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Showing posts with label Technology. Show all posts
Showing posts with label Technology. Show all posts
Monday, April 2, 2012
Wednesday, March 14, 2012
Sunday, February 26, 2012
The rise of the subscription model
It seems like there there is a new E-Commerce website with a subscription model on Tech Crunch every week! Just one week ago, Lost Crates expanded their subscription model to includes verticals other than what they had started with first: boutique stationery goods. There is a pretty good list of subscription services here. I started wondering: what is behind this new trend?
Let's first consider what job customers hire these websites to do? In one word - curation. Consider the example of Bespoke Post, launched by my Kellogg classmates, Rishi and Steve.
Bespoke Post sends you hand-picked goods, which enable you to 'Turn into a gentleman. One box at a time.' And they send you a new box of 'Awesome'. Their marketing message is simple and brilliant. Their persona seems to be - wait for it - 'Barney Stinson.' For people who do not watch the show 'How I met your mother,' Barney is his early thirties and almost always wears a suit. He picks up women - all the time. And always has an opinion. And uses the word Awesome and Legendary a lot! Hence Bespoke Post's marketing message reads (at least to me) if you are a classy gentleman who like the fine things in life, subscribe to our service, and we will send you products that help you maintain your classiness. And it's all curated by us, so there is no effort on your part. And by the way, their products are super awesome!
Next let's consider, what is behind the rise of so many subscription model E-Commerce businesses?
1. Subscription models have been around forever; these businesses are online versions of traditional subscription businesses.Wine of the month club comes to mind.
2. Such businesses can start producing revenue quicker than let's say a marketplace. What do you need to get started? A cool concept, a good website and some amount of inventory and a clear value proposition. Layer on the marketing on top.
3. There is a good amount of predictability. Only order a little more than you think you need for that month - since you are seeing numbers month to month, you can predict the demand for next month to a reasonable degree. If you under order - back order the goods, please the order with the supplier, and have them shipped out a little later.
4. Most of them are buying from small suppliers, so they have enough negotiating power to get good margins, and also shift some of the risk over to the suppliers
5. The cost of customer acquisition is lower in this new era of social media marketing. And then there is affiliate marketing - just offer your customers $10 off for very friend that signs up, and you have another channel going
6. As the number of such businesses will show, there are enough number of niches to be filled
7. On the customer side, another value proposition is surprise. As an example, Birchbox sends 4-5 samples/month for $10. What the samples would be? That's a surprise that's eagerly awaited by customers
8. The perceived price from a customer's perspective is lower; Psychologically speaking, $19.95/month seems much lower than $240/year.
9. I think the biggest factor is that these businesses give the founders a chance to share something they are passionate about. For example another friend Gautam, from the same Startup Leadership Program batch as I, launched Naturebox, which sends healthy Snacks daily. He passionate about healthy food, and the startup enables him to share this with his customers.Read this excerpt from his blog:
"As a co-founder of NatureBox, I’m especially pleased to introduce you to our company and thank you for your visit. The NatureBox mission of helping you eat healthier without changing your daily routine, has great personal meaning to me. I grew up overweight – weighing more than 200 pounds at the age of 12 – and struggled with obesity for most of my life. As a child, I would come home from school and spend hours eating junk food. My weight struggles were preventable if I had healthier options and better eating habits. Through hard work and dedication, I lost weight by focusing on healthy foods. Now I am dedicating my life to helping others discover a healthier you."
But as the number of these business rise, what will enable each one to be successful?
1. Scale - is the market big enough? Probably boutique stationary goods is not!
2. A clear marketing message - as in what do you provide, and who do you provide it for? Can the customer easily recognize that the service is ideal for them?
2. Trust - do your customers trust that you will send high quality items? Startups often prove this by showcasing examples of things they have sent before
4. Additional revenue sources - even with a large number of customers, the business model might not support a large company. Additional revenue sources come in handy here. A prime example is Birchbox's marketplace - if you like the samples they send, you can purchase a full size version of the product right from their website.
So go on, find the subscription service right for you now!
Let's first consider what job customers hire these websites to do? In one word - curation. Consider the example of Bespoke Post, launched by my Kellogg classmates, Rishi and Steve.
Bespoke Post sends you hand-picked goods, which enable you to 'Turn into a gentleman. One box at a time.' And they send you a new box of 'Awesome'. Their marketing message is simple and brilliant. Their persona seems to be - wait for it - 'Barney Stinson.' For people who do not watch the show 'How I met your mother,' Barney is his early thirties and almost always wears a suit. He picks up women - all the time. And always has an opinion. And uses the word Awesome and Legendary a lot! Hence Bespoke Post's marketing message reads (at least to me) if you are a classy gentleman who like the fine things in life, subscribe to our service, and we will send you products that help you maintain your classiness. And it's all curated by us, so there is no effort on your part. And by the way, their products are super awesome!
Next let's consider, what is behind the rise of so many subscription model E-Commerce businesses?
1. Subscription models have been around forever; these businesses are online versions of traditional subscription businesses.Wine of the month club comes to mind.
2. Such businesses can start producing revenue quicker than let's say a marketplace. What do you need to get started? A cool concept, a good website and some amount of inventory and a clear value proposition. Layer on the marketing on top.
3. There is a good amount of predictability. Only order a little more than you think you need for that month - since you are seeing numbers month to month, you can predict the demand for next month to a reasonable degree. If you under order - back order the goods, please the order with the supplier, and have them shipped out a little later.
4. Most of them are buying from small suppliers, so they have enough negotiating power to get good margins, and also shift some of the risk over to the suppliers
5. The cost of customer acquisition is lower in this new era of social media marketing. And then there is affiliate marketing - just offer your customers $10 off for very friend that signs up, and you have another channel going
6. As the number of such businesses will show, there are enough number of niches to be filled
7. On the customer side, another value proposition is surprise. As an example, Birchbox sends 4-5 samples/month for $10. What the samples would be? That's a surprise that's eagerly awaited by customers
8. The perceived price from a customer's perspective is lower; Psychologically speaking, $19.95/month seems much lower than $240/year.
9. I think the biggest factor is that these businesses give the founders a chance to share something they are passionate about. For example another friend Gautam, from the same Startup Leadership Program batch as I, launched Naturebox, which sends healthy Snacks daily. He passionate about healthy food, and the startup enables him to share this with his customers.Read this excerpt from his blog:
"As a co-founder of NatureBox, I’m especially pleased to introduce you to our company and thank you for your visit. The NatureBox mission of helping you eat healthier without changing your daily routine, has great personal meaning to me. I grew up overweight – weighing more than 200 pounds at the age of 12 – and struggled with obesity for most of my life. As a child, I would come home from school and spend hours eating junk food. My weight struggles were preventable if I had healthier options and better eating habits. Through hard work and dedication, I lost weight by focusing on healthy foods. Now I am dedicating my life to helping others discover a healthier you."
But as the number of these business rise, what will enable each one to be successful?
1. Scale - is the market big enough? Probably boutique stationary goods is not!
2. A clear marketing message - as in what do you provide, and who do you provide it for? Can the customer easily recognize that the service is ideal for them?
2. Trust - do your customers trust that you will send high quality items? Startups often prove this by showcasing examples of things they have sent before
4. Additional revenue sources - even with a large number of customers, the business model might not support a large company. Additional revenue sources come in handy here. A prime example is Birchbox's marketplace - if you like the samples they send, you can purchase a full size version of the product right from their website.
So go on, find the subscription service right for you now!
Wednesday, February 22, 2012
Alice.com - great concept, terrible design!
I recently came across a new e-commerce site called Alice.com. This is how Alice.com describes itself "Alice.com will be an open, online retail platform for consumer packaged goods, focused primarily on linking manufacturers of essential household stuff like tooth brushes, toilet paper, trash bags etc. to end consumers directly." - Crunchbase.
I was intrigued - why Alice.com? Why not Amazon.com - doesn't has the same variety of goods? What do you gain Alice.com, rather than drugstore.com or amazon.com? Then I saw Alice.com's crunchbase page.
"Consumers currently lack a convenient way to shop for household essentials on the web, while manufacturers of consumer packaged goods are in the market for a fresh alternative to the large bricks-and-mortar retailing services. The Alice.com model will be unique both in terms of how goods are ordered/distributed and how consumer packaged goods companies can target, incentivize and personalize offers to consumers"
Once I explored the website I did begin to understand the merits. See for example the page for the Cat litter deodorizer. It clearly lays out how long the product typically lasts, reviews from customers etc. Some other pages also laid out the green rank of products etc. The bottom line - the site is custom designed for household products, and so gains a significant advantage over other sites like amazon.
Thinking of Alice.com in a jobs to be done framework, the site is enabling users to shop for household products online rather than go to the store. Quoting from a HBS working knowledge paper, there are a few dimensions to this framework:
"With few exceptions, every job people need or want to do has a social, a functional, and an emotional dimension. If marketers understand each of these dimensions, then they can design a product that's precisely targeted to the job. In other words, the job, not the customer, is the fundamental unit of analysis for a marketer who hopes to develop products that customers will buy."
In terms of functional dimension, the site does well in terms of how it enables viewing of various aspects of household products important to the user e.g., how long they last, how green they are etc. There is also a product rank section that lets you see how other products in the same category are handled. This is something that amazon is likely going to find hard to do, given that they have a much larger variety of products, and products can be listed by merchants in the marketplace. So far, so good.
The social element is well handled - in terms of reviews appearing instantly on the tight, letting you see what the other users think of the product. Another aspect of both social and emotional element is the budget; the question is there on a lot of people's minds - am I paying more than others for the same stuff? The site shows a tab called My Budget which compares your expenses to the average household.
There are two things that the site does badly. One is design. See the following screen shots: in the first one I hover over one of the category icons. As I go to select a subcategory, I move the mouse left - and the category to the left gets selected. I had seen such issues with websites designed in 2000 - it seems that they did hire a designer from that era!
The second thing that seems to be forced is social networking. There is a section called MyFriends - where you can share activity related to your favorite products in the neighborhood. The web is full of places where people highlight products that they love - but these products carry a lot more emotional value for them. Whether it is music, movies, books - sharing these highlights an aspect of the user's personality. I completely understand reviews - but social sharing of toilet paper and detergent is unlikely to excite anyone. I might be proven wrong, but I doubt it.
It would be certainly interesting to see how Alice.com does. I haven't made my first purchase yet, but do plan to soon, and post more thoughts on the site.
I was intrigued - why Alice.com? Why not Amazon.com - doesn't has the same variety of goods? What do you gain Alice.com, rather than drugstore.com or amazon.com? Then I saw Alice.com's crunchbase page.
"Consumers currently lack a convenient way to shop for household essentials on the web, while manufacturers of consumer packaged goods are in the market for a fresh alternative to the large bricks-and-mortar retailing services. The Alice.com model will be unique both in terms of how goods are ordered/distributed and how consumer packaged goods companies can target, incentivize and personalize offers to consumers"
Once I explored the website I did begin to understand the merits. See for example the page for the Cat litter deodorizer. It clearly lays out how long the product typically lasts, reviews from customers etc. Some other pages also laid out the green rank of products etc. The bottom line - the site is custom designed for household products, and so gains a significant advantage over other sites like amazon.
"With few exceptions, every job people need or want to do has a social, a functional, and an emotional dimension. If marketers understand each of these dimensions, then they can design a product that's precisely targeted to the job. In other words, the job, not the customer, is the fundamental unit of analysis for a marketer who hopes to develop products that customers will buy."
In terms of functional dimension, the site does well in terms of how it enables viewing of various aspects of household products important to the user e.g., how long they last, how green they are etc. There is also a product rank section that lets you see how other products in the same category are handled. This is something that amazon is likely going to find hard to do, given that they have a much larger variety of products, and products can be listed by merchants in the marketplace. So far, so good.
The social element is well handled - in terms of reviews appearing instantly on the tight, letting you see what the other users think of the product. Another aspect of both social and emotional element is the budget; the question is there on a lot of people's minds - am I paying more than others for the same stuff? The site shows a tab called My Budget which compares your expenses to the average household.
There are two things that the site does badly. One is design. See the following screen shots: in the first one I hover over one of the category icons. As I go to select a subcategory, I move the mouse left - and the category to the left gets selected. I had seen such issues with websites designed in 2000 - it seems that they did hire a designer from that era!
The second thing that seems to be forced is social networking. There is a section called MyFriends - where you can share activity related to your favorite products in the neighborhood. The web is full of places where people highlight products that they love - but these products carry a lot more emotional value for them. Whether it is music, movies, books - sharing these highlights an aspect of the user's personality. I completely understand reviews - but social sharing of toilet paper and detergent is unlikely to excite anyone. I might be proven wrong, but I doubt it.
It would be certainly interesting to see how Alice.com does. I haven't made my first purchase yet, but do plan to soon, and post more thoughts on the site.
Thursday, February 2, 2012
Thoughts on Pinterest
Pinterest is the hot new thing. The new kid on the blog. The new story in town.
On hearing about it from multiple people, I decided to give it a shot. I actually had to wait to be let in and create an account - which made it all the more desired for me! After spending some time in it, I have started to see what makes it so special. Here are some thoughts:
1. Design - obviously, the design is super awesome! But what exactly about the design is so awesome?
As this article would tell you, it is the infinite scrolling and the masonry style layout. Infinite scrolling is a technique used by several new websites, including Facebook. There is no pagination; as you scroll down, the page just refreshes with more content. No effort required on part of the user. The masonry style layout, as the article says, " the most efficient utilization of space possible given varying image heights. It overcomes past layout hurdles and takes vertical height into account when laying out the images, thereby creating a super tight, puzzle piece flow of images on the page. "Simply put, the images are laid out in an efficient manner, and you can scroll forever till you find something that captures your attention.
I will add one more thing; it is the way images "pop." Forgive me for being non-technical, but I am no UI designer. I notice that the contrast of the images to the rest of the page, including backgrounds, comments etc. is so good, that as I scroll down, my eye can dart from one image to another without being interrupted by anything else. That is what makes the scrolling so fast and efficient. And the more I scroll, the more I am likely to discover something interesting. And spend more time on it.
2. Positioning and messaging - The positioning and messaging of the site is outstanding. Let's start with the name - Pinterest. I think of pin and interest. I am slightly confused, but interested. And what do they mean by interest? Is it the money I earn from a savings account, or things I like to do/see/experience?
But the confusion disappears the moment I enter the site. It's your virtual pinboard - ah now I get it! I can pin the things I like on the web, just like I would pin clippings from a magazine to a real-life pinboard. The messaging is simple like other great startups, especially Dropbox, which describe itself as a 'Magic pocket in the cloud.' You could drop anything (file) in it, and pick it up from anywhere. Such simple, intuitive messaging ties technology to real life objects, and turns skeptic visitors into people just waiting to try the product out.
3. Get them started - It is so easy to get started with Pinterest. And I don't mean just signup. I mean you have pins and boards to look at the moment you are on the site. The homepage takes you to the most popular pins on Pinterest. If you have friends on Facebook who are using Pinterest, you are immediately subscribed to them. You can look at what they are interested in, repin the pins, and find similar users/boards and follow them.
4. And keep them coming back - And of course, Pinterest makes it easy to share pins on Twitter, Facebook, blogs etc. Which means even if I have not visited the site, I will see the Pins in some feed and will visit again
So am I an avid user of Pinterest. Not at all actually. Why? Well the most popular pictures are women's clothes, accessories etc. I am not trying to be sexist; it is just currently dominated by items of interest to women. I am sure us tech and business geeks will catch up. Till then, I continue to visit Pinterest occasionally, and follow any news on them very closely.
On hearing about it from multiple people, I decided to give it a shot. I actually had to wait to be let in and create an account - which made it all the more desired for me! After spending some time in it, I have started to see what makes it so special. Here are some thoughts:
1. Design - obviously, the design is super awesome! But what exactly about the design is so awesome?
As this article would tell you, it is the infinite scrolling and the masonry style layout. Infinite scrolling is a technique used by several new websites, including Facebook. There is no pagination; as you scroll down, the page just refreshes with more content. No effort required on part of the user. The masonry style layout, as the article says, " the most efficient utilization of space possible given varying image heights. It overcomes past layout hurdles and takes vertical height into account when laying out the images, thereby creating a super tight, puzzle piece flow of images on the page. "Simply put, the images are laid out in an efficient manner, and you can scroll forever till you find something that captures your attention.
I will add one more thing; it is the way images "pop." Forgive me for being non-technical, but I am no UI designer. I notice that the contrast of the images to the rest of the page, including backgrounds, comments etc. is so good, that as I scroll down, my eye can dart from one image to another without being interrupted by anything else. That is what makes the scrolling so fast and efficient. And the more I scroll, the more I am likely to discover something interesting. And spend more time on it.
2. Positioning and messaging - The positioning and messaging of the site is outstanding. Let's start with the name - Pinterest. I think of pin and interest. I am slightly confused, but interested. And what do they mean by interest? Is it the money I earn from a savings account, or things I like to do/see/experience?
But the confusion disappears the moment I enter the site. It's your virtual pinboard - ah now I get it! I can pin the things I like on the web, just like I would pin clippings from a magazine to a real-life pinboard. The messaging is simple like other great startups, especially Dropbox, which describe itself as a 'Magic pocket in the cloud.' You could drop anything (file) in it, and pick it up from anywhere. Such simple, intuitive messaging ties technology to real life objects, and turns skeptic visitors into people just waiting to try the product out.
3. Get them started - It is so easy to get started with Pinterest. And I don't mean just signup. I mean you have pins and boards to look at the moment you are on the site. The homepage takes you to the most popular pins on Pinterest. If you have friends on Facebook who are using Pinterest, you are immediately subscribed to them. You can look at what they are interested in, repin the pins, and find similar users/boards and follow them.
4. And keep them coming back - And of course, Pinterest makes it easy to share pins on Twitter, Facebook, blogs etc. Which means even if I have not visited the site, I will see the Pins in some feed and will visit again
So am I an avid user of Pinterest. Not at all actually. Why? Well the most popular pictures are women's clothes, accessories etc. I am not trying to be sexist; it is just currently dominated by items of interest to women. I am sure us tech and business geeks will catch up. Till then, I continue to visit Pinterest occasionally, and follow any news on them very closely.
Wednesday, January 25, 2012
Monday, January 23, 2012
Yes, there is an app for that!
One of my wife's friend's mom recently gave her some advice: if your baby is crying too much, then just switch on the vacuum cleaner. Babies are fascinated by the noise and often start crying. In fact, she went through several vacuum cleaners raising her three children!
My immediate thought was - maybe, just maybe, there is an app for that. Of course! Called the 'White Noise Baby', this app plays car ride, vaccum cleaner, hair dryer etc.! Awesome!
But wait, one glitch. The free version comes with one sound. I wanted to buy the others (just costs 99 cents), but the link on the app gives an error. Please fix it dear White Noise Baby application developers, and I will gladly give my 99 cents.
My immediate thought was - maybe, just maybe, there is an app for that. Of course! Called the 'White Noise Baby', this app plays car ride, vaccum cleaner, hair dryer etc.! Awesome!
But wait, one glitch. The free version comes with one sound. I wanted to buy the others (just costs 99 cents), but the link on the app gives an error. Please fix it dear White Noise Baby application developers, and I will gladly give my 99 cents.
Sunday, January 22, 2012
On internet marketplaces....
I have written before about two-sided markets.Harvard Business Review has a phenomenal paper on strategies for two-sided markets. I have been observing the emergence of a large number of internet business that generate value by connecting two distinct user groups, and gathering my thoughts on it. Here is how I think about these businesses.
How does the business generate value?
One needs to think about how the business generates value for both groups of users. Value is generated by one or more of the following ways:
1. Lowering costs or effort: Let's take the case of TeachStreet, a marketplace connecting students with teachers. For students, it simplifies the process of looking for a class. For teachers, it lowers marketing expenses and effort; by creating one single site that lists all teachers, TeachStreet can perform SEO much better, ensuring that its pages show up near the top of Google search results.
2. A better match: The other side to the coin is how internet marketplaces can help create a better match.
Let's take the example of eharmony. While you would not see it as a classic 'marketplace,' it is essentially matching guys to girls. No, eharmony does not support men seeking men, or women seeking women (so I heard). Anyway, back to my original point - because of a large number of men and women on the site. EHarmony is able to leverage attribute based matching and proprietary algorithms to get a supposedly better match.
Another example is EBay - you can get the exact product you are looking for, down to model, version number etc. etc.
3. A unique experience: A number of marketplace-like businesses have started provide unique experiences, not available anywhere else.
Skillshare and Sidetour are the first two that come to mind. Skillshare is 'a community marketplace to learn anything from anyone.' Which means that people who were not sharing their knowledge before, are doing so, using the platform. Sidetour, a 'Marketplace for Authentic Experiences,' provide experiences that you cannot find anywhere else. For example. 'Visit NYC's Flower Market and Create a Bouquet with a Floral Designer' by the owner of a Floral Design Boutique who has a lot of knowledge about the NYC flower market (otherwise she would be out of business).
A challenge for these marketplaces is their uniqueness - particularly, how can they scale while maintaining their uniqueness and quality. It is completely possible that as these platforms get more and more popular, more people sign up to teach. But then again, would the quality of people signing up be just as good? That remains to be seen.
Value proposition
Similar to the point above re: value generation, Marketplaces need to have a clear value proposition defined for customers. The value proposition might emphasize comprehensiveness (eBaY - the world's largest marketplace for goods, so you can find anything here), uniqueness (other than the examples above, Etsy - the marketplace for handmade goods that you cannot find elsewhere), cost (one of the main attractions of AirBnB, though so is uniqueness) or quality (TakeLessons.com for example provides customized music lessons by handpicked teachers, to ensure quality).
One value proposition might affect another; for example, comprehensiveness = more buyers and sellers = more efficient marketplace = lower cost.
Revenue model
Several interesting revenue have emerged in marketplace businesses i.e., ways in which the marketplaces themselves make money
1. Transaction fees - from the days of eBaY, this is the most popular model. Fees might be percentage of final price plus flat fees (e.g., eBaY's listing fee, fee for using more than 5 images etc.)
2. Subscription fees - typically, one side of the marketplace is charged a subscription fees, while the other is free. Normally it is the service provider which is charged
3. Other - Some companies have other revenue models.
BetterFly.com, for example, has none :). My guess is that they are aiming to build a large user base at first, and worry about monetization at a later point. This might be a great strategy; once they have regular matches on the website and people contacting teachers, they can monetize by solving various problems for their clients. One might be appointment scheduling - if a user lookup the service provider's calendar, scheduling an appointment through the web and pay up front, this might save the teacher a lot of hassle, and reduce the risk of no-shows dramatically.
NextGuru.com asks all service providers to give a free first class, and charges $20 to the student for the class.
One of the most interesting business models is from restaurant reservation site Savored. Started by SLP fellow Benjamin Kean, Savored helps restaurants solve capacity management issues; essentially, you can reserve a table at a restaurant for an off-peak time, and get 40% off food and alcohol. You get money off the meal, and the restaurant gets to fill in idle capacity and generate incremental revenue. For this, you pay $10 to make a reservation through Savored. As of now, 635 restaurants have signed up for Savored, and the website is reportedly doing very well.
Success factors
So what determines success in this business? Simply put two things:
1. Are you able to build a large user base on both sides of the marketplace?
2. Is your customer lifetime value significantly higher than your user acquisition cost?
Let's look at both factors in detail.
1. Building a large user base: The first problem in building a large user base is getting the initial users. Marketplaces face the chicken and egg problem at first. Why would parties on one side of the platform sign up, without enough users from the other side?
Startups often give one side offers such as free trial period, in which they have no upfront costs, and won't see any costs until they see some sort of indication that they are benefiting from the marketplace. This indication could take the form of people signing up for their service, or even visiting their page.
Sometimes this trial is not enough, especially if it takes some effort to sign up, create a profile etc. Startups can further boost the initial signups by making the process as simple as possible, and providing some kind of value to the user immediately upon signing up. Betterfly for instance providers teachers a set of Marketing tools that allow teachers to market themselves in other venues such as Google Places, Craigslist etc.
Sometimes the trial is necessary for both sides. For example a site connecting buyers and sellers of goods could give the buyers $5 off first purchase etc.
The second problem in increasing the user base is capitalizing on the initial set of users to make sure that your business grows virally. Word of mouth marketing plays a big role in this. In the age of Facebook and Twitter, websites must make it simple for users to spread the word about their Marketplace. For example, if someone signed up for an event through your website? Share on Facebook. The next most emerging channel might be Pinterest
2. Making sure LTV>> CAC: Let's talk about both LTV and CAC with an example. Take the case of a marketplace that matches teachers with students. Let's say the cost of acquiring a student is a dollar through a combination of SEO/SEM/Social Media and Inbound marketing. What will determine the success of the business is whether LTV is much bigger than the the initial acquisition cost. Let's also assume that the revenue model is percentage of transaction - Let's say 5% of transaction.
Suppose the student finds a teacher through the website, and signs up for the first class online. If the cost of the class is 20 dollars, revenue generated is 5% of $20 or $1. Which is equal to the acquisition cost of the user.
The key question is - what happens next? Does the student meet the teacher, and decide to do more classes? If he/she does so, is the transaction through the website, or does the teacher tell the student to just email him/her directly next time, and pay in cash? Or does the startup have a way or controlling, or atleast influencing that the transaction continues through the website? Also, does the student continue to look for other teachers in different subjects? The key is to increase customer loyalty, and prevent leakage. Common ways of doing this are loyalty programs, email marketing.
How does the business generate value?
One needs to think about how the business generates value for both groups of users. Value is generated by one or more of the following ways:
1. Lowering costs or effort: Let's take the case of TeachStreet, a marketplace connecting students with teachers. For students, it simplifies the process of looking for a class. For teachers, it lowers marketing expenses and effort; by creating one single site that lists all teachers, TeachStreet can perform SEO much better, ensuring that its pages show up near the top of Google search results.
2. A better match: The other side to the coin is how internet marketplaces can help create a better match.
Let's take the example of eharmony. While you would not see it as a classic 'marketplace,' it is essentially matching guys to girls. No, eharmony does not support men seeking men, or women seeking women (so I heard). Anyway, back to my original point - because of a large number of men and women on the site. EHarmony is able to leverage attribute based matching and proprietary algorithms to get a supposedly better match.
Another example is EBay - you can get the exact product you are looking for, down to model, version number etc. etc.
3. A unique experience: A number of marketplace-like businesses have started provide unique experiences, not available anywhere else.
Skillshare and Sidetour are the first two that come to mind. Skillshare is 'a community marketplace to learn anything from anyone.' Which means that people who were not sharing their knowledge before, are doing so, using the platform. Sidetour, a 'Marketplace for Authentic Experiences,' provide experiences that you cannot find anywhere else. For example. 'Visit NYC's Flower Market and Create a Bouquet with a Floral Designer' by the owner of a Floral Design Boutique who has a lot of knowledge about the NYC flower market (otherwise she would be out of business).
A challenge for these marketplaces is their uniqueness - particularly, how can they scale while maintaining their uniqueness and quality. It is completely possible that as these platforms get more and more popular, more people sign up to teach. But then again, would the quality of people signing up be just as good? That remains to be seen.
Value proposition
Similar to the point above re: value generation, Marketplaces need to have a clear value proposition defined for customers. The value proposition might emphasize comprehensiveness (eBaY - the world's largest marketplace for goods, so you can find anything here), uniqueness (other than the examples above, Etsy - the marketplace for handmade goods that you cannot find elsewhere), cost (one of the main attractions of AirBnB, though so is uniqueness) or quality (TakeLessons.com for example provides customized music lessons by handpicked teachers, to ensure quality).
One value proposition might affect another; for example, comprehensiveness = more buyers and sellers = more efficient marketplace = lower cost.
Revenue model
Several interesting revenue have emerged in marketplace businesses i.e., ways in which the marketplaces themselves make money
1. Transaction fees - from the days of eBaY, this is the most popular model. Fees might be percentage of final price plus flat fees (e.g., eBaY's listing fee, fee for using more than 5 images etc.)
2. Subscription fees - typically, one side of the marketplace is charged a subscription fees, while the other is free. Normally it is the service provider which is charged
3. Other - Some companies have other revenue models.
BetterFly.com, for example, has none :). My guess is that they are aiming to build a large user base at first, and worry about monetization at a later point. This might be a great strategy; once they have regular matches on the website and people contacting teachers, they can monetize by solving various problems for their clients. One might be appointment scheduling - if a user lookup the service provider's calendar, scheduling an appointment through the web and pay up front, this might save the teacher a lot of hassle, and reduce the risk of no-shows dramatically.
NextGuru.com asks all service providers to give a free first class, and charges $20 to the student for the class.
One of the most interesting business models is from restaurant reservation site Savored. Started by SLP fellow Benjamin Kean, Savored helps restaurants solve capacity management issues; essentially, you can reserve a table at a restaurant for an off-peak time, and get 40% off food and alcohol. You get money off the meal, and the restaurant gets to fill in idle capacity and generate incremental revenue. For this, you pay $10 to make a reservation through Savored. As of now, 635 restaurants have signed up for Savored, and the website is reportedly doing very well.
Success factors
So what determines success in this business? Simply put two things:
1. Are you able to build a large user base on both sides of the marketplace?
2. Is your customer lifetime value significantly higher than your user acquisition cost?
Let's look at both factors in detail.
1. Building a large user base: The first problem in building a large user base is getting the initial users. Marketplaces face the chicken and egg problem at first. Why would parties on one side of the platform sign up, without enough users from the other side?
Startups often give one side offers such as free trial period, in which they have no upfront costs, and won't see any costs until they see some sort of indication that they are benefiting from the marketplace. This indication could take the form of people signing up for their service, or even visiting their page.
Sometimes this trial is not enough, especially if it takes some effort to sign up, create a profile etc. Startups can further boost the initial signups by making the process as simple as possible, and providing some kind of value to the user immediately upon signing up. Betterfly for instance providers teachers a set of Marketing tools that allow teachers to market themselves in other venues such as Google Places, Craigslist etc.
Sometimes the trial is necessary for both sides. For example a site connecting buyers and sellers of goods could give the buyers $5 off first purchase etc.
The second problem in increasing the user base is capitalizing on the initial set of users to make sure that your business grows virally. Word of mouth marketing plays a big role in this. In the age of Facebook and Twitter, websites must make it simple for users to spread the word about their Marketplace. For example, if someone signed up for an event through your website? Share on Facebook. The next most emerging channel might be Pinterest
2. Making sure LTV>> CAC: Let's talk about both LTV and CAC with an example. Take the case of a marketplace that matches teachers with students. Let's say the cost of acquiring a student is a dollar through a combination of SEO/SEM/Social Media and Inbound marketing. What will determine the success of the business is whether LTV is much bigger than the the initial acquisition cost. Let's also assume that the revenue model is percentage of transaction - Let's say 5% of transaction.
Suppose the student finds a teacher through the website, and signs up for the first class online. If the cost of the class is 20 dollars, revenue generated is 5% of $20 or $1. Which is equal to the acquisition cost of the user.
The key question is - what happens next? Does the student meet the teacher, and decide to do more classes? If he/she does so, is the transaction through the website, or does the teacher tell the student to just email him/her directly next time, and pay in cash? Or does the startup have a way or controlling, or atleast influencing that the transaction continues through the website? Also, does the student continue to look for other teachers in different subjects? The key is to increase customer loyalty, and prevent leakage. Common ways of doing this are loyalty programs, email marketing.
Wednesday, January 11, 2012
Gamificaiton
Gamification, or applying Game mechanics to everyday activities, is a trend thats super interesting to me.
Mint.com has already been known to apply game Mechanics to motivate people to achieve financial goals. Just today, Payoff.com announced a $2MM fundraising round. The intent of the site is to motivate people achieve financial goals
Three problems. First, I get this error when trying to add an account to the site on the iPad. That is not good. It does not give this error when used on Firefox on a PC.
Second, effort involved in importing all my financial information (which is already in Mint.com) is too much. Especially as I run into more issues on my PC! For example, accounts were in progress of being added, and then I get this error.
And the third? Just by adding an account, I got a Super Saver badge. I have no idea what this badge means - and unlike a Foursquare Mayor badge, it has no significance to me. Especially since it is not proportional to my action!
The concept certainly is promising, and I sincerely hope that the product gets there too!
Mint.com has already been known to apply game Mechanics to motivate people to achieve financial goals. Just today, Payoff.com announced a $2MM fundraising round. The intent of the site is to motivate people achieve financial goals
Payoff.com Product Explanation from Payoff.com on Vimeo.
Three problems. First, I get this error when trying to add an account to the site on the iPad. That is not good. It does not give this error when used on Firefox on a PC.
Second, effort involved in importing all my financial information (which is already in Mint.com) is too much. Especially as I run into more issues on my PC! For example, accounts were in progress of being added, and then I get this error.
And the third? Just by adding an account, I got a Super Saver badge. I have no idea what this badge means - and unlike a Foursquare Mayor badge, it has no significance to me. Especially since it is not proportional to my action!
The concept certainly is promising, and I sincerely hope that the product gets there too!
Sunday, January 8, 2012
Bye Bye Delicious. Hello evernote
I have been a loyal user of Delicious since early 2010. Finally, I have decided to move on - to Evernote! There were several reasons why I decided to make the switch:
1. We live in a world where we use several services together. For example, I use Read it Later to mark items I want to - well, read later. I also use Evernote for my notes, web clippings, thoughts etc. And I used to user Delicious for my bookmarks. They worked seamlessly with each other - I could mark an item as 'Read later' using my Read It Later web browser plugin, then read it on my Read it Later iPad app, and then save it to my delicious bookmarks list from the app while marking it as read. Until the delicious API started failing on me - especially from Read It Later iPad app. All, apparently because of some changes to the API which broke the connection with the Read It App. Lesson: Please do not break your most basic API services - people will leave
2. When I looked at what my alternatives were, the best one was to just export all by Bookmarks to Evernote. I found an article here that allowed me to export my book marks and import to Evernote with a little bit of work. There was a little bit extra work required, as the Delicious bookmark only returns the first 1000 results, and I had to repeat this process again, passing the argument 'start=1000' to retreive the next 1000 results, to get all my bookmarks. Ultimately, in 30 minutes, I had all my bookmarks in Evernote. Now the tags still do not work properly - but I see this as an opportunity to read through some of my bookmarks and consolidate them, so that I can actually find things I need. A painful process, but well worth the effort.
Now I use Shareholic and Read it Later plugin in my browser to move things where appropriate. So bye bye Delicious. Hello again, Evernote!
1. We live in a world where we use several services together. For example, I use Read it Later to mark items I want to - well, read later. I also use Evernote for my notes, web clippings, thoughts etc. And I used to user Delicious for my bookmarks. They worked seamlessly with each other - I could mark an item as 'Read later' using my Read It Later web browser plugin, then read it on my Read it Later iPad app, and then save it to my delicious bookmarks list from the app while marking it as read. Until the delicious API started failing on me - especially from Read It Later iPad app. All, apparently because of some changes to the API which broke the connection with the Read It App. Lesson: Please do not break your most basic API services - people will leave
2. When I looked at what my alternatives were, the best one was to just export all by Bookmarks to Evernote. I found an article here that allowed me to export my book marks and import to Evernote with a little bit of work. There was a little bit extra work required, as the Delicious bookmark only returns the first 1000 results, and I had to repeat this process again, passing the argument 'start=1000' to retreive the next 1000 results, to get all my bookmarks. Ultimately, in 30 minutes, I had all my bookmarks in Evernote. Now the tags still do not work properly - but I see this as an opportunity to read through some of my bookmarks and consolidate them, so that I can actually find things I need. A painful process, but well worth the effort.
Now I use Shareholic and Read it Later plugin in my browser to move things where appropriate. So bye bye Delicious. Hello again, Evernote!
Friday, December 30, 2011
Amazon and Customer Delight
I define Customer Delight as exceeding customer expectations. There have been two recent instances where Amazon did a remarkable job.
One was when I ordered the Roku box from Amazon. I spent an hour with Roku trying to troubleshoot the problem with Roku customer service - which was awful! The guy kept trying to make me reset the box, but the picture was still unclear on my TV. Now I don't have the latest 3D 1080p 240 Hz HDTV, but my TV isn't bad! It's HD enabled (aka 720p) and other players work well with it! Finally, when I gave up on Roku, I contacted Amazon.
Thats where things went uphill. Rather than call a 1800 number and wait for several minutes, they have a form on their website, where they call me! In 5 minutes, I was connected to a human being, and best of all, I spent no time waiting. They exchanged the Roku box for a new one, sent overnight. When that did not work too, I returned it - which meant clicking a link they sent me, printing the UPS label and dropping off to the UPS box.
The second instance was returning a $9.99 pair of sleep pajamas. Unfortunately the sizing on the website did not match what arrived in the email. I clicked on the return button, and it asked me for the reason code. When I entered it, that's it - the return was complete, I was refunded, and got a message 'For being a loyal customer, you don't even need to send back the item.'
It makes sense; the cost of having the item shipped back, processed for return, and then resent to someone else probably did not cover the profit Amazon.com will expect to make from the item. Additionally, they gained loyalty from me, by not making me go through the hassle of shipping the item back.
Now I am not sure if everyone will not get the same level of treatment. I order a fair amount from Amazon, and also am a prime members. Their low prices and great customer service has made me a loyal customer; I pretty much look to order almost everything from them. They must be deploying fairly sophisticated segmentation techniques to determine who they give the premium treatment to. Whatever it is, it seems to be working - I am delighted, and this instance made me an even more loyal Amazon.com customer.
One was when I ordered the Roku box from Amazon. I spent an hour with Roku trying to troubleshoot the problem with Roku customer service - which was awful! The guy kept trying to make me reset the box, but the picture was still unclear on my TV. Now I don't have the latest 3D 1080p 240 Hz HDTV, but my TV isn't bad! It's HD enabled (aka 720p) and other players work well with it! Finally, when I gave up on Roku, I contacted Amazon.
Thats where things went uphill. Rather than call a 1800 number and wait for several minutes, they have a form on their website, where they call me! In 5 minutes, I was connected to a human being, and best of all, I spent no time waiting. They exchanged the Roku box for a new one, sent overnight. When that did not work too, I returned it - which meant clicking a link they sent me, printing the UPS label and dropping off to the UPS box.
The second instance was returning a $9.99 pair of sleep pajamas. Unfortunately the sizing on the website did not match what arrived in the email. I clicked on the return button, and it asked me for the reason code. When I entered it, that's it - the return was complete, I was refunded, and got a message 'For being a loyal customer, you don't even need to send back the item.'
It makes sense; the cost of having the item shipped back, processed for return, and then resent to someone else probably did not cover the profit Amazon.com will expect to make from the item. Additionally, they gained loyalty from me, by not making me go through the hassle of shipping the item back.
Now I am not sure if everyone will not get the same level of treatment. I order a fair amount from Amazon, and also am a prime members. Their low prices and great customer service has made me a loyal customer; I pretty much look to order almost everything from them. They must be deploying fairly sophisticated segmentation techniques to determine who they give the premium treatment to. Whatever it is, it seems to be working - I am delighted, and this instance made me an even more loyal Amazon.com customer.
Thursday, December 1, 2011
Wednesday, November 30, 2011
Web Innovator group demo companies
The Web Innovators Group started by David Beisel been one of my favorite Boston startup events for several years. I last went to one in 2008, and one event in which PunchBowl presented. Now having moved back to Boston, I found myself at the Web Inno 32 meeting.
The event maintains the same format: there are 3 main dishes: startups that present on the main stage, and several side dishes that have demo tables available to them. Selections are made by David, I assume.
The event has grown massively in size since 2008, reflecting the enthusiasm for startups in the Boston area. The caliber of the entrepreneurs presenting also seems to be much higher. Here are my reviews of the main dishes:
1. Best Vendor helps people discover business applications for tasks ranging from marketing to accounting; from note taking to personal productivity. Sign up is simple; you mention your 3 favorite apps, log in via LinkedIn, and you get application recommendations. The more you add applications and fill in your profile, the better your recommendations become.
The platform solves a legitimate problem; for businesses, it is not easy to find the best applications for a given category; for the companies making these applications, the cost of customer acquisition is pretty high. While the revenue model for Best Vendor is a little unclear, presumably they will likely depend on fees from the application providers in return for cheaper customer acquisition.
The one thing that was a bit lacking was the demo itself; I love demos that tell a story and present the application in Clayon Christensen's 'Job to be done' format. The idea is simple, but profound. Every product is hired to do a job. Present what job your product is doing, and then demo how it is doing that. Demo done. Instead, the demo featured on a bunch of features and moved haphazardly through different screens.
2. Kibits Labs was probably the coolest of the bunch; it is a IPhone application that enables rich group messaging. You really need to either see the demo or download and use it to experience it. The demo itself was presented very well; the CEO Matt Cutler discussed some real life use cases;he is a very successful serial entrepreneur and mentor at Techstars, and it is obvious that he has done this before. In particular the Thanksgiving case appealed to me. Let's say you have extended family, all of which cannot get together to celebrate. Instead, you invite everyone to a Kibits group, and its easy to share pictures, videos and keep it separate from all your other texting/email junk. The application shows updates, shifts between items effortlessly. With the coolness factor. Kibits won the Audience Choice award by a narrow margin.
3. My favorite was restaurant reviews site Tasted Menu. It solves a legitimate problem; how often have you asked a friend, or the server at the restaurant 'What is good here?' Well, hello Tasted Menu. It is very easy to find restaurants on the site, and look up top rated menu items. They are coming up with a mobile app soon as well. Currently they are based in Boston, but will expand to other cities shortly.
I find the team to be pretty impressive; a pretty young HBS grad as CEO, a UI designer from TripAdvisor, a Ranking and Reputation engineer from Google and a Food Anthropologist (yes, those exist) managing the food taxonomy. They have been around since 2009, and are likely to do very well.
So here is to the next batch of Kick Ass Webb Inno companies!
The event maintains the same format: there are 3 main dishes: startups that present on the main stage, and several side dishes that have demo tables available to them. Selections are made by David, I assume.
The event has grown massively in size since 2008, reflecting the enthusiasm for startups in the Boston area. The caliber of the entrepreneurs presenting also seems to be much higher. Here are my reviews of the main dishes:
1. Best Vendor helps people discover business applications for tasks ranging from marketing to accounting; from note taking to personal productivity. Sign up is simple; you mention your 3 favorite apps, log in via LinkedIn, and you get application recommendations. The more you add applications and fill in your profile, the better your recommendations become.
The platform solves a legitimate problem; for businesses, it is not easy to find the best applications for a given category; for the companies making these applications, the cost of customer acquisition is pretty high. While the revenue model for Best Vendor is a little unclear, presumably they will likely depend on fees from the application providers in return for cheaper customer acquisition.
The one thing that was a bit lacking was the demo itself; I love demos that tell a story and present the application in Clayon Christensen's 'Job to be done' format. The idea is simple, but profound. Every product is hired to do a job. Present what job your product is doing, and then demo how it is doing that. Demo done. Instead, the demo featured on a bunch of features and moved haphazardly through different screens.
2. Kibits Labs was probably the coolest of the bunch; it is a IPhone application that enables rich group messaging. You really need to either see the demo or download and use it to experience it. The demo itself was presented very well; the CEO Matt Cutler discussed some real life use cases;he is a very successful serial entrepreneur and mentor at Techstars, and it is obvious that he has done this before. In particular the Thanksgiving case appealed to me. Let's say you have extended family, all of which cannot get together to celebrate. Instead, you invite everyone to a Kibits group, and its easy to share pictures, videos and keep it separate from all your other texting/email junk. The application shows updates, shifts between items effortlessly. With the coolness factor. Kibits won the Audience Choice award by a narrow margin.
3. My favorite was restaurant reviews site Tasted Menu. It solves a legitimate problem; how often have you asked a friend, or the server at the restaurant 'What is good here?' Well, hello Tasted Menu. It is very easy to find restaurants on the site, and look up top rated menu items. They are coming up with a mobile app soon as well. Currently they are based in Boston, but will expand to other cities shortly.
I find the team to be pretty impressive; a pretty young HBS grad as CEO, a UI designer from TripAdvisor, a Ranking and Reputation engineer from Google and a Food Anthropologist (yes, those exist) managing the food taxonomy. They have been around since 2009, and are likely to do very well.
So here is to the next batch of Kick Ass Webb Inno companies!
Monday, August 8, 2011
An Insightful analysis on Amazon.com
Amazon.com: the Hidden Empire
View more presentations from faberNovel
Sunday, April 3, 2011
The Yelp platform success
"The key to Yelp's success is that it is a reliable, user-friendly local information service that reflects the passion of its users."(from this BBC article)
Platforms are a tough business. Above all, they suffer from a chicken and egg problem. Let's take a video game console as a platform that connects gamers and game developers. If you do not have enough gamers which have the console, why would the game developers put in time, effort and money into developing games for that platform. And if you do not have enough games available, why would anyone buy the console.
They key to success in platforms is getting pricing right i.e., figuring out which side to subsidize, and how. This is why Microsoft and Sony sell their consoles lower than the cost to manufacture and distribute these systems, and then make up profit on fees from developers.
Yelp.com, and other social platforms face a similar but different challenge. Initially there were prices. Both businesses and reviewers are online for free. But what use would a review site be without reviews? Yelp solved this problem by building social mechanisms for good work. A key part of this is the user profile page that highlights the behaviors that Yelp is trying to encourage. A related post can be found here.
Why the sudden interest in Yelp? I am working on a platform business idea, and so was looking for inspiration. Wish me luck!
Platforms are a tough business. Above all, they suffer from a chicken and egg problem. Let's take a video game console as a platform that connects gamers and game developers. If you do not have enough gamers which have the console, why would the game developers put in time, effort and money into developing games for that platform. And if you do not have enough games available, why would anyone buy the console.
They key to success in platforms is getting pricing right i.e., figuring out which side to subsidize, and how. This is why Microsoft and Sony sell their consoles lower than the cost to manufacture and distribute these systems, and then make up profit on fees from developers.
Yelp.com, and other social platforms face a similar but different challenge. Initially there were prices. Both businesses and reviewers are online for free. But what use would a review site be without reviews? Yelp solved this problem by building social mechanisms for good work. A key part of this is the user profile page that highlights the behaviors that Yelp is trying to encourage. A related post can be found here.
Why the sudden interest in Yelp? I am working on a platform business idea, and so was looking for inspiration. Wish me luck!
Wednesday, September 8, 2010
Is the Web Dead?
In one of the most fascinating articles about the Web I have read in the recent past, Chris Anderson, the editor-in-chief of Wired magazine and the author of the book/concept the Long Tail argues that the Web is Dead. The title of the article is quite catchy, but as the Web would say,"The reports of my death are greatly exaggerated."Instead, Chris explains how some essential characteristics of the web are changing:
1. There has been a considerable change in traffic on the internet; from FTP and web being the majority in 2000, to video and peer-to-peer dominating in 2010.
2. The larger websites have become the media giants of 2010. Look at Facebook, Apple iTunes and Youtube; in 2001 the top 10 websites accounted for 31 percent of pageviews in the US. Now, the top 10 websites account for 75% of page views. And these larger players are likely to encourage closed gardens to monetize to the maximum, rather than make it all open and completely accessible. A case in point is iTunes.
3. The way we access the web is changing; more and more content is being consumed through smarter, thick clients like apps, on smartphones and tablets vs. the browser. A large part of this is because these thick clients offer much better user-experience. As a result, the internet is being used as a dumb transport mechanism.
4. The big web properties are acting more like all-or-nothing media giants, vs. what Chris calls the 'come-one-come-all collective utopianism' of the Web. Chris compares this to the natural path of industrialization: invention, propagation, adoption, control. Very strong argument!
5. Other than search, the web has not proven to be a great mechanism for advertising. A case in point is banner ads; they have always suffered from low CTRs, and are generally ignored by users. However alternative advertising mechanisms presented outside the pure browser-page based ads could be pretty attractive. This could include advertising mechanisms like sponsored social goods, banners in social games, mobile app based ads, video ads etc. While all of these are available on the browser, they are increasingly being used outside the browser.
In some sense, I do agree with Chris; especially since tablets and mobile phone based apps often provide a very engaging user-experience, far better than a general purpose browser. But there are several reasons why the web is far from dead
1. The web remains the largest source of information, and the currency of exchange of information - web links - get more and more important as this information is spread across the web rather than concentrated at one place. Even large properties like Facebook and Twitter rely on the exchange of information through links. In fact, as soon as I complete this blog entry, I will post it on facebook and twitter, which is probably why you are reading it.
2. App traffic is growing because of video, but is traffic the right measure? It takes several times more bandwidth to consume an hour long video, than is needed when keeping the user engaged for an hour with a traditional web page. So the metric for comparing is not exactly fair.
3. There are several innovations in web browsers - particularly from Google Chrome - that might help bring back the browser.
4. The B2B web is likely to remain on the web as far as I can see - I mean how else could you write something that can easily be used within and outside an enterprise, than as a web application. In fact, enterprises are still in the midst of completing the transition to web-based applications, so the thought of moving from the web to this new app based web is hard to think of.
1. There has been a considerable change in traffic on the internet; from FTP and web being the majority in 2000, to video and peer-to-peer dominating in 2010.
2. The larger websites have become the media giants of 2010. Look at Facebook, Apple iTunes and Youtube; in 2001 the top 10 websites accounted for 31 percent of pageviews in the US. Now, the top 10 websites account for 75% of page views. And these larger players are likely to encourage closed gardens to monetize to the maximum, rather than make it all open and completely accessible. A case in point is iTunes.
3. The way we access the web is changing; more and more content is being consumed through smarter, thick clients like apps, on smartphones and tablets vs. the browser. A large part of this is because these thick clients offer much better user-experience. As a result, the internet is being used as a dumb transport mechanism.
4. The big web properties are acting more like all-or-nothing media giants, vs. what Chris calls the 'come-one-come-all collective utopianism' of the Web. Chris compares this to the natural path of industrialization: invention, propagation, adoption, control. Very strong argument!
5. Other than search, the web has not proven to be a great mechanism for advertising. A case in point is banner ads; they have always suffered from low CTRs, and are generally ignored by users. However alternative advertising mechanisms presented outside the pure browser-page based ads could be pretty attractive. This could include advertising mechanisms like sponsored social goods, banners in social games, mobile app based ads, video ads etc. While all of these are available on the browser, they are increasingly being used outside the browser.
In some sense, I do agree with Chris; especially since tablets and mobile phone based apps often provide a very engaging user-experience, far better than a general purpose browser. But there are several reasons why the web is far from dead
1. The web remains the largest source of information, and the currency of exchange of information - web links - get more and more important as this information is spread across the web rather than concentrated at one place. Even large properties like Facebook and Twitter rely on the exchange of information through links. In fact, as soon as I complete this blog entry, I will post it on facebook and twitter, which is probably why you are reading it.
2. App traffic is growing because of video, but is traffic the right measure? It takes several times more bandwidth to consume an hour long video, than is needed when keeping the user engaged for an hour with a traditional web page. So the metric for comparing is not exactly fair.
3. There are several innovations in web browsers - particularly from Google Chrome - that might help bring back the browser.
4. The B2B web is likely to remain on the web as far as I can see - I mean how else could you write something that can easily be used within and outside an enterprise, than as a web application. In fact, enterprises are still in the midst of completing the transition to web-based applications, so the thought of moving from the web to this new app based web is hard to think of.
Tuesday, August 31, 2010
Wednesday, July 7, 2010
Thursday, January 7, 2010
2010 : The year of the Tablet/E-Book Reader
I was (and am) waiting for the Apple Tablet to be released. It is expected to be announced January 25th or 26th. Expectations for it are sky high. Here are some of the things I have read about it on Tech blogs
1. The price will be $800
2. It will have a new, and very surprising method by which you interact with it. Do you sing to it?
3. It will have the regular color screen, apps, multi-touch interface
4. It will include an E-Book reader
5. Steve Jobs is happy with it. That is saying a lot!
But even before the launch of the Apple tablet there are many other devices that either are already here, or are expected to be announced soon:
1. HP/Microsoft's Slate Tablet released at Consumer Electronic Show
2. Plastic Logic's Que ebook reader (video below). It's pitch is that it is flexible, shatter proof and completely designed for Business. It features full control by touch, ability to view documents, synchronize calendar with outlook, pin favorite things, receive books by wireless etc.
1. The price will be $800
2. It will have a new, and very surprising method by which you interact with it. Do you sing to it?
3. It will have the regular color screen, apps, multi-touch interface
4. It will include an E-Book reader
5. Steve Jobs is happy with it. That is saying a lot!
But even before the launch of the Apple tablet there are many other devices that either are already here, or are expected to be announced soon:
1. HP/Microsoft's Slate Tablet released at Consumer Electronic Show
2. Plastic Logic's Que ebook reader (video below). It's pitch is that it is flexible, shatter proof and completely designed for Business. It features full control by touch, ability to view documents, synchronize calendar with outlook, pin favorite things, receive books by wireless etc.
Plastic Logic shows off Que eBook reader from Dean Takahashi on Vimeo.
3.HP's Android tablet here
And so on and so forth. But what do you really want from a tablet/ebook reader Device? The way I look at it, I always question - what device does the Tablet replace? This is true of most new gadgets. Even the iPod replaced a device - the CD Player. It also replaced you carrying around a 1000 CDs. The apple tablet must replace a few simple things for me - a pen, a notebook, and books that I read. It must include a eReader, but be a lot more.
This is what I want:
1. A single device - not a separate ebook reader and tablet PC
2. Calendar/email integration
3. Ability to download and run apps
4. A replacement for the notebook - with a stylus pen, and ability to add comments to documents, create notes and synch with a service like Evernote
5. Price less than $500. Because I am a student
6. Wireless capability for downloading books
What are the questions apple faces:
1. How to get wireless service on the device? Would users be willing to pay for another connection?
2. How to get content - books, videos etc? It can rely on iTunes for everything else other than books. But what about books? Partnerships? Perhaps a partnership with Amazon, which might be very contentious, given the Kindle?
I am waiting eagerly for January 26th...
Wednesday, December 30, 2009
Google and Yelp Acquisition Talks
One of the key lessons we learned in our first strategy class was - always question an acquisition. Always question whether the objectives of the acquisition could be met simply with a contract, and whether the synergy (the most over-used buzzword in the history of business, and possibly
mankind) made any sense.With this perspective, I began to analyze the recent Google - Yelp acquisition talks. I feel that the synergies associated with Yelp as part of Google do make sense, and Google should acquire Yelp, if the price is right. What do you think?
mankind) made any sense.With this perspective, I began to analyze the recent Google - Yelp acquisition talks. I feel that the synergies associated with Yelp as part of Google do make sense, and Google should acquire Yelp, if the price is right. What do you think?
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