The part where things become contentious is that getting things done (aka shipping) requires discipline. This means not changing your mind unless you have a good reason to after you’ve decided on what to build and knowing when to cut loses if things are coming in late or over budget. A great post about what it is like for an engineer working in a Steven Sinofsky organization that embraces these principles was written by Larry Osterman about Windows 7.

Each of the feature crews I’ve worked on so far has had dramatically different focuses – some of the features I worked on were focused on core audio infrastructure, some were focused almost entirely on UX (user experience) changes, and some features involved much higher level components. Because each of the milestones was separate, I was able to work on a series of dramatically different pieces of the system, something I’ve really never had a chance to do before.

In Windows 7, senior management has been extremely supportive of the various development teams that have had to make the hard decisions to scale back features that were not going to be able to make the quality bar associated with a Windows release – and there absolutely are major features that have gone all the way through planning only to discover that there was too much work associated with the feature to complete it in the time available. In Vista it would have been much harder to convince senior management to abandon features. In Win7 senior management has stood behind the feature teams when they’ve had to make the tough decisions. One of the messages that management has consistently driven home to the teams is “cutting is shipping”, and they’re right. If a feature isn’t coming together, it’s usually far better to decide NOT to deliver a particular feature then to have that feature jeopardize the ability to ship the whole system. In a typical Windows release there are thousands of features and it would be a real shame if one or two of those features ended up delaying the entire system because they really weren’t ready.

The process of building 7 has also been dramatically more transparent – even sitting at the bottom of the stack, I feel that I’ve got a good idea about how decisions are being made. And that increased transparency in turn means that as an individual contributor I’m able to make better decisions about scheduling. This transparency is actually a direct fallout of management’s decision to let the various feature teams make their own decisions – by letting the feature teams deeper inside the planning process, the teams naturally make better decisions.

Of course that transparency works both ways. Not only were teams allowed to see more about what was happening in the planning process, but because management introduced standardized reporting mechanisms across the product, the leads at every level of the hierarchy were able to track progress against plan at a level that we’ve never had before. From an individual developer’s standpoint, the overhead wasn’t too onerous – basically once a week, you were asked to update your progress against plan on each of your work items. That status was then rolled up into a series of spreadsheets and web pages that allowed each manager to track all the teams’ progress against plan. This allowed management to easily and quickly identify which teams were having issues and take appropriate action to ensure that the schedules were met (either by simplifying designs, assigning more developers, or whatever).

Transparency was also a cornerstone of Steven’s leadership style. The level of transparency into the organization’s decision making process via formalized mechanisms as described above as well as his personal decision making process has been unprecedented in my experience at Microsoft. It may not be as transparent as Google’s TGIF but on the other hand, I don’t think there’s anywhere else at Microsoft where visibility into how and why decisions are made was as clear as in the Windows organization.

At the end of the day, I’ll miss Steven and his influence on Microsoft. I’d like to think I became a better manager and leader from my time working spent working in his organization as well as the multiple exchanges we had over the years. Thanks for the memories.

Note Now Playing: Fall Out Boy - Thnks fr th MmrsNote


Categories: Life in the B0rg Cube