Foursquare DOA

Foursquare is rolling out a self-service ad platform and the initial structure looks to be surprisingly well thought out. Businesses will be able to engage in a pay-per-action bid process that allows them to pay for people to actively promote and/or check-in to their establishment. It is a promising move for a company that has been stubbing its toe for the last several years. Unfortunately, the issue with Foursquare is not one of good ad products; it is one of user base.

According to recent reports foursquare has a user base of 40 million people. These are people who have signed up for the social network, it is not, an indicator of the number of people who actively use it. Let’s see how that stacks up to some of the other major social networks:

Comparison of major social networks

As this chart shows Foursquare has roughly 1/8 the user base of Pandora and 1/3 the user base of Pintrest. Certainly engagement is an even bigger metric, but Foursquare doesn’t share user statistics, so let’s stick with total users for this exercise. Also as Read Write Web reports there are roughly 6,000,000 check-ins/day on Foursquare. The new ad product (based on action) looks to monetize this traffic with a mobile banner that is $1 per check-in. Assuming this banner only appears at check-ins we can assume that the ad product offers total maximum revenue yield of $6mm/day or ~$2.2bb in potential revenue annually.

It this metric sounds great! But how does the pricing stack up, or, better put, will there be demand? Well assuming the banner is only shown in conjunction with the 6 million daily check-ins we can back out a CPM on these campaigns down to $1,000.  Compare this to (albeit antiquated) reports that Facebook is getting a $10 CPM for their mobile news feed advertising and we see that Foursquare is trying to monetize their traffic at a 100x premium over Facebook. Quite simply this is not sustainable. While local businesses are less savvy and more prone to overpaying on a CPM basis when compared to national competitors, other tech startups have shown that product demand can dry up quickly if the advertising isn’t correlating directly to business.  So, assuming that demand for Foursquare’s service is on par to Facebook (who has a much bigger treasure trove of data, including location) then the revenue potential should be scaled back 100x. This means that Foursquare (at current user levels) has a revenue ceiling of roughly $22mm/year. Granted Foursquare can develop other revenue products and revenue streams, but, given the size of its user base, and the fact that the check-in is the most valuable data they have to monetize, it is tough to see Foursquare exceeding 150% of the above revenue stream, and that is in the rosiest of projections. This gives the company a total revenue ceiling of $55mm.

It is at this point we get to the real problem with Foursquare and why it will soon be more likely to go the way of Audience Science (into obscurity with one foot in the grave) as opposed to Yelp. Foursquare has raised a shocking $112mm in VC or roughly 2x its maximum gross annual revenue yield.  Even more disturbing, from a business perspective, is that they are hemorrhaging cash and resorting to debt financing ala LivingSocial.

So while Foursquare has built what could have had some promise as a nice $50mm/year business, it seems like it will only be a matter of time before the cash is gone and the business is sitting on the patent scrap heap for the big tech giants to pick through.

7 Things I Learned from Andrew Mason & Groupon

Andrew Mason was let go from Groupon on Thursday. Here are some things I’ve learned from following Groupon and their former CEO.

1. There is a lot of luck involved in being successful. Consider that Groupon started off as failed blog. The company was a byproduct of user activity.
2. Don’t be a CEO unless you really want to be one. It just never seemed like Mason wanted to be the boss. Even his departing email reeked of a young simpleton trapped inside a CEO’s suit. In hindsight, perhaps he should have looked for a different role in the company.
3. Sometimes your first offer is your best offer. The smart thing for Groupon, from a product standpoint, would have been taking the Google offer.
4. In today’s world, profits matter. If Facebook’s stock price and purchase of Atlas doesn’t prove that, then Mason’s tenure certainly does.
5. When your product becomes a fad, pursue growth and pursue it quickly. Three years ago daily deals exploded onto the scene. The growth projections were astronomical. Groupon built a billion dollar company by racing into more markets faster than anyone else. In an industry filled with graves, Groupon’s continued existence is further proof that scale matters.
6. To points 1, 2 &3, “stupid is as stupid does.” Groupon was more of an accident than a business plan. As such the former CEO and his brain trust have made a number of poor decisions in its brief history which may have doomed the company for the long haul.
7. DailyDeals is dead. If this was the first shoe to drop I would say it was just the man. But with LivingSocial laying off staff, one site after another shutting down, pathetic sales numbers being posted by AmazonLocal, Google Offers and DealChicken (thank you Gannett for the punchline) this is clearly an industry in decline.

The Online Ad Industry has Its Head Up Its Cash

Online Ad Industry is Missing the Point

The ad industry is squealing like pigs being led to slaughter over Microsoft’s announcement that “Do Not Track” will be the default setting on IE10.

A quick guide for the layperson. Do not track will send out a signal from your browser to websites that you visit letting them know that you do not want your online behavior tracked when you visit their site.

This option is currently available on Safari and Firefox, but not on Google’s Chrome (No surprise as Google makes gobs of money via behavioral targeting.) The difference is on Safari and Firefox the option is there, but turned off by default. On Internet Explorer it will be turned on.

The knee-jerk reaction from the online ad industry has been one of anger and contempt. From opinion pieces like “Since when did Microsoft become my nanny?” to the IAB releasing a message to its members condemning Microsoft’s decision. Beyond reflecting abject panic these reactions have revealed how out of touch the online industry is with the current consumer market. It also reveals that the online Ad industry is built around the wrong metrics forcing it down a path that ignores consumer sentiment.

To the first point of how out of touch the ad industry is – The most common recant is “The consumer is better served by us knowing their behavior. More information on the browser = more relevant ads = happier consumer.” In fact I recently had one agency executive tell me that: “People want their advertising to be more relevant.” I had to chuckle at these remarks. If people want relevant ads won’t they just turn off “Do Not Track” as soon as they download IE10? Of course if this is the case why all the consternation? The simple fact is most consumers could care less about the ads they see. They want free content and whether they see an ad for American Express or one for Netflix is really irrelevant. Need proof? The average click-through rate for an internet banner ad is .10%… that isn’t 1% it is POINT-ONE-ZERO percent. Take 10% divide it by 100 and you are there. (Maybe when we talk about the 99% we should be talking about people who don’t click on ads?) Need more proof? A couple of years ago Google gave their users the option of filling out a questionnaire which would help Google serve them up more relevant advertising. Their engagement rate? .5% which, granted is 5x more than their average click-through but still an overall paltry number.

OK so maybe consumers don’t care about ad relevance. But, still what is the big deal? Isn’t that just the price of being on the internet? Maybe, but consider the following: When a company runs a behavioral campaign they peer into my computer, look at where I have been and develop a “profile” of me which they lock in their database. The big deal here? It is simple… that machine they are looking into is mine. What gives any third party the right to look into my browser history? The argument from the ad industry is one of “implied consent” which amounts to, “If they want to block us they can.” But where else does this idea of implied consent with personal property exist? If I leave my house unlocked I don’t expect a Kraft executive to come strolling in, rummage through my refrigerator and cabinets to determine what I like to eat, put it on a notepad and then stroll out, now ready to send me nifty direct mail pieces based upon what I have in the kitchen. Certainly Kraft does have a profile on me. But, they built that profile off of my frequent buyer card, one where I signed-up and opted in to their system. Furthermore, that card only gathers data when a. I am in the supermarket (on someone elses property) and b. I chose to swipe my card. Therefore, any correlation of implied consent in the online space goes out the window as my 3^rd party behaviorally targeted ad friends ignore both of the tenants.

Well the argument goes. “Kill the cookie and you kill the online ad industry.” To this I reply “Really?!?” Marketing in it’s modern form has existed for hundreds of years, from the first newspapers, to the famed Sears Catalog to the advent of radio and television. Even better news – the ad industry has thrived without the use of personal individual data! You see for years the industry was simple. The buyer looked at 1) Context, 2) Location (Primarily geographic) and 3) Creative. The great news is that all of these are available online. Even better traditional metrics are ultimately more favorable to publishers than current online metrics. Can you imagine if Newspapers and Magazines in the ‘70’s had been paid on the “Cut Out Rate” (I bet it would be worse than .10%) of their ads? Could you imagine if Newspaper companies only got paid when a customer walked in the door with an ad cut out from the Sunday Times? Yet these are exactly the same absurd metrics that online marketers have been trained to chase. The net result is a cookie based online world that ignores the quality of the audience in exchange for pursuing “clickers” which is to say people who (based on previous behavior) like to click on ads or lack a steady hand and accidentally click on them, with frequency. With audiences spending more time than ever online one could make an argument that the cookie is standing in the way of even more meaningful monetization, rather than accentuating it.

Conclusion. It is time to look beyond the third party cookie. The internet industry needs to understand that there is momentum to protect privacy and rather than ignoring this fact and kicking and screaming, it is time to do what we do best, start innovating. Let’s look for ways to make creative more relevant. Let’s push brand marketing and move away from the performance based advertising in display. Let’s figure out ways to reach the right consumer without peering into his or her computer. Let’s start looking forward and stop shedding tears for the things in the rearview mirror.

5 (More) Ways Facebook Can Make (More) Money

Now revenue really counts.

Coming off a successful IPO questions remain regarding the monetization of Facebook and thereby the justification of the substantial multiples at which its stock is currently trading.

There is a justified concern that Facebook is

1)   Not growing revenue at a rate fast enough to justify its $100 billion (+/-) market cap.

2)   The ads on Facebook don’t work well (See GM’s $10 million cancelation).

3)   Lacking in a mobile monetization strategy.

4)   Not prioritizing earnings and revenue to the degree in which they should.

I believe that these are all legitimate concerns, but ones which can be addressed in a way which will not negatively affect the user experience. The bottom line is that Facebook has the opportunity to become a very Google-Like company in terms of scope and profitability. However, the organization must be careful as one or two major missteps will cause growth and thereby investment to languish.

Here are 5 thoughts on how Facebook can monetize faster while protecting the user experience.

1)   Separate Ad product team from user product team. Facebook’s ad products are in desperate need of innovation. This will be slow in coming as long as you try to keep the two married. By separating ad product development from user product development you create an environment of creative destruction and some healthy tension. As long as there is a strong voice in Mark Zuckerburg with the final say the user experience will be protected.

• Facebook may also want to rethink its ad sales. I constantly hear that the current sales organization is quite difficult to work with.

2)   Begin to charge on a tiered basis for Facebook business pages. There is absolutely no reason why Facebook should not be charging for the use of business pages, especially for large corporate clients, such as GM, who utilize the space as a major part of their overall business social PR strategy. The key here is to tier pricing based on numerous factors so as not to drive away local mom and pop businesses with a few thousand followers and thereby create a public backlash. Therefore I would recommend the following to take place.

• Tier pricing based on followers. Ex 1-5,000 free, 5,001- 10,000 $150/month and so on.
• Charge businesses to upload rich media and set up graphics.
• Again, make certain you are capitalizing on the people who are using your product to capitalize on the market.
• Develop custom premium ad tools that are available on a paid-for basis. Perhaps consider purchasing a Social DSP and looking for ways to integrate it’s capabilities directly into the Facebook platform.

3)   Allow for sponsored news feeds: It’s working (sort of) for Twitter and given the higher levels of penetration and engagement on Facebook it is a no-brainer. I would even suggest only allowing local businesses to use this feature. This will keep the content more relevant and less obtrusive to the average Facebook user.

4)   Incorporate sponsored feeds into your mobile platform. This creates instant mobile monetization and is a compelling creative in a space that lacks creative pizzaz.

5)   Rethink your current “display” ads. They’ve gotten you this far. But the creative design is crap, and by not capping frequency you have disregarded 100 years of marketing research. It’s time for your core ad product to get a facelift.

These are just a few ideas. Facebook has innumerable levers they can pull in order to turn on the revenue ramp. It will have to be done with a balance of delicacy and assertiveness.  A few missteps can mire any organization in an unhealthy malaise and Facebook is still a relatively new company so each decision will be viewed under a microscope.

The Groupon Effect – Causing Massive Mal-Investment

The trials and travails of Groupon (NYSE:GRPN) have been well chronicled. What many analysts have yet to discuss is how GRPN has helped generate a wave of mal-investment in the online space – the effects of which are only now beginning to be flushed out of the system.

When Google attempted to buy Groupon for anywhere from $2 billion to $6 billion it set off a wave of interest and speculation in the online space that has contaminated the system. Groupon came from nowhere to be featured on Forbes as the fastest company to reach $1 billion in annual sales. It was another example of the internet making the dreams come true. In the case of Groupon a failed blog took a niche product launched by its users and built it into a multi-billion dollar empire.

Immediately there was a rush to invest in this new and “exciting” space. The beauty of the Daily Deal space was there minimal barriers to entry, no inventory costs and the sky seemed to be the limit in terms of revenue.

Following the PR orgy competitors poured into the space led by LivingSocial, Buy With Me, Google Offers and AmazonLocal just to name a few. Soon other angles of the same idea began to be built out. Traditional media companies entered the fray with a half-price deal that offered advertising in lieu of revenue share. Other companies offered the ability to have some of the revenue donated to charity. In this brave new world of Daily Deals the only barriers were getting local merchants to give away their merchandise at a 70%-75% discount and there was money to be made by everyone (save the merchants).

The bubble burst when Groupon filed their S1 and, to many analysts shock, they weren’t profitable, in fact, they were losing close to $500,000,0000’s annually (depending on how you read their bizarre accounting). Groupon’s filings (and subsequent flounderings) showed that the cost of sale in the space actually could be greater than revenue leading to a daily deal being a LOSS LEADER and not an income generator. It was as if we learned suddenly that the emperor had no cloths, and if the emperor was naked what did that mean for the court jesters, also known as their competitors? Investors began backing off, consolidation of the space began, and thunder clouds hailing a second dot-com crash were seen on the horizon. The market began to sour on daily deal pure plays as investment dried up.

While the effects of the above have been relatively obvious, there is a whole other segment of the daily deal industry that I characterize as the secondary players. Many of these companies did not initially focus on the Daily Deal product, but instead decided to attempt to grow massive user-bases with the idea that once the eyeballs were captured the organization could simply slap a high margin daily deal on the product and rapidly monetize.

Even as the luster has worn off the Daily Deal space many of these companies march on, attempting to come up with new monetization schemes, pretending that a Daily Deal was just one part of their strategy. Let’s take a look at some of these secondary casualties below.

Foursquare: A smartphone App which allows you to broadcast to the world your location for the narcissists among us. Foursquare has numerous problems, from hitting critical mass at a relatively low number of users, to  the privacy concerns of girls who don’t want to be stalked by creepy porn addicts. Foursquare’s monetization scheme was built on a flash-deal style product where simply checking in to a partner gets you a discount on your food, drink or waxing. Unfortunately it doesn’t seem that a majority of Americans want to tell billions of web users their location. Given the lack of user scale it becomes difficult to convince restaurant owners to give a discount to the 1% of their clientele who choose to check-in.

Patch: If daily deals were wildly profitable Patch might be the hottest web property in the local space. The thought process in the buildout was simple. Get people coming back every day for news and while they are with you sell them a deal. Unfortunately, the net result was building out a platform at 4x (+) the normal cost structure of a normal deal platform. To make matters worse people who consume news don’t seem to engage in deals. (See Deal Chicken). Less than 12 months out of the gate Patch Deals  seem to have vanished Aol will seek another way to monetize this hefty investment.

Yelp: I love Yelp as a consumer. Nothing like peer reviews to tell me which dive bar to try and which 5 star to avoid. However, Yelp combines the problems of the two companies above. Nobody wants to be creeped via check-in and when I’m searching for a review I tend to ignore a deal. When deals don’t sell and the cost of sale becomes even MORE prohibitive. So how do you monetize this thing? (Oh and as a consumer I may love Yelp but my local baker, Serge, hates it after his dreaded competitor left a 1 star review and mentioned a mice problem that (hopefully) doesn’t exist.) Yelp can build out a sales force and sell a suite of services, ala Yodle & ReachLocal, but then why do they need the directory? Not to mention poor Serge who will never give them a dime of his business.

Dishonorable Mention: Gannett’s Deal Chicken: One thing that is common on this blog is our distain for a majority of traditional media’s attempts to get with the dotcom world. A majority of tech and dotcom companies have followed Google in treating employees with respect and dignity, again an approach ignored by their soon to be extinct peers. Poor employee benefits = Poor Talent = Deal Chicken. That’s right Gannett Newspaper marched into the deal space with their group buy product known as “Deal Chicken.”

The fact that Gannet called it’s daily deal product “deal chicken” is worth a chuckle (Once 10 are sold a deal is “hatched”). A cursory look at the amount of deals being sold turns the chuckle into a full belly laugh.  Similar to Aol’s Patch the deal sites have no engagement, no deals sold and a rather frightening layout . (“Tell your Peeps on Facebook”…REALLY?) The sad fact is that Gannett actually invested money to the tune of over $1,000,000 into the design and functionality of this product, again not innovating, but trying to catch-up with the daily deals craze. At least Groupon sells a ton of deals (although they still lose money). Gannett manages to lose even more money by not selling their pathetic deals. The joke is on Gannett with deal chicken as the life has literally been choked out of this product. It may still look alive, but the truth is it just continues to hop around long after the death sentence has been executed.

Lesson to be learned. Fools rush in. We all thought Groupon was wildly profitable, but at second blush, the daily deals market is much more complicated, and much less lucrative, than we ever imagined. Organizations and investors would be wise to consider entirely new opportunities to make money before deciding to chase after an unproven model, with minimum data points. Copying a loser is a surefire recipe for failure.

A Billion Dollars for A Picture Sharing App?

Very interesting that Facebook spent $1,000,0000,0000 on Instagram. A company with few employees and no revenue. In fact I would call this a head-scratching move. I understand the concern with Facebook struggling to capture revenue in the mobile space. (Google is the #1 revenue generator in mobile followed by Pandora.) I also realize there is a patent issue here. But still $1 billion for a company with zero revenue? Wow. To put things in perspective Pandora, with over 50 million active users and the #1 downloaded iPhone App generates less than $200,000,000/year in the mobile space. To make matters even more interesting they actually have a local salesforce.

Unless Facebook has a strategy to quickly integrate Instagram and monetize the product, and given Facebook’s scale and know-how this is a real possibility, this would acquisition seem to indicate one of two things.

1)   A defensive move. Most likely scenario is that Facebook saw a future competitor and wanted to take them out while they still could. This, combined with the patents and talent being acquired made this an acceptable deal for Facebook. Note that Facebook has had little luck breaking into competitive spaces with new product launches (remember Facebook Deals?) making this motivation for the acquisition even more likely as Facebook would seem to be better off buying companies than building their own new products and one-offs.

2)   Nefarious motives. Let’s chalk this theory somewhere between Occupy Wall Street conspiracy theory and the US didn’t actually land on the moon conspiracy theory. Question is how many of Facebook’s active investors have cash in Instagram? (Answer: A few but not a smoking gun.) Still with many of them set to make a hefty ROI on Facebook’s $100 billion IPO why not pressure Facebook to pump 1% of the IPO cash into a secondary investment (in this case Instagram) furthering the ROI of these investors as they make a hefty return on Facebook and also get a 2x valuation on Instagram? Meanwhile the bill is paid by mom and pop’s 401k which automatically invests in Facebook at the IPO. Again, nefarious motives, but not too outlandish when you consider the power brokers at play.

Bottom line. It’s hard to believe that a company that has never earned a dollar is worth $1billion. It’s hard to imagine that Instagram itself will ever generate enough revenue via traditional metrics to justify the valuation via traditional finance multiples and it is a very steep price to pay if the value only represents opportunity cost. Still it is a price Facebook is able to afford and if nothing else it reflects that Facebook will be very aggressive in protecting its position at the top of the social media universe.

There may be gold in Pandora’s box

What analysts are missing on Pandora.

There has been much written regarding Pandora Media over the last 9 months. Most of the speculation regarding the potential and shortfalls of the company has focused upon the correlation between revenue and royalties.

As you can see it hasn’t been a pretty picture for Pandora. Revenue is barely outpacing listener hours.

Based upon this extrapolation Pandora is a doomed company. There appears to be almost a 1:1 correlation between revenue and listener hours. Based upon this… and the fact that Pandora will need to renegotiate royalty fees with the music industry it is hard to imagine a scenario where Pandora is ever widely profitable.

However this misses several key points and opportunities.

1)   Pandora isn’t a radio station. It is a radio platform.

• Pandora is not building a radio station… they are building and internet platform which delivers audio.
• This means that current growth in the subscriber base = higher future potential profits. Best case scenario Pintrest: Pintrest has experienced cataclysmic growth in the US. This growth has build a robust user base providing future monetization potential. The larger Pandora’s user—base the more potential for long-term growth.

2)   News Talk/Sports Talk content has no royalty fees.

As Pandora grows its platform there is a great opportunity to dive into the talk radio space. Why go there? Isn’t Pandora all about the music genome?

• Ans: No Pandora is about a radio platform – think of it more as ClearChannel than as an extension of iTunes.
• Talk content represents fixed cost content (no royalty fees).
• Bonus: The right talent pays for itself. Big name talkers (Rush Limbaugh, Howard Stern, Don Imus, Mike Francesa) carry enough advertisers to  be wildly profitable on their own. How much does NetJets spend advertising on Imus every year?

3)   Traditional radio is lost.

• Look at Cumulus Media (CMLS). They are the second largest radio company in the US. When it comes to online they are clueless.
• (They spent millions on launching CumulusJobs.com which was an utter failure and has been sunset.)
• They are trafficking no network ads on their sites, not because banners are being sold locally but because there is no traffic.
• Traditional radio organizations won’t cannibalize today’s revenue in order to grow tomorrow. (Hate on Netflix but their CEO sees the future and won’t hesitate to kill todays golden goose to feed the goose of the future.)
• Traditional radio organizations are so overleveraged that the golden eggs are taken by bankers before they ever make it into shareholders coffers.
• Greedy CEO’s like Lew Dickey are fine with this scenario as long as they are able to get a little gold dust from the nest,    Bottom line management doesn’t care that the ship is sinking. They will be first on the lifeboat. So their response? Let the passengers starve while they eat the prime rib and fatten up before paddling away.

Recommendations for Pandora (and other tech savvy competitors)

1)   Don’t forget you are a platform – not a station.

2)   Buy up good talent.

1. It’s no secret that the traditional companies in the music industry are sinking. Good people are looking to get off the Carnival Cruise ship while the Captain is drinking with his girlfriend(s?) in the top cabin. Scoop them up now.

3)   When your platform hits scale go News/Sports Talk….

1. Think about all of the revenue you can generate without paying for listener hours?
2. Mike Francessa’s contract is up in 2013… how about the “Mike’s On” sports talk station launching on Pandora?

4)   Screw the analysts.

1. Seriously. Build the platform to scale. Keep costs in check and hockey stick revenues. Remember Apple and Amazon were left for dead by “the street” not too long ago.

5)   Don’t forget to take pictures as traditional radio companies die…. sometimes the scenery is just too much to pass up.

News Flash RIM is a disaster

The saddest thing about RIM’s demise? They should have seen this coming. I’m 31 and not too young to remember when PDA = Palm kinda like Tissue = Kleenex.

Palm should have had a lock on the smartphone market. What happened?

Quite simply they didn’t see the future. By the time the Palm OS was out to market at scale a little company called RIM had stolen their lunch and was laughing at them in front of all of the other kids on the playground. Although Palm rebounded with a great OS that kicked Blackberry’s proverbial @$$ they hit scale way too late to the game and no one was developing apps for the Palm Centro. Users couldn’t get the tools they wanted and the company was sent to purgatory also known as an HP buyout.

RIM should have learned from Palm’s mistakes… See the future, adapt, keep growing and keep eating the competition’s lunch.

Unfortunately RIM didn’t see the future.  (In case you are wondering it is touch screens,  hi def phones and powerful web browsing and application usage.) What I can say is that their execs were too busy getting wasted in first class to notice that the plane was going way off course.

The first warning should have been there were 2 guys in the captains chair… How can a company have 2 CEO’s?

The second warning should have been their first foray into the touch screens. The Blackberry Storm will live among the largest epic fails of all-time in the smartphone market. The platform was absolute garbage. The Torch phones should have all been gathered up and tossed in a bonfire, or at the very least scrapped and turned into iPhones.

But here is the real disturbing thing. Every company gets off course, misses a train drops the ball. Heck Apple practically forgot to put an antenna on their 3rd generation iPhone. What did Palm do? Told all the passengers not to worry. They weren’t on the wrong course. “Don’t let your eyes deceive you. We aren’t losing altitude.”

And so they continued on. And lost more ground. And then 2 important things happened which put the big nails in RIM’s coffin.

1)   Android was released and it worked well. Really well.

2)   Apple cut a deal with Verizon

Yikes time to figure this out. Sober up and set a new heading right? Wrong. RIM ordered another round. “Don’t mind the Andes ahead folks. We are doing just fine.” Unfortunately the idiocy in not adjusting course has cost Palm tons of time. Now the company is in a mad scramble. They have 12 months to start turning this around. Only time will tell if it can be done but here is my advice to RIM.

1) Remember your core audience. You destroyed Palm by taking over the professional market. Apple and Android have made huge gains in this realm. Time to make the white-collar worker your target.

2) Know what you do best. It’s e-mail. RIM still has the easiest email product in the smartphone market. Drive that point home.

3) Cut deals with LinkedIn, Hoovers, Salesforce and other professional services to have unique applications. Your market is professionals and professionals live on these services. Time to figure out a way to enable better integration of your product with theirs.

4) Turn SMS into a professional’s version of Twitter. SMS is beautiful allowing people to chat for free globally. Ironically it works as a mobile Twitter feed in the cloud. RIM should allow blackberry users create SMS communities. Figure out a way to set up a separate inbox for SMS messages that fall under a specific topic. (Ex “Mobile Marketing”). Anonymize posts and create discussion forums that live on peoples smart phones.

Bottom line. RIM has 2 options. Either sell the company or figure out a new point of differentiation. Something that makes a Blackberry a must have for a certain market segment. Admittedly the task looms large (See the title of this post), but the sun hasn’t set on the company yet.