An Interview with Charlene Li Founder, Altimeter Group

Date: September 25, 2009 Interview with Charlene Li

Lee Kennedy: Hi! This is Lee Kennedy a board member for the National Center for Women and Information Technology or NCWIT and I'm also a founder of Boulder Search. Welcome to our next segment in our entrepreneurial toolbox series. It's a series of interviews with successful entrepreneurs in which we address a variety of issues ranging from networking, learning from failures, to finding opportunities, and business playing competitions. With me today is Larry Nelson from w3w3.com. Hi Larry!

Larry Nelson: Hi! It's a pleasure to be here. We just really enjoy working with NCWIT and all there different programs. I know this is an exciting interview coming up.

Lee: Great! We also have Lucy Sanders who is the CEO and founder of NCWIT. Hey Lucy!

Lucy Sanders: Hi! Looking forward to the interview today.

Lee: Great! Well Lucy and Larry today we continue with one of our entrepreneurial themes Social Media and we have Charlene Lee the founder of Altimeter Group and co-author of the business best seller "Groundswell: Winning In a World Transformed By Social Technologies." Charlene, welcome.

Charlene Lee: Thank you.

Lee: So we have been very excited about having you for this interview. Charlene is one of the most frequently quoted industry analysts and she's appeared on "60 minutes," "the McNeil News Hour," ABC News, CNN, CNBC, and just so many things. Charlene. Do you want to tell us a little about the book "Groundswell" as well as we know you have a new book coming out?

Charlene: Yes. I wrote a book about a year and half ago that was published by the Harvard Business Press came out in May 2008 and it is called "Groundswell Winning in the World Transformed by Social Technology." I wrote it with my co-author Josh Bernoff because we saw that a lot companies were struggling with this whole idea of this new social technologies and trying to figure out what will I do with that? Is it important? How do I think about these new relationships that are being formed? More importantly, how do I look at it from our strategic point of view rather than just a point solution that I put in placed? In the work that I was doing at that time with Forester. I just felt like there was more talk about in this space than just the 20 page report which you typically put at Forester because there were some fundamental changes that were happening in the industry because of these technologies being adopted by consumers. So we decide to write a book about it.

Lee: That's great. Charlene you have got too many awards for us to even list and so many accomplishments. Maybe we should just go ahead and jump in to the first question we have for you. Can you help us define Social Medial. Our listeners would love to hear about what's the hype? What's the facts? And what's important to them about Social Media?

Charlene: The way I defined Social Media is really around these technologies that allow people to connect with each other. It's much more than a technology that is being used by young people. In fact it's being used by so many people now that's it's becoming, like for example YouTube more than 50 percent of the urban population is regularly using some sort of online video. The difference though is that, not everybody is necessarily creating the content. A lot of people are watching it, listening to it, and likely sharing it too. Especially small numbers of people who are actually creating the content and I think most of us have probably someone to post the blog. Some of us maybe very active in social networks, but we don't really consider ourselves to be at this very top of the pyramid of people who are creating content. I don't think you need to be. I think Social Media again is just media content information that is being shared by people with each other.

Lee: One follow on question to that is so many people that I know and interact with really have a hard time knowing. Where to jump in? Should I get a Facebook account? Should I be on LinkedIn? What advice do you have for our listeners about that?

Charlene: I think the most important thing is just to figure out what you want to get out of it. If you have a lot of friends who have been haranguing you to get on to Facebook. That's probably a good place to be because you have friends and the people that you know already on that site. You would want to communicate with. Again, I think the whole idea of Social Media is to share information with the people that you know and want to stay in touch with. So if you don't know anybody on twitter and somebody says, you should just be on twitter. If you don't have a good reason to be there then probably not a good reason to be there. Versus going to places like Facebook or LinkedIn where the idea that you do want to reconnect with people that you've known in the past or maybe it's to make new connections. Meet new people too as well. Those all are very good objective to have some reasons to use these tools.

Larry: Obviously, Charlene. You understand a lot more about Social Media than the most people I know. What is it about Social Media that grabbed you to begin with?

Charlene: I've been using some form of Social Media since, about 1996 or so, when I was creating Websites for small local newspapers in the Boston area. These are community newspaper. One of the things that we saw was the pent-up need for people in town to be able to share information with each other. But they didn't know HTML and they wanted to do something some more than just email. Today, it's as easy as scribbling out a form to be able to share something with somebody you want to. I can share pictures with my extended family with some of these tools. I could do it safely and security on places like Facebook with just the people I want to have very fine tuned relationships, and permission. But I can also go out there and say. Hey! There is something I want to tell people about like I just bought a new Prius or I loved this restaurant I can also tell people about it. Again, what's interesting is it's a very natural extension of the things that we do everyday. We tell people when we share the things that excite us. The things that make us mad. We sometimes we'll go out there and complain about things. For me in many ways Social Media is an extension of the things that I do everyday.

Larry: I tell you one thing, we were harangued into to just like Lee said for w3w3.com our listeners were saying, hey, you better get on the Social Media so we've hopped on.

Lee: Well it's interesting because, this is a follow up question as well, when we define Social Media around sharing with people we know and things that are sort of a natural extension of our lives. It's also the case of businesses want to jump in to Social Media with people they don't know. They're really trying to influence people they don't know. Charlene, can you tell us a bit about that?

Charlene: In some ways you don't them but they sell to customers all the time who you don't know today. The difference is with the Social Media. You actually can get to know them. You can get to know that Joe is on here and that Joe has very different processes than Peter or that Mary was very delighted with everything except for this one feature. You actually now have names and faces of people. I think that's the most interesting thing is that you no longer actually have an excuse to say. Well I don't know my customers. I don't know what they want. They're telling you what they want and you just might not be listening.

Lee: It's true. In the old days the customer service you had that calling party IDs that would show up and would tell, you know oh that's Larry don't answer? This is the case that you can get to know people much more through Social Media well. So Charlene you've see Social Media evolve over the years since 1996 and its early years. Obviously you've been seeing some good evolutionary changes and in some not so good uses of Social Media. Can you tell our listeners a bit about both?

Charlene: I think the good uses are again being able to connect people together who couldn't connect to other channels. Again, there are differences in terms of time and geography and the ability to be able to find each other. I'm a working mom so the only time I really connect with my girlfriends is after my kids have gone to sleep and my friends may have been sending the information or they're sharing what's happening during the day. Then I'm connecting with people from all over the country and actually internationally too. So I can catch up with them, but it's not in this one dimensional way of email and sometimes I might even catch them when they're awake and I initiate a chat window with them or even in video or you can get on the phone and talk with them. But what happens is that I have that continued relationship now and so I think one of the real interesting benefits here is that it's really enriched a lot of these relationship that I have offline and in some ways I build new online relationships for people who I'd met almost completely through Social Media. Because of all the difference. So that's the good side. Again, being able to be connected with each other. The bad side though is that it's just like human nature's people will tend to do things that they shouldn't be doing. There will be people who go out there and exploit these new relationships. The trust that people put into them. You do have to use these tools just like you just have to be that express caution in going out there and meeting new people. Again, in new situations you have to express caution.

Lee: I do have to agree that the good out of it is connecting. I can tell you how I've connected recently with people that I haven't seen in thirty years that were in elementary school or high school with me. Its wild they're finding me out on Facebook.

Larry: You're not even that old.

Lucy: Friend finder. You rejected my friendship request if I recall correctly.

Lee: Exactly. Oh.

Lucy: Yeah, friend finder.

Lee: Charlene in these interviews we have a lot of people that are beginning entrepreneurs and trying to grow start ups that are listening to these podcasts that we do. What advice or information would you give to them and how they could leverage social networking to help them grow there company, get the world out about what they're doing? Help them to leverage their business.

Charlene: I think, again, if you're an entrepreneur. These tools give you a much bigger voice than what your company could have had in the past. In that you can now amplify your voice and reach a much bigger and boarder audience that you get ever before. That's the case with having an online presence. Even more so you can go out and I think the most important thing is to figure out where are your audiences is today. What are they talking about topics that are very closely related to your product or even talking about your company. Really start engaging with them, they'll probably saying things like "Oh I really like these products,: "I don't like those products, "Oh I wish I could do this" Or how do I something? Here's an example. If you're providing a service that professional BBB service or company. You might want to go out to LinkedIn and see who's asking questions inside of LinkedIn answers and ask them to see who's asking those questions and then act as somebody who can provide them with that expertise. You may be offering it for free but you're asking pretty basic questions that they've already asked in public. You're showing your expertise in it and that they could see your background. They can see your recommendation and accommodation of other people you have the clients. They go on to, and maybe your blog if you have one and see your thoughts about how you would approach problems like this? See other case studies that you've written about and then contact you. So it could be a great lead generation for your.

Lee: You also mentioned something in your book about how Social Networking or Social Media can help you shape the company's public image? Did you have examples of that?

Charlene: Yeah. I think again, it has everything to do with not so much sending a message out to people anymore. This is not your traditional PR where you go "Here's my message carefully crafted" and I'm going to sit here and measure and see how many times that message and these key attributes are repeated. It's much more again about developing relationships with people and saying. You may have thought of ball bearings as a pretty boring area. This is actually what's out there. You can actually take into control what that message that people are sharing. They hear it directly from you rather than to a third party like a newspaper article or through a customer.

Larry: It sounds very exciting but now I've got to ask a tricky question. What is the single biggest mistake you could make when it comes to Social Networking?

Charlene: I think there are two mistakes. The first one is that many companies approach it like marketing. They approach it as a campaign. They believe they can turn it on and then turned it off. They approach it as a company rather than customers rather than saying these are people on the other side that I'm trying to reach. I really want to have a conversation with them, and when you're engaged in conversation with people you don't necessary have the entire conversation scripted out. You don't know what people are going to say back or they might say good things. They might say bad things. But you have to do a lot of listening. I think frankly some companies say they do a lot of listening. They do a lot focus groups and they do surveys. But do they truly sit down and listen? Give back to the customers and say Oh I hear how you were disappointed in this, will do better next time. Or say "I'm glad you're enjoying our product. I'm very happy for you and it's so good to have you as our customer." Just saying things such as thank you back to customers on a regular basis like that isn't something that comes naturally to companies.

Lee: The next question really is a different type of question and it's related to the work environment. This is back from maybe what the blog says about your new book. It's related may be not. This may be a great time to interject your new book. But we have so many people, young people today who are entering the work force who have grown up in online Social Media world where I think there's no doubt that there are different norms around influence and communication, who has power, and who can publish - everybody can published. There are different interaction rules and social norms online and we've been reading that sometimes young people start work today and they think the work environment is going to be the same way that the online environment is like. Can you play philosopher with us for a moment and tell us what you think about that?

Charlene: I think there was a generational and it does have its boosts to some degree with what people are doing online with these social tools but I wouldn't put the whole blame on the social tools because when these young people are coming in. They've never work before. They don't know what it means to be professional. They don't know the rules of the workplace and frankly this is the case even when we had the book coming in from other companies. It takes a little while to figure out what the culture of the company is what you can and can't do what's acceptable; do you give feedback to your peers, do you give feedback to your managers? Do they talk to you in a direct way or do they wait for the formal assessment at the end of the year? I think it has more to do in many ways with assimilating people with communicating with them what's appropriate or not. I do know a lot of young people the key reason why there's a problem is they get work done in a very different way. They're not necessary causing trouble but they're doing work in a way that is much more open it's, much more free, it's much more lose, and transparent than most people are comfortable with. They will go out on to the Internet and ask their friends for advice rather than call up a colleague because they have this relationship so comfortable with them. They feel comfortable sharing with those things and people inside the company get very nervous. "How dare you go out and talk to somebody outside the company?" You are like "well I was just asking them some Excel spreadsheet tips. It wasn't as if I was spilling the company's beans I don't know anything that suites you to the company." The new book that I'm writing is called "Open: How Leaders Win By Letting Go." The idea here is there isn't an absolute that you need to be open and transparent in the sense like but rather that there is a continuum of openness and being close and companies always falls somewhere on the continuum. The question is giving your goals, given where your employees today and what there needs are and also given the environment, the competitive situation you're in. That all those things are going to dictate, how open you will be? In the same set up pushing company to be more open than they are comfortable being today are things like employees agitating for more freedom. It is customers asking you to be more transparent. It is a need for innovation and to be able to move faster which is why you need again, open up your processes for development and for marketing and customer's support in this turbulent economy. I think what's the biggest challenge right now of our Social Media isn't the technology. It is about how open companies will be. That's the question I get all the time. How open do I need to be? We kind of lack that possibility of how open as you can be. That is a very valued question that I'm explaining.