Effective immediately, I will assume the role of executive chairman where I’ll focus 100% of my time on advancing Baynote’s technology vision and strategic development of products, customers and partners in emerging markets. Also effective immediately, Mike Backlund has been appointed president and CEO of Baynote.

Mike joined Baynote in 2009 as senior vice president of worldwide field operations, but I have worked with him in one way or another for more than a decade. I am extremely pleased to appoint an executive with his extensive operational and customer development experience to lead Baynote to our next stage of growth and beyond. Mike has more than 20 years of experience as both a CEO and senior operations executive within the software and technology industries. He previously held the role of CEO for Quorum Technologies, Inc. and Emagia. And as SVP of Field Operations at Interwoven, he was instrumental in driving annual revenue from less than one million dollars to more than 200 million dollars in three years time. His successful track record managing fast-growing companies and deep experience partnering with enterprise customers at every level of the relationship will be invaluable to Baynote.

In addition to partnering with Mike and the executive team on driving Baynote’s vision, I’ll remain Baynote’s chief evangelist. I will be just as involved in the blog (if not more!) and other forms of communication as I have been since founding the company in 2006.

This is an exciting new chapter for Baynote and I am looking forward to working with Mike to help our customers continue to deliver relevant and engaging online customer experiences.

After attending the event for four years, I’ve had the opportunity to see first-hand how the market has shifted over time. The discussions at eTail West in the earlier years were primarily about how to manage, measure, and increase transactions. But most retailers have this figured out by now, so their focus has shifted to maximizing their revenues in new ways.

Naturally as the market has matured, retailers have grown to be more concerned with customer experience and service, so it’s no wonder that the three consistent themes at this year’s event were multi-channel customer experience, personalization, and recommendations. Online retailers are looking for new ways to increase their revenues and to achieve better personalization and customer targeting. They are also looking for new ways to maximize revenues by deploying the recommendations they already have in place in a much broader sense. Now that retailers have reaped the benefits of traditional product recommendations, they understand the capabilities these technologies have to tackle the newer issues, such as navigating social elements of their sites and the ongoing quest to improve search.

Just as the market has matured, so has Baynote. Each year at eTail, we’ve seen interest in our approach grow. Listening to the conversations of the attendees and the other speakers this past week, it was clear to me that Baynote’s time has come as retailers hone in on providing a superior customer experience and ultimately how to create happier, more loyal customers.

Perhaps the best evidence of this was a survey I conducted during my presentation. I asked the crowd: “Raise your hand if you think your best salesperson can outsell your best customer?” The result? Not a single person in the room raised their hands. When I asked another question: if the happiest customers are the most important to increasing their revenues; almost every single person in the room agreed. This demonstrates just how powerful peer-to-peer brand advocacy has become to retailers and the bottom line.

I left Palm Desert thinking about what an exciting time it is to be involved in the e-commerce industry, and how proud I am that Baynote’s customers are setting the standard with more sophisticated personalization approaches that are transforming the customer experience as well as their online businesses.

P&G’s eStore was prompted by a mediocre year in online sales for the consumer goods manufacturer. According to a recent article by Andy McMains of AdWeek, less than one percent, or $500 million, of P&G’s $79 billion in global revenue last year stemmed from online sales via sites such as walmart.com and amazon.com. Through the eStore, P&G hopes to learn from consumers how to better market their products and improve online sales across all e-commerce channels. One of the main goals of this initiative is for P&G to learn about consumer buying patterns and share this customer intelligence with its retailer partners to boost sales.

eCommerce is unique in that Websites allow retailers to quickly identify consumer shopping patterns, and automatically adapt their merchandising programs based on this insight. This is simply not possible in brick-and-mortar stores. With Baynote’s technology, for example, retailers such as Urbanoutfitters.com and Bluefly.com are able to more quickly recognize even the most unexpected trends, such as consumers purchasing two seemingly unrelated products, and then personalize product recommendations in real-time. This improves the next shopper’s experience, builds loyalty and boosts sales.

Since most products are currently sold via retailers rather than directly by manufacturers, manufacturers are often left in the dark on the valuable data that their retail partners can obtain about consumer behavior. While brands have been able to utilize the Internet well to engage with consumers via email marketing, social networks, online product reviews, and a slew of other activities that require their explicit feedback, they have not had a direct link into the less obvious but often more telling data that ecommerce affords. This includes leading, often termed “weak” signals about consumer intent that can only be gleaned from the online shopping experience. Think clicks and hovers, not hard transactions.

This new online environment should enable P&G to monitor and respond to shifting consumer trends in real-time, and we are looking forward to seeing how their customer engagement initiative will change the overall online retail landscape. We predict that the insight gained from eStore will improve both indirect and direct sales, as P&G will be able to better collaborate with their distributers on why certain products are selling well, and how to improve upon the merchandising and online sales strategies. If managed well, the P&G eStore should also allow the manufacturer to bring innovative new products to market significantly faster based on real-time visibility into the online browsing behaviors of their customers.

As the title suggests, Forrester believes that information and knowledge management professionals who deal with public websites need to use a mix of different technologies from an ecosystem of providers – no single platform will meet all of their needs.

According to the report’s authors, Stephen Powers, Matthew Brown and Peter Schmidt, the shaky economy has increased pressure on companies to engage customers more efficiently online. We agree that websites offer unmatchable economies of scale when it comes to interacting with customers, enabling better lead generation, increasing engagement, conversions and customer retention rates.

What the report doesn’t say is that the emergence of the real-time Web has also accelerated the need for technologies that can dynamically personalize the online experience and keep pace with rising consumer expectations for instant gratification. We believe this trend will be an even bigger catalyst for investing in these technologies in the months and years to come.

Forrester sees investments rising too:

“Our most recent data suggests this trend will continue into the next year. Consider that in 2010, 51% of organizations plan content management implementations, more than one-third will implement or upgrade customer relationship management tools, and one in four is planning marketing automation software investments.”

While investments in online customer experience technologies are on the rise, Forrester notes that time-to-market for site changes, campaigns, and customer experiences have suffered. According to their client inquiries, “disjointed technology has become a prime factor behind time-to-market issues and the ability to achieve improved online processes.”

If companies can’t rely exclusively on WCM or enterprise marketing suites to support online customer engagement, then what does the bigger ecosystem look like?

Forrester puts several players, including Baynote, into three categories:

Content management vendors include traditional WCM players like SDL, Tridion, Autonomy as well as ECM vendors that offer the fundamentals, plus interactive delivery.

Enterprise marketing vendors include Alterian, Aprimo, Omniture, and Unica, who mainly support campaign management.

New breed engagement vendors, such as Baynote, Backbase and Kapow Technologies, support next-generation Websites.

According to the report, new breed engagement vendors fill important gaps in the overall ecosystem and will be critical pieces of next-generation, more personalized and adaptive websites in the future. We couldn’t agree more.

6Sense developed out of a 2008 acquisition of search technology company Trovix.  According to a Monster press release, “6Sense patented semantic search technology utilizes intuitive, concept based searching, with a human-like understanding of the recruiting process and hiring needs.”^[1]

In case you’re not familiar, semantic search utilizes a concept called “disambiguation” to determine the probable meaning of sentences by building conceptual relationships between words, syllables, and related text.  However, the system cannot function in absence of what’s called the “conceptual basis” or primary logic required to begin building the conceptual relationships which govern the system.

But who or what determines the logic of the conceptual basis for a given semantic search system?

Intuitively, most people respond with an answer they find very simple, “The task at hand determines the logic of the conceptual basis”.  However, this simple and intuitive leap of the designer (the human mind) is an exceptionally difficult leap for the designed (computational system).

Unlike its designer, the semantic search system does not have the luxury of thinking outside of its own box.

Because the system relies on the wisdom of its designers to set the most appropriate logic, would it make sense to open up this process to a larger audience?

Given the presumably enormous amount of data and users, how many possible sub-contexts exist within the contextual premise of the initial system?  What is the probability that a conceptual basis created by a few experts will account for all of these possible combinations?  And most importantly, would differentiation at this level of granularity deliver measurable improvements to the user experience?

Well, I assume some level of diminishing marginal returns would arise; however, I’m confident this level of contextual granularity has probably not been reached in the case of 6Sense.

At the very least, I think this ad clearly communicates that successful companies are coming to realize the importance of their web channel, and therefore, the importance of relevant search and navigation.

And when it comes to relevance, we’re all beginning to realize that context is king.

I think Monster said it best. “The intelligence of the 6Sense technology contextually interprets the meaning behind words and concepts rather than relying on the narrow, literal meaning of keywords.”^[2]

I couldn’t agree more.

http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100201006672&newsLang=en

Collective Intelligence

1)      Tom Austin, Gartner – Tom is a group vice president and Gartner fellow who covers how IT can enhance the performance of individuals, teams and organizations.  His blog includes insightful analysis on the impact that various forms of technology have on productivity. He has been placing a lot of focus on Pattern-Based Strategy, which enables business leaders to actively seek, amplify, examine and exploit new or novel business patterns.

2)      Forrester’s Customer Intelligence Blog – Authored by Forrester analysts Dave Frankland, Julie Katz, and Suresh Vittal, this blog provides details on the latest research and trends affecting marketers that are focused on mining customer data from online behaviors.

3)      MediaPost Behavioral Insider – Steve Smith’s blog takes a fresh look at behavioral marketing, analyzing the latest strategies for marketers to better understand their customers and make strategic decisions that are based on proven approaches.

4)      Destination CRM – This online daily edition of CRM Magazine reports on the latest information on customer relationship management.

Real-Time Web

5)      Steve Gillmor, TechCrunchIT —  Recognized as the leading journalist on the real-time Web, Gillmor has reported on every key player in real-time, either through written blog posts, or in online video episodes with The Gillmor Gang. The Gillmor Gang is a technical show that interviews IT industry executives at major companies that have deep knowledge in the technology that they focus on.

6)      Pete Cashmore, Mashable – The founder and CEO of Mashable, one of the most popular blogs worldwide, Cashmore writes a weekly column for CNN.com as well as regular posts on Mashable. He has been following real-time Web closely lately in his CNN column.

7)      John Borthwick – Currently the CEO of Betaworks, Borthwick’s blog posts study the development of the real-time Web. As an entrepreneur, Borthwick is involved in various companies that touch on the real time Web, and in his own words, is interested in understanding “how media evolves as it collides with real time conversations.”

e-Commerce

8)      Jeffery Roster, Gartner – Jeffery is a research vice president at Gartner as part of the Industry Market Strategies Worldwide unit covering the retail and wholesale industries. His blog posts provide insight into research he is working on, as well as his reflections on industry events including NRF.

9)      Forrester eBusiness & Channel Strategy Professionals Blog – Forrester analyst, Sucharita Mulpuru contributes to this blog every once in a while, and we always find her posts to be very relevant to Baynote. Sucharita publishes the annual Holiday Retail Forecast, and is a recognized authority on technology developments that affect the online commerce industry and vendors that facilitate online marketing and merchandising.

10)   Get Elastic – An e-commerce blog maintained by Elastic Path’s Emerging Media Analyst and eCommerce consultant, Linda Bustos.

11)   Shop.org – An open forum for shop.org members to post their knowledge and experiences with e-commerce.

Search

12)   Gilbane Search Blog – Linda Moulton of analyst and consulting firm, Gilbane Group, blogs regularly about trends and technologies in enterprise search.

13)   Search Engine Watch Blog – This blog by Nathania Johnson provides tips and information about searching the Web, analysis of the search engine industry and help to site owners trying to improve their ability to be found in search engines.

Technology & Innovation

14)   Sramana Mitra on Strategy – An entrepreneur and a strategy consultant in Silicon Valley for over 15 years, Sramana  also writes a weekly column for Forbes and is currently authoring Entrepreneur Journeys, a series of books focused on demystifying entrepreneurship. Her blog posts profile various entrepreneurs, and provides a comprehensive look at the innovation that is happening in Silicon Valley today.

15)   Read/Write Web – One of the world’s top 20 blogs, Richard MacManus, Marshall Kirkpatrick, and their team do an excellent job of analyzing all products that relate to the Internet, and the top trends that impact changes in Internet-related technology. RRW is a great place to remain updated on the latest and greatest Internet innovations.

Customer Service

16)   Ragsdale’s Eye on Service – John Ragsdale is the Vice President of Technology Research for the Technology Services Industry Association (TSIA). He shares the latest in technology innovation, industry events, and his expert commentary on the latest issues effecting customer service executives on his blog.

The excitement reached a fever pitch on Dec. 7 when Google announced it would begin displaying real-time results in its searches.

It’s an electrifying time to be a part of the Web to say the least, and it’s nice to see real-time at the forefront of conversation in the media and at industry events I’m attending.

Given that Baynote is focused on mining real-time implicit behavior on the Web, I’ve been asked lately on numerous occasions what my perspective on the real-time Web is.  Rob Hof, previously of BusinessWeek, also recognized our leadership in real-time back in August, when he featured Baynote as fifth on the list of real-time Web start-ups, behind the likes of Twitter, Facebook and Aardvark.

My take? I believe we are on the cusp of a brand new Web, one that will be driven by the power to tap into both real-time explicit and implicit intelligence, as well as the Collective Intelligence of all Internet users. Although much of the recent excitement about the real-time Web has been focused on gathering and making sense of explicit feedback captured in published sources, such as Twitter, you cannot possibly observe the Web merely by looking at it or reading it. Further, ninety-nine percent of what happens on the Web is never written, never rated, never reviewed. It’s told through implicit behaviors in the form of mouse patterns, clicks and hovers to name a few. It’s told through intent.

In the real-time Web, you can’t just watch what people say, you have to watch what they do.

At Baynote, we are focused on the business use cases of real-time, providing companies with the tools to tap into the implicit behaviors of customers on their sites, and learn, adapt and take action automatically. This Collective Intelligence is reflective of the silent majority, not the loud minority. It is free of bias, and requires no manual processing or analysis.

As the fever pitch for real-time continues to grow, we look forward to helping companies become smarter, more personalized, real-time businesses on the much longer road to actualizing a truly real-time Web. We will continue to watch this trend carefully and plan to write more about the real-time Web for business here in 2010.

Stay tuned for more insight.

Coined by the National Retail Federation a few years ago, Cyber Monday offers retailers a way to organize sales and promotions in an online version of Black Friday, the Friday after Thanksgiving Day. The promising news for retailers is that Cyber Monday hasn’t typically been the largest online shopping day of the year, meaning this season’s peak is likely still yet to come.

I thought readers of this blog may also be interested in my guest article for BusinessWeek, where I share five rules that savvy online retailers already had in place heading into Cyber Monday. For those of you not yet incorporating these practices, fear not. They’re easy to implement and each can help your business year-round.

Over the past few weeks, we’ve explored how there are three key principles that explain why site search just doesn’t perform like we expect it to and what we can consider to help mitigate this.  So far, we’ve learned that:

1. The critical information we need to make search great isn’t in the document – it’s in the users’ heads.
2. Asking users to explicitly provie us information that would improve search, while a seemingly good approach, is inherently flawed.

Today, we explore the third principle that shows that if we want to improve search, we need to focus on all of the things users are doing online.  What I mean here is that we need to look beyond search and at the entire site experience to truly understand what’s valuable, why it’s valuable, and in what context it’s found to be valuable.

Reason #3:  Search does not exist in a vacuum.

In order to improve search, we need to observe more than just search behavior.  Search and navigation have traditionally been seen as two separate paradigms: separate interfaces and separate systems driving them.  But in reality what’s happening?  A user is coming to your site and expressing an interest or intent through their actions.  They might have first expressed that intent through a Yahoo! or Google search that brought them to your site.  They might then express it in the pages they visit and engage with, the navigation they use, the links they click, and maybe the site searches they perform.  This expression of interest may span multiple searches and clicks.  And, finding documents that hold true value for that interest and intent may also take multiple steps.

Let’s think back to the “Insight/Incite” example once more.  Had we only looked at what search results users clicked on, the problem might never have been solved.  Why?  Because the valuable content was never in the results – it wasn’t there to be clicked on in the first place!  To learn what users really meant by “insight”, we had to watch their subsequent navigation, paying particular attention to the patterns of behavior that indicated engagement or that they had discovered content that was of value – even if it happened several steps after the initial search.  Observing search behavior alone is not enough!

What about users who don’t search at all?  What can we learn from them?  Users are actually giving us continual clues to their intent and interest with every link they click and every category they choose.  The documents that users engage with and the order in which they engage also tell us not only about relationships between documents, but intent.  If we take this valuable, implicit insight into account, then we really begin to see how this insight could be used to fix search.

What’s really remarkable is that once we take a step back and think of the entire online experience as a single unified expression of intent and value, we can do a lot more than fix search.  We can start to make recommendations and optimize the user experience with every interaction they make with your site; from the moment they arrive, every step they take through the site, as well as every search they perform. The true goal is to understand the user’s intent and then automatically surface documents that other like-minded peers have found valuable in that same context.  That’s the true wisdom of the crowd, and what Baynote’s Collective Intelligence Platform (CIP) is all about.

About 300 delegates, most of whom are returnees already working in China such as Robin Li of Baidu.com, were chosen, and I was one of the 18 representatives from the United States, and one of only four CEOs. A part of my function as a delegate was to attend the PRC’s 60 year anniversary celebration in Beijing on October 1^st. I was honored to be in such a momentous event, and was impressed with President Hu’s address to the delegates where he laid out his plan to focus China’s economic vision on innovation.

President Hu has engaged with the delegates in a similar way that Baynote applies its technology for our customers: He is taking wisdom of the crowds to make more well-informed decisions.

Here are some photos that I took that capture the essence of the celebration:

When I returned to Silicon Valley, I was energized and enthusiastic that the work we are doing at Baynote is making an impact beyond the borders of the United States. It was humbling to be surrounded by some of the smartest minds in the world, from scientists and professors, to entrepreneurs, who have all made a strong impact on technology innovation.

My visit to China was followed by a meeting at Baynote’s Cupertino offices with Mr. Li Yuanchao, head of China’s Organization Department of the Central Government and member of the Central Committee Political Bureau, and a delegation of several Ministers and the Chinese Ambassador to the United States. Mr. Li toured Baynote as well as four other Silicon Valley companies, including Cisco and Google, during his brief trip to California. The purpose of his trip was to learn from us how to operate technology-focused companies that are economically successful and technologically innovative so he could take what he learned and apply it to China’s plans.

Included below are some key points that I made during my presentation to Mr. Li. My goal in this presentation was to give him a better sense of what entrepreneurship is all about, and to pass on some lessons that I have learned over the years that are applicable around the world.

• It’s all in the people. Get the right people on the bus and the wrong ones off, and then decide where to drive. You need talents with experience, education, but more importantly with passion!
• A startup is a process. Research the market in the real world by talking to potential buyers and tapping into the wisdom of crowds. Don’t take no as a bad feedback. On the contrary, too many yes’s mean caution.
• A few things must be created from day one: A core team, leapfrog innovations, and a culture that will serve as the foundation throughout the company’s journey.
• It’s ok to fail many times. Without moments of despair, you don’t have a lasting startup. Take a flywheel iterative approach to anything: market, technology, business model…
• In order to succeed, you must have a strong desire to learn and change: Be open to learning from your peers and taking constructive criticism, as it allows for growth. Did I mention the wisdom of crowds?!
• Always challenge the conventional norm.
• Be open and direct. There is no place for politics in startups.

Mr. Li’s visit encouraged me that President Hu’s initiative is very real and imminent. We may see a Silicon Valley in China in the future, a great thing for the international collaboration for technology development. I look forward to seeing how Baynote’s input will be applied to China’s efforts to improve technology and science – not only throughout the region but around the world.