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Reflections on location-based services

23 Sep

Why do or why should consumers value location-based or “check-in” services?

  1. It’s a quick and easy way to meet up with your friends.
  2. The game aspect of it is fun.
  3. Love knowing what friends are up to and where they are.
  4. It’s yet another piece of context for us to use when talking to our friends.  If I know that you were at a great Mexican place yesterday, I can ask you about it and you don’t even have to tell me that you were there.
  5. Tangentially, eliminates the “what have you been up to question” so that we can get straight to what is your opinion of X, Y, Z place.  It’s a good place to begin a conversation.
  6. Love knowing what complete strangers think of a place.  Plus its cool to know how recent their opinion actually is.  For example, I love telling Gowalla what my favorite food at a restaurant was.
  7. Rewards.  There’s little reason why you can’t set up a system that allows restaurants to give rewards to peopel that actually spend money at an establishment.  But its not clear why any electronic rewards program is better than the paper stamp card.  Sure electronic is two-way, so now the business can actually keep up with their customers and vice versa, but seems like a lot of transaction cost.

So, let’s ask a tougher question, why do or why should local businesses love location-based services?  What’s in it for them?

  1. Customer feedback.  This is available through Yelp alone but maybe you can learn something about your business if the last 20 people to have been there have raved about the chocolate mousse or complained about the lemon bar.
  2. Know your most frequent customers.   Maybe give them rewards based on what they spend, but this requires linking up their purchase history with every specific store.
  3. Lure in addiitonal customers with discounts or just by letting them know what you have to offer.
  4. Lure in additional customers based on what friends think about your establishment.
  5. Lure in additional customers and the friends they have with them, this is what is aiming to do.
  6. It could help them build community by advertising events to people that are around the physical location.

A possible new startup “order”

9 Sep

If it’s true that Lean Startups product more output with less input and that the definition for the “big win” hasn’t changed, then there’s only a couple of ways to get big: (1) hope you fund the right startups, or (2) smartly combine startups.

via Welcome to the new startup

Recent events have shown that startups do not need more early-stage capital, they need less.  More and more startups in niche markets show that its possible to actually be profitable and be a relatively new company–a phenomenom that used to be considered rare.  However, the combination of cheaper startup costs and quicker profitability seems to be disappointing the startup community.

This seems to be because there aren’t the big wins that there used to be.  But maybe we need to change our definition of what constitutes a “win” by asking a win for who?

  1. A win for an investor that put in $25,000?
  2. A win for an investor that put in $500,000 or more?
  3. A win for the entrepreneur that hopes to take his one year investment of 90 hour workweeks and cash out at least $5-10 million?
  4. A win for newly happy customers?
  5. A win for our community because there is a new small business that generates jobs and profit?

Too long we’ve been defining a “win” in the technology startup community as requiring annual return of 5-20x.  But in a business that requires less than $300k to actually generate $1 million or more of annual profitability, couldn’t a “win” be defined by metric #5?

There is a valuable place for small technology companies just as there is a place for small restaurant chains.  The difference is that the latter are less profitable for more investment.  Yet we still consider our local 3-location restaurants to be wins, in fact big wins, for our community.

Maybe instead of inculcating a culture of entrepreneurship that demands $50 million exits, we should be encouraging the next generation of entrepreneurs to build innovative and sustainable businesses that generate actual profits.  Maybe the new startup order is actually just a focus on building a business to last not designing a company that’s easy to sell.

Democratizing manufacturing

2 Sep

Ponoko is part of a wider DIY product movement which includes companies like 3D printing service Shapeways or T-shirt maker Threadless where users design and manufacture their own products. This democratization of manufacturing parallels the user-generated content explosion unleashed by content-sharing sites like YouTube. Ponoko users have made 60,000 items to date covering everything from steam-punk couture to furniture.

via Make your own gadget with Ponoko and SparkFun | VentureBeat.

This is probably the most exciting and least reported development in our society.  For the first time, everyone has access to the means of production.  What still remains (and may never change) is the ability to get people to see what you have created.  This is quite possibly the biggest opportunity for empty retail spaces.  What I imagine is small storefronts where independent owners select the best of these products, display them, and sell them to the customer.

This brings the idea of a boutique to an entirely new level, especially if our newest designers give boutiques a commission for what they sell.  Indeed, if I was a designer that used Ponoko to manufacture my products, I would gladly give a boutique a 25 or 30% commission to display my products so that I could actually market and distribute my creations.

This is the only way I can see to practically market these tens of thousands of new items that are being created every day.  Despite its efforts, Etsy still needs an editor or someone that suggests and helps people choose products.  60,000 variations on a wallet is too much for anyone to wade through.  But style-conscious folks should be able to help me make this choice and they should be compensated by the manufacturer / designer for doing so.

Do people want all-purpose?

11 Aug

That said, if Facebook introduces its own check-in service, the companies and investors that have been dominating geolocation to date may be in trouble.

via Facebook tiptoes closer to launching geolocation | VentureBeat.

I’ve often thought about whether consumers want an all-purpose anything.  Do we want one search engine for every type of search?  Google’s dominance suggests the answer is yes.  Do we want one auction site for anything we wish to buy or sell?  Ebay appears to be the dominant player with just a couple of specialty competitors.  How about price quotes, do we want one site where we can get a quote for anything?  The answer on this seems to be pretty clearly no because we have LendingTree for mortgages, uShip for shipping, for cars, and many many more.

If we narrow our focus to social networks or how we manage our social relationships, I wonder if we really want to do everything at Facebook, our Wal-Mart of social networks, or if we prefer to go boutique at Gowalla or Foursquare for our check-ins.

The key here is in determining how most people actually use facebook as it is and social check ins as they are.  Facebook’s central bet with starting their own check-in service may be that when you share your location you want to do this for all 1,100 of your friends.  But I’m willing to bet that lots of people will be turned off by this and that they will prefer to circulate to a much smaller group of friends.

At the end of the day, all-purpose solutions in social networks may just come down to whether we prefer intimacy or efficiency.  So far Facebook has made a bundle on efficiently keeping up with your friends.  But close friendships don’t thrive on this type of behavior and I do think that one of the points of check-ins is to enjoy quality time with friends, not just share your location.  Social networking with intimacy as its goal may be the very reason why Facebook shouldn’t create its own services but rather opt to allow–as it has thus far–its users to broadcast their Foursquare location through facebook.

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More Thoughts on eBooks, advice for publishers, device makers, and (r)etailers

10 Aug

After making a cozy profit on the sale of my used iPad, I decided to take the plunge and buy the new Kindle. It hasn’t arrived yet but I’m incredibly excited about having a device that will make for an immersive reading experience. Thinking about life as a future Kindle-lover, I also put a lot of thought into why I hadn’t yet joined millions of others in the world of electronic reading. Put differently, what will it take for us to abandon physical books and do all our reading through a Kindle-like device?

There’s good precedence for this question: music. People really began to embrace mp3 players and listening to music on computers when it became possible to take all of the music they already owned and convert it to mp3 format. People warmed to a new device because it embraced the individual media they owned on their old devices while also allowing them to more easily add to their collection. The key was they almost never had to pay twice for music they already owned. This, in addition to a easy process for buying music, is what really allowed mp3 players to become the de-facto choice for music.

To become truly dominant, an ebook reader has to do what the mp3 player did. As the iPod embraced the CDs you already owned, the Kindle has to figure out a way for you to carry digital copies of the books you already own.

But rights holders (read: publishers) probably don’t want you to be able to have electronic copies of your physical books.  They want you to pay once for a physical copy and again for an electronic copy. They want to protect themselves against you selling the physical copy if you got the electronic copy for free. They also want eBooks to operate as “new books” only, with no competition from used books. The publishers (and device makers that double as new book e-tailers) make no money from a used book.

In making the calculation that you shouldn’t be allowed electronic copies of books you already own, publishers slow down the adoption rate of ebooks.  (And let’s not forget that an e-book market with many competing devicemakers/e-tailers is good for publishers.  $9.99 for an e-book means more profit for publishers than $9.99 for a paperback.  Of course its good for e-tailers too because they don’t have to cover the costs of warehousing, etc, etc.)

But there is a way out of this conundrum.  Device makers should offer a deal to publishers where they collect and recycle used books in exchange for the device maker granting the owner of the used book a digital copy of the used book.  Publishers could even get a $2 or $3 per book, paid by the consumer as a “conversion fee.”

As more and more people “trade-in” their used books for new books, the supply of used books will go down dramatically.  This will cause the prices of used books to go up and they will ultimately get very close to the price of new books.  This will eliminate the price advantage of buying used books.  At this point, more and more people will either buy new physical books or buy new e-books, bringing more revenues to publishers and e-tailers and taking away the competition provided by the used book market.

In the long run, the decision to digitize used books could prove to be an enormous revenue boon for publishers, device makers, and e-tailers.  It’s a decision that would speed adoption of an arguably higher profit sales model (e-books) while also providing incredible convenience to consumers.  I know that I would like it…

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Why stories are important to online retailers

9 Aug

I found this to be a wonderful insight on the importance of stories for online retailers.

On the marketing side, we’ve learned that having a great story is as important as having a great product. As a small company, you need to connect with your customers on an emotional level as well as on the physical level of the product. We sell DODOcase’s exclusively online which means most of our customers are buying a product without ever touching it. To achieve sales in this way, its important that customers ‘want’ to buy into the story as well as the product. We’ve believe that we are in the middle of a giant cultural shift from the book to the computer (e-reader/iPad). We hope that DODOcase can help ease that transition by providing the tactile experience we’ve all grown up with applied to these amazing new devices.

via The Way of the Dodo — How to Sell 10,000 iPad Cases at $60 Each (and Other Lessons Learned).

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How you know that a country has a massive supply of talent

3 Aug

China’s UltiZen Games said it has raised $8 million for its game development outsourcing business in a third round of funding.

Shanghai-based UltiZen makes art and games for game publishes such as Trilogy Studios. It also develops and publishes online games under the U-Pal brand, and it develops and publishes mobile games under the Mo-Star brand. The company said it will use the funding to expand its online web and mobile game publishing businesses.

via UltiZen raises $8M for game development outsourcing business | VentureBeat.

It’s obvious that you can’t start massive consulting without a large pool of talent.   So assuming you had the financing, how easy do you think it would be to round up 400 game developers in any part of the United States?  Could you do it all without exclusively poaching from existing game development companies?  Put differently, is our “talent pool” of game developers increasing at a fast enough pace for the companies that want to develop games?  You might consider this a silly exercise but it speaks volumes to the glut of talent that China is producing.

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