Following that series of metaphors, of thought processes that push the collective intelligentsia of Silicon Valley to new heights, what’s the latest guru spouted meme which we should navel gaze upon? Well, it’s nearly the end of a calendar year here and I am positive we’re in a new era. One of transcendence, of companies who grasp the foundation and scale to new heights. These transcendent firms don’t just understand where the puck is going, they also consciously push the puck from it’s current trajectory, thus achieving disruption in their category and beyond. The companies that are breaking the mold and recasting it in their own image are the transcendent startups.

A startup I reviewed earlier today is one such company that’s missing the current meme of being transcendent. While their product is good, even interesting, it’s missing the strategy of moving the puck outside of the reach of others. It may have clearer pricing, but that’s something incumbent players can easily update. It may have more automation, however, that’s a well worn track which is already on the roadmap of every company, large and small. They may have passion, but one thing is common among every well run large scale enterprise, and that’s culture. From the day you join to your exit interview and beyond, large companies excel at creating, installing and building a company culture around a set of well defined principles.

One person I know refers to this as the process of drinking the koolaid, serving the koolaid and then making more In such an environment, you cannot succeed in breaking the shackles of the incumbent by an Apple-esque landing page and pithy marketing speak. The startup has to go beyond. If the enterprise offers rudimentary support, offer it 24 by 7. If the enterprise offers no uptime guarantee, promise five nines and a refund equal to every minute of downtime. If the larger firm offers Walmart style pricing, provide a price match guarantee, with a never ending lookback window. If the larger firm makes more money through cross sell than the generic product, offer that same generic product for free, and only charge through cross sell.

Transcendent companies are looking beyond the now at the seemingly impossible or inane and adopting it as their own, embodying the future with their undeniable foresight and building a community that believes in their vision. Fulfilling needs before they are perceived, anticipating wants and desires, eliciting spontaneous moments of awe and at the same time providing a bedrock of consistency, this is the nature of the transcendent startup. These companies understand the future trends; that we want to be well connected with the least amount of effort. We want that gennie in a bottle that grants our every wish. What do these transcendent companies do for me? They inspire me, they give me magic, I trust them and on top of all of that, I rave about them.

Today, the currently available open source knowledge graph includes:

• Wikipedia
• GPL image sites such as Flickr, etc
• Commoncrawl (index of 5 billion URLs)
• Read this article comparing Bing & Google’s “Knowledge Graph” announcements from Search Engine Land. Google acquired Freebase, provider of knowledge graph data sets.
• In addition there are many companies offering an API to their data layer with some amount of commercial restriction including Amazon, Apple, etc.

The main thing that Bing and Google are doing is integrated third party data sets into the main results, making them more interesting, rich, meaningful and able to answer a broader set of intentions today than they were able to do even two years ago. Most of this is done through open data offerings, but rich media that allows websites to further customize their search engine listing are getting more and more prevalent all the time. Facebook has open graph tags for sites to improve their listings, traffic and categorization in that index. These digital examples are only a small slice of our time, as we’re not yet a hundred percent connected to the network.

Now take the idea one step further, with the self driving cars all sending information to and from Google Inc. Or the Iphone sending your data to Apple, Inc and helping to drive the creation of a three dimensional map of the world based on so much real, physical presence. Now Apple has announced Siri as a button is integrating into Cars and automobiles. If you read my book, Be Transformative, you would notice a chart showing “How many avenues to your customer?” The chart from the book shows that each of the main categories of things you interact with is soon becoming a node, in the global network.

One thread from all of these integrations into the real world, even Google’s Project Glass, is that they aim to aggregate and deliver a ton of data for re-use through a commercial API. In other words, we’re all helping to build the global knowledge graph, with very limited ways of opting out and the very act of opting in, while it drives commercial value, offers up too much convenience for all but a small minority even selecting the global opt-out of this passive syndication of personal data.

The constantly aware network of brands and companies that have the largest reach today in terms of time spent, are all creating partnerships and deep integration all the way down to your vehicle. Iphone jacks, Siri in your car dashboard, Google Voice Directions helping you while in a few years, Google Car Driver chauffers you along to your voice given designation. The foundational data layer that each of these companies is integrating into their products and services is based on real world people, patterns and usage. Every time a new product line is developed, careful attention is paid to how might this product enable the leading company to extend their graph of movements, traffic, people, real world relationships and more.

As an Iphone family, could Apple not opt all of the immediate family members I have, along with most of my extended family and even my friends, into one big social network? Eventually they could give us birthday reminders, and prompt us, via text from Siri, to get the right present for the right person. That way if my sister was talking about a certain book on a social network, perhaps I might be reminded that she needs it.

The company which might pull this off is Google, so far, with their project glass. They now have an excuse for constant two way broadcasting data from the perspective of a user with integrated audio, visual and geospacial feedback. Including the ability to do voice and face recognition, geotagging of objects and cross referenced search into your personal history in Gmail and offline as well, the Project Glass could essentially, “optimize” based on their PageRank algorithm the most likely list of things you, personally, should do at that very moment based on your intentions, personality and probability. Ok if I think about all the possibilites I do get extremely excited but also a bit creeped out. Do you remember a few years ago, when then Google CEO said, “We’d like to be able to recommend what you do that day.”

With Project Glass, Google just might do that. Siri will from Apple, and perhaps Samsung will leverage it’s growing network effect as the largest in many types of electronics and other categories will jump into the data layer development category via some acquisitions like Nuance, the speech recognition firm, and Blekko, the search engine startup. The fascinating aspect of the whole data layer notion is that it extends into the real world in a way that some of the current, most popular open source softwares such as WordPress are invisible in the interaction, merely being one kind of pipe through which a set of data flows into your Google, Apple, Samsung or perhaps Nike device. So the current set of open best practices and technologies that are used for the desktop and mobile web will still be used even in the far off future. However, increasingly all of these will be augmented with an extended set of open technologies combined with an exponentially increasing amount of data sources and inputs, both free, customer driven and commercially available.

Now that I’ve paid the “link debt” I owe to the greater web, I’m going to focus on what I’ve learned and the implications of how we think about building, structuring and managing the “performance process.” In thinking about website performance over the past few months, and reading about how other very smart, incredibly talented people are also thinking about the same topic, I’ve begun to embrace some bigger picture concepts as it relates to performance. Granted, this framework might not be new to marketing folks, tech folks or design experts but it’s a new way for me personally to think about the initial investigation work, to the progress and finally to the outcome of “World Class Performance” (™).

Will the future we live in be slower or faster than the past?

Part of the process that goes into investment decisions is the balance between short and long. This is a standard conundrum, and why many large firms get disrupted by startups. Change the game, and you have new rules. Change fast enough, often enough and pretty soon, there are rocket ships launching, flying and falling at a regular interval. The rules left behind by these successive launches become the new standard for those rare companies that launch, fly and last. I believe, as anyone who has studied the trends of the web should believe, the future is faster than the past; faster internet speeds, rising expectations and greater consumption online. That was the thesis of my previous post on this topic, which was that expectations will rise so not only do you need consider performance optimization today, but also plan for the future. One nice thing about performance optimization, from a prioritization and marketing perspective, is it has immediate gains in conversion rates, as well as longer term impact on innovation, reliability, trust and value.

Let’s get down to the principles and the stages, based on my observations of the space and where we’re headed. It’s an amazing place, full of fast loading, intuitively designed and inspiring experiences which prompt the natural desire to share the joy with others. Are you with me so far? Good.

Principles

These basic principles have helped me define the stages of performance optimization, the business implications and the process by which you should engage the team, design your strategy and assess your results.

1. Speed requirements increase over time as expectations rise – “fast” is a relative metric, not an absolute one. Thus as more companies get “fast” those that want to continue to be perceived as “fast” have to push the envelope.

2. Prospect modality, or the way in which the addressable market behaves, is dictated by their a priori expectation. It’s safe to assume your potential customers are doing three things online: checking email, searching and social networking. Each of those activities has essentially 90% penetration, or will by the end of 2012. So if your site differs greatly from one out of these three modalities in email, eg, using Outlook, Yahoo! Mail, Hotmail, Gmail, AOL Mail, or searching using Google / Bing, or connecting with friends & family on Facebook / Twitter, odds are 100% solid you’ll fail. Disruption occurs in two standard deviations from the norm, which I’d suggest is one part commercial innovation and one part true disruption, reframing the value proposition or changing the source of value in a given context. One specific example of this: links are blue. Period. Look at Facebook, Amazon, Apple and Google. Links are *blue*. If you design elsewise, you’re creating dissonance, adding cognative load and essentially making it hard for your potential customers to do business. Personally, I abhor the idea of a company imposing “creativity” on me because their designer couldn’t be bothered to make stuff as clear as possible. Links are blue is only one specific example of a list of design principles.

3. Sharing is a natural extension of a great product experience. I covered this reasonably well in a prior post. It boils down to setting expectations and delivering well above the water line. Many companies have started to formalize “Net Promoter Score” as a way of measuring their success or failure. Another favorite metric is “Sentiment Analysis” to figure out if the chatter is good, bad or neutral which accompanies your brand online. Sharing gets baked into so many different things in so many ways, I want to be clear about the sharing in this list, which is that sharing is the act of telling somebody else, in person, about the wonderful story you had, staring a product which fulfills some need. It’s not clicking a like button, retweeting or other vanity metric. It’s inspiring the good old fashioned phone call, daughter to mother, or son to father, to tell them about the time you first encountered “product or service Y” and how it blew your mind / fascinated you / was better than sliced bread. You get the idea. The product that wins is always the one most share worthy in “reality” not just online.

Stages

Still with me? Awesome, because I’m about to give you the keys to the universe, at least in terms of performance optimization. Here are the various stages, characteristics and some business implications of each part of the transformation from beginning to end:

Stage 1: Complete ignorance. No dashboard, no understanding and no reporting. This stage represents the majority of companies today, including Bank of America, (my bank, which I find especially deplorable, because they take my money and willfully waste my time), Microsoft.com (I would expect the most commonly used operating system in the world to better understand the value of their customer’s time), and Geico.com (Berkshire Hathaway, are you listening? All that money spent on television ads is NOT converting as high as it should because you guys are missing the foundation with which to build your digital empire. The reality is the consumer experience on each of these websites is much, much slower than it should be. So I give them all an “F” grade.

Stage 2: Proud of their Yslow and strutting like peacocks. These are the firms that have performed “plan pass one” and did some work. I would put FunAdvice, the company I co-founded, in this category. In 2007, we did the first performance optimization project and dropped our bounce rates by 10%. That’s a huge deal; user metrics rose across the board. However despite our monitoring since, we never measured the right things. The fallacy of measuring the wrong numbers or not having a holistic view and continuing to ask the hard questions results in stagnation, decay and ultimately disruption of your core business by those who “get it.”

Stage 3: Leveraging Yslow, httparchive and still missing the bigger picture. If you haven’t seen this site yet, do yourself a favor and read it. Even if you don’t read much, please, please read through the stats on this page. The web, overall, is getting slower. The quote, “we have met the enemy, and he is us,” is especially appropriate in this context. Suppose you have your dashboard, you have the third party industry trend data in hand. That’s the point at which you know two things: your stats, your market stats, and exactly how you can drive sustainable competitive advantage. This principle was the first in my list, above, for this very reason. Understanding trends is only as valuable as your ability to *act* on those trends, influence the team you work with and drive for those results you crave. Without that stitching together, companies at this stage get some benefit but not the long term halo of the second principle, that of prospect modality. Companies in this category have a more holistic dashboard than the companies in stage 2, but still miss the bigger, more important picture around principle two, which is that your digital presence will always be compared to the sites your audience interacts with regularly, prior to coming to yours. I don’t use Bank of America daily; I use Google, Facebook and Amazon much more often. These companies “get it” and clearly have embraced a holistic scorecard, shown their own case studies to the world and pushed all of us to embrace the idea of a faster internet. Godaddy (yslow score of “B” why not “A”), Digg (remember them? Grade “C”), and Chime.in (was Mixx, now part of Bill Gross’s latest global domination strategy – Grade C). I’m positive the smart, motivated and savvy marketers and programmers behind all these web based companies know performance, know KPI’s and know their relative success vs competitors. However, in absolute terms, none of them are scoring a goal, which is the main reason these firms and in this category. In other words, for these companies, they are happy they are good on Yslow and beating their category, but the main, missing ingredient is that they’re not benchmarking against the overwhelming majority of users time. Facebook, Amazon, Google and or Apple. If you aren’t as fast as them, you’re slow, even if your site is the fastest by a mile in your category.

Stage 4: Benchmarking against the best in class, destroying your category and feeling good. The challenge with this stage is your company is now in rarified air. The performance metrics are in place, all fully green and compared to any other firm that sells the same variety of widgets, you are head and shoulders above the competition. However, the companies at this stage are not the Amazon, Google or Facebook’s of the world. TripAdvisor would be in this category, they’re clearly head and shoulders above the competition and their overall stats are very impressive. When you benchmark this kind of result to Amazon.com, which is a similarly complicated home page, the trend is clear: TripAdvisor is world class in it’s own right. However, have they built the fanatical dedication to performance into their DNA, have they broadcast far and wide their commitment to these KPI’s and made significant progress? In some ways, yes, as httparchive.org shows on their overall page size, javascripts and CSS they made a significant investment about six months ago. Interestingly, Quantcast seems to show a massive step function change in their audience and usage, tying into their performance stats: http://www.quantcast.com/tripadvisor.com The trouble is, despite their solid performance, TripAdvisor is not one of the best performing websites in the world. At their scale, Tying Amazon or edging them slightly is not enough. They need to set a new standard, to force the industry to catch up to their level, rather than settling for equality among the industry leaders of today.

Stage 5: Setting the standard and continuously pushing the envelope. This is going to sound controversial, but I would put 37signals in this category for one specific reason. Ruby on Rails backend performance has become possible in the 50-75 millisecond range, which compared to a decade ago, is an incredible milestone. As DHH is one of the principles in 37signals and their Basecamp redesign is a case study in amazing, they deserve the credit from the front and back end performance benchmarks in being truly forward thinking and innovative. Google also deserves a ton of credit, as you read in my earlier blog post referenced above, for their bold 2009 study. Without the courage to put a public stake in the ground, it’s possible none of us would realize how problematic it is to systematically waste people’s time. Those companies that have the courage, the long term view that performance matters and signal to the rest of the digital world that wasting time, reducing productivity and creating discomfort are unacceptable aspects of an online experience are those which have reached this stage.

Selfishly, this post is entirely geared towards motivating every large, commonly accessed websites to become a stage five on the performance progression scale. Personally, I think it comes down to principles and strategy. It’s really hard to say, “We’d like to waste people’s time, decrease our GDP and create more churn,” in any meeting, large or small at a company with sufficient scale and influence. However, the sad reality today is that Geico, despite their advertising slogan of “we can save you 15% or more on car insurance,” has a fundamental breakdown between that marketing campaign and the commercial reality. Instead, they should say, “15 minutes can save you 15% or more on car insurance; it would be 10 minutes but we don’t value your time enough to care.” Yes, that’s a bit finger pointy but long term, should we, as a society, value highly companies which consciously or unconsciously waste our time, energy and inhibit productivity improvements? My vote would be a resounding “no,” that we should embrace these principles and both understand where on the performance ladder we are, and how to reach a loftier place.

Open source software, of many varieties, has swiftly eclipsed the traditional “closed source” model. If you’re a programmer, you tend to have libraries, code and other snippets available on your blog, github profile or Stackoverflow, all of which require time, effort and valuable skill to create. These bits are all available for free, usually with some attribution or another, to those who would like to exploit the functionality for commercial advantage. The result of all this is that the value of any given system is less today than it used to be, as eventually, there will be an open source alternative that, while it might not be the dominant force in the market (FireFox anyone?) will cause ripples that change the entire industry. If you’re in the Content Mangement System business, expect to hear the question, “How is this better than WordPress?” If the answer is, “We include behavioral targeting out of the box,” expect to hear a snark filled reply. “I can get that for free in WordPress, with this plugin.” If you’re curious, Interwoven used to be the “bees knees” in CMS systems. Does the search interest in their brand reflect this, or is WordPress winning?

Granted, the open source solution might not be perfect out of the box, might require some polish, but let’s face facts. Apache powers the web, as the web server with the largest market share in the world, it’s not going anywhere. The features, functionality and capability outstrip the closed source alternatives by a zillion to one. Do you develop for the web in a given scripting language? Perl, PHP, Python and Ruby are the most common server side scripting languages, so called fourth order because of their natural language like syntax, lack of compile and are all built in C, another open source paradigm. Are these programming languages perfect? Nope, none of them are. If you use a database layer, REDIS started as open source, MongoDB is open source, MySQL was open source before the acquisition and so on. Want a site search engine? Lucene and Solr are as powerful as Endeca and the cost, well, you get the idea.

What does the closed source, or Golems, view of the world look like?

Let’s take a look at a few high profile examples of companies that leverage closed source technology. Microsoft, for one, has seen it’s share price flat line over the past nearly decade, according to Google Finance. Yes they provide a dividend, but let’s compare that to Apple, which uses (gasp) Linux as the underpinning for their operating system, from their server, to their laptops to their IOS devices. Without putting too much math into the question, AAPL went from a $5.50 price about a decade ago (split adjusted) to say, $550 today. Sure that’s the wrong way to look at it, as they don’t actually provide a web server software, nor do they provide any open source software themselves that I know of. However, the point is about leveraging the open source, as it’s that open source which will win out in the end. A million people all fixing bugs, patching the code, contributing their ideas is infinitely better than closing up the nuts & bolts and pretending that your group has the lock down on the best ideas, the “precious” ring which will somehow bind the universe to it. Redhat looks like it was a great bet over the last decade, as the leading commercial vendor supporting Linux. Seems that you would have increased your investment about five fold in the same period.

Sony, you know, the company that famously has complained about people, “hacking their devices,” to (gasp) install other stuff on them? Ya, their stock is down by 50%. Sure they provide a dividend, but what we’re looking at here is the pure, unadulterated financial return. Closed source, close minded and closed thinking yield poor long term performance. Amazon, the first platform to offer independent authors a way to reach the masses without going through ridiculous courting rituals with traditional publishing. The first company to offer cheap, easy CDN services for websites. You get the idea. Amazon increased about 400%, from nearly $50 ten years ago to $200 today.

Would you rather hoard access, code and insights – or let it fly and get help improving the system, for free?

Not everybody has the courage to let the light shine into every nook and cranny of their business. It’s a hard, gut wrenching process to go through, having your pride, joy and life’s work out there for scrutiny by the proverbial unwashed masses. However, it’s not about the naysayers, the critics, the ones who would rather throw a stone than build a foundation. It’s about improving access to core knowledge, platforms and enabling ecosystems. It’s about interactions, scale and continual improvement. The companies who embrace this thinking, in code, in business process or in other ways, are those that win. The stock price, the search oriented interest, I can continue, but I think the idea is pretty well covered already. Open up and win big. Cover up, hide and cower in the dark, well, the rest of us will have no choice but to believe that the “precious” you’re stroking is really a path to self destruction, rather than a powerful force for growth.

Ultimately, that’s what your prospect will see, which will make word of mouth, social media and other types of, “earned media” that much harder as each fracture of your message dilutes the power of the message. Can you imagine a group of people talking say, the exact problem that your business solves. Then, one after another, a real person, embodying those disparate marketing messages, tag lines and tracking URLs or micro-sites tries to sell them, in sequence, on the benefits of your particular solution? The reality is, this won’t be nearly as effective as if each sales person said the same thing, the same way. Sure you want to make it contextual, but if it’s the same prospect, over and over, you need to make sure the core message is exactly the same to get the value of repetition, halo and word of mouth.

A few tools I have some experience with include Omniture Test & Target (Offermatica was rebranded as this…), Webtrends, Google Website Optimizer and Sitespect. Each of these tools has it’s pros and cons of course, but given the lens of website performance optimization, Omniture’s tool, Google’s tool and Webtrends tool are clearly inferior. Sitespect here is superior because of the low impact to the latency of the web experience and given the impact of load speed on conversion, it’s mission critical to test in a way that does not degrade the web channel.

Anything is good in moderation, with that adage in mind, let’s review some recent examples of marketing brilliance as it relates to pricing strategy, especially in the case of ebooks. Many people charge the absolute minimum for their ebooks, despite zero evidence to suggest that this will maximize revenue, profit or marketshare. In this blog post by Sacha Greif, you’ll note that the author achieved 1,500 sales in less than two days of his ebook – without distribution on Amazon, Barnes & Noble or Apple. So we have one example at least, along with a host of evidence and citations in that blog post, that says when selling an ebook, you must offer two editions, one priced low and one high.

There is another side to the story, of course. Why not price things as high as they possible can be priced? If you read through the, Part two: premium pricing, this post by Jarrod Drysdale, you’ll see that not only is there another way to address the issue of price for a good, but that in this specific case, it also earned the author even more money than the scenario “A” or “B” which the original author outlined. So is there a right or wrong answer to the question of maximizing value? Nope. The only thing I will point out in this debate and the overall price discussion is that when in doubt, consider the long term impact of your price, your customer experience and the market at large. Walmart competes on price, one hundred percent of the time. So does Amazon.

Despite my personal admiration for Amazon in particular (they published my book after all) three out of the last four kindles we purchased broke in less than a few years post purchase. The apple products we’ve bought? Never a single mass failure, unless the abuse given to the device warranted the implosion of functionality. I say price your book according to what you think its worth to you in terms of knowledge or entertainment value. I personally have a failing in that I tend to underprice everything and reading those two articles made me think more about pricing strategies and how ebook pricing in particular is are truly subjective.

• Include the most common keyword phrase for the page towards the left of the title
• Keep the repetition to a minimum, as it won’t read natural
• Use direct marketing style copy

On the meta description, search engines will not always show this if it does not have the keyword phrase, in an exact, broad or fuzzy match for the listing. So on the meta description, the rules are:

• Include the most common search term, in one of these three match types
• Use behavioral economics or other triggers to entice people to read the whole 154 character message
• Include your brand name, relevant details and use direct marketing style copy – 3rd person narrative here will tank your CTR

Many sites have gone off the deep end on these factors and despite the studies, they will see Google Webmaster Tools report abysmal click through rates, despite fantastic rankings. If you rank well but do a poor job of drawing the click, it’s effectively the same as ranking poorly and your business will not benefit nearly as much as it should from the search placement you achieve.

Fast forward a few years and while I’m not an expert, I have dabbled in the process enough to convert a few photos. Most of those, you’ll see here or there and the difference between a standard photo and an HDR shot is truly unreal. Every friend, family member or acquaintance I’ve shared my “favorite photo” library with has been blown away by the visuals. While I would love to take all the credit, a massive chunk of that has to do with the discovery of Stuck in Customs website, the tutorials there and the amazing photos. A link is a small payment for something so wonderful and so I’d like to ask you all a favor. Take five minutes, surf his website and then share it with friends, family or loved ones who appreciate stunning, beautiful images. I have never met a person who abhors nice pictures and his are truly masterful works of art in their own right.