reDesign

April 22, 2012

Weekly Reader: Facebook virality, Twitter patents and Groupon’s Lefkofsky

Filed under: daily deals, facebook, groupon, twitter — Rakesh Agrawal @ 8:46 am

This contains a summary of my work this week. I had two very important non-Groupon stories this week, on Facebook and Twitter.

My work

Secrets of Facebook’s success: Virality — Facebook’s photo tagging feature was an important driver of its growth. Traditional marketing approaches aren’t as effective as products that are designed to take advantage of the social nature of people. Google+ misses the basics. While Google spends millions running beautiful Oscar ads, they ignore very basics of product design necessary for social interaction.

Can Twitter and Yammer fix our broken patent system? – Twitter announced a new agreement with its employees that Twitter will only use patents for defensive purposes and will not become a patent troll. Employees who invent for Twitter will have a say in how Twitter can use the patents. As an inventor, this has a lot of appeal. Could this be a sign of more sanity in patent battles?

Chicago Tribune talks to Groupon chairman Lefkofsky; asks the wrong questions – A Chicago Tribune business columnist sat down for an extended interview with Groupon chairman Eric Lefkofsky and failed to ask the hard questions, such as: Why did you take so much money off the table pre-IPO? How is it that you made so much money on previous companies and investors were left holding the bag.

“It just works” rules – I’m launch a new feature on VentureBeat where I’ll be taking a look at brilliantly designed products. My goal is not to traditional product reviews, but to help product people learn from great design. Do you have a product that fits my criteria? Shoot me an email.

Staying connected with friends for frequent travelers – For someone who travels as much as I do, staying in touch with friends can be a challenge. Here’s a strategy I came up with.

Other interesting nuggets

The Perils of the Daily Deal Customer – A first person account from a merchant on her daily deal experience. The merchant’s experience is exactly the result I expect from the economic model of the daily deal. At their core, daily deals create unserviceable demand from untargeted customers at massive discounts.

I just finished the final hellish weeks of a Groupon deal I ran a year ago. I’ll probably never do one again. If enough merchants grow to feel the way I do — and many already do — Groupon and its countless imitators will wither and die because they will not be able to get enough businesses to participate in the deals you so enjoy.

Why aren’t we going back for more? Because daily deal customers are worse than normal customers in every way imaginable.

About these ads

February 2, 2012

Why Facebook investors should be concerned about international growth

Filed under: facebook — Rakesh Agrawal @ 10:14 am

In the short-term, much of Facebook’s user growth will come from international markets. Unfortunately, that’s not where the money is. Based on my analysis of Facebook’s S-1, Facebook generated $13.99 in revenue for each U.S. user and $2.81 for foreign users.

I expect that some of Facebook’s highest growth markets, including India and Brazil, will have ARPUs significantly lower than even the $2.81 figure.

In the long-term, this is the right move by Facebook. But it will cause short-term margin compression.

January 30, 2012

Facebook has 100 million more U.S. users than Google did at IPO

Filed under: facebook, google — Rakesh Agrawal @ 11:09 am

In December, Facebook had more than 100 million more unique users than Google did when it went public in August 2004. In December 2011, Facebook had 162.5 million unique users in the United States. In August 2004, Google had 61.9 million U.S. unique visitors. It was a distant #4 among Web properties. (Yahoo was #1, with 113.1 million uniques.)

Strong usage can turn into strong demand among retail investors.

But for long-term prospects, it can also indicate saturation. At the time that Google went public, it reached less than 40% of the U.S. Internet audience. Facebook already reaches 73.7% of the U.S. audience.

For some reason, Google Docs charting starts the scale at 40 instead 0, this distorts the size of the difference between Facebook and Google. Facebook at IPO is 2.6x Google at IPO, but the chart makes it look 6x. Stranger still, I couldn’t find a way to get Google Docs to start the chart at 0.

January 23, 2012

Twitter and Google are both responsible for you not being able to search tweets

Filed under: facebook, google, search, twitter — Rakesh Agrawal @ 7:45 pm

Chris Dixon ignited a firestorm on his blog when he said it was Twitter’s fault that Google doesn’t index tweets. It’s the fault of both parties, really. Neither has the moral high ground.

Twitter does not block Google from crawling their site. Google does crawl Twitter and index tweets. You can see this by going to:

https://www.google.com/search?sourceid=chrome&ie=UTF-8&q=site%3Atwitter.com%2Frakeshlobster

You will see some of my tweets in Google’s search index.

Right now, Google does this by crawling Twitter, just like it does for everything else. But crawling takes resources (bandwidth, compute cycles). For a site that is updated as much as Twitter, it would take a lot of resources to keep a reasonably fresh index.

This also has an impact on the crawled site. Twitter has enough stability problems without Google increasing its crawl rate. If Google cranked it up, it would make Twitter less stable.

Another alternative is for Twitter to provide a feed of new tweets to Google. This is what they do for bing and what they previously did for Google, before their agreement ended. This would take less computing power and bandwidth on both sides.

Twitter used to charge Google for this. It was a rare case where Google paid for content. According to Google, Twitter decided to stop licensing this feed to them.

So there are two ways to get more tweets into Google:

  • Twitter could provide a feed (either for free or a mutually agreed upon fee).
  • Google could increase it’s crawl frequency.

A third, more complicated way to solve this is for Twitter to provide Google a real-time query API. This would require that Twitter build a decent search engine first.

There’s a broader question here, that Yelp has raised a few times, including in the senate hearings: should Google be allowed to use its dominance in Web search to make its way into other spaces like local and social?

If  social search was not part of Google’s dominant Web search, no one would care whether it included Twitter or Facebook results because no one would use it. But because Search plus Your World is so prominent in Google search, Twitter and Facebook care.

See my series on Google and antitrust for a deeper exploration of this.

September 8, 2011

Why Google’s acquisition of Zagat matters

Filed under: facebook, foursquare, google, groupon, yelp — Rakesh Agrawal @ 6:17 pm

Today, Google announced its acquisition of Zagat, the company that publishes the venerable restaurant and hotel review guides. It’s a terrific acquisition. If Google executes correctly, this deal could be as significant as the YouTube deal has been. (I was also a big fan of that deal.)

Although Zagat is primarily known for its maroon pocket-sized guidebooks, it has long been working with innovators to get its data in the hands of mobile users. I first used Zagat on a mobile device on my Newton MessagePad 110 in the mid-90s. I later used it on a Palm V and Palm VII as part of the Vindigo service. (Vindigo eventually switched to Gayot and other data sources because they didn’t want to pay Zagat’s licensing fees.) There are aspects of those services that still haven’t been replicated by the leading mobile products.

Competition with Yelp

The most direct competitor to be affected by this deal is Yelp.

I love Yelp and use it all the time. But it’s way too much work. Half of each review seems to be about the personal life of the reviewers. Sorry, but I couldn’t care less that your girlfriend dumped you; I just want to know how the food and service was. Yelp has made great strides over the years in making sense of the reviews but its five-point scale that homogenizes food, service, ambiance and cost isn’t very helpful. Add to that the fact that a lot of restaurants are rated 4 stars and quickly discriminating among places is hard.

When it comes to restaurant reviews, comprehensiveness is less important than conciseness. There isn’t a “correct” answer — I’m just looking for a good-enough answer quickly. I don’t want to engage in a 30-minute research project and read 20 reviews to choose where to go to dinner. That’s where Zagat has excelled. Just glancing at the ratings, I can quickly pick a place. (I think my food threshold was 24.)

All that said, I stopped using Zagat when Yelp took off. The primary reason: I didn’t want to pay the fees and Yelp provided a good-enough solution for free. I fully expect that Google will take down the Zagat paywall and offer the ratings for free. (I’m surprised that hasn’t happened already.) I also expect that Zagat ratings will be syndicated across various Google properties, including mobile properties.

Zagat’s team is good at synthesizing information into actionable data. If Google can translate that knowledge into algorithms acting on data collected by Google Places, that could be really powerful.

Mobile

Mobile has been a godsend to companies like Yelp, Fandango and others that have strong brands. Unlike the Web, they’re not held hostage by Google’s search algorithm for traffic. Google has continually expanded the presence of its own local products on the main search results pages to the detriment of sites like Yelp.

The app-centric nature of mobile devices to data means that companies with strong brands can intercept that traffic before Google gets a chance. Zagat is a brand that carries its own affinity and a free Zagat app would instantly become a strong competitor to Yelp.

Brand

One of the biggest assets that Google gets with Zagat is the power of the Zagat brand, which in many circles is synonymous with fine dining.

As powerful as Zagat is with consumers, it’s also incredibly powerful with restaurateurs. Here is my subjective assessment of various local brands, as perceived by restaurateurs:

  • Zagat. Highly positive.
  • Facebook. Positive.
  • Google. Neutral to positive.
  • Groupon. Slightly negative, but heading downhill rapidly.
  • Yelp. Strongly negative.

Where Zagat is viewed as a friend of restaurants, Yelp is often viewed as an enemy. Part of the problem is that Yelp has sold advertising to restaurants and many restaurateurs view Yelp ad sales people as extortionists. (I believe Yelp management’s claims that they separate editorial from advertising, but that doesn’t change the widely held perception.)

If Google can use the Zagat brand as an in-roads to better engage with restaurateurs, that alone would be the price of the acquisition.

Facebook — and why all this might not matter

The biggest problem I have with local reviews as they’ve been done to date is that they largely ignore the social layer that has been built up over the last four years. When it comes to matters of taste, I’d rather get recommendations from people I know than random strangers.

It bugs my friends at Yelp and foursquare that every time I go on a trip, I post a Facebook status message asking for restaurant recommendations. Bill at Yelp will tell me to check Yelp. Tristan will tell me to check out foursquare Explore.

Yelp has its own social layer, but the people in my Yelp friend graph aren’t my real friends. The few that are rarely write reviews. Foursquare has my real friends, but for the most part doesn’t have enough data density to suit my needs. (A recent trip to Chicago was an exception.)

Even without any optimization, Facebook has both. Most of my status updates generate 3-4 restaurants, which is all I need. There’s another important benefit: I know how my tastes compare with the tastes of my friends. There are some friends that I know have a positive affinity with; if Dariusz offers a restaurant recommendation, I’ll go there without thinking about it. There are others with whom I have a negative taste affinity; if they recommend it, I won’t go.

A lot of people have looked at Facebook’s recent public announcements in local — killing its Deals product and removing the Places product from mobile — as a sign that Facebook doesn’t care about local. That couldn’t be further from the truth.

I’ve seen Facebook testing product concepts that point at its future direction in local. One test asks you to compare recent places you’ve visited. Another feature lets users contribute data on restaurants and other venues. Facebook realizes that most average people won’t go to the trouble of writing long reviews like those on Yelp. It’s better to collect small nuggets of data from massive audiences. See my post, Heading toward the Facebook recommendation engine.

Ironically, Ted Zagat, son of Tim and Nina Zagat, works at Facebook. That should make for some interesting dinner conversations. The question is how they’ll decide where to eat.

See also:

August 30, 2011

There are only two deal companies that matter: Facebook and Google

Filed under: facebook, google, groupon — Rakesh Agrawal @ 7:32 am

Much has been made of Facebook’s decision last week to exit the daily deals space. Yesterday, Yelp told Bloomberg’s Doug MacMillan that it is also exiting the daily deals space.

A lot of the analysis has used these examples to illustrate what a great position this puts Groupon and LivingSocial in. That analysis is wrong.

I reached out to Facebook PR for some more detail on their decision. Here is what spokeswoman Annie Ta told me (emphasis added):

After testing Deals for four months, we’ve decided to end our Deals product in the coming weeks. We think there is a lot of power in a social approach to driving people into local businesses.  We remain committed to building products to help local businesses connect with people, like Ads, Pages, Sponsored Stories, and Check-in Deals. We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.

That reads to me like Facebook is still very committed to local, it’s just that they don’t see the daily deals model as the right path to it. Like Google, I’ve always thought of Facebook as too good a company to be in the space in its current exploitative state and I’m happy that it got out.

Over the last couple of months, I’ve had several conversations with Eric Rosenblum, the head of Google Offers.

Part of the reason I haven’t aggressively beaten up on Google Offers, aside from the initial piece titled Why I Want Google Offers And The Entire Daily Deals Business To Die, is that I really believe that they want to do the right thing. People have pointed to the slow rollout of Google Offers as a sign of weakness and the relative strength of Groupon; I view it as a sign of discipline and wanting to truly learn about what works and what doesn’t for merchants. They view it as a market-entry strategy and a way to educate local merchants about online advertising. (To be fair, I may just be buying their spin. But I don’t think that’s the case. Groupon largely has refused to talk to me, despite numerous requests.)

At the rate that Groupon is growing, it’s hard to learn anything. It’s also impossible to maintain quality talent when you grow headcount 35% in one quarter. In just one quarter, Groupon has added about as many employees as Facebook has in total.

Google and Facebook can afford to take their time. Rosenblum told me that because he’s not on a march to an IPO, he can afford to treat merchants right and build for the long term. That shows in the structure of the deals that Google Offers runs. There are more restrictions that make it a better deal for merchants.

Offers will be just one tool in Google’s toolbox for merchants. It is essentially a cost-per-acquisition model. Small businesses don’t know what an impression or a click is worth, but they have a better sense of what a customer is worth. But many categories haven’t been exposed to online advertising and that’s what Google is trying to change with Offers. Eventually, Rosenblum believes that merchants will use Google’s self-serve tools. The several-thousand strong sales army of Groupon will feel more like an anchor than a moat.

I believe Facebook has a different play. Its entire business is about connecting people and having them share information with each other. If Facebook sells someone an offer and they then connect directly with the business on Facebook, that’s additive to Facebook’s core business.

By contrast, Groupon and LivingSocial have every incentive to keep you from building a relationship with the merchant. They would much rather sell you another deal themselves than have you go back to the merchant directly. Groupon is even running ads telling consumers to stop paying full price — undercutting the value that merchants provide. At every step of the way, their business interests are directly opposed to those of merchants.

They could change that — I wrote a post with more than a dozen ways how the merchant experience could be improved — but they won’t. They’ve sold investors on the story of massive revenue growth and the fastest way to do that is to con merchants into selling big deals that they don’t fully understand. Even if they fully agreed with my analysis of the business, the best path for insiders right now is to continue the march to IPO and cash out as fast as possible.

Both Google and Facebook have enormous amounts of leverage in their business. The number of people each employee at Facebook impacts is unprecedented. Groupon is not a scalable business. In fact, it’s showing declines per employee as it gets larger. Its average sales per sales rep dropped from $172,000 in Q1 to $138,000 in Q2.

In a few years, we’ll look back and see the daily deals business as a fad that delivered untargeted, unsustainable discounts to unprofitable customers. The Groupon and LivingSocial brands may be around, having been sold to some company in a liquidation sale or bankruptcy proceeding. (Though even that may be difficult, as many merchants hate them.) Even if they survive as companies, the product they sell will be very different.

And we’ll see Google and Facebook ruling the much larger, sustainable local advertising market.

August 15, 2011

Could Google use Motorola and mobile to muscle its way into social? Does antitrust law matter?

Filed under: facebook, google, social networking — Rakesh Agrawal @ 10:47 am

Today’s announcement of Google’s acquisition of Motorola Mobility shines a brighter light on the antitrust conversations that were getting louder at the end of last week.  Bloomberg reported that companies such as Microsoft, Expedia and Yelp may have been asked to provide information to the FTC.

It also brings up the question of what happens in social — and mobile is the future of social. Already, more than 250 million people use Facebook on their mobile devices. In many parts of the world, a mobile device is the only computer most people will have.

More than a month in, Google+ still feels like a very boring place. Today’s news has diversified the conversation in Google+ from being primarily about Google+ to primarily about Google+ and Google/Motorola. My feed remains dominated by the tech elite. Conversations from real friends (those who are not geeks) are few and far between.

Google must figure out social. If you think about how people solve problems in real life, starting with friends and family is often the first step. If I need a dentist, I start by asking my friends first. (I’m visiting the dentist tomorrow, one recommended by my friend Tristan Walker.) Travel is often the same way — many friends post requests to Facebook asking about what they should do in a new city. Facebook has already started detecting topics in status messages and promoting related content.

To the extent that Facebook can capture these requests, it represents a significant threat to Google’s business model. Of course Google knows this, which is why they keep trying to get social right.

So far, its efforts have been failures. The only buzz that buzz got was for violating users’ privacy. Wave was greeted by the ennui of baseball fans who are so bored with the game that they start doing the wave.

Although Google+ has reached more than 25 million unique users, a company with as much traffic as Google can do that by accident. What matters is whether people truly engage and adopt the platform. So far, I’ve seen little sign of that happening. Friends still primarily post on Facebook — because that’s where their friends are.

Importance of mobile

Google has an important weapon in this fight, one that hasn’t been fully brought to bear: Android. In its second quarter earnings call, Google touted more than 550,000 Android activations each day.

Four years ago, when Facebook first appeared on iPhone, I wrote about the importance of mobile to social and how the iPhone would be the center of the social network. This was before Android existed, but the same could apply to Android.

Among the features a social-network centric phone would have:

  • Pick up a new phone and enter your account information. Your contacts are automatically populated, complete with pictures of your friends. No need to fiddle with re-entering all your data.
  • Check the status of your friends before you make a call. If you see that your friend is on the phone, you can call later or send a text message. (Similar to presence on IM.)
  • When a contact changes their phone number, the new information is automatically updated. You don’t have to worry about outdated phone numbers.
  • Pull up a map of where your friends are when you’re trying to meet up.
  • Take pictures and videos and upload them straight to your social network.
  • Get reminded of events in your network without having to manually add them to another calendar. The reminder leads straight to maps and directions.

Every one of these features now exist in some form on some phones, whether it’s an Android or an iPhone. But the integration is often clunky, some require separate app downloads, others work only a very limited number of handsets. And even a minimal amount of friction in these applications can dramatically reduce adoption. Deep integration of features like these would greatly enhance the social experience.

One thing that is becoming increasingly common in social situations is connecting with others on the spot. Someone adds you to their Facebook network from their phone when you meet them. But right now, it has a lot of friction — it takes a lot of steps and requires entering someone’s name.

Imagine an alternate scenario: you meet someone and all you have to do is tap your phones together. Using the NFC chips, your ID is transmitted to the other phone and vice versa. You’re automatically added to each others Google+ networks. The phone could automatically capture where you were and when. (No more wondering how you met.) If you were attending a scheduled event like a conference or a party, that could also be noted. Inferences could be made about whether it was a business or a social relationship. This makes for a much richer social graph.

Android and Google+

Google could do all of this with Google+ and Android. By deeply integrating Google+ with Android, it could improve the adoption that Google+ is currently lacking.

There are already signs of this: although I’ve been generally bearish on Google+, one feature I really like is the automatic upload of photos from the phone to Google+. As soon as you take a picture with the camera app, it’s automatically uploaded and ready for you to share on Google+. It’s the lowest friction way to upload a picture that I”ve seen yet.

Google could also integrate your calling, SMS, email and IM habits into Google+. As much as we use social networks for communications, they don’t capture all of our activity. The activity in other modes of communications often capture relationships that aren’t fully expressed within the confines of a social network.

With the potential deeper hardware integration that a Motorola acquisition offers, Google could add in other sensors.

Google and antitrust

Integration like this can be extremely useful to consumers because it removes a lot of tedium and data inconsistency.

The big question is whether Google will let others integrate at this level with Android. Will Google allow open access to others trying to integrate deeply into Android? Or will we see a return of the Microsoft vs. Netscape wars of the 90s?

Google is already reportedly under FTC scrutiny with respect to its dominance in search. As Google has grown, it has introduced many new products that compete with these companies. Many Google products rank very highly in Google search, which is the de facto starting point for many Internet users. A top 3 three ranking can mean a lot of traffic; being dropped “below the fold” can kill an otherwise thriving business.

Google claims that it doesn’t alter the search order to favor its own products. This is technically kind of sort of true, but also misleading. The positions in organic listings doesn’t change. But take a look at this result for the search “GOOG”:

The most prominent spot on this page takes you to Google Finance

The most prominent spot on this page takes you to Google Finance.

The thing with the big stock quote and chart? That doesn’t count as an organic listing. Click anywhere on the big graph and you’ll go straight to Google Finance. (Yahoo! Finance is the first organic listing.)

I worked on search products at AOL. A presentation like the stock chart above can easily garner 40-50% of all the clicks on such a page. The graph is where the eye will go and what people will click.

Other Google products are often presented in their organic order — but with a different, more prominent presentation. Even small changes in presentation can have huge impacts on clickthrough rates.

In this screenshot, compare the treatment of the YouTube video with the same content on Bloomberg’s site. Even if were ranked lower in the results, the video with thumbnail would get higher clickthroughs.

Comparison of organic results in Google search

Comparison of organic results in Google search

Google’s aggressive moves in mobile

Even before today’s announcement, Google has been taken an aggressive stance in the mobile space.

Skyhook Wireless, which pioneered WiFi location-based tracking, is suing Google over allegations that Google interfered with a deal it was trying to do with Motorola.  In my conversations with Google, I’ve been told that at least the NFC chips will be locked down and not available to other applications. Google’s introduction of its free navigation product on Android has decimated the markets for companies like Telenav, Garmin and Magellan.

Google has also made it known to Android manufacturers that it wants to preserve the Google experience on its handsets, even threatening to withhold access to early code of future releases. Will Google make Google+ a required part of Android? And will it try to keep OEMs from preloading Facebook? If the acquisition goes thorough, it’s safe bet that Google+ app will get prominent placement on Motorola devices.

Does antitrust law matter?

Increasingly, it seems antitrust law doesn’t matter. Even if you win, it’s most likely a pyrrhic victory — just ask Real and Netscape how their antitrust victories worked out for them. Regulators just don’t move fast enough. By the time they make a decision, the market has already moved.

Antitrust law has almost no deterrent value. The penalties for going too far are infinitesimally small compared with the rewards that come from plowing forward aggressively.

Facebook has two big advantages over Real and Netscape: a brand that consumers love and network effects. Facebook is one of the most important applications on a mobile phone. If Facebook functionality were crippled, it would influence my selection in phones. Carriers know the draw that Facebook has. The sheer magnitude of Facebook’s social graph should also serve as a barrier. Switching from Netscape to IE was painless; switching from Facebook to Google+ would be a lot of work, for you and your friends.

July 21, 2011

An Average User’s First Google+ Experience: “Ug. This Is Already Too Much Work.”

Filed under: facebook, google, social networking — Rakesh Agrawal @ 11:25 pm
Kristin

Kristin

Much of the discussion of Google+ has been from the point-of-view of very experienced users and early adopters. In my analysis, I’ve really tried to focus on how a normal user would evaluate Google+, especially someone who was a heavy Facebook user. Google will need to get the attention of a lot of them in order for Google+ to be considered a success.

What follows is a transcript of an IM exchange with a friend during her first experience with Google+. Kristin is in her mid-30s and has a Ph. D. in systems engineering. She is currently working on hydrogen fuel cells. She uses Facebook but doesn’t use Twitter and hadn’t heard of digg.

This type of research is frequently done during product launches. It’s really best to do this outside of Silicon Valley as the pool of potential testers here is very polluted. Ideally, you’d do it with the researcher on site. But you can also do it on the cheap — I did this entirely over IM.

I’ve always found it to be one of the most fun parts of product development. This is just one user’s experience, but it provides important insight into a non-techie’s view of Google+.

The key takeaways:

  1. Google would have failed acquisition marketing 101. Kristin’s first experience with the product was to get an invitation from me. When she clicked through, she was told she wasn’t allowed in. She tried a couple of times. Then, when space was available, there was no follow up message asking her to try again. If I hadn’t asked her about it, she likely would’ve forgotten about it for a while. After she signed up, there was no message back to me saying, “Hey, your friend Kristin signed up! Here’s her profile page… come say hello!” I could’ve served as a welcome wagon, improving her first experience. (If my own usage had lapsed, it would have been a trigger for me to reengage.) Onboarding is an extremely important part of the end-to-end product experience. This is especially true for social products.
  2. Her initial reaction to inviting friends was confusion over who was already in the product versus those who were not. (This is differentiated in the interface, but easy to miss.)
  3. There was a feeling that the product required too much work and repeating work that she’d done before on other sites. Referring to dragging people into circles, she said “ug. this is already too much work.”
  4. Her friends (aside from me) who were already on Google+ aren’t doing much posting.
  5. She didn’t see a clear differentiation between Facebook and Google+. “Really, this seems like a carbon copy of facebook, except that you can drag people into groups.” In order to get users to convert to change existing habits, there needs to be a clear, compelling message.
  6. She wants location-based circles. This is actually a very common need and I’m surprised that no one has done this yet. This provides a lot of value to the user and can be done automatically. Think of iTunes Smart Playlists.
  7. Her mom is on Facebook. This presents a significant switching cost. Even if her mom were willing to switch, those of us who do technical support for parents know that it’s easier to have them continue doing what they’re doing.
  8. She’s willing to try new products and would be willing to dump a large proportion of her friends, if there was a very significant benefit, but Google+ currently doesn’t provide it.
  9. She is worried that this will just create another place to check and more work.
  10. She would like her social network to also be a news source for topics she cares about. She would like this information segregated from updates from her friends.

The exchange has been lightly edited to fix typos, remove personal information and adjust IM synchronicity issues. There was no set up other than me inviting Kristin to Google+ shortly after the launch. Emphasis added.

me: did you get into Google Plus yet?

Kristin: no, I’ve checked a couple of times, but it always says the same thing.

I’m wondering if it’s because I’m in Germany

me: i see people from other places on there

do you have a different email address i can try?

Kristin: i can give you my work one

oh wait!

i just tried the original one.

looks like its working!

haha, Gender: male, female, or other

me: are you going with other?

Kristin: haha, what are you implying?

me: i was at a bar the other day where they had two bathrooms, each with 1 stall. a woman came out of the men’s room and i was joking with her about her penis.

Kristin: ok, I’m in!

hmm

it’s suggesting people that I am pretty sure are not on Google+

for example, my mom

me: it’s based on your address book in gmail

there should be a section somewhere that shows you just people who are already on Google Plus

Kristin: ug. this is already too much work.

me: how so?

Kristin: dragging people

just my first impression.

this looks just like facebook.

me: would you switch over from facebook?

Kristin: no. unless there is a good reason to do so.

after reading your post last week, I don’t think there is one.

me: Do you see any of your friends already on G+?

Kristin: yeah, actually about 20 of them.

me: any of them posting anything?

Kristin: you!

me: anyone who is not a nerd?

Kristin: and my friend Rommy

Wanita

is she a nerd?

I’m not sure.

me: Less so than you.

Kristin: so for example, this is asking me to fill out my profile. Something that I have already done a million times in other apps.

I don’t feel like doing that again.

Kristin: What about me? Am I in your “nerd” circle =)

me: You wouldn’t come anywhere close to my nerd circle.

Kristin: Wait, what? I’m not nerdy enough for your nerd circle?

me: Not even close.

You’ll have to settle for close friends.

The intersection of nerds and close friends is quite small.

Kristin: haha

damn, now I feel a challenge to become nerdier.

did you know I was on the Junior Engineering Technical Society team in high school?

me: What other circles would you add?

Kristin: I added one called “Berlin”

maybe “DC Friends”

but, you know what I really want?

I want a news feed added into facebook that give me feeds of articles on topics that I am interested in. I don’t want them mixed in with status updates, but on their own tab or something.

me: that’s what twitter is for, no?

Kristin: really? I don’t know, I don’t use twitter. I thought it was a way to read people’s random thoughts on stuff every 30 seconds.

they could be ranked by importance and quality, which would be voted on by other readers of the articles

me: you mean like digg?

Kristin: I don’t know, what’s Digg?

I’m really subtracting from my nerdiness rating now!

me: see, you don’t belong in my nerd circle!

Kristin: I need a nerd tutorial!

me: so would this news feed be based on general population or just your friends?

Kristin: no, not my friends.

although, maybe. maybe I could switch between the two.

you know like on NYT, it has articles your friends shared, and articles everyone shared.

me: your friends already share news items in the regular feed, no?

Kristin: yeah, some of them do.

so that’s fine.

but for example, I am friends with the California Fuel cell partnership, and they regularly post news articles.
which is cool, I like that because I see fuel cell news. but it would be nice to separate that stuff from the friend stuff.

me: you don’t want your worlds to collide?

Kristin: I guess that’s kind of what circles does, but I’d also like to filter based on what kind of content it is. FB used to have a thing where you could view all pictures, all status updates separately. I don’t know if it i has that anymore.

i don’t mind worlds colliding, but sometimes I just want to read news without other stuff interfering. For example, when I am eating lunch and want to mouse but not keyboard bc I might get food on the keys.

another topic, but now I’m like, oh man, now I have to check Google+ AND facebook? Seems like it’s the same kind of stuff posted on there.

really, this seems like a carbon copy of facebook, except that you can drag people into groups.

me: do you see any other differences?

Kristin: seems faster

obviously the stream filters on the left

I have less friends

I’m assuming the chat is gchat integrated so it is probably better than the fb chat.

also maybe its integrated w/ gmail

which would be cool bc fb messages suck.

me: Would you use a better product if it only had half your Facebook friends?

Kristin: which half? haha

but seriously, it depends. I could probably dump half my fb friends without too much heartache.

but only the ones I don’t know that well

so, to answer your question, yes, BUT: it would have to be quite a bit better. not just marginally.

AND it would be great if all the fb data ported.

me: is your mom on facebook?

Kristin: yeah

me: when did she get on facebook?

Kristin: mm, I don’t know

maybe a year ago?

no, more than that. 2 years?

but she doesn’t use it that much

I don’t think we’re ready for a fb alternative anyway. It’s too hot right now. Give it a few years, then give us something better and people will switch. That’s just my amateur opinion.

me: do you think your mom would switch?

Kristin: to Google+? Definitely not.

me: hey, can i post this online? i can delete your last name if you want. i think it’s important that tech people know how real users react

Kristin: Sure.

Kristin: Check this out – here is what my friend Rommy wrote. I read this just now, after I wrote that stuff above.

Now what WOULD have been awesome is Google organizing the content for me. If G+ is truly a “sharing” network, then Google can uses its power as a predictive search company to do an automatic categorizing of incoming content in all my circles placed into categories like “tech news” or “gaming” or “politics” or “business news” or even “photos” or “statuses” would be compelling. And a page which shows the top news and keywords being shared across all my circles by category would be incredible.

What I really find compelling, which no network has managed well is content. Because even with Circles, the organization of content ceases to exist. I can make a Circle of Tech friends, but they’re not talking about Tech much of thetime. I can make a Circle of Close friends and they can post just about anything. Even my Politics friends won’t be talking politics all the time. All of which somewhat defeats the purpose of Circles.

I’m not saying get rid of Circles, I’m saying organize the content within Circles so that it becomes more digestible.

OK, it’s me again. That is exactly what I was trying to say.

fb slightly accomplishes that, in that I can filter out updates from specific apps like farmville. But I cannot say, show me news articles, show me pictures, show me stuff about hydrogen.

Kristin: btw, I have lists of contacts in Gmail, why doesn’t it use those as default circles? In my case, it wouldn’t really make too much sense bc of how I have it organized, but it seems like that would be a sensible place to start.

though maybe they felt burned by the Google buzz thing.

I remember there was some kind of controversy over people being automatically added.

July 5, 2011

Google should just buy Twitter already. At any price.

Filed under: facebook, google, twitter — Rakesh Agrawal @ 8:40 am

I’ve been thinking more about Google+ since my TechCrunch post on the Google circles colliding.

Even if you buy the argument that categorizing your friends into buckets offers user value (which I don’t), that is not a defensible feature for Google. Facebook could replicate that functionality in weeks, if not days.

And sitting on top of years of interaction data, Facebook could do it better. Based on your interrelationships, Facebook could suggest which friends to put in to the college bucket, friends bucket, best friends, ex-girlfriends, etc. That would create the value of Circles without the upfront pain of manually categorizing your relationships.

As it’s currently structured, Google+ is a bigger threat to Twitter than to Facebook. (Even then, just based on network effects, I don’t think it’s a big threat.) Twitter is a simple but extremely clunky platform. A lot of the constraints that were essential for its early growth just don’t apply any more.

Think of Twitter as a command-line interface for communications. You have obscure commands like @, ., d, #. It’s extremely unfriendly to users. DM fails happen regularly. We had to invent an inefficient layer of URL shortening services to deal with Twitter limitations. It relies on handles, which is a geeky thing.

For content publishers, tracking activity on Twitter is a challenge to say the least. When people reply to conversations, it’s much harder than it should be to track what they were responding to.

Google+ is a GUI for communications. But so is Facebook.

Despite its clunkinesss, Twitter has built an extremely loyal following of publishers. If you have 1 million, 100,000 or even 1,000 followers on Twitter, it’s going to be extremely hard to get all of them over on to Google+. Unless Google+ entirely replaces Twitter or Facebook, it’s just another place to check and to manage. If there were unique functionality, it might be worth incurring the overhead. But the new functionality is marginal at best.

With a Twitter acquisition, Google could transfer those relationships onto a more user-friendly platform. Google benefits from having a huge firehose of information and relationships.

Twitter also benefits in that it gets a partner with deep algorithmic and search experience. Twitter has also fallen asleep at the wheel when it comes to local — something I don’t understand at all, given its strong assets. Google is one of the leaders in local. Local could be Google’s backdoor into social, given that a lot of social interaction happens in places.

Someone asked me what price Google should pay. My answer: whatever it takes.

Google has had many failed attempts at social. Without Twitter, Google+ isn’t likely to work either. And Google can’t afford to keep failing at social.

See my answer to “Is Google overreacting to the the rise of Facebook?” on Quora for the reasons why.

June 1, 2011

The experience is the product

Filed under: apple, facebook, marketing, product management, strategy — Rakesh Agrawal @ 4:44 pm

Apple retail stores celebrated their 10th anniversary last week. The stores have defied all analyst expectations and have become the highest grossing retailers in the world. The company’s market cap exceeds all of the other players in tech. Its $5,000 in sales per square foot leave Best Buy ($1,000) and Tiffany’s ($2,700)  in the dust. Even in the midst of the worst recession in my lifetime, stores are packed and sales are through the roof.

Why did Apple succeed when most others have failed at retail? Apple understands the importance of the end-to-end customer experience. Marketing, product, retail, packaging and services all work together to form a cohesive customer experience.

When you walk into an Apple store, you can actually use its products. Want to make a call with a phone? Go ahead. Want to surf the Internet? There’s free WiFi. Want to talk to someone about product problems? Sign up. Want to learn about a product? There’s a class for that.

As a result, not only does Apple sell more of its products, it also gets to keep the retail margin.

In contrast, when I went to a Best Buy to look at a Google TV, there was a sign next to it apologizing for the store’s poor broadband network and promising that the product wasn’t really that slow.

Apple’s television advertising is elegant, emotional, evocative and educational. Take a look at this ad:

Not only does it tell a compelling story for people thinking about buying an iPad, it also works for people who already have one. I get a glimpse of apps I might not know about. But the experience doesn’t end there. In the App Store, there’s a section devoted to apps from the TV ads. If something catches my eye on TV, I can quickly find it.

Unfortunately, too many companies are bound by organizational boundaries and don’t think holistically about the customer experience.

I was interviewing for a product marketing leadership role. The interviewer asked me how I would market their finance product. My response: I would create a widget that would automatically scan a blog post for mentions of public companies and then present live quotes and charts in a module on the page. I would then work with financial bloggers to incorporate that on their sites. It provides value to the blogger (live market data), value to the reader (instant, relevant information) and value to the company (an introduction to potential customers in a meaningful way).

The response: “That’s a product idea. Give me a marketing idea.”

No, it’s both. Yes, I could run banner ads or do search advertising. With a large enough budget, I could advertise on CNBC or Bloomberg TV. Those are traditional marketing ideas. But I can guarantee you that they will be less cost effective than this “product idea.”

Some of the best product ideas are also the best marketing ideas. My favorite example of this is the people tagging feature on Facebook. Before more than 600 million people were on Facebook, it encouraged people to sign up. Consider the many functions that people tagging supported:

  • Acquisition. Because you could tag people with an email address if they weren’t already on Facebook, it served as a user acquisition tool. And instead of a generic “Hey, you should sign up for Facebook!” message, it was directly relevant to you. People’s vanity undoubtedly increased open rates.
  • Retention. Keep in mind that photo tagging came out before people lived on Facebook all day. The notification you received prompted you to go to the site and check out the photo. Once you were there, you could leave a comment. … Which would trigger a notification to the person who posted the photo. And the cycle repeats.
  • Education. The messages served to educate users about the photo tagging feature. If you got an email, you became aware that it was possible to tag people. This encouraged more people to tag people. And the cycle repeats.

With Internet marketing, we have a huge advantage in that we can use data to create custom messages that introduce new products, ensure satisfaction with existing products and measure how we’re doing.

For example, Square is introducing a new product called Card Case that gives customers a digital wallet, complete with loyalty programs. Square has already been sending email receipts when people use a credit card. Instead of sending a generic message that says, “Hey, sign up for Square’s Card Case and loyalty offers,” the message could be “Thanks for eating at Chili Inside. You’re only 5 more purchases away from a free hot dog… Click to download Card Case and keep track.” (I haven’t seen Card Case in action yet, but this is what I’d like to see.)

Even shipping data can be used to create a better end-to-experience. APIs from the post office, UPS and FedEx will let you know that a package has been delivered. How about reaching out a few days later thanking the customer again for the purchase and offering product setup information and help links? Not only will this create a good impression, it can cut down on customer support costs. If a product requires online activation and you haven’t seen the customer activate it, it would also be a good time to reach out and figure out why. (This could also reduce return costs.)

Consumers don’t make a distinction between the marketing that gets them to a page, the sign up flow, the product features and the support that a company provides. Part of this is the result of a blurring of the lines in experiences. You could buy shrinkwrapped Microsoft software from Staples. If the store was loud and dirty and had a 25 minute wait to check out, you didn’t blame Microsoft. If the software was difficult to install or crashed a lot, you didn’t blame Staples. Online — as far as the customer is concerned — these are done by the same entity. Of course there are different groups of people behind the scenes. But customers shouldn’t see that.

In the early days of the Internet, I could easily tell which sites were likely to fail. If I could faithfully reproduce your org chart simply by looking at your home page, you were doomed. It’s rare to see cases that egregious these days. But it’s also rare to see user acquisition, marketing, product and customer care working seamlessly.

See also:

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