Fast Company

Paul Graham: Why Y Combinator Replaces The Traditional Corporation

Austin Carr — Wed, 22 Feb 2012 14:35:17 EST

If Y Combinator is the next PayPal Mafia, then Paul Graham is Silicon Valley's godfather. Graham is the cofounder of Y Combinator, the investment firm that plugs seed money ($18,000 on average) into early stage startups in exchange for mentorship and access to its ever-growing network of alumni.

It's the latter benefit that's truly made Y Combinator a Valley powerhouse--YC's vast network of influential entrepreneurs that includes breakout Valley stars such as the founders of Dropbox and Airbnb. (We attempted to capture this network on our list of the Most Innovative Companies in Business with this fantastic infographic.) Early on, Graham envisioned this network as a "replacement for the traditional corporation."

"You know what’s great about the YC network? It gives the benefit of being part of a large company without being part of a big company," Graham says. "The problem with doing a startup--even though it’s better in almost every other respect--is that you don’t have the resources of a big company to draw on. It’s very lonely; you have no one to give you advice or help you out. In a big company, you might be horribly constrained, but there are like 1,000 other people you can go to to deal with any number of problems. Now [with YC] you have 1,000 people you can go to to deal with problems, and you don’t have all the restrictions of a big company."

The YC network, he says, now operates as a "distributed peer-to-peer replacement" for the traditional company. Comparing himself to an air-traffic controller, Graham says much of his time is spend making introductions and helping the YC community solve problems within the network. "Simon Willison, for example, the guy who wrote Django, was in a batch I think a year ago," Graham says. "So when someone had a problem with Django, we just introduced them directly to Simon Willison, and they’re like, 'Holy shit!'"

“As YC grows, the number of startups we’ve funded in the past keeps getting bigger," Graham continues. "This latest batch now has 317 startups-worth of people they can ask for help...It's very helpful for the founders. It didn’t really exist before. There are so many YC founders around now. It’s a small world: If I go to San Francisco and walk down the street for a few blocks, I will run into someone we funded."

Read more about Y Combinator and check out our infographic about the next Silicon Valley from our list of the Most Innovative Companies in Business.

[Image: Flickr user Mark Sebastian ; Thumbnail: Flickr user Al Abut]

Follow-Up: Google's Goggles Come Into Focus

Kit Eaton — Wed, 22 Feb 2012 13:09:17 EST

Google's working on a new device, a pair of augmented reality glasses that've been all but confirmed by the New York Times. We looked at this idea a couple months back--now here's what's new.

The New York Times isn't messing around with today's headline: "Google to Sell Heads-Up Display Glasses By Year's End." Nick Bilton's convinced enough by info from his sources to really go for it. And the article's original pre-publish headline even borrows a little sci-fi iconography to spice things up: "Google to Sell Terminator-style Glasses..."

That's more or less what we said back in December when we included a clip from that very film to illustrate what an Augmented Reality system could ultimately be capable of.

Now, according to the Times's sources (who are "several Google employees familiar with the project who asked not to be named"):

"...the glasses will go on sale to the public by the end of the year. These people said they are expected “to cost around the price of current smartphones,” or $250 to $600. The people familiar with the Google glasses said they would be Android-based, and will include a small screen that will sit a few inches from someone’s eye. They will also have a 3G or 4G data connection and a number of sensors including motion and GPS."

That's pretty detailed. Other leaks add yet more detail, describing a unique navigation system which uses head motions to scroll and click and a low resolution camera that views the world in real-time to feed data back to the wearer. They're not designed to be worn long-term; rather they are meant to be slipped on and off about as often as you'd dig a smartphone out of a pocket. Google's also said to be very concerned about privacy, and whether or not passers-by need to be aware they're being recorded by a camera. As for data, the idea is that the Android-powered specs will tap into Google software like Latitude, Goggles, Maps and so on--with the bonus that you'll be able to do things like check in to locations through the glassses interface itself.

Back in December we pointed the logic of this out--noting Google has "access to data that other AR firms can't compete with and it has the globe-spanning clout to actually change habits." We even guessed that we wouldn't be wearing them 24/7 and instead would "make it a habit to slip on a pair to aid with work, navigation or shopping."

But where we suggested this was a gateway for Google to embed hidden adverts in the real world, all the while garnering data on the wearer's habits--data it can sell to add partners--the new leaked information implies Google is not looking at business models for the hardware. Instead the company sees them as an experiment that anyone can join. Only if they sell well and are well received will Google look at ways to monetize the system.

That sounds like a development from the way Google's monetizing Android. But really, it sounds more like what Google's going to do is see what data it can gather about its users without invading their privacy too much--if that's at all possible--and then slap ads everywhere they can. Just not at first.

[Image: Flickr user ladydragonflyherworld ]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

Skunkworks, Reorganization, And Other Tactics To Excel In The Digital Age

Aaron Shapiro — Wed, 22 Feb 2012 06:46:11 EST

Outside of the technology sector, most of the large companies that I encounter are startlingly similar.

They're massively successful, indisputably recognized as world-class leaders by consumers and the business community. Their executives are all quite smart and good at what they do. They acknowledge the world is going through a technological revolution and that digital technologies are transforming their businesses. They know that to stay up to par, they have to lead in the Internet space, too. But for some reason they just can't get it done.

Here’s why: traditional organizational structures are ill-equipped to meet the challenges of the digital age. While they can execute like a fine-tuned machine against core business goals, they generally consist of a series of silos--and digital is inherently integrated. Management of what I call the Software Layer, a layer of technology that surrounds the core business and serves as the focal point of interaction with the outside world, requires a more unified approach.

I’ll demonstrate the mismatch through GlobalCorp, a hypothetical company. GlobalCorp has a division for each country in which it operates, and within each country, it maintains a different business unit for each kind of product it sells. Then it has separate organizations for its internal operational departments like sales, marketing, customer service, and so forth. Each group is set up to accomplish those specific tasks, and pre-Internet, this worked pretty well. Now enter the digital era. GlobalCorp needs to be able to interact with individuals through the Web, but no one has the authority to create a company-wide Web experience. As a result, each group goes it alone, implementing its own solutions. They mean well, but their efforts are often tailored to the sole interests of their own group. The needs of the broader organization are not considered.

Flip to the experience of Internet users. They go online to interact with GlobalCorp, one task of many that they’re trying to accomplish in their busy day. But the company’s digital footprint is so fragmented and disjointed, they’re unable to figure out where they need to click to get where they need to go, and they have an inconsistent brand experience. Neglecting user needs is the fastest way for companies to lose potential and existing customers, business partners, press calls, job candidates, and various other valuable interactions and relationships.

Two main types of unusable digital experiences result from management by traditional organizational structures. At the digital marketing agency I run, some clients come to us with more than 1,000 discrete websites for a single company. That’s a big problem. Another issue is when the company has one site, but presents the content in a way that matches its internal organization--even though most users aren’t familiar with a company’s internal structure and lingo. In both cases, users become confused and even stymied, unable to complete their intended digital interactions with the company. These problems become exponentially more deleterious as they surface in mobile, social, and other digital touchpoints.

The transition to an organizational structure that supports long-term leadership in digital can come to life in three phases, all of which can eventually run concurrently.

Step One: Launch a Skunkworks Project. This step requires the least amount of heavy lifting and political strife, yet it can produce tremendous results. A skunkworks project is an undertaking where a new, small, and nimble division is placed outside of the existing organizational structure, reports directly to a C-level executive, and is tasked with creating groundbreaking products and solutions that support user and business needs. Even companies structured to excel at digital, like Google, lean on skunkworks projects to nurture great leaps ahead. For non-technology companies, it can produce the big bang needed to fuel great momentum toward digital leadership.

Step Two: Implement Concentric Organization. Concentric organization requires that a small group of digital experts, perhaps some of the same individuals from the skunkworks team, develops and implements a company-wide digital infrastructure that, again, is designed to meet both user and business needs. This team must be a full-fledged, accountable business unit with its own P&L and performance goals, and it must have the authority to influence company-wide operations. Without these attributes, it often becomes a powerless internal agency responding to the whims of various departments. Its end product should be a system that allows large numbers of nontechnical employees to use digital tools to advance their specific business goals, which protects the external user’s experience by standardizing the output. Once developed, key digital team members should be exported to relevant departments throughout the company to aid in integration.

Step Three: Reorganize Comprehensively. The final step is to combine the online and offline functions of a particular area. For example, a single customer-service group should handle issues via telephone, email, and social media, and a retail merchandizing group should manage products in both the offline and online stores. The result is an organization structured around each stage of the relationship between customer and business.

When all three elements are working together, the company is unified by a strong foundation of clear digital business goals and tools, and can maintain a consistent and wholly usable experience for users, while producing cutting-edge digital products. But this machine, the Software Layer, won’t work for long without adequate leadership. One person acutely aware of user needs, business goals, and technical feasibility must remain in charge of the company’s entire digital footprint. Everyone “owning digital” is almost as destructive as no one owning it--it’s all too easy for factions to fracture from the whole, for the infrastructure to deteriorate, for top-level business goals to lose their weight, and for the user experience to degenerate. A company is a truly digital organization only when management maintains a keen focus on meeting user needs.

Author Aaron Shapiro is CEO of Huge and author of Users Not Customers.

[Image: Flickr user Dan Dzurisin]

The Unexpected Way To Use Your Social Network Strategically

Don Peppers — Wed, 22 Feb 2012 07:47:30 EST

If it’s a clear night tonight, go outside about 9 p.m. and look west at the two brightest stars, beautiful as jewels, one above the other. Low to the horizon will be the planet Venus, the “evening star,” just beginning to set. Above Venus is the planet Jupiter, the gas giant with more than 60 known moons (and still counting). Now turn around and face east. Coming up off the horizon you’ll see another jewel, this one quite reddish; that’s Mars, the Red Planet (two tiny moons). On March 3 this year, our Earth (one giant moon) will pass closest to Mars, overtaking it in our orbital race around the Sun.

The solar system is a network of planets, each of which has its own network of moons, so it provides a picturesque (if inexact) analogy for social networks, which are also networks of networks. Everyone seems to be on the social media bandwagon now, with the most enthusiastic advocates often competing to build up their networks of Twitter followers, Facebook friends, or LinkedIn connections.

But rather than counting how many moons you have in your network, what you ought to be doing is figuring out how to get the most benefit from the right ones. And despite the hype, my own informal canvassing has convinced me that most of us aren’t very strategic when it comes to the best way to take advantage of the enormous potential of our own social networks.

Suppose, for instance, you want to find a new career. Maybe you’ve recently had a job shot out from under you. Or perhaps you just think you can do better. Everyone knows, of course, that networking is the best way to find out about job openings and career opportunities (as well as most other business opportunities), but is there a smart way to use your network?

Yes there is, and most people aren’t conscious of it. Almost 30 years ago, a landmark study showed conclusively that the best leads for job opportunities are more likely to come from your more distant colleagues and friends, as opposed to your closest ones. This isn’t because your close friends don’t give you good recommendations, but because you and your other close friends are more likely already to know about the same job openings, while the job openings known to your more distant colleagues--those with whom you don’t interact very often--are not as likely to be known to your own friends, or to you.

This principle, known as the “strength of weak ties,” has other strategic applications as well. Two venture capitalists have found, for instance, that investing firms that share information with others regarding potential investment prospects tend to gain access to a wider network of candidates--essentially leveraging their weak network ties, rather than focusing solely on strong ties. They also cite another recent study by other academics that shows VC firms concentrated in the traditional tech centers (Silicon Valley, New York, Boston) do better than other firms primarily because they "cast a wide, public net," harvesting the results of their weak ties.

Or consider the question of generating new business in the B2B space, or with regard to expensive, considered purchases. If you use a straight-ahead business-development plan, you’ll develop a laundry list of leads and opportunities to be followed up. While this can be useful, the truth is that a great deal of such business comes in via the referral of others. And how can you increase your access to such referrals? You guessed it--by concentrating on your weak ties, rather than on your strong ties. By developing your own network of industry colleagues and blog or Twitter followers, for instance, you get access to their connections with others. And one of my favorite strategies for B2B competitors is to prepare PowerPoint decks about the benefits of the firm, and then make those decks freely available on your own Website for download and unlimited use. However, this isn’t a tool for persuading the people who come to your site to buy, but for helping them to persuade others within their firm. In effect, you are arming these weak-tie prospects with the tools necessary to appeal to their own networks.

And of course, the power of weak ties can hardly be overstated when it comes to generating creative or innovative ideas. All new ideas come from combining previous ideas and concepts. This is one reason why a group of people with completely independent ideas is likely to come to a better, more creative, or predictive conclusion than any single one of them acting alone, even the smartest member of the group. In essence, ideas and innovations themselves exist in a kind of network, with some ideas connected to others, clusters of ideas within other clusters, and so forth. Your best new ideas, and a company’s most breakthrough innovations, will come when you tap your weak ties by interacting with the disciplines you know less about, or the experts you rarely consult, or the people you associate with less frequently.

By contrast, the surest way NOT to have a creative breakthrough is to rely on all the experts you already know, and all the disciplines you’re already familiar with. One study of entrepreneurs showed they are more likely to have “deliberately exposed themselves to different sources of information, by striking up conversations on trains, for example, or maintaining a diverse range of acquaintances, to increase the odds of stumbling upon an interesting opportunity.”

Finally, even if all you’re trying to do is to advance your own career at whatever firm you’re working for, the “weak ties” argument will help you better appreciate which other executives you should be trying to add to your network. It’s long been thought that the best way to get ahead is to hitch your wagon to a senior star, but a University of Chicago business school professor’s book, Neighbor Networks, has debunked this myth. A summary of Prof. Ronald S. Burt’s book suggests “There is no advantage at all to having well-connected friends.” Instead, it is the managers who do the connecting that tend to earn demonstrably higher salaries. This is not because they become linchpins or hubs or gateways to power and information, per se, but rather because managers who maintain contacts in a diverse range of departments are getting a very healthy and intellectually stimulating “exposure to diverse ideas and behaviors.” According to Burt, “the way networks have their effect is not by getting information from people, but rather by finding people who are interesting and who think differently from you,” adding that it isn’t being in the know, “but rather having to translate between different groups so that you develop gifts of analogy, metaphor, and communicating between people who have difficulty communicating to each other.”

So whether you’re interested in a better job, more business clients, or simply more creative ideas, it makes sense to think more strategically about how your network operates, and how you can better operate within it. If you want to be successful, you need to strategize how to make better connections with groups you don’t know much about, or how to craft analogies by combining different disciplines--business success and astronomy, for example.

[Image: Flickr user Carl Jones]

Fast Talk: How Warby Parker's Cofounders Disrupted The Eyewear Industry And Stayed Friends

David Zax — Wed, 22 Feb 2012 07:26:17 EST

Meet Neil Blumenthal, cofounder and co-CEO of Warby Parker. He tells Fast Company how a pact over a beer at the company's inception helped its founders preserve their friendship.

Last year saw 500% growth for the online eyewear brand, Warby Parker. The company is disrupting prices in a business historically rife with mark-ups, all while advancing a social mission of bringing corrective eyewear to people who can’t afford it. Fast Company spoke with Warby Parker cofounder and co-CEO Neil Blumenthal to discuss dentistry, data visualization, and friendship.

Give us a quick refresher on why Warby Parker is innovative.

We’re a new brand of designer eyewear, designed to let people express their personality while doing good in the world. We’ve made pricing simple--there’s one price, $95. And for every pair we sell, we distribute one to someone in need.

How have you kept prices so low?

Simply put, we bypass the middleman. We design our own frames under our own brand, and we work directly with suppliers. We avoid paying licensing fees, and we sell directly to consumers through WarbyParker.com. We started the company because we were sick and tired of radically overpaying for eyeglasses. It didn’t make sense to us that a pair of eyeglasses should cost as much or more as an iPhone. Eyeglasses were invented over 800 years ago and don’t contain rare minerals or state-of-the-art technology.

You founded Warby Parker with three friends from Wharton Business School. Was there a moment when you knew your were onto a good idea?

It was our first semester, the fall of 2008. We were in the computer lab between classes, having a conversation, and the light bulbs just went off. The next morning, we all quickly called each other. None of us could sleep the night before--we were all up thinking, “Is this a good idea?” Later that night, we ended up going to a bar, Roosevelt’s on 23rd and Walnut in Philadelphia, and we had that gut check where we all, over a beer, promised each other two things. One, that we were gonna work really hard on this. And the other thing we promised was that we were going to do everything possible to remain friends. We’d each read those horror stories about how founders quickly became enemies, and we didn’t want that to happen to us.

How did you implement the second promise?

We actually ended up putting in place a bunch of different mechanisms to help us remain friends. One was monthly 360 reviews between the four of us, where we’d come back to the same bar, and put each one in the hot seat. We would basically say, “You’re doing this great, this could be improved, and hey, when you email me a 10-page email at two in the morning, I want to punch you in the face.” I think that helped create a very productive and friendly working dynamic. We each made ourselves equal partners, and we created a vesting schedule, where equity would vest every month until we graduated.

And you guys are still talking to each other...?

Yes, the four of us make up the board. We’re still close friends, usually talk at least once a week, and go out pretty frequently together.

Warby Parker recently became a B Corporation. Can you explain what that is?

A B Corp is a stakeholder-driven business. For us, we consider our customers, employees, the environment, and the community in every decision we make. While we’re still trying to scale and be incredibly profitable, we won’t necessarily make a decision that will increase profits at the expense of our customers, employees, the environment, or the community.

Getting B Corp status can be a long, probing process; an executive once compared it to going to the dentist.

It’s a long process, but it’s something we took pride in. It’s something we were very happy to do. The dentist analogy I’m not sure I agree with. If you’ve built your company from Day One under this mantra, it’s very easy to answer the questions.

Do you think it’s important for companies who talk the talk about being ethical to apply for B Corp status?

If you’re claiming to be having a positive impact and not being transparent, you’ll be found out, and it will be company-destroying: it will hurt your ability to build relationships with customers, and impede your ability to recruit and retain talent. The idea that you can slap on a cause to a product or service--I think people are too smart and becoming too well informed for that to work. I think the status quo moving forward, in the next five years if not sooner, will be companies that do good, that are transparent, and that can withstand the scrutiny.

You have a staggering assertion on your site, that year-end reports don’t have to be boring. But it’s true: you transformed your year-end report into a series of fascinating interactive infographics.

The initial idea came because one of our designers, Jarrett Fuller, creates a personal annual report in the form of an infographic every year. We were just blown away by the response. We thought some people would find it interesting, but it was retweeted 2,000 times and led to our three highest consecutive day of sales--even more so then when we were in CBS Sunday Morning or the New York Times. For us it was incredibly exciting that people were that interested in taking a look under the hood, so to speak.

This interview has been condensed and edited. For more from the Fast Talk interview series, click here. Know someone who'd make a good Fast Talk subject? Mention it to David Zax.

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Brands Get Physical To Build Trust

Martin Lindstrom — Wed, 22 Feb 2012 10:47:55 EST

From handshakes to hardware, intimate signals constantly affect us in life. As the world becomes increasingly digital, we are losing many sensory signals that once moved us. Here's what can companies do to reclaim these touching moments.

I’m sure you’ve had the experience of reaching out to shake someone’s hand, only to be surprised by a palm so limp that it feels more like a dead fish than a warm welcome. What was your immediate impression of the person? How, then, did you reassess them? If you thought it indicative of a weak character, you’re onto something.

Some years ago, researchers at the University of Alabama studied 112 male and female students whose handshakes were evaluated by four handshake coders. The coders had received one month of training and practice in shaking hands and evaluating handshakes before the study began. The students, who didn't know their handshakes were being evaluated, had their hands shaken eight times (twice with all four experimenters) and they also completed four personality questionnaires.

Results of the study, led by Dr. William F. Chaplin, showed that a person's handshake is consistent over time and is related to some aspects of his or her personality. Those with a firm handshake were more extroverted and open to experience, and less neurotic and shy than those with a less firm or limp handshake. What strikes me is that we are somehow intuitively aware of this personality evaluation filter, where something as simple as a touch significantly influences our decision-making processes.

Having worked with sensory signals throughout my career, I’ve come to appreciate how the smallest sensory details can have the greatest impact. Take, for example, the sound and feel of opening a bottle of water. You’re at least subconsciously familiar with the subtle click of a breaking seal. However, let’s say you’re in India, where the water bottles open silently. When I heard about the absence of the subtle click, I questioned the safety of the water. Apparently I wasn't alone: I remember reading about a competitive water bottler who took advantage of this, changed the top so that it clicks, and gained a competitive advantage in the water market place. People believe the water is safer.

Signals across almost every aspect of our lives affect us. It’s interesting to note that, as we become increasingly digital, we are losing many sensory signals that once surrounded us. Others, however, often replace these. We’ve come to depend on a whole new set of tones as we key in numbers on an ATM or a cell phone.

In order to investigate just how important our senses are, I initiated a small experiment exploring people’s perception of an unknown brand, based on the type of media where they were introduced to it. I wanted to look at how different media formats convey indirect messages. But, most importantly, I was interested in seeing if the physical presence of a media channel, such as a billboard, would affect a person’s sensory impression of the advertised brand.

We established four different sources: a billboard, a storefront, a print ad and a banner ad. The fictitious brand, Insursafe, claiming to sell insurance, was featured in almost identical fashion across all four media platforms. We then questioned 132 volunteers on which source inspired the greater impact regarding trust and sensory impressions. Then using only those volunteers who had indeed noticed the message, we discovered something quite fascinating. The more ‘physical’ the media channel was, the more ‘solid’ was the impression it formed in the respondents’ brains. The signage on the storefront was the most trusted, followed by the billboard. They outperformed, by far, the print ad and banner ad. Not only was there greater trust for the fictitious insurance company when viewed on a building or a billboard, the volunteers also expressed a stronger emotional relationship with it.

Perhaps more surprisingly, people also felt a stronger sensory relationship with the brand that they saw on the shopfront and the billboard. When asked what senses they linked with Insursafe, the storefront and billboard registered three times more sensory connections than the print or banner ad. Bear in mind that no one had ever heard of this brand before and exactly the same logo and message appeared in all four options.We have been led to believe that, as the world transitions to all things digital, we will naturally embrace whatever is on offer. This is far from true. Our brains regard a physical presence as a more reliable and trustworthy conveyer of messages and we also log more sensory impressions to the brand. Why, you may ask, is that so important? When I was conducting fMRI experiments for my book Buyology, I learned that the more sensory impressions a brand conveys, the more likely we are to remember it. This perhaps goes some way to explaining why that handshake is so important.

What occurs when we’re consistently deprived of sensory cues? My theory is that, for example, when we sit in front of a screen and push away at order-confirmation buttons, we need to find a way to compensate for the absence of touch.

So, as thousands of retail stores close their doors each day and hundreds of conventional media channels seem increasingly paralyzed by social media's magnetic appeal, contextual messages and data mining, it just might be that the large signage displayed on the local office building or the CBS Outdoor billboard is massaging your brain in ways that no banner ad can hope to compete with.

Of course, I never said that. My message was merely conveyed by a firm handshake, based on trust.

[Image: Flickr user my 2-dimensional world]

Read more by Lindstrom: We Know What You Want And When You Will Buy It

Martin Lindstrom is a 2009 recipient of TIME Magazine's "World's 100 Most Influential People" and author of Buyology: Truth and Lies About Why We Buy (Doubleday, New York), a New York Times and Wall Street Journal best–seller. His latest book, Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy, was published in September. A frequent advisor to heads of numerous Fortune 100 companies, Lindstrom has also authored 5 best-sellers translated into 30 languages. More at martinlindstrom.com.

PlayStation's Jack Tretton On Today's Vita Launch [Video]

Kevin Ohannessian and Adam Barenblat — Wed, 22 Feb 2012 10:10:07 EST

Today marks the American launch of the PlayStation Vita, Sony's latest handheld gaming device. We talk with Sony Computer Entertainment America president Jack Tretton about producing a dedicated game system in the era of smartphones and tablets.

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FAST COMPANY: What are you feeling as the launch approaches?

JACK TRETTON: This is my fourth launch now at Sony. They never get old. I equate it to the Super Bowl. You only get to launch a few times in your career. And just like the guys that play in the Super Bowl you say, "Take a look around and make sure you soak it in." It's so incredibly exciting. You build up something for years and you get to see all the consumer excitement on launch day. And later, you look back over the course of the product's life cycle and all it's accomplished and you remember that launch date forever. February 22nd is going to be a lifetime memory for me.

As you have seen the Vita come together, what feature has surprised you?

I am amazed at how quick technology moves, in such a short period of time. If you think back to life without cell phones or other things and it is hard to remember. But being so close and so involved in the industry, I remember every ounce of innovation. I remember the first time I saw the original PlayStation. It just made my jaw drop and I said, "That's like nothing I have ever seen."

I think the great thing about the Vita is that I saw the promise in the original PSP of the ultimate portable gaming device for an older consumer, a console gaming experience with multimedia capabilities. And I think for it's time, in 2005, it was an incredibly noble effort. But it's great to sit here in 2012 and see really the culmination of what was the vision back in 2005. To have those dual analog sticks, and the front and back touch, and the front and rear cameras, and to really look at how beautiful that OLED screen is--and look at the power it has under the hood--it really is the vision we had back in 2005 brought to full life.

What game are you looking forward to playing on the Vita the most?

I'm a Hot Shots Golf addict. I am spending all of my spare time building up all my attributes. I am already online and competing in tournaments. I thought I would get there early and get ahead of the game. But I am amazed I wasn't the only one with that idea. I thought I would have to compete with some Japanese consumers who had a two-month headstart on me--but good old fashioned American ingenuity and Canadian ingenuity--you look at the top of the leaderboard, it's already a bunch of Americans and Canadians who had their hands on it for a week.

What would you say to those who feel that in this day and age of smartphones and tablets, a portable game system can't succeed?

I guess everybody is entitled to their opinion. My first assumption is that they are not gamers. If you're not a NASCAR fan--and I can't necessarily say that I count myself as the core NASCAR fan--the non-NASCAR fan, they'd say it's a bunch of people taking left-hand turns, waiting for an accident. If you are a NASCAR fan you would think that was incredibly ignorant and people don't appreciate the depth of it. I think the same is true about gaming.

If you are a gamer, you are not going to be at all confused when you get a Vita in your hands and you play something like an Uncharted: Golden Abyss; you are not going to be at all confused as to why there would be a market for a dedicated game platform. But if you're not a gamer, and you are not into that in-depth experience, and you don't spend the type of hours and dollars that gamers do playing it, then I can see where you would say, "Why would you need a dedicated portable gaming device when there are smartphones and tablets?" I would tell you, that quite frankly, that is not our target audience for day one. But the good news is that I welcome all those consumers in because just a few short years ago, those people didn't play games at all, but now smartphones and tables are whetting people's appetite for gaming.

I think they are more of a potential consumer for us in the near future, than they were back in 2005 when we debuted the PSP. I see it really being more additive to the ecosystem and we are trying to bring that PlayStation experience to those consumers before they get a hand on the Vita, with things like PS Suite where they can experience PlayStation quality gaming on an Android smartphone or on a tablet. It's not a part of the industry that we are intimidated by.

The 3DS had a rocky launch with a $250 price point and Nintendo lowered the cost. Are you worried the $250+ prices will also slow the market's acceptance of Vita?

I think at the end of the day, we are in a fashion industry and what drives people are the must-have item. It's what my friends have. It's where the best games are. I think software drives hardware. I much prefer a system that is $249 with a great launch library--we have 26 games and 100 games that follow that. If you play an Uncharted: Golden Abyss, you appreciate that $249 value immediately. If the contrast is that it is incredibly reasonably priced, but it doesn't have the software library, I'd rather make my way with the $249 pricepoint and the launch library. I think people will respond very positively to the price point.

If you had two minutes to show something from the vita to reluctant gamers, what would you show them?

Talking about it and even showing them video really doesn't do it justice. We have invested so heavily in our pop-up stores and promotional events, and actually bringing Vitas to retail and setting up full-blown displays, because you can't do it justice describing it. You have to put it in people's hands. As soon as people hold it, they are immediately drawn to the OLED screen. They get the nice comfortable feel in their hands. They see the dual analog sticks, the shoulder buttons, the d-pad, the things they are very comfortable with. And then the casual gamer will be very comfortable swiping and using the touchpad. And then that rear touchpad is going to appeal to the casual gamer and the core--for the first time, if you are a core gamer, all ten fingers can be in play, controlling different characters on the screen.

Our goal as gamers, is to get the most immersive experience possible, and to have as much control as possible and having it as intuitive as possible. And I think the Vita really marries those together. So what I would do is just let somebody hold it and not do a lot of talking. I would point out some of the key features they should notice right away. But I would really try to get them to spend some time with it and try one of the 26 launch games, depending on the genres that appeal to them. If they even got a passing interest in gaming, we got a good chance of getting them on board.

Ultimately, what is Sony's strategy with the Vita?

To me, the message is simple; the strategy is simple. First and foremost, it's not a debate to us whether there is a market there for us. I think we carved out a heritage in gaming. We know what we are talking about; we invested million in this dedicated portable handheld device. And then we evangelized to consumers, retailers, and to the development community--and I think they have responded very positively.

The target audience is a PlayStation owner, male, early 20s. Now, that's the center of the bullseye, that's not the entire target. But if you say that is the center of the bullseye, you've got all your PlayStation network attributes, all your trophies, all your friend lists that immediately crossover. You got cross-play opportunities using your PS3 content, cloud saves, picking your games up and continuing them on your PS Vita. And I think we expand the first circle out from that to non-PlayStation 3 owners, but core gamers, and that's an extremely large audience. And then we start to fan out to those consumers that even have a passing interest in gaming--and there is a Billion of them worldwide, 163 million in the United States.

So to me, the easiest question in the world is do you think there is a market for this, do you think the gaming industry is healthy and expanding. I think it is expanding like no other industry or other form of entertainment out there. To be focused on gaming, and to have a device that is just targeted to that audience, is extremely exciting to me. I think at the end of the day, every device has a core competency and ours is gaming. So if you are a gamer, check out the Vita. And if you are not a gamer, keep an eye on your friends, because you'll want one soon.

Want more?

Sony's Quest To Conquer Mobile Continues With PlayStation Vita Sony Brings PlayStation Characters To A Live Action Spot PlayStation's Jack Tretton on 3-D Games and the Gamification of Business

Follow the author (@khohannessian), video producer (@adambarenblat), or Fast Company on Twitter.

Innovating Office For iPads: Or, Why Microsoft Should Stop Worrying And Learn To Love Apple

Kit Eaton — Wed, 22 Feb 2012 10:22:53 EST

The tablet-based publication (tab-lication?) The Daily is embroiled in a fuss about its leak of plans to bring Microsoft's Office suite to the iPad. The Daily's convinced the software is for real, but Microsoft has issued a tissue-thin denial that actually confirms or denies nothing material. Meanwhile, the general feeling is that MS would be crazy not to expand its Office domain onto the best-selling tablet PC--one that's causing a computing revolution. But Microsoft is actually facing a stickier problem here.

It's about price and precedent.

MS would be foolish not to address the iPad App Store as a market space because Apple's tablet is continuing to dominate the scene, is likely to do so for a while, is affecting PC sales, and is penetrating into business workplaces (with a recent survey saying 91% of business and IT pros using one for work). That's MS's traditional Office stomping ground. MS's own Windows 8-powered tablets aren't due for a while yet and will likely take a while longer to actually establish a decent market share, so delaying a tablet edition of Office until then could miss out on potential sales. It's also arguable that while Android is building its tablet market share, writing Office to be compatible with so many subtle variations of Android OS and hardware would be a lot more work than aiming at Apple's product.

So, let's assume that MS really is developing a version of Office for Apple's iPad that embodies some of its own Metro mobile OS styling as the leaked imagery hints. Let's guess that MS may even build in some of its upcoming SkyDrive tech to facilitate cloud storage, thus boosting business-user productivity (when users later download that PowerPoint slide they were working on to their office PC) and competing with Apple's iCloud system. That sounds great, doesn't it? MS fans, or those merely chained to MS by years of having to use its products, will get their familiar systems on a new and very chic computing platform that's ideal for use while commuting and which will enable perfect compatibility with their PC apps at home or at their desk.

Now--how does Microsoft price this code?

Apple already has its own business productivity apps on the iPad with Pages, Numbers, and Keynote, and they offer compatibility with MS's system and interlock through the cloud to Apple's own desktop versions. If you use one iTunes account on several iPads, thanks to the way Apple's system works you only need pay once for these apps. They sell for a very reasonable $9.99 each, allowing Apple to continue its PR effort that points out how many apps you have to pay for on PCs are free, already installed, or low-cost on its hardware.

Microsoft could easily price at or very near to the same point and compete directly, relying on the massive inertia the Office name carries.

But Office on the PC costs $119.99 for one user on a home PC for the lowest "Home and Student" edition, and $349.99 for the full "Professional" version. That's four times the cost of Apple's iPad apps for the entry level and over 11 times the cost for the top edition. It costs more still to install Office on a handful of PCs ($499.99 for the Pro version). So pricing the tablet edition at $30 for the full package could set a precedent among consumers to expect lower prices for the desktop software too. Which would hurt MS because Office is one of the world's best selling pieces of software and it makes up a big part of the company's profits (it may, or may not, have recently superceded Windows as the biggest contributor to MS's bottom line, and was credited with boosting a 6% rise in MS quarterly profits to $5.74 billion late in 2011).

So MS could make the tablet versions not fully featured, arguing (perhaps without real basis) that the tablet environment isn't suited for the full workload of, say, Excel or that the hardware wouldn't support it. That sets a bad precedent for its own software on Windows 8 tablets then: Why buy a Win 8 tablet if the apps are already on the iPad cheaply, and why buy them at all if they don't work as well as the desktop ones? If MS then chooses to make the Win 8 versions of Office better than the iPad ones, this would be simply exposed as marketeering and could alienate a considerable number fo consumers who already love their Apple product. And don't forget the rumors about the upcoming iPad 3--its super-high-resolution screen will best that on many PCs, and its hardware would thus seem perfectly capable of supporting as complex an app as Excel. It may even beat the upcoming Windows 8 hardware.

And Apple, seeing the app competition, could always spend a little effort to brush up its own iWork suite on the iPad to improve both functionality and cross-compatibility with Microsoft's software, and quickly nullify any added value in buying Office and maybe even Windows 8 tablets. After all, the iPad is very publicly applauded right now, and who would spend $500 to $800 on one in March, complete with their familiar MS Office aboard, only to ditch it for an unproven Windows effort late in 2012?

Hence Microsoft is trapped in a version of the famous prisoner's dilemma, being forced to cooperate uncomfortably with its erstwhile "enemy" in order to make profits from the iPad's success, so both parties ultimately benefit. Its one true path out of the mess is to really innovate, and deliver such serious added value from the iPad edition of Office and the Windows 8 version that it actually attracts customers because of its exciting strengths and cool new features. Does that sound like a typical Microsoft solution to you?

[Image: Flickr user x-ray delta one]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

Rhapsody, Spotify, Netflix, And The 28-Day Waiting Game

Austin Carr — Wed, 22 Feb 2012 09:29:55 EST

The music industry may soon be acting even more like the film business and delaying streaming songs to avoid cannibalizing sales."Windowing," says Jon Irwin, CEO of subscription-based music streaming service Rhapsody, "[is] fundamentally the wrong thing to do."

New movies aren't available to Netflix subscribers until at least 28 days after they're released to the public (even 56 days in some cases). Movie studios use this practice of delaying releases, called "windowing," in order to stop subscriptions from cannibalizing DVD sales and rentals.

Soon, that same practice could become more commonplace in the music industry, where a number of popular artists believe "windowing" might offset any potential for subscription services to cannibalize single and album sales. It represents a huge obstacle for Rhapsody and Spotify, which are concerned with keeping their music libraries fresh in the eyes of iTunes-addicted consumers. And it's a a practice that Jon Irwin, Rhapsody's CEO, hopes to stop.

"Windowing," Irwin says," [is] fundamentally the wrong thing to do."

Rhapsody is the No. 1 subscription service in the U.S., and Irwin has seen plenty of big-name artists question whether it's better to release their albums on iTunes before Rhapsody in order to boost sales revenue. Coldplay, for example, released Mylo Xyloto in October, but it was nowhere to be found on streaming services such as Spotify and Rhapsody until earlyer this month. There was no official window that Coldplay agreed to--the band simply added it (quietly) to Rhapsody and Spotify several months after it went on sale.

"EMI, in this case, said, 'They're not releasing it for streaming; you can't put it up in your feed,'" Irwin recalls. "I said, 'Okay, well, are they going to?' And they said, 'I don't know.' We try to have a dialogue with the labels and the band management to understand why [they're] making this decision."

The reason was simple: "Spotify competes with download stores," Dave Holmes, Coldplay's manager, said in January. He was "very concerned" that subscription services would hurt Coldplay's sales--and who can blame him? The band set digital-sales records in the U.K. with Mylo Xyloto. Now that it's released on Rhapsody and Spotify, Coldplay stands to continue to generate revenue off the album each time it's streamed.

Irwin believes that theory is wrong. For one, he says there is no evidence that Rhapsody and Spotify have cannibalized CD or MP3 sales. If anything, he argues, streaming services help cannibalize pirated music. "I think [the "windowing" theory] is wrong because Rhapsody provides incremental revenue," Irwin says. "There are people who are going to continue to want to own and purchase music--those people who are buying it on iTunes are probably still going to buy it on iTunes. There are going to be people who want access and who would never pay--those people who are aren't buying it on iTunes are never going to buy it on iTunes. And there are people who, if it's not available on streaming, they're going to steal it. They're going to pirate it. They're not going to go out and buy it."

When asked if he could understand why a band as big as Coldplay might want to sell their music on iTunes first to make as much revenue as possible from album sales first, Irwin acknowledges that an album stream won't be worth as much as an album purchase. "But what happens to that album over time? That streaming revenue model goes on and on and on--it's going to compensate you forever and ever," he says. "You're trading analog dollars for digital pennies--maybe digital dimes--and hundreds of millions of plays will become billions of plays and trillions of plays."

Still, it will likely take sometime before streaming revenue becomes that significant--Rhapsody boasts just 1 million subscribers, and Spotify 3 million. Until it does, though, Irwin believes "windowing" isn't worth it, as it might "potentially alienate your fan base."

While Irwin believes artist adoption of streaming services is inevitable, some believe it could be the policy of "windowing" that is inevitable too. Music analyst Mark Mulligan anticipates that "windowing” will help artists release albums across various digital services. “That is a really easy way to mitigate a lot of the risk of streaming,” Mulligan told the Financial Times. “The relationship between streaming and the download could be the same as radio and the CD. Radio cannibalizes sales as well...but artists get many multiples higher on Spotify per play than they get on the radio.”

In this sense, perhaps the idea of "windowing" is out of the hands of Rhapsody and Spotify, which rely on artist and label content as heavily as Netflix relies on movies and TV shows from studios.

"I just fundamentally think it's the wrong thing to do, which would probably indicate what our behaviors will be," Irwin says, stressing so for a second time. "We don't have the choice because the labels and the artists are making the decisions about the content and the art that they create, and the rights they grant the labels, and what the labels can in turn grant to us."

Then he adds: "I don't really have a say in it."

[Image: Flickr user James Calder]

Fab CEO Jason Goldberg On When To Go Big (He Should Know)

E.B. Boyd — Wed, 22 Feb 2012 09:16:52 EST

In the last two weeks, the design flash-sale site has added five verticals and opened a site in Germany. Isn't that expanding kind of fast for a company that's not even a year old?

Fab has been a busy bee recently. Last week, the flash-sale site launched five new verticals. And now, the New York-based startup has snapped up Berlin-based Casacanda and opened up their first international site, Fab.de.

That's a lot of expansion for a company that's not even a year old.

Sure, Fab is growing like gangbusters. After opening its digital doors in June, it grew to 1 million members in November and got to double that earlier this month. It's doing an average of $1.5 million in sales a week and plans to log at least $100 million this year. Along the way, the startup has scooped up over $51 million in venture funding, including a $40 million Series B led by Andreessen Horowitz in November.

But still, knowing when's the right time to expand is always a tricky call: Try to do too much too soon, and a nascent startup risks imploding under its own ambitions. But wait too long to get all your ducks in a row, and you might be overtaken by competitors. So how do you know when's the right time to start branching out?

We asked Fab cofounder and CEO Jason Goldberg how the company knew it was the right time to start expanding. Here's what he told us:

In the beginning, focus on just "one thing"

"We have this concept at Fab called the 'one thing,' which is: Do one thing, and do that one thing better than anyone else," Goldberg says. "We're almost religious about that." New opportunities pop up for Goldberg and cofounder Bradford Shellhammer all the time, but they say no to anything that isn't design-related. "We're very careful about [remembering] that moving in certain directions at a certain time [could be] too fast or would dilute our primary focus."

Let the metrics guide the growth

"At the end of last year, we looked at where were we on our trajectory. We ended the year with 1.5 million members. We were growing very quickly," Goldberg says. They had momentum, so they could start to think big when setting their goals for 2012. "One of them was to go from having about 3,000 products on the site per day to having tens of thousands," Goldberg says. "We wanted to get to a place where people say: 'I turn to Fab whenever I want something design-oriented.'"

The most logical way to explode the number of products was to add independent verticals. So the team reviewed the data to see which segments had the most demand. "There are categories on the site where we had clear evidence from our usage and from user behavior that our users wanted to see more, that were selling really well whenever we did it, but we just hadn't provided enough product," Goldberg says. That's how they came to the decision to launch independent shops for Vintage, Fashion, Kids, Pets, and Food, which started going live last week.

Leave international on the back burner until you have momentum at home...

It used to be that companies could take their time going international. They'd master their game at home, and then take it overseas when it felt right, usually many years later, not worrying much about competition from local startups. Starting up was difficult and expensive. Competing with a well-funded American firm was no easy trick.

No more. "It's faster, cheaper, and easier than ever to put up a website," Goldberg says. "There are copycats and clones everywhere." A U.S. company that takes too long to get its butt overseas risks finding the market saturated by the time it gets there.

Still, you don't want to move too fast. "I wouldn't think about it at all until you can say you've really started to figure out the business model, and you really can see some significant scale and growth," Goldberg says. "In our company, I was religious about not thinking about doing anything other than our 'one thing'--design in the U.S.--until we could say we had begun to seriously figure that out."

…But once you have that traction, get moving overseas.

The flip side of taking your time is you don't want to wait too long to make your move. "In the German market particularly, we saw six Fab copycats emerging over the course of this fall," Goldberg says. "We had to make a decision pretty quickly: Do we want to get out ahead in the market or do we want to be playing catch-up?"

One of Fab's investors and board members is Andreessen Horowitz's Jeff Jordan, who also has a piece of Airbnb and Pinterest. "Those companies had German clones very quickly, and now they are just playing catch up," Goldberg says. Fab knew if they waited too long to get overseas, local movers would define the game, and the New York company would have an uphill battle once it made landfall.

"Fab is an opportunity to build a brand for the ages," Goldberg says. "We really think we have an opportunity to build the global brand synonymous with design for years and years to come. That drove us to think international faster."

Acquire local companies so you can hit the ground running--but only if they're a perfect fit.

Once you've decided to go overseas, you face the perennial strategy conundrum: Build or buy. Build out a team and infrastructure of your own so you know it'll be perfectly suited to your needs, or buy up an existing company in the hopes of being able to easily retool it where necessary.

Buying an existing company often seems like the smart choice. It lets you hit the ground running. At least in theory.

The Fab guys decided that a local acquisition had to have three attributes. The local team had to be passionate about building a company just like Fab. "In Germany, it's easy to find people who are passionate about building a business," Goldberg says. "But we wanted to work with people who are passionate about building this business."

The team would have to have mastered the fundamentals of executing on the business. "We didn't want to have to teach them," Goldberg says. "Casacanda had solved a lot of the same problems we had solved."

And they had to have traction. Without that, Goldberg says, "you might as well build from scratch."

Fab found those three attributes in Casacanda. "We met five other teams here in Germany, and none of them had learned those lessons like these guys," Goldberg says. Fab snapped the company up for a reported $10 million in stock, and by earlier this week, Fab.de was open for business.

But despite the frenzy of activity in the Fab space overseas, moving this fast was never a sure thing. "If we had not been able to find a team like [Casacanda], we would not have gone to Germany for another six months," Goldberg says.

E.B. Boyd is FastCompany.com's Silicon Valley reporter. Twitter | Google+ | Email

Progress Report | Reinvent The Wheel

Tania Karas — Wed, 22 Feb 2012 00:30:00 EST

GOAL | Reinvent the Wheel PROJECT | Bridgestone "Airless Concept Tire"

Thesis Flat tires generate more than 3 million AAA calls each year, and blowouts can easily cause auto accidents. But what if tires didn't need air?

Method Bridgestone fashioned a prototype from recyclable aluminum, rubber, and thermoplastic resin, a material that's "strong enough to handle the [vehicle] load while at the same time easy to mold," says Hiroshi Morinaga, who manages the company's advanced-tire-technology department.

Results Because the interlacing spokes are curved and flexible--as opposed to the rigid metal in normal tires--it's easier for them to distribute pressure. "The bending stiffness supports the load," says Morinaga, noting that each wheel can withstand up to 660 pounds.

Remaining Challenges 1. Safeguard spokes Wayward debris can catch between the curves, locking the wheel in place.

2. Increase durability Because it's so malleable, thermoplastic resin sometimes breaks down in extreme heat and cold.

3. Don't pull a Michelin The Bridgestone rival's airless "Tweel" was thwarted because it would vibrate constantly above speeds of 50 mph, generating far too much noise and heat. "Those have not yet been issues for our tire," says Morinaga.

Future Plans The Airless Concepts are currently being tested on small electric vehicles (see below). But Morinaga says his sights "are ultimately set on creating a viable . . . alternative to conventional [car] tires," which are a $160 billion annual market.

[Illustration by Crystal Chou]

A version of this article appears in the March 2012 issue of Fast Company.

How To Pitch A Startup In Three Minutes

Philip Butta — Wed, 22 Feb 2012 11:25:49 EST

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Each year, Startup Riot gives entrepreneurs three minutes and four slides to pitch their business--the top three win coveted investor meetings. As hopefuls gather in Atlanta on February 22, founder Sanjay Parekh shares the winning formula.

Prepare for everything

TripLingo, a language-assistance app, formed just two weeks before last year's Riot--and won, thanks to ultra-preparedness. Where did they find the time? Says founder Jesse Maddox: "During those two weeks, we slept at the office."

Amp Up the Visuals

Last year, fraud-monitoring company Pindrop Security gave Parekh a preview of its presentation, which he called "clip-art bad." His impassioned plea led Pindrop to hire a designer; the new, appealing, and engaging slide show took second place.

Don't be dramatic . . .

In 2010, a professor named Charles Hofer presented a glucose-monitoring device and simulated insulin shock by fainting--twice. Too much, says Parekh. "I bet 99% remember he fainted, but how many remember why?"

. . . But Put On A Show

Schmoozing never hurts. Allan Branch, cofounder of LessAccounting (which won in 2010), perfected the art. "I told everyone: 'If you sign up today, I'll give you a free piggy-back ride for two minutes.'" You can bet he kept his promise.

[Illustrations By David Cowles]

A version of this article appears in the February 2012 issue of Fast Company.

Google May Sell AR Glasses This Year, New Premium Ads Expected From Facebook, Apple Plans Second Enormous Data Center

Nidhi Subbaraman — Wed, 22 Feb 2012 10:38:18 EST

Breaking news from your editors at Fast Company, with updates all day.

UK Govt. Calls For Innovation, Alternatives To GPS. There's a sore need to innovate in the navigation space and create GPS alternatives, a committee has warned. The way things are wired today, fluctuating space weather could easily knock out GPS systems crucial to everyone from the military to financial systems, leaving no back-up plan if such an event took place. --NS

--Updated 10:30 a.m. EST

Google's Doodle commemorates 155 years since the birth of Heinrich Hertz, the first person to prove the existence of electromagnetic waves.

Google May Sell AR Glasses This Year. Long simmering rumors about Google's sci-fi AR glasses are coming to a boil. The New York Times has heard that the experimental products which could be able to to track locations, or identify objects being looked at, may be going on sale before the end of the year, costing somewhere between $250 and $600. --NS

New Premium Ads Expected From Facebook. Facebook may be launching tougher, more effective, premium ads later this month, which can be launched from a brand's Facebook Page, and targeted at any user. With Facebook's first Facebook Marketing Conference in NYC around the corner, it's likely these are the first of a few changes we can expect to see rolling out soon. --NS

Apple Plans Second Enormous Data Center. Apple has confirmed that it is building a second data center in Oregon on a 160-acre plot. This comes a day after the company revealed the shiny details about a solar and fuel cell-powered data center it's planning in North Carolina. --NS

--Updated 6:00 a.m. EST

Yesterday's Fast Feed: Barnes & Noble Announces $199 Nook Tablet, DataWind Off The Aakash Case, Google Planning Satellite Farm In Iowa, and more!

How Googley Is Yandex Anyway?

Nidhi Subbaraman — Wed, 22 Feb 2012 10:25:23 EST

The Russian search company has just announced a collaboration with Twitter. Here's how they're becoming more like Google--and also how they also zag with every Google zig.

Yandex and Twitter just announced a collaboration that would give the Russian search company access to Twitter's fire hose of real-time updates, news, and events. In our MIC 2011 feature (Yandex came in at #26), Yandex was growing "Google-style," sprouting add-ons and apps month on month. Yandex now has a video search service, a photo hosting site, and an advertising analysis tool. It runs primarily on advertising money. Recently it added an online payments system (Yandex.money). Sound like anyone we know?

But in the year since we last visited with Yandex, whose name derives from the phrase "Yet Another Indexer," has become anything but. It's taking over turf that even the maker of an autonomous car hasn't.

First for the familiar bits. In April last year, Yandex announced a program called Yandex.Factory, to invest in promising tech startups. "We are full of ideas, but it’s not always easy to do everything at once," Ksenia Yolkina, Project Manager of Yandex.Factory said at the time. "If we spot a young, talented team of like-minded people doing interesting and relevant things on the market, we are eager to support them in all possible ways, including financing.” An approach not unfamiliar to Google, which believes in investing in startups of all sorts through via Google Ventures.

Also in April, Yandex announced they'd gotten into mapping--perhaps you've heard of Google's own mapping service. By June, though, Yandex released a planner application for routing trips via public transport. By August, they'd added a traffic monitoring service. But then it did something un-Googley and launched a taxi search service (also in app form!) to relay taxi hail requests to companies in Moscow, with plans to expand to other big cities.

Then there's mobile devices, on which Yandex seems to be in direct competition with Google. In October last year, Yandex kicked off a partnership with Samsung to have its search engine installed as the default on all Samsung's bada-powered smartphones in Russia--40% of Samsung's total smartphone sales in the country. Yandex's ever-growing list of apps also placed prominently in Samsung's devices, offering up weather data, mail services, currency exchange rates, and more. It also inked deals with Nokia, HTC, and Microsoft to get installed on Lumia Windows Phones as the default search engine.

In addition to launching local spin-off search services, part of Yandex's strategy seems to be to expand into non-English-speaking markets. In September, Yandex launched in Turkey for the first time, targeting an Internet-rich market that had a growing search need for local language content. "Rolling out this new product involved developing a number of new technologies, such as a technology for storing web documents in different languages and a document prioritization technology. We expect to make broader use of these technologies in the future," Arkady Volozh, Yandex CEO said at the time. By the end of January this year, their Turkey base had grown to 100,000 daily users.

Then there's the Twitter deal. Twitter's own interest in languages will be of good use to Yandex on this front. But then, it will also strengthen Yandex's core identity as a general search engine, allowing it to deliver results super fast, and super first.

Nidhi Subbaraman writes about technology and life. Follow on Twitter, Google+.

[Image: Flickr user Fiddle Oak]

User Experience The Don Draper Way

Brian Solis — Tue, 21 Feb 2012 19:03:27 EST

Products, pages, profiles, and entire click paths are often narcissistic by design, taking into account the needs of decision makers and stakeholders over the customers they’re designed to entice. Instead, they should be designed to evoke emotions and trigger a desired effect, regardless of platform or device.

This is part 2 in an ongoing series.

In the development of customer-facing products, apps, displays, and destinations, businesses often miss what are among the most critical elements for true customer engagement: evoking a desired experience and sentiment.

Businesses tend to have a narrow view of customer needs or expectations. And, rather than design to evoke human emotion, journeys are designed with a "mediumalistic" approach, where platforms and devices take precedence over the human connection or aftereffect. Products, pages, profiles, and entire click paths are narcissistic by design, taking into account the needs of decision makers and stakeholders over the customers they’re designed to entice. The need to plug into trends trumps the opportunity to innovate and improve the customer journey.

In addition to taking mediumalistic approaches, businesses fall victim to what I refer to as creative endowment. This is a phenomenon in which creative professionals bestow their ideas for campaigns where technology becomes the stage for imagination, without regard for the customer experience. Instead, these ideas, no matter how brilliant, are thrust upon customer senses--what they see, hear, and touch--for the sake of executing an idea rather than evoking a sensation or designing an outcome. Regardless of the medium, this isn’t necessarily a new phenomenon. But, it is a problem.

There is a cure to creative endowment, however. To demonstrate this point, I can’t help but think back to the Mad Men episode where Don Draper presented his touching concept for Kodak’s new wheel, “The Carousel.”

In a dimly lit room and in a vulnerable voice, Draper took us on a touching journey: “Technology is a glittering lure, but there is the rare occasion where the public can be engaged at a level beyond flash…if they have a sentimental bond with the product.”

Draper told the story of his first in-house advertising job at a fur company and how his coworker, a copywriter named Teddy, explained the importance of combining "what’s new," with emotion, “He also talked about a deeper bond with a product. Nostalgia. It’s delicate, but potent. Switch it on...Teddy told me that in Greek, nostalgia literally means, 'the pain from an old wound.' It’s a twinge in your heart, far more powerful than memory alone.”

Nostalgia, indeed, is a potent play. In this gripping scene, Draper doesn’t push a creative idea for the sake of the idea; instead he takes technology and makes it human. He makes it so human, in fact, that as you watch the scene, it becomes intimate, and it becomes personal. As such, you’re reminded of your cherished memories, and for that moment, your experience joins the confluence of emotion, brand, and technology.

Here’s the important part: That scene--or, let’s pretend that was really the campaign Kodak considered--was designed to do just as I described. And, that’s the point. That campaign as conveyed would take center stage where technology, media, design, and the overall experience would be designed to evoke emotions and trigger a desired effect, in any network or any platform or device.

The ConflUX of Technology, Creative and Emotion

Whitney Hess is a user-experience strategist. It is her viewpoint that I appreciate as it aligns with what I believe to be the secret ingredient to engagement…empathy. Hess concludes that empathy builds empires. And in her presentation, "Design Principles: The Philosophy of UX," she shares something that is so profound, it serves as the very essence that most organizations miss in their engagement strategies: “User Experience is the establishment of a philosophy about how to treat people. Visual Design is the establishment of a philosophy about how to make an impact.”

In her article for UX Magazine, "Guiding Principles for UX Designers," Hess outlines 20 guiding principles that pave the way for frictionless engagement.

I’ll share 11 now and more later in the series...

Stay out of people’s way…provide an efficient experience.Create a visual hierarchy that matches people’s needs. Limit distractions and choices.Provide strong information scent.Provide signposts and cues.Provide context.Use constraints appropriately.Make actions reversible.Provide feedback during the experience…design is not a monologue, it’s a conversation.Make a good first impression.Be emotional.

This is the beginning of an important shift where neither technology nor creative will lead the strategy for developing and steering customer experiences. Instead, intention and aspiration become the North Star. Technology and creative merely become the enablers in the delivery of magical experiences and gratifying sentiment.

The JUXtaposition of Empathy and Experience

As Hess says, “empathy build empires.” In UX, user experiences are interwoven with absorbing visual design packaged in a journey rich with empathy and desire. For UX to work, for it to mean something, architects must first feel it. See, I believe that effective engagement is inspired by the empathy that develops simply by being human. It takes a holistic approach to truly deliver an empathetic voyage. Design, channels, and devices are not enough. It takes a culture of customer-centricity to feel their challenges and ambitions and what it is that they need or do not know they need. It takes a vision, mission, strategy, and purpose.

Leadership must reimagine the future of customer relationships and not only vocalize it, but express it as a working charter. It requires nothing short of a culture shift to truly appreciate the customer for not only what they can do but also in how they feel.

Like so many things related to technology and new media, champions tend to push a bottom-up strategy. But, my point for this series is to complement the current groundswell by convincing executives and decision makers to lead top-down strategies that covey a vision for what customer experiences should involve. Then, and only then, we can inspire incredible UX to in turn bring that experience to life. Everything starts with defining a vision that articulates the view of the customer journey not just as you see it, but what it is that customer would appreciate, relate to, and value.

Vision is device and platform agnostic. But as Mr. Draper reminded us, it’s “delicate, but potent.”

Next up: The emotional and cognitive pillars of UX.

[Image: AMC]

Better Ways To Give It Away: Philanthropy 2.0

H. King McGlaughon — Tue, 21 Feb 2012 13:07:52 EST

Our distrust is very expensive.--Ralph Waldo Emerson

As the Susan G. Komen for the Cure Foundation recently discovered, mixing mission and politics can cost an organization both credibility and dollars. Susan G. Komen, dedicated to the least controversial cause imaginable, eradicating breast cancer, lost the support of many core donors over its (since reversed) decision to end its relationship with Planned Parenthood, a national organization that provides women’s health care, family planning, and, incidentally, abortion services.

Ironically, given the scope of Komen’s mission and the size of the foundation, the Planned Parenthood grants somehow became the tail that wagged the dog. Last year, for example, Komen gave Planned Parenthood $700,000 to finance 19 separate breast-related programs. That donation, while generous, represented a tiny portion of its $93 million in grants. Yet these grants, however small, however mission-appropriate, were nonetheless sufficient to plunge the entire organization into crisis.

Komen’s decision was widely interpreted to be politically motivated, and this perception is at the crux of the organization’s debacle. Komen’s existing supporters expected the organization to be politically neutral. Public charitable organizations are supposed to be broadly embraced, broadly understood, broadly valued, and broadly and publicly supported. Many of Komen’s core donors therefore felt betrayed by what they perceived as a breach of trust, a misappropriation of charitable funds to accomplish a political agenda seemingly unrelated to the organization’s stated public mission: eradicating breast cancer.

The Komen crisis begs the questions that all of us struggle with when we give to a nonprofit organization: How do I make certain that my philanthropic dollars align with my own philanthropic goals and my core beliefs? How do I prevent my donations from being diverted to spending and programs that don’t accomplish the intended purpose of my gift? Can I trust a public nonprofit to act transparently and consistently in support of its stated mission?

Increasingly, affluent donors are answering these questions by taking control of their own philanthropy. Instead of writing a $100,000 check to an organization like Susan G. Komen or the Red Cross or any other large public charity, they are funding causes directly through their own private foundations and donor-advised funds. With their own foundations, they can give that amount incrementally rather than in a lump sum, targeting effective and deserving grantees and monitoring their performance and continuing alignment with stated goals and objectives over time. Perhaps that’s why private foundations have seen such explosive growth in recent years. According to The Foundation Center’s Statistical Information Center, there are currently more than 76,000 private foundations in the United States--almost 33,000 more than there were just 15 years ago.

The growing prevalence of private foundations reflects the life experiences and styles of many of today’s most prominent philanthropists. Entrepreneurs like Bill Gates, Ted Turner, and Warren Buffett didn’t follow conventional paths to success. Gates, after all, famously dropped out of Harvard. Is it any wonder that he, like many self-made business leaders, might harbor a healthy skepticism of big institutions? Is it any surprise that when it comes to their philanthropy, Gates and other entrepreneurs might want to harness their own business acumen, resources, and experience to accomplish a philanthropic goal instead of merely writing a check to a charity and trust that it will accomplish that work effectively and efficiently?

If there is a silver lining to the Komen controversy, it’s that it has motivated donors to take a harder look at how their dollars are spent by their charitable donees and how those organizations are led and governed. The impassioned reader comments and discussions that accompany each new Komen-related headline point to a new reality for nonprofits: Whether donors are writing small checks or making significant grants, I believe that they will demand increasing transparency and accountability from the recipients of their funds. On the public charity side of the table, organizations will need to remember and re-embrace the basic fact that when positioning themselves as public charities to gain broad public support and funding there is a trade-off around being able to assert and promote narrower, less publicly attractive agendas and objectives. That type of focus is better accomplished in the private foundation format. These are not negative developments.

As Americans, we are a famously generous people. We’re also famously self-reliant and innovative. Ideally, philanthropy should unite the best of our impulses with the best of our abilities, marrying purpose to efficacy. As the days of blind faith in large institutions--even the best-intentioned ones--come to a close, I foresee not a diminishment of charitable activity but the golden age of the philanthropic entrepreneur. Philanthropy won’t be hurt by this recent crisis but it might be revolutionized.

For more leadership coverage, follow us on Twitter and LinkedIn.

[Image: Flickr user Gabriela Camerotti]

Apple Rumor Patrol: Fatter, Faster iPad 3, Later iPhone 5, MS Office For iPad

Kit Eaton — Tue, 21 Feb 2012 12:23:50 EST

iPad 3 Fatter

NextMedia has gotten ahold of what they're saying is an iPad 3 rear shell, and photos of this thing are all over the web. It's consistent with previous rumored hardware, but for the first time it gives a true sense of what the iPad 3 will look and feel like. The MICGadgets website has yet more examples of the hardware, and they've also released photos.

What's it like? Pretty much like the iPad 2. It's so very similar that, based on the photos, it's unlikely to be an iPad knock-off (there's no SD slot, no USB socket or other non-Appley stuff), so we're inclined to see it as the real thing. But it is fatter, by maybe around 1mm, and this greater depth means the back face of the device is slightly more chamfered in.

So far, nothing major... except that many iPad 2-compatible pieces of hardware (things like stands and extremely form-hugging covers) won't fit. That'll cause all sorts of silly noise online for a while, with accusations that Apple is screwing third-party manufacturers. But it does mean that the internals of the device have changed significantly--Apple's too design conscious to make this change otherwise, and there already was a deal of spare room inside the iPad. And that means either a bigger battery, different hardware to deal with connectivity for LTE, or a bigger camera module (or various combinations of these).

The camera certainly does look to have a larger window, but we're skeptical Apple would opt to put in a higher-resolution camera that adjusted the iPad's profile to this extent. It means a bigger battery, to deliver more oomph for longer life, or perhaps to power energy-hungry LTE hardware or a much higher resolution screen.

iPad 3 Screen

That screen is now very well leaked. It's definitely coming with four times as many pixels as the current iPad--meaning its resoution is 1,536 by 2,048. That's incredible--and your brain may pop at the idea of playing an updated Infinity Blade on this thing (the game app Apple used to wow audiences about the iPad right back at the start).

It also reveals how Apple will try to combat Amazon. The iPad 3's screen will likely deliver text in e-books that is so very sharp and contrasty that it will make e-ink seem dim and inferior, which deals nicely with the original Kindle e-readers (although they may still work better in direct light). And the Kindle Fire's screen is just 600 by 1024 pixels, which will seem incredibly weak compared to the iPad 3's. If Apple, as rumored, also opts to use new IGZO tech in the LCD, it'll also out-perform most other tablet LCDs out there.

A5X System-on-a-chip?

A leaked photo of what's said to be an iPad 3 motherboard is causing some online discussion, as it's clearly labelled with an "A5X" system-on-a-chip, rather than the expected A6 ARM-based processor. Could the A5X be a quad-core version of the A5? Could it simply be an A5 updated and clocked to much higher speeds?

At this point it's all speculation. It's possible the chip is a development of the A5 in the same way the iPad 3 would seem to be a development of the iPad 2, but we're thinking that super-high-res screen needs more beef than an updated chip can manage. The photo may be of a pre-development prototype, or Apple's chosen a strange naming convention.

iPhone 5 In Fall

Tallying with our thinking, and what an Apple insider told Fast Company last year, it's now definitely thought Apple will release an iPhone 5 in the September/October window. That's a little under a year since it revealed the iPhone 4S and disappointed many who were expecting a new look and feel--and it's consistent with the effort Apple must be taking to perfect the hardware.

iTunes Overhaul

Apple's also said to be planning a big-scale overhaul of both iTunes Store and the App Store experience. While this is a rumor, it's welcome news--Apple really needs to pay attention to these two pieces of software that have grown to encompass uses that they weren't really designed to cope with from the start. The iTunes Store is feeling old and clunky, and the App Store faces criticism for making it hard to surface new or better apps--despite being on the verge of serving up its 25 billionth app.

Would a bigger iTunes overhaul come alongside these changes? Arguably that's overdue too... but as of now the rumor winds don't carry such whispers.

Microsoft Office On iPads

From a leaked image, it looks like Microsoft is about to sleep with the enemy and launch Office for the iPad. Its own Windows 8 tablets are expected later this year, which puts the Office team at loggerheads with the Windows tablet team--with such in-fighting a famous issue for MS. But Apple's lead in the tablet field is all but unassailable for the near future, and Microsoft's exec team has probably decided that it can turn a shiny penny (or several billion) by selling its apps to execs who've bought an iPad but still yearn for the familiar embrace of their traditional business productivity software. MS detractors will shiver at the thought, but it will seriously dent allegations the iPad is a consumption-only app, it could sync nicely with MS's plans for an iCloud-rivaling SkyDrive app on the iPad, and the entire rewrite needed for Apple's OS would at least allow MS's coders to ditch some of the more famous Office unpleasantries.

Chat about this news with Kit Eaton on Twitter and Fast Company too.

Why Clear's Dead-Simple List Stands Out In The To-Do Market

Kevin Purdy — Tue, 21 Feb 2012 11:56:57 EST

It's easy, it lets you swipe away tasks, and you literally can't get too detailed while using it. And Clear might just be the thing you need to make knocking out tasks fun again.

There’s a lot that’s interesting about Clear, an iPhone app that, at its core, makes gradient-colored lists of things. Its design has garnered a lot of kind words. In short, it breaks a whole lot of conventions, and it’s designed from the perspective of swipes, pinches, and pulls--things your fingers instinctively know how to perform on a glass surface.

But there’s something more interesting about Clear, once you get past how you use it, and that’s what you would use it for. For the past decade, and likely before that, the predominant jumping-off point for thinking about how people who work with distracting computers all day can track what they need to do has been Getting Things Done, often noted as simply GTD. David Allen’s system is centered around getting tasks written down, with proper context and step-by-step conception, so they aren’t in your head. It’s popular with technical-minded types, and, unsurprisingly, there’s a huge number of apps made by technical types that implement many of these ideas, with a huge variety of themes, interfaces, syncing features, keyboard shortcuts, and other things that make people like me eager to write about them. 2Do, Remember the Milk, Astrid, OmniFocus--the App Store runneth over.

But now that we're all a little more familiar with what it's like to have constant access to powerful data tools, and to the world at large, some app makers and tweakers have come to take a second look at productivity tools and wonder if it’s all too much. Some early enthusiasts see many modern “life hacks” and productivity tools themselves as distractions, and a counter-trend has been bubbling up in desktop software and mobile app design. Clear, clearly, is part of it.

“Whilst lots of folks swear by GTD, we wanted something that didn't need a book to explain a methodology or mindset,” wrote Nik Fletcher, product manager for Clear maker Realmac Software, in an email. “Something that felt as useful and effortless as pen and paper, but on your iPhone. 28 characters per task, most pressing at the top. Its enforced conciseness is deliberate.”

Explained another way, Clear is an app that aims only to, as Fletcher put it, “better pen and paper more than anything else.” He adds: “A page of your notepad doesn’t have a ‘Create New Task’ button--you just start writing.” Paper is often claimed to be the best to-do list medium around, due to its persistence, spatial cues, and its ability to grab your attention. Clear doesn’t offer all that, but it also doesn’t let you hide tasks behind filters or nested trees. Everything in Clear is there, and probably needs to be addressed.

How to Know If You Need a To-Do Listectomy

Of course, abandoning your current task/ to-do list to try out a hot new minimalist iPhone app is the epitome of pseudo-meta-productivity. How do you know if it’s worth the transition time? For one thing, if your to-do list looks more like a delusional blue-sky wish list than a holding tank for your daily planner. To-do items have to be clear, concise, and specific to be do-able, and if your items aren’t there, a clean slate with a hard word limit might help.

The other way a Clear-like system might help is if your current system feels less like a meaty challenge and more like a whole-grain lentil patty--something that makes you feel like you’re doing the right thing, but isn’t very rewarding. It’s similar to decision fatigue, in which your best behavior short-circuits itself. Labeling all your tasks with the right context (”@email”), project (”+WebRelaunch”), and overly ambitious deadlines helps you know exactly what they require, but can also make them seem imposing, complex, and less fun to strike a line through. Very intentionally, completing a list item in Clear involves flicking it away, not check-marking or labeling it.

Fletcher wrote at length about the motivations and ideas that went into designing Clear, but the key mission was two-part simplicity: “We wanted the app to be fun, and above all quick to use.” Whatever your system, if it’s hardly ever those two things, then you’re just cataloging your problems, not creating an itinerary.

[Image: Flickr user robstephaustralia]

Follow Kevin Purdy on Twitter, and Fast Company, too.