Real Users Hate Ajax

There is actually a really good article over at news.com over the usability testing travails of hotmail 2.0. . I canít tell you how many times Iíve been in exactly the same situation . . . trying balance innovation, strategy, and immediate user feedback.

In the end, users hates any types of change (good or bad) . . . they will eventually adopt changes that are clear improvements, but that will still take a while. . . there is no such thing as a magic switch in the first place.

People that believe being ďcustomer focusedĒ is the ONLY goal of any product manager doesnt really understand innovation and strategy (ie innovatorís dilemma). On the other hand, product managers that are married to pushing the envelope on innovation and un-reasonably attached to their frameworks (information architecture, product strategy etc) really belong on Sand Hill road instead. There is a middle ground but its a case by case basis . . . knowing when to turn back (like the hotmail team) is a good first step. For all of MSFTís faults, Iím actually quite impressed by this story.

Another random note, M&A teams of major companies are usually completely clueless on stuff like this. They believe that 1+1 = 3 while in reality 1+1 = 1.5. For example, taking a popular rumor over the weekend, if Microsoft and Yahoo merged what would be the combined userbase of their instant messaging product in 12 month if they tried to merge the two clients into one product? It would for sure be less than the combined marketshare of the two clients currently. The disastrous Sprint + Nextel merger was another perfect case study . . .

Creating your Own Buyout Fund

Marc Andreessenís blog is surprisingly great for non-tech related topics. Its already raised to the top 10 feed in my feed reader in short couple of months. Anyways, with the Blackstone IPO all over CNBC this morning, it got me thinking about how LBO funds differ from traditional investments. I have tons of useless and never applied finance/asset management education . . . so this post by Marc really resonated with me.

Here is the thing, the returns for LBO funds (like Blackstone) looks great compared to the S&P500, but its actually (somewhat of) an illusion. A large percentage of LBO fund return is from borrowing money to purchase equity which creates an amplified return on a smaller base of actual cash investment. (think getting a mortgage to buy a house and the price of the house goes up). Thus you and I can actually mimic blackstone by simply borrowing money to buy the SP500 without having to pay the 30-40% "carry" on the investment profit that LBO funds ask for. Average joes, regularly borrow money to buy houses, the same can be done for the index. The only problem is that its (very much unrationally) much much easier to borrow against real estate than it is equity. (that is also why we have a real estate bubble right now.

So the harder question to ask is that what ever fund you buy into (including the Blackstone IPO) are they 30-40% better than what you would get through a simple margin purchase of the index? My guess is that only the top 10% of LBO funds will be worth it (including Blackstone) but most of the other funds are just juicing return by taking on more risk . . which you and I can do pretty easily without paying someone to wear.