Snapchat, Poke And Facebook

Image via CrunchBase

You end up feeling like you have seen this movie before. Facebook tried to do in FourSquare. FourSquare's popularity skyrocketed after Facebook's try.

Pokey

Snapchat, the trendy smartphone app that lets you send photos and videos that self-destruct after a few seconds ....... Facebook constantly “roams the tech universe in search of interesting technology, then mercilessly assimilates all the best stuff into its ever-larger catalog of features.” Over the last couple years it has copied the defining ideas behind Foursquare, Twitter, Google+, Groupon, GroupMe, Instagram, Quora — and now Snapchat. .... The only reason that the app could acquire millions of users in a few months’ time is because Snapchat spread through each of its users’ Facebook friends. Instagram and Pinterest, the two other recent social-networking successes, also benefited tremendously from their users’ Facebook’s connections. .... Every photo that people were sharing through Instagram was a dagger at the heart of Facebook, the world’s largest photo site. That’s why Facebook attempted to copy Instagram—see its Camera app—and then had to buy it. Similarly, every message that you send to your Facebook friends through Snapchat is a lost opportunity for Facebook. That’s why Facebook had to squash it. ... But Poke is already losing to Snapchat in the app standings. Like Facebook’s failed imitations of Instagram and Quora, Poke’s quick decline shows that if Facebook wants to stay on the vanguard of online communication, it needs to act even before it sees an opportunity—by the time somebody else has had success with something, Facebook’s version isn’t going to catch on.

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eBay, Come Back

Image via CrunchBase

I have not used eBay in years. I had no idea it needed a comeback. I just read about it in my hometown newspaper.

Behind eBay’s Comeback

EBay, Yahoo and AOL, the dominant Internet triumvirate circa 2004 ..... eBay’s success has big implications for struggling companies like Yahoo and AOL, not to mention more recent sensations that have already lost some luster, like Zynga, Groupon and even Facebook ...... “One of the unique things about the Internet is a company can be a white-hot success and become a global brand and reach global scale in just a few years — that’s the good news,” he told me this week. “But then somebody can turn around and do it to you. There’s constant disruption. One of the first things I had to do here was face reality. EBay was getting disrupted.” ...... So thoroughly has eBay been transformed that he didn’t even mention its traditional auction business ..... Excitement about eBay’s prospects has little to do with its traditional auction business, or even its core e-commerce operations ...... Most of its growth came from mobile retailing and its PayPal online payments division, a business it acquired in 2002 for what now looks like a bargain $1.5 billion. ...... “Mobile is revolutionizing how people shop and pay.” ..... EBay is offering a one-click payment solution. .... Mr. Spitz said he was recently stopped at a traffic light and the sun was bothering his eyes. By the time the light turned green, he had used his phone to order and pay for sunglasses. ...... “We saw the mobile revolution early and we made a big bet across the entire company. We saw that mobile was an important factor for our customers. It was becoming the central control device in their lives. We didn’t worry if it cannibalized our existing business, because we knew it was what our customers wanted.” ..... The smartphone “has blurred the line between e-commerce and off-line retail,” Mr. Donahoe continued. “Four years ago, you had to be in front of a laptop or desktop to shop online. Now you can do it seven days, 24 hours. We’re going to have to drop the ‘e’ from e-commerce.” ...... Amazon continues to invest in its delivery systems and it, too, has an effective mobile app and one-click payment system. ..... EBay and PayPal apps already rank among the top 10 mobile apps .... EBay stresses, without mentioning Amazon by name, that it doesn’t compete with its retail customers. ...... “We spent three years fixing the fundamentals and tried not to worry about what everyone else was saying.” ..... “We’re more technology- and innovation-driven than we’ve ever been. Mobile gave us the opportunity to start with a clean slate from a technology perspective.” Less than two years ago, eBay acquired Critical Path Software, which was helping to develop eBay’s mobile apps. “We thought they were the best, so we bought them and got a couple hundred of the best software developers in the world working exclusively for us,” Mr. Donahoe said. ...... PayPal Here, a new payment system, would allow customers to “check in” in advance at a shop, be greeted by name when they arrive, complete transactions without a mobile device or credit card and get a text message as a receipt. ..... Mr. Donahoe has been chief for just over four years, and has replaced most of eBay’s top management.

Looks like PayPal is doing the trick.

Looks like John Donahoe is a role model for Marissa Mayer. Yahoo also needs a turn around.

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Google, Zagat And Content

Image via CrunchBaseGoogle was not, is not a content company. Yahoo yes, AOL yes, but not Google. So I was a little surprised that Google went ahead and bought Zagat. But then Google pays entities like the Associated Press to get news stories directly on to the Google News platform. That's getting into content.

Goes on to show how unformed the mobile space is. The mobile space, the local space. Marissa Mayer might not have been able to buy GroupOn, but she sure did buy Zagat, did she not?

I was surprised and still don't fully understand, but that is not to say it is not a good move. And the price tag - undisclosed, I believe - is not outrageous.
Image via Wikipedia

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Rocky Agrawal's Take On GroupOn

Image via CrunchBaseRocky's premise that the whole daily deals business is crap, well, I don't buy into that. I am at the other end of the spectrum on that thinking. I think they are onto something cutting edge.

What Fascinates Me About GroupOn
My Web Diagram

Unless Google would be willing to employ thousands of salespeople, Google and others can not compete with GroupOn, but in employing those salespeople Google will have veered from its core so far that that stretch might end up hurting its core businesses. Google is better off doing smart cars and wind farms in the vast oceans and monorails.

What Fascinates Me About GroupOn

Image by smemon87 via FlickrOf all the tech companies out there, the one that most fascinates me is GroupOn. It speaks to me. Its emphasis on people action, and its emphasis on words - cute emails - are really something. Of all the tech companies out there, the one that I find most inspiring in terms of what I would want to do with my microfinance startup, GroupOn stands out. You focus on a few basic human actions, and you go for it. You splurge.

I also like how fast they have grown. They were not here at all. And suddenly they are everywhere.

This blog post explains where I think group dynamics stand on the tech map: front and center.

My Web Diagram

GroupOn is the web maturing to land in the human domain, in the flesh.

Live Nation And GroupOn: That Offline Component
18 Months Ago GroupOn Did Not Exist
GroupOn's Legacy: Cute Email?
Image via WikipediaGroupOn, Zappos, And The Non Tech Components
GroupOn Did Not Launch At South By South West
GroupOn Did The Right Thing

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My Web Diagram

Fractals: Mandelbrot
Is Location The Fifth Dimension?
18 Months Ago GroupOn Did Not Exist
The Google/Facebook Of Microfinance
Microfinance: Post Obama Race Talk

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Live Nation And GroupOn: That Offline Component

Image via WikipediaTo my understanding, the Live Nation proposition is that you might listen to all the digital music you want, pirated, bought, shared, what not, but when it comes time to pay, you will pay to see those artists perform. And so if the big chunk of the artists' money is coming from live performances, then it makes perfect business sense for that artist to give out her music for free. You want to steal? Steal.

That business model of Live Nation has long fascinated me. And their tickets are pricey. At one point they were giving rise to monopoly accusations. But people are paying.

GroupOn reminds me of Live Nation. GroupOn has not come up with code that has confounded the minds of the Mark Zuckerbergs and Sergey Brins of the world. Their technology is quite simple. You could argue their business model is also equally simple, and hence the hundreds of copycats. But what I notice most is they took that step to go offline. They employ thousands of salespeople who go knock on the doors of local merchants. I find that proposition exciting.

18 Months Ago GroupOn Did Not Exist

Image via Wikipedia

Reuters: Grouponomics: 18 months ago, Groupon didn’t exist. Today, it has over 70 million users in 500-odd different markets, is making more than a billion dollars a year, has dozens if not hundreds of copycat rivals, and is said to be worth as much as $25 billion. What’s going on here? There’s obviously something clever and innovative behind Groupon — but what is it? ...... “Groupon doesn’t do anything that four of us with a phone couldn’t do” ...... the more people Groupon signs up, the more targeted its deals can be ...... the idea that coupons only become activated once a certain minimum number of people have signed up for them. This is essentially a guarantee for the merchant that the needle will be moved, that their effort won’t be wasted. With traditional advertising or even with old-fashioned coupons, a merchant never has any guarantee that they will be noticed or make any difference. But with a Groupon, you know that hundreds of people will be so enticed by your offer that they’re willing to pay real money to access it. That kind of guaranteed engagement is hugely valuable, and more or less unprecedented in the world of marketing and advertising. ....... one sector, which I think is Groupon’s biggest: restaurants. ....... Before Groupon came along, there was no effective way for merchants to reach consumers in their area, while excluding everybody else. If you’re a neighborhood restaurant, you don’t want to entice people who live miles away: you want to reach locals. And while Groupon isn’t quite there yet — especially in New York, where a restaurant more than a few blocks away can feel like a schlep — it’s orders of magnitude better at targeting than anything which came before it. And it’s improving every day. ........ one of life’s great mysteries is why the New York Times is spending tens of millions of dollars building and promoting its easily-circumventable paywall, when it could have built a first-rate Groupon clone instead. The NYT has the exact home addresses — and the associated email addresses — of hundreds of thousands of well-heeled newspaper subscribers in a rich city of tiny neighborhoods. It also has a sales force which talks to local businesses regularly. It should own this space in New York City, instead of ceding it to arrivistes from Chicago who have much less specificity as to where exactly their subscribers live ........ when a few hundred people have signed up for your deal, you get a huge amount of mindshare from them. Many will redeem the Groupon very quickly, but a lot of them will wait a while, thinking about you in the back of their minds all the time ....... Groupons provide an important nudge to jolt people out of their day-to-day habits and try something new ....... By forcing people to pay for their Groupon, restaurants lock in new customers in a way that old-fashioned coupons never could. ....... a Groupon is a commitment device ...... very good at driving traffic during slow periods ...... he timed its Groupon “to create a surge of business in an otherwise soft couple of months after the holidays.” ....... 66% of merchants offering a Groupon said that the offer was profitable for them in and of itself — not including any subsequent repeat business from new customers. ....... diners spending their Groupon at a restaurant averaged a check 80% greater than the face value of the Groupon itself. ...... if that Groupon helps you to discover a new neighborhood gem where you go on to become a regular, then that’s a genuine and highly valuable service that it has performed, no matter how much money you spend on your first visit. ....... social media is at heart a fantastic way for companies to compete on quality rather than marketing glitz. ........ the best way to get great word-of-mouth is to deliver fantastic service. For a small company or even a large company which is great at what it does and never does any marketing per se, social media is a godsend. ........ Groupon’s CEO, Andrew Mason, attributes his company’s success not to the genius of the idea itself, but rather to Groupon’s ability to execute — to keep both consumers and merchants happy. ...... more than 95% of merchants would run their deal again or recommend Groupon to a fellow merchant. ...... enormous amounts of effort into ongoing customer service, rather than just putting four sales guys in a room with a telephone and putting them on commission. ...... Groupon itself, as much as its merchants, is counting on repeat business. And that comes from having a positive reputation which can spread like wildfire over Facebook and other social networks.

GroupOn's Legacy: Cute Email?

Image via Wikipedia

BusinessWeek: This Tech Bubble Is Different: Groupon, which e-mails coupons to people, may be the fastest-growing company of all time. Its revenue could hit $4 billion this year, up from $750 million last year, and the startup has reached a valuation of $25 billion. Its technological legacy is cute e-mail.

GroupOn is a great example of a company that has used fairly simple technology to build an amazing company. The wealth GroupOn has create is very legitimate.

And you thought the inbox had gone stale. For most people their inbox is still their most prized web possession.

But it's not even the inbox. GruopOn has hired thousands of salespeople. The action is not on the computer screen. It is offline. It is in face time.

More Sam Walton Than Bill Gates

My startup is a tech startup, sure. But it is first and foremost a high touch startup. Face time is key to my operations to be.

I keep thinking in terms of companies like Zappos. Zappos sells phone calls, not shoes. Customer service is key to how Zappos rolls. I also end up thinking about the offline components of companies like GroupOn.

Walmart early on became a major user of computer technology. Walmart collects so much data. Every transaction is valuable data. And you can only hope to make meaningful sense of all that data if you employ computers. So that's there.

But in microfinance, you can do all the tech trick in the parlor, but it still boils down to face time. The most precious time you will spend with your customers will be in person. Technology helps, but technology can't be front and center, that space is reserved for flesh and blood people.

GroupOn, Zappos, And The Non Tech Components

Image by David Berkowitz via FlickrGroupOn Did Not Launch At South By South West

I dig these two companies for their emphasis on non tech components. Zappos does not sell shoes, it sells phone calls. The emphasis is on customer service. Tony has told his people, talk to the customers for as long as they will talk to you.

GroupOn has boots on the ground. That army of sales people is integral to how GroupOn rolls.

GroupOn Did Not Launch At South By South West

Image via WikipediaGroupOn has grown like crazy. But it was not launched at South By South West. And I have an observation to make.

GroupOn has this very clear offline component to it. It has hired thousands of sales people. And its customer base is your very average person, the Walmart types. They want to save money. They want to save money on haircuts.

That is why you do not hear GroupOn and South By South West in one sentence. I never have. Because GroupOn's early adopters were not the kind of people who end up at South By South West.

Overall I feel good about South By South West. But I also have a word of caution for the crowd. You don't want to end up in some kind of an echo chamber where you are only hearing each other. It is possible to collect too many business cards. What are you going to do with them? Networking is a good thing overall, but too many business cards can also mean a lack of focus.

Like the Kayak.com CEO likes to say, I don't go to events.

Whining Is Not The Word

Image via Wikipedia

ZDNet: 2010: The Year of Whining About Women In Tech: Whining about the inequality of women in tech has been big for page views this year..... Arrington said women in tech have more “equal opportunity” advantages handed to them than men. He delivered cracked-out lines about “the nurturing and risk tolerance needs of women,” and in closing he called us “you people.” ...... Arrington framed his argument with the opening set-up that the tech arena is a meritocracy. ..... And every person in tech knows that nothing could be further from the truth. ..... Kara Swisher .... blasted Twitter, Facebook, Zynga, Groupon and Foursquare for not having any women as directors ..... the top quarter of Fortune 500 companies with gender diversity outperformed those in the bottom quarter with a 53% higher return on equity. And that firm outperformance seems to happen once there are at least three female directors in the boardroom ..... Tech is not a meritocracy, and it does not run on the right thing to do.

What you are saying is so absolutely ridiculous. So you think the best way to make progress on gender is by NOT talking about gender? How come you don’t apply that same logic to rocket science and software and what have you? The best way to make progress on a software project is by NOT talking about the software project. How about that? How do you like them apples?

Google's Failure To Purchase GroupOn Shows Google Is No Monopoly

Image via WikipediaFacebook is the most serious competition Google ever faced, and Facebook is not your classic search engine, it is not a ten blue links company. Although it is blue!

Look at how Facebook has gone after Google by not going after Google like one bull after another. The web as a whole is too fluid a place, too open to innovation for any company to manage to pull a monopoly on there.

GroupOn Did The Right Thing

Image via CrunchBase
Image via WikipediaSources: Groupon rejects Google's offer; will stay independent
Groupon Annual Revenues Actually $2 Billion

Secretly I was hoping this would not come to be. Google and GroupOn were not a good match. A great high tech company is not automatically a great high touch company. GroupOn does a lot of stuff offline. In that way GroupOn is not like YouTube at all. YouTube is all tech, all online.

This was not going to be a good buy for Google. And this would have severely limited GroupOn. GroupOn is just now getting started. This company could do really well independently.
Image via CrunchBase
Amazon buying Zappos was similarly a bad idea. Zappos was IPO material. The white venture capitalists who forced Tony into Jeff Bezos' arms acted racist.

Google, GroupOn: Facebook Needs To Go Public

Image via WikipediaFacebook has so far never made an acquisition. Acquihires like Dropio and Hot Potato don't count. And a company can not do internal innovation forever. The price you pay to get big is you are open to innovation from outside. You keep a clear vision of where you want to go as a company, and you make acquisitions along the way in emerging spaces and sub spaces.

Facebook was ready to go IPO last year based on its fundamentals. But a recession perhaps was not a great time to go public. But now the recession is over. Further delays will cause Facebook harm. To put it down bluntly, Facebook can not make GroupOn like acquisitions if it stays private.

Google, GroupOn: Integration Will Be Key

Image by earcos via FlickrThis is not a merger, this is an acquisition, but it feels like a merger. Granted this is no AOL Time Warner - thank God - but it feels like a merger more so than the YouTube acquisition felt. The YouTube acquisition felt like an acquisition, a big acquisition but still an acquisition. This feels like a merger.

Google, GroupOn: Marissa Mayer's Stalking Of Andrew Mason

Image by jdlasica via FlickrAndrew Mason first spotted Marissa Mayer at South By Southwest. He did not think much of it. He did not think someone like Marissa Mayer might actually know who he was. Only two years before he had been eating Ramen noodles. He could still feel the taste of Ramen in his mouth.

Google, GroupOn: Say No The First Time

Image by jdlasica via FlickrHotmail was hot. So Bill Gates wanted to buy it. The joke in the industry for a decade and a half had been that Microsoft was always one step behind.

Sabeer Bhatia was summoned for some face time with Bill G. Bill Gates offered $200 million.

"Can I sleep on it?" Sabeer Bhatia replied. He flew back home to the Bay Area where he lived.

Google, GroupOn: It's The G Factor

Image by earcos via FlickrI am going to post a hypothesis. The hypothesis is that GroupOn always wanted to get bought, and it wanted to get bought by Google. From. Day. One. GroupOn plotted for this day to come before its inception.

Why do I say that?