Category Archives: Business

Foursquare takes on Yelp

Posted by under Business, Internet

Last week Foursquare CEO Dennis Crowley sat down for an interview at LES co-working space Projective. The event was part of Pando Daily’s ongoing speaker series. Since it was a short five minute walk from my apartment, I decided to check it out. PandoDaily’s Sarah Lacy tried to get in several gotcha moments. First, asking about a potential acquisition offer from Yahoo (Crowley deflected) and then leading into an even bigger question with, “this is probably going to piss you off, but…” Back to the Yahoo question though. Crowley answered by saying something along the lines that he doesn’t really know what their new strategy is and how his company would fit in. He also mentioned that just because he was seen talking to someone doesn’t mean anything. He talks to people from lots of different companies, that’s just how it works. From the glances they were exchanging, I would guess that something is going on here. Foursquare seems like a perfect acquisition target for Marissa Mayer at Yahoo. The other gotcha question is as follows:

I want to ask you broadly about liquidation of shares and cashing out and secondary markets and how you guys have viewed that. And the particular story I heard about Foursquare was that there was a guy who was you know, a fairly senior level guy who wasn’t working out very well, who you guys got rid of. And about the same time there was a kind of stupid rich man in New York who really wanted to get some shares of a hot up and coming internet company, knew nothing about the space, found out something about Foursquare, some how got hooked up with this guy who had just been fired from Foursquare. I believe it was around the time you were doing your Series C and basically said well what was the valuation of the Series C and someone told him so he said, well what if I pay you three times that. Like he had no idea how this worked, bought out this guy’s shares, news trickled back to Foursquare, there wasn’t a lot of allowance for liquidity among the employees and the employees were furious because this douchebag who had been fired just got cashed out triple times while the guys still working at the company weren’t.”

(cue audience laughter)

Crowley declined to answer, but was surprisingly well natured about the whole thing. Based on his reaction, I’d say he knew exactly what she was talking about.

Overall the entire exchange was fascinating, although most of the audience questions weren’t very thoughtful. One thing Crowley could actually talk about was where Foursquare is heading in the future. He spoke a lot about the data (over three billion check-ins) and what that allows them to do. He also hinted at being able to directly take on Yelp with Foursquare’s Explore feature.

That direct competition was rolled out today. Foursquare’s web site is now giant discovery tool for places in your area. You can see it live on Foursquare.com.

Craigslist clusterfuck

Posted by under Business, Internet

Craigslist is one of those ubiquitous, old school internet properties. Started back in 1995, it’s safe to say it has gotten a little stagnant. It still looks exactly like it did when it launched and has failed to keep up on more recent innovations. Yet somehow it still dominates the market. A series of events over the past few weeks have brought up some questions about the site’s future relevance and questionable business dealings. I’ll get back to this in a bit, but first I need to explain how we got here in the first place.

Padmapper was a site run by a single web developer, trying to make apartment searching just a little less painful. This especially resonated with me because at the time I was looking for a new place in New York (which is an absolute nightmare). What he was doing was scrapping data from a variety of sources (mainly Craigslist) and then aggregating all those apartment listings and plotting them on a map. The map then had these great filters for important things like location, rent, bedrooms, bathrooms and type of lease. For a place like New York this was especially important because location is very important. A tool to sort through all the terrible listings and just focus on the good ones saves so much time. (New Jersey does not count as being five minutes from midtown).

At some point his little site got too big and caught the attention of Craig Newmark and the gang at Craigslist. The normal Silicon Valley response would have been to offer to buy Padmapper and bring the developer on board at Craigslist to build innovative features like this into the site. Instead they sent a cease and desist letter to Padmapper and threatened to sue if the site continued to use their data. The developer claims he tried to get in touch with the Craigslist legal team to no avail. Unable to even have a conversation with Craigslist, Padmapper was forced to stop using that data, but only temporarily. It’s important to point out that, while Padmapper was using Craiglist’s data, they were bringing users back to the original posting on Craigslist. They were serving ads on the map mashup, but they argued, were not taking anything away from Craigslist or stealing their users per say.

Enter 3Taps, a company that makes access to data on the web easier and more convenient to use. They take major sites like Craigslist and scrape the data from Google’s indexed cache and then turn it into a well-documented API for web developers to build upon. The distinction was key for Padmapper, 3Taps turns Google into a middle man in this entire situation. No one is dumb enough to sue Google, right? Satisfied that this would be a legal workaround, Padmapper turned back on the Craiglist listings, but this time through 3Tap as opposed to directly. The result? Craigslist sued them both.

All while this is going on, Craig Newmark is abdicating any responsibility for the situation, constantly tweeting things along the lines of him being the customer service rep and Jim Buckmaster, being the CEO, is the person these questions should be directed to. Newmark is estimated by some sources to be worth more than a billion dollars as a result of the empire he has built around Craigslist. To this day he still goes through and manually responds to posts flagged for abuse, answers the phones and responds to customer complaint emails. For him it has always been more about the community and bringing people together, rather than anything more material, like making money. Despite this hippie mentality, the company is for some reason notoriously litigious.

Around the same time Craigslist makes some moves internally to update their terms of service to say that users are giving exclusive rights over their listings. Seems like a clear move to bolster their legal case against Padmapper, 3Taps or any future targets.

To me, this entire thing is very bizarre. Why would you even sue these people? They aren’t doing anything that hurts your core business, if anything they are improving on and adding to it. You’re generating tons of negative press and provoking the ire of the internet masses, which is never a good idea.

You would think Newmark would be worried about some new innovative take on the classifieds coming along and wiping him out. He hasn’t improved the site since the very beginning. And yet, no one has come along and destroyed him like he destroyed the newspaper classifieds before him. There’s a saying that when an industry ceases to innovate, they start to hire lobbyists and lawyers. I wonder when he hired his first lawyer.

All of this got me thinking about a bit of news I saw a few months back. TechCrunch had discovered that Craigslist had posted an ad (on Craigslist of course), seeking a user experience expert to make the site, “faster, friendlier and easier.” It also mentions a need for mobile development skills. To me this indicates that they might finally be working on an internal project to roll out some changes and get with the future. It would explain why they didn’t just buy Padmapper and instead want to snuff them out as even a potential competitor. If they have been working on an internal project for months now, they might be close to rolling something out. And now there are reports that in certain markets, they are testing new embedded maps in ads. Nothing too revolutionary, but at least it is a step in the right direction.

My prediction is that within the next year, Craigslist is going to slowly roll out a lot of small iterations to the site, never making it seem like a major redesign, but twelve months from now we will be looking at a very different experience. Newmark himself has admitted that he doesn’t really know why Craigslist is so successful and as a result he has been very hesitant to change it.

The legal implications of data scraping could have large ramifications and even set some legal precedent that might impact innovation on the web. But all indications are that this thing is going to drag out and won’t be revolved anytime soon.

In my mind, Craigslist is dominant because of network externalities. Each additional user makes the service even more valuable and entrenched. They have now captured such a large market share, it seems nearly impossible for a new company to come along and disrupt them. However, time and time again we’ve seen companies in this seemingly unassailable position be beaten into irrelevance (MySpace, Yahoo search, etc.).

I’ll use this case to further support the thesis I started to explain in my Best of All Worlds Review.

In my mind Facebook’s death knell will be a proliferation of niche social networking sites eating away at Facebook’s giant user base. Best of All Worlds is merely the first of many to come. Facebook’s death will be one of a thousand tiny paper cuts.

Although I was talking about Facebook, the argument is the same. The only way Craigslist gets disrupted and replaced is by more niche services eating away at key verticals. There are a lot of verticals within the site (furniture, real estate, etc.) that are large enough to have a dedicated site built around them. These things are certainly cyclical in nature, progress is inevitable.

Additional interesting reading on the topic:

Best of All Worlds Review: the Social Network for the One Percent

Posted by under Business, Internet

Full disclosure, I am working for a startup in this general space. Not a direct competitor, but close enough that I’ve been watching this one closely.

Last week the hotly anticipated Best of All Worlds launched. The app is Erik Wachtmeister’s latest project, for those unfamiliar with Wachtmeister, he was previously a co-founder of A Small World, which in a pre-Facebook world was MySpace for the elite. While the original site still exists, like MySpace it has failed to evolve and keep up more recent web app trends. Wachtmeister’s PR plant of a Wikipedia profile explains:

…the idea occurred to him during a wild boar hunt in the German forest. He stated “In traveling extensively to the world’s social hot spots for many years, I realized there was a community of global nomads who hang out together. I decided to make a business out of helping them meet and find solutions to their common problems.” The website launched two years before Facebook was made available to non-college members, and was dubbed “MySpace for millionaires” by the Wall Street Journal.

New members must receive an invitation from a pre-existing member with invitation privileges to be accepted. As of September 2007, the site had 150,000 users. By May 2008, the number had grown to 320,000 members, with about 65% of members from Europe and 20% from the United States. By April 2009, Wachtmeister had ceased to be active with managing the website, and membership was in excess of 500,000.

It’s unclear what happened to ASW. Some reports claim Wachtmeister had a falling out with the management team he brought in, while others report that he sold his stake and left willingly. From what I can gather it sounds like he had a vision of where he wanted to take A Small World that not everyone shared and parted ways to do his own thing. While ASW still exists, it is still very much stuck in 2004. Best of All Worlds looks very much like the realization of his original vision, now that better technology exists to create it. Venture capitalist Marc Andreesen summed up this mindset in a recent All Things D interview when he stated, “Now we have the chance to build the businesses that we thought we were going to build in 1999.”

As for the actual Best of All Worlds app, it does a lot of things really well. It’s a little early to declare whether it will be a hit or not, but early indications are decent. (Also – I need to stop declaring everything I encounter as an early adopter is going to be the next big thing). Right now the app can be summed up as doing two general things. First, it allows you to connect to people and socially network with them (message, friend, etc.). Second, it acts as sort of city guide for the jet setting elite (search curated events, hotels, nightlife in major hotspots around the world).

I’m sure your first question is, “why do I need yet another social networking app?” Best of All Worlds is trying to bridge the social and professional worlds (think what you do on Facebook versus what you do on LinkedIn), but do it in a way that allows you to put on a good face for both, all within a community of like-minded, equally accomplished individuals (hence social networking for the 1%). The service is invitation only, so you have to know someone who has access to get access yourself. It remains to be seen if this will be enough to preserve a community of the right types of individuals.

The app is at the moment iPhone only, but there is a desktop companion site. When you login from your computer you only have basic access, but you’re allowed to do all the things that would be tedious to do from your phone. You can edit your profile, add interests, update profile pictures and most importantly send out the ten precious invites you start you’re given. With an increasing focus on the mobile world, any other mobile only sites should take note of how this is handled. People don’t want to type a bio out on the keyboard of their phone, some things are still best done from an actual keyboard.

Best of All Worlds has different modes (social, professional, family, party, private) and asks you to select a different photo for each. When you connect to different users on the site, you can select how you connect to them and have some control over what aspect of your online persona they see. Not totally revolutionary, but a very clever way to begin to bridge the social and professional gap (think “should I friend my boss on facebook?”). You can also pick what mode you’re in at any moment, conceivably so people can connect to you for the right reason. Most of the modes are fairly straightforward. I’m not really sure if the “private” mode is aiming to finally be grindr for rich people or something else. Just like Facebook’s poke feature, or Twitter’s hashtags, the modes will definitely evolve based on how users begin to use it.

A Small World existed before the idea of a user’s social graph was so important. Here BOAW has a slightly new approach. There is a pre-defined set of interests (edit: free form answers are also technically possible), with the ability to set the level of interest in said interests. So you could for instance, indicate Horseback Riding (casual) and Art Collecting (expert). This leads back in to how you connect to people. This feature allows it to make sense to connect to strangers if you have a shared interest (social), or need advice on a particular subject (professional). You could connect to totally random people, but you can also search people by degrees of connection (similar to LinkedIn). You can view within one or two degrees, meaning friend of a friend or friend of a friend of a friend. These two things coupled together make it so you’re not just adding all of your Facebook friends, Twitter followers, LinkedIn connections to yet another service, but instead make “networking” with new people more likely. This is a step forward in regards to the ways people can connect, view and interact with each other.

I realize the app is still very early (less than a week old), but I do have one major issue. My problem is with the email address you use to with your account. You can’t change it or add additional ones. Get invited through a company email address and a personal email address? Congrats, you have two separate accounts now. I got the invite on a company email address where I’m doing some consulting work. I definitely don’t plan on using this email address forever, nor do I want to confuse people by sending invites from it. Hopefully this gets resolves in future updates. All of the other issues involve lack of curated content or users, but both of these are forgivable for such a young service.

The app is free (at least for now). I’m not sure about monetization plans, but JetSetLife has an interview with the founder that sheds a little light on the topic. From the interview:

Rob: Okay. So let’s talk a little bit on how this company will be built in terms of monetizing. Will it be advertising or will it be PPC ads that people can buy like Google does? How will that work?

Erik: If you look at A Small World, it’s a hundred percent banner ads and email shots. And I find that a bit intrusive to just focus on that because they have too many banner ads and that’s where they get all the revenues from and it may be a bit intrusive especially if you send out emails where you get paid and if there’s a conflict of interest because the email may not be welcomed to the recipient. So we will have traditional banner ads for sure and we will do some email campaigns but we will limit it to maybe a quarter of our revenue model. And the other 3 revenue models will be micro campaigns and local listings; you know where are goal is to get thousands of listings and micro campaigns going for hotels, restaurants, lawyers and other professionals, real estate brokers and other services. The 3rd leg will be a freemium model that we talked about before where we hope to convert let’s say 10% or 15% of the most active users who want to subscribe to additional profile matching, etc. and the 4th leg which could be the largest is really e-commerce and lead generation where we’ll be able to partner up with really great services where we will enable them and make them available to our members either on a white label basis or on a direct basis.

Talk about another way of saying, “here are all obvious business models, we will figure it out eventually.”

Overall Best of All Worlds is doing some interesting things and I’ll keep an eye on it. What is far more interesting is what it represents, which is the future of social networking and the response to Facebook’s one billion users. Just like how MySpace once felt like it would never be replaced, but is now a derelict web property and the butt of many internet jokes, Facebook is now in the same position. No one knows what its eventual usurper will look like and some even doubt it will ever happen. The argument is “How does a service with one billion users ever get replaced? It’s impossible because it is so entrenched.” In my mind Facebook’s death knell will be a proliferation of niche social networking sites eating away at Facebook’s giant user base. Best of All Worlds is merely the first of many to come. Facebook’s death will be one of a thousand tiny paper cuts.

Is anyone else using the app? Let me know in the comments. If you’re interested in getting an invite, let me know. The folks at boaw.com have limited the amount of users that can activate their accounts, even if they have an invite. Watch this space for updates on the situation.

March 2013 – Quick update on invites here.

Is there any money in publishing free content online?

Posted by under Business, Internet

I’ve been having some interesting discussions with a client about this very question. Is there any money in publishing free content online? Like any good burning question, this has resulted in some good longform reading.

If you’re at all interested in this subject, I suggest reading the above articles. Personally I find thinking about the different economic models along to be fascinating.

Without getting into too much detail, the answer is certainly yes. The caveat is that it definitely isn’t easy money. A lot of people assume that this means the opposite must be true, but evidence says otherwise. So what’s the solution? How is there money to make in publishing free content? Very creative business models. Hopefully in the coming months I’ll have one to show off to everyone.

I will not sign your NDA, so do not even ask

Posted by under Business

I had a discussion today with a potential client via e-mail. They wanted my company’s services, but before they could even tell me about the project they demanded that I sign a non-disclosure agreement. I immediately told them no out of principle. Under no circumstances am I going to sign away first amendment rights to a stranger for nothing in exchange. They kept pushing about how great their idea was, so I had to come up with a more substantial response, because apparently doing something on principle wasn’t enough. A few quick google searches and I came up with this great response from Quora:

Should startups have engineers and developers sign NDAs, before scheduling the interview?

No.

Assuming that there is a magic algorithm which guarantees the success of the project, it should be easy enough to avoid any sensitive topics even during extended interviews.

If the idea can be quickly copied by someone, just from having a frank discussion during an interview, then the idea does not have a defensible business model and will be quickly copied by fast followers anyway.

So if this is a big point of concern when even discussing superficial topics, you should consider whether this is truly the right idea.

Perfectly said. It seems like everyone who has seen The Social Network thinks that every web developer or company is out to get them. Andrew Warner also has a good blog post on the subject. Out of all his reasons, my favorite is, “It puts all the obligation on me and none on you. I have to make sure that I never reveal what you say or I’m (potentially) liable. But where’s your obligation?” The potential client kept trying to justifying reasons for me to sign the NDA. At one point he even said that I was actually protecting myself. Protecting myself from what? What a joke.

Why I Am Leaving Company X

Posted by under Business, Culture, Internet, Journalism, Media, Pop Culture

In the last 24 hours there has been a firestorm created around a NY Times Op-Ed titled “Why I Am Leaving Goldman Sachs.”

The article itself is a great read, but so are all the other reactions.

There are two reasons this is really interesting. The first is that the original article spawned a series of parody articles. In the past 24 hours this has hit full on meme status. But I can’t help but wonder if this is seriously taking away from the original article. It’s almost trivializing the original article’s substance, but at the same time it is getting people talking about it more.

The other interesting aspect is the article itself. It’s not a good sign when any former employee publicly rips on every aspect of a company’s culture and business. It’s even worse when that person is a really high level employee. I was surprised that Goldman Sach’s response was so soft. I was also surprised it didn’t attempt to resort to ad hominem attacks. They basically just reassert how great they are and how much money they pay their employees.

Interesting stuff to think about and worth reading more into as this continues to unfold.

Viva Las Vegas

Posted by under Business, Culture

I’m headed to Las Vegas next week for work. Just a few quick thoughts on the change of working environment and how it affects getting work done.

At my first job out of school I received lecture after lecture about how, while I was an adult, it was totally inappropriate to drink with any of the college students, even if they were of age. The reasons given didn’t really make much sense. They amounted to “we don’t trust you to make decisions on your own,” a sentiment that echoed in how the entire organization operated.

Fast forward to today when we were talking about the upcoming trip to Las Vegas. The message today was, “make sure you find people to go out with every night, even if there isn’t a business opportunity immediately apparent, this is the time to build relationships.” There is a world of difference in the two approaches.

When I was first out of school I didn’t know anything and it seemed normal. Now with the benefit of comparing the two approaches, one makes sense, one does not. I guess that’s called having the benefit of experience. I get significantly more work done when I have the freedom to operate. Is there any example of a reason you would be more productive when you have to get approval to do every little thing? Or any reason that approach would be better? Someone play devil’s advocate in the comments.

How Facebook Poaches Google Employees

Posted by under Business, Internet

I was speaking with a friend recently. We were talking about the investigation into tech companies having non-compete agreements for each other’s employees. Which, for the record, is definitely wrong and breaks anti-trust laws. He told me that as a Google employee, all his ads all the time on Facebook are variations of “Unhappy at Google, come work at Facebook!” or “Learn about why Facebook is a great place to work!” Funny stuff, although I doubt it’s all that effective, because it seems to be a bit of a joke among Google employees.

Steve Jobs Solved the Innovator’s Dilemma

Posted by under Business

The Harvard Business Review had a really thought provoking article about the Innovator’s Dilemma and how it was solved by Steve Jobs. The book itself is incredible and I highly suggest it. I read it a few months ago for the first time. The thesis of the book is that when companies use technology to gain a competitive edge and dominate an industry they eventually become stagnant and their market position is usurped by a young upstart. This new company uses the same methods as the first company (technology as a competitive advantage) to come to dominate the industry, only to eventually be usurped themselves.

In the article, the author claims that Steve Jobs found the solution to this dilemma.

Jobs was profoundly influenced by the Innovator’s Dilemma — he saw the company he created almost die from it. When he returned to Apple, Jobs was determined to solve it. And he did.

Worth taking a few minutes to read.

Would You Rather Be Underpaid or Over Rated?

Posted by under Business

Kanye West is living proof that if you talk enough, you will eventually say something smart. In one of his songs he says the line “would you rather be: underpaid or over rated?” It’s a good question and something I often think about.

This week The Economist had a great chart on executive pay.

(click to enlarge)

I’m sure if you ask the executives on the left side of the column they would say over rated, but argue at the same time that they aren’t over rated themselves. The executives on the right side column would probably say underpaid. With people like Steve Jobs and Steve Ballmer on the underpaid column, I’d like to think most of those executives are performing better because they are passionate about their work and not in it for the money.

Personally I’d rather be underpaid than over rated. I want people to find my involved me essential. Besides, if you’re important to an operation of any sort and people realize it, you have tremendous leverage for solving the pay problem. It doesn’t quite work the same way if you’re over rated.

Obviously this makes a lot of generalizations, but what do you think? Would you rather be underpaid or over rated?