Monthly Archives: March 2011

How Color can chart a course to avoid being the next Wave

Yesterday, I wrote about Color, a new app that has the promise to become a ubiquitous, location-aware sensor network. It’s first incarnation is as a photo sharing application available on iPhone and Android.

The initial launch has met with much criticism, including comparisons to Wave — a doomed social effort from Google.

Consider the similarities:

  • Enormous expectations. Wave was hyped by Google and given high profile executive attention at Google I/O. Color’s expectations have been set by having raised $41 million.
  • Poor out-of-the-box experience. Both Wave and Color have poor first experiences for the casual user. Even industry luminaries are scratching their heads.
  • Big change in user behavior. Both Wave and Color go against established patterns of user behavior. Wave tried to replace email. Color is challenging the notion of manually creating friend lists.

Google made a number of key execution mistakes in the launch of Wave. Fortunately, Color has avoided the biggest one: Wave was opened slowly on an invite-only basis. Despite the fact that the product was based on group interactions, you couldn’t get enough invites. I know. I tried to get my entire team to use Google Wave, but I couldn’t secure enough invites. Color doesn’t require a special invite.

The Color app should provide an easy way for viewers to see where a picture was taken.

The Color app should provide an easy way for viewers to see where a picture was taken.

There are a couple of other key mistakes Google made. Here’s  how Color can avoid them:

  • Lack of notifications. When I would make a change in Google Wave, the other participants had no way of knowing that I made the change. (Short of logging back into the service.) After I did this a few times and got no response, I stopped using it. The same exists with Color. I will see people’s photos randomly added to my Color application, but I don’t get notified when it happens. Getting notified when other people nearby are using Color would increase usage because you wouldn’t feel like you were talking to an empty room. It would also make face-to-face interactions easier. Notifications are an important part of ramping up any social network. At some point, your product will become so popular that people will use it all day unprompted. (I shut off Facebook email notifications long ago.) Until then, you need to nudge people to use it.
  • Lack of clear use cases. Most people have a really difficult time adopting radically new product concepts. You need to hold their hands and show them how it could apply to their lives. Wave didn’t do that. You were dumped into a blank canvas with a lot of unfamiliar controls. Color is much the same. There’s little guidance as to how Color can improve your life. The initial controls are so tight that you also can’t easily see how other people are using the product.

Then there a few things that are specific to Color and its goals that should be improved:

  • Lack of location/time liquidity. Color matches you with people based on photos being taken at the same place at the same time. That’s overly restrictive. Outside of major events and cities like San Francisco, this is going to be infrequent at best in this stage of the product’s adoption. It’s as if you launched foursquare and could only see tips left by users in the last 5 minutes. Older content has value. A few years ago, I took a set of pictures at Liberty Tavern. These pictures are valuable even now. And they’re certainly better than showing nothing. Showing older content would also encourage more people to take pictures. If privacy is a concern, older pictures with faces could be excluded with face detection software.
  • Locations aren’t visible. For a product that is focused on location, it doesn’t do a good job of showing it. I have random people in my Color feed, but I don’t know where I might have bumped into them — I have to guess at that. It would be better if I could select a person and see a map of where I met them with the date and time. Someone commented on one of my pictures asking where it was taken. That’s not a question they should have to ask. The data is already in the network; it should be accessible. (With the caveat that private places should be obscured so that someone doesn’t follow you home.)
  • People can’t connect with experts. One of the big reasons for the success of Twitter is that it works even if you don’t have any friends. When I’ve done user research on social products in the past, I inevitably had people who said “I don’t have any friends” or “my friends are stupid.” Social products need to work even in these scenarios. In fact, most of my real friends aren’t on Twitter. But I can still derive value from the people who are. With any social product, you’ll have a few people who are on the bleeding edge who can seed content for you. Exploit that. To fit into Color’s model of not requiring explicit follows, they could be added automatically if someone browses their pictures.

See also:

Color me impressed — the big idea behind Color

There’s been a lot of head scratching in the past week about Color having raised $41 million for another photo sharing application. One questioner on Quora asked “How does the Color photography app compare to Picplz, Path and Instagram?”

Although on the surface, Color seems to be another mobile photo sharing app, it is really the first incarnation of a ubiquitous location-aware sensor network.

Today’s cell phones are in many ways more powerful than laptops and desktops because they are packed with sensors. A modern smartphone has GPS, WiFi, Bluetooth, compass, gryoscope, light sensor, microphone and camera — at a minimum. All of these data can capture data to be analyzed.

Ever wonder how Google can show you traffic on side streets? It’s by crunching location data sent out by Android phonesSkyhook Wireless has used its WiFi location look up system to create visualizations that correlate location with time of day. (Scroll down on that page to watch a video of user flows in and out of Manhattan.)

Color is trying to take all of those inputs and layer social networks on to them.

If Color’s vision is fully realized (or my vision of Color’s vision), we can expect to see applications like these:

  • Breaking news. By detecting abnormal usage spikes, Color could quickly identify where news is happening. Because the app is automatically location aware, it’s possible to distinguish between people who are actually at the scene and those elsewhere who may be reacting to the event. See my post Adding Color to breaking news.
  • Security line timers. Get accurate times for various security checkpoints. Copenhagen International Airport is deploying technology that will use WiFi signals to track passenger traffic flows.
  • Race finders. Marathons and similar events today use chips to track runners. Imagine that Color is able to identify all of the spectators and runners with the app during Bay to Breakers. Based on your previous social interactions, Color would know who your favorite runners are. Not only would you be able to track their position on a map, you’d be able to zero in on the pictures that are being taken in the vicinity of those runners. It would also be able to provide you a map to reconnect after the race.
  • Person-to-person transactions. Going to a game at AT&T Park, but don’t have a ticket? Fire up Color and see people nearby who have tickets for sale. Tickets from people you know would be prioritized. Instead of sitting next to strangers, you might end up next to friends who have an extra seat.
  • Person recognizer. This could be a huge boon to people with a poor memory for faces. The person at the party looks vaguely familiar. You know you’ve seen them before, but you’re too embarrassed to ask for the name. Pull up previous interactions and find out their name and the contexts in which you’ve met.
  • Bar finder. When I go out, I often have a mood in mind. I may want to be really social or I may want to chill. With Color, I could pull up a bar and see what the feel is right now by looking through the photostream. If there are no pictures, I could potentially ping someone there and ask them to take to a picture. (It gives new meaning to “Would you mind taking a picture for me?”) Foursquare is providing a variant of this with Foursquare 3.0’s recommendations.
  • Search and rescue. Missions could be tracked automatically, making for more efficient operations. Pictures from a location could be used to identify victims, discover who may still be missing and to notify next of kin.
  • CalTrain tracker. Instead of the horribly inaccurate data provided by CalTrain, Color users would automatically crowdsource the data. You wouldn’t even have to check manually for updates. They would be automatically pushed to you.

That’s the grand vision. In order for Color to accomplish any of these things, it will have to reach large scale. This is a challenge because Color is a seaparte application and not built in to the OS. Google can use Android phones to detect traffic because it’s baked into the OS. Likewise, Google and Apple get location and WiFi network information based on other things that people do on their devices.

Color needs to create an application that provides enough value that people launch it and enable all of those sensors. The application that’s out right now falls short of that goal. It doesn’t deliver an instant wow experience and by most accounts is confusing. Color has tremendous potential, we just need to see that demonstrated better.

See also:

CNN testing QR codes on TV

CNN began testing QR codes on air this weekend to direct people to a site where they can help Japanese earthquake and tsunami victims.

CNN QR code

The code was easy to scan, even without pausing the broadcast. It worked fine from across the room. Just launch a barcode scanner and it will decode the URL and give you the option to open it in the browser. If you have a scanner, you can scan it off the image above. If not, click to go to the Impact Your World mobile site.

This is a great implementation of the often over-hyped QR-code technology. Print ads have occasionally featured QR codes which take you to an advertiser’s URL.

Some other applications I’d like to see:

  • In movie trailers. Scan it and it gets added to your movies to see list, possibly with a calendar entry dropped on the release date. Or an option to add to your Netflix queue for movies that are less interesting.
  • In TV promos. Scan it and it gets added to your recordings list. (The better implementation would be that the DVR itself would recognize a tag and prompt you.)
  • In TV commercials and on billboards. Scan to go to the advertiser’s site.
  • On CNN. Scan to get more information on a story.

QR-codes have a number of advantages over other technologies. They are free to generate, don’t require any hardware beyond a camera, hold more data than a standard bar code, are easy to replicate, work across a distance and have a built-in call-to-action (scan me!). QR-codes can also hold structured data; scanning the QR code on will load up my contact information.

But it’s not the ultimate technology for every application. As much as people in the technology industry like to claim that one technology will take everything, that rarely happens.

Artwork at MoMA scanned with Google Goggles

Artwork at MoMA scanned with Google Goggles. In this case, it was a scan of a picture of the painting on flickr.

Here are some other applications where other technologies work just as well or better.

  • Identifying artwork. Many paintings in the MoMA’s collection can be identified just by taking a picture of it with Google Goggles. Let’s face it, QR codes are ugly. They’re designed to be easily readable by machines, not to be pretty. I should point out that the wacky kids in Dubai are trying to turn them into architecture with a QR-code hotel. Still, it’s not my taste in architecture.
  • Payments. Because they are easy to reproduce, QR codes (and bar codes in general) aren’t well suited for payment applications. They only work when you don’t really care about security.
  • Scanning books or products. One discussion that came up recently was using QR codes in stores like Barnes & Noble to identify whether a book is available in nook format. That’s overkill — you can do this perfectly well with the bar code already printed on the book. Heck, you can take a picture of the cover and that’ll work.
  • Print ads. URLs can be detected with simple OCR software. No need to clutter your creative with an ugly QR code. The key here is to use a simple font against a high contrast background and leave space around it. That’s a good practice anyway to ensure that human eyes can read it.
  • Checking in to a business. WiFi and GPS positioning do a reasonably good job of this without requiring businesses to do any extra work. This could be improved, but it works OK.
Plain text URLs work just fine in Google Goggles.

Plain text URLs work just fine in Google Goggles.

Flipboard makes news worth flipping through

Photo spread in Flipboard.

Photo spread in Flipboard.

I wrote earlier about why iPad magazines aren’t selling well. The short version: they weren’t designed to meet the needs of readers, they were designed to meet the dreams of publishers.

Flipboard is designed around the optimal consumer experience. It offers a visually compelling personalized magazine edited by you, your friends and others you trust.

While Twitter has been offering personalized news streams for years, it’s as visually compelling as classified ads: scroll through a long list of  terse text-only snippets with bizarre abbreviations to find something you like.

Flipboard takes content from your Twitter, Facebook, Google Reader and other feeds and renders it automatically with photos, call outs and other design elements that were sadly lost with the transition to the Web and personalized information. It can even generate beautiful photo spreads like the one at right.

I’ve looked at many iPad news apps and Flipboard is the one I come back to. I frequently mark content on my laptop to read later using Flipboard. It is one of the first apps that I check when I get up and the last one that I use before I go to sleep.

Flipboard hits the key elements that are important to the future of news:

  • It’s personalized. The days of one-size-fits-all newspapers are numbered. Prepackaged content from a bunch of people I’ve never met (and who have never met me)  just isn’t compelling. People have diverse interests and differing intensity in those interests. I couldn’t care less about what Lindsay Lohan is up to or what’s going on on Jersey Shore. But I can’t get enough of what’s going on in location-based services. Mass publications are catering to a mass audience that is rapidly disappearing. Magazines do better at this because many are catered to niche audiences, but even they can’t get deep enough for some.
  • It’s hyperpersonal. When I worked in the newspaper business, there was a rule of thumb for what made the front page. The further away it was from us, the more people had to die for it to make A1. With hyperpersonal, things like a friend completing a triathlon, having a baby or getting married can make my own A1. I discovered the power of social and hyperpersonal when I was on a business trip to Dublin. I shot a video of our VP chugging a Guinness and posted it online. Within minutes, that video had circulated all over the offices in Dublin and back in Virginia.
  • It’s social. My interests overlap with the interests of my friends. As a result, I get news that is likely to be of interest to me through Flipboard.  Even the incongruities are helpful. They add a bit of serendipity to news that professional editors seek to provide. Seeing friends’ comments also adds to my understanding.
  • It’s timely. Weeklies and dailies might as well be fortnightlies. With Flipboard, the content is up to the minute.
  • It’s free. People will only pay for very limited types of news. The vast majority of authors will have to find other ways to make money. That’s a challenge. And it’s a challenge that is exacerbated by many talented people who are willing to write for free.

Flipboard has the opportunity to reset the focus on content. One thing that has jumped out at me is how much I enjoyed reading content in tablet form. It wasn’t just the use of touch or the lack of a keyboard. The big reason: the content wasn’t struggling for attention against SEO links and ads for refinancing homes I don’t own.

SEO links have cluttered up many news sites. Content is surrounded by links whose sole purpose is to feed the search engine crawlers. Navigation on many sites is next to impossible. Ironically, this just drives people back to search because it’s much easier to find what you’re looking for there.

Ads, especially remnant ads, have a similar effect. Publishers have chased remnant ads for revenue. (“Even a fraction of a cent is better than nothing.”) As RPMs have gone down, publishers have piled on more ads. In the end, this does a disservice to everyone. It’s the tragedy of the commons. Instead of grass, the common good being destroyed is the attention of readers.

Flipboard is in a rare position to help bring better economics to publishers and a cleaner experience to users. It’s already working with some publishers on specialized content presentations.

As much as I like the existing product, there are a few areas for improvement:

  • Personal prioritization. Even with the limited number of sources I have in Flipboard, I don’t have time to read everything. One of the functions of editors at newspapers and magazines is to help decide what’s important. Flipboard doesn’t yet do this. It would be nice if it would algorithmically determine what were the most important stories and topics to focus my attention on.
  • De-duplication of content. In the current implementation, you can have the same story repeated multiple times. This could be used as a signal in prioritizing content.
  • Aggregation of friends’ comments. Related to the above, when multiple people have shared a story, collapse them into one. And then show the comments from all friends.
  • Better content extraction. When it lays out pages, the snippet that is rendered is often nonsensical. This could be done with site-specific crawling, by offering publishers guidelines for Flipboard optimization or both.
  • Better photo placement. Flipboard will sometimes place horizontal photos into vertical spaces and vice versa, poorly cropping the pictures. At a minimum, photos should use the right aspect ratio. Eventually, I could see Flipboard using techniques like facial recognition to more intelligently crop photos.
  • Publication of personal magazines. It’s so easy to create personal magazines that I want to be able to share with others. For example, I quickly created a Portland food magazine. (This might finally give Twitter lists a raison d’etre.)
  • Filtering out topics. There are times when my friends are all talking about something I’m not interested in and it just floods my stream. An easy way to get rid of these items (e.g. everything related to SXSW) would significantly improve the experience.

Disclosure: I worked for Flipboard founder Mike McCue when I was at Tellme. Before jumping fully into the online world, I worked at and launched

EXIF marks the spot: a guide to geotagging pictures

Geotagging pictures allows you to more easily search your photos based on where you’ve been. In addition to online tools such as flickr and Picasa, desktop apps like iPhoto will take advantage of geotags. (Facebook is a notable exception; it currently doesn’t use geotags.)

You can also create visualizations of your travels like this:

A map of my favorite pictures on flickr.

A map of my favorite pictures on flickr.

Digital photo files contain EXIF headers that store information about the picture. The information that most people are familiar with is the time and date. Each picture can contain hundreds of fields that include minutiae about the cameras settings, including aperture, shutter speed, program modes, etc. Geotags store latitude, longitude and elevation. You can see a sample of EXIF data on flickr. (The geotags are toward the bottom of the page.)

Unfortunately, the actual process of geotagging is still cumbersome. It’s a lot easier than it used to be, but shy of what it should be to make it mainstream.

Here are a few options for geotagging your pictures:

A dedicated GPS that can record GPX tracklogs

A hiking GPS can record your every move. As you walk, hike or run, the GPS unit logs your current location. (As frequently as once per second.) These are recorded on a memory card in a .gpx file. When you return to your computer, you can pull that file and then the photos from your camera’s memory card. Specialized software (such as GeoSetter) then synchronizes the timestamps of the photos with the data from the GPX tracklog and writes the location information into the file.

Don’t worry if the timestamps are off. GeoSetter offers numerous ways to adjust the timestamps so that the time recorded in your pictures lines up with the time in the location data. (To make this easier, I recommend taking a picture of the time display on your GPS at the beginning and end of your trip.)

I’ve used a Garmin eTrex Vista Cx. Any GPS that can write GPX files to a memory card will do the trick.

Advantages: Works really well when outdoors. Precise location, due to GPS accuracy and frequency of updates. The GPS also provides valuable information when you are hiking.

Disadvantages: Additional cost for the GPS unit. Because you aren’t looking at the GPS unit when taking pictures, you may miss errors such as being out of coverage, dead batteries or a full memory card. It’s another thing to carry. Applying the coordinates is a multi-step process. If you go to a distant location, the GPS can take up to 20 minutes to get an initial fix. It may be difficult to get a fix in densely packed urban areas. (In any case, when you head indoors, you’ll have to rely on the last reading.)

Using an Android or iPhone app to record GPX tracklogs

This works pretty much the same as having a dedicated GPS, except that it relies on your cell phone to track your position. The biggest downside is that it will chew through your phone’s battery very quickly. I use Motion-X GPS on the iPhone and My Tracks on Android.

Advantages: Works really well whether indoors or outdoors. Precise location, due to GPS accuracy and frequency of updates. The GPS also provides valuable information when you are hiking. No additional cost. Because the phone can approximate your location in other ways, the time to a GPS fix is much faster.

Disadvantages: Because you aren’t looking at the phone when when taking pictures, you may miss errors such as being out of coverage, dead batteries or a full memory card. Multi-step process. The GPS app will chew through your phone’s battery very quickly.

A geotagging digital camera

Specialized digital cameras can automatically geotag photos. I have a Panasonic DMC-ZS7. It will automatically write the current location into the data file when you take a picture. No lining up separate files or manually geotagging pictures. The Panasonic has a built-in landmarks database. Standing in front of the Statue of Liberty? The screen will show “Statue of Liberty”. In playback mode, the camera will let you browse pictures by location.

Incredible? Yes. Too good to be true? Sadly, also yes. When it works, it’s like magic. When it doesn’t… it just adds incorrect data to the picture.

There are two big problems with Panasonic’s implementation: it takes way too long to get a fix and it doesn’t update when the camera takes a picture. Often when I’ve arrived in a new location, the camera is still showing the old location hours later. The instructions claim that the camera updates location even when it’s off; I haven’t found that to be true.  Even at its best, the location only updates every five minutes. Undoubtedly, the camera’s designers faced challenges trading off the accuracy of the GPS location against battery life. The balance they struck made the GPS feature largely useless.

Advantages: Simplicity. Works OK when outdoors. Because the location is shown on screen, you can determine whether it’s correct and that there are no other issues.

Disadvantages: Location information is often wrong. Very long time to first fix. The GPS uses the camera’s battery. (I didn’t find this to be a huge issue, but you may want to carry a spare battery.) Despite the fact that the camera knows the nearby landmark, it doesn’t write it into the EXIF data in a way flickr and other tools can read. Poor indoor coverage. Additional cost when compared with cameras without GPS capability.

Eye-Fi memory card

Eye-Fi sells a line of memory cards that will geotag locations. The primary purpose of the cards is to automatically upload your pictures to the Internet. But they’ve expanded the capabilities to also geotag the pictures.

Here is how Eye-Fi works: when you take pictures, nearby WiFi networks are recorded. During the upload process, those network locations are used to compute a location using Skyhook’s database of WiFi locations.

Advantages: Simplicity. Works well indoors, especially dense urban areas in the United States.

Disadvantages: The Eye-Fi cards cost substantially more than comparable SD cards (sometimes 10x). It won’t work when you’re in an area without WiFi signals, which rules out EyeFi for geotagging many hikes. The Eye-Fi card’s WiFi capabilities will drain your camera’s battery faster. The locations are added after the fact, so you won’t be aware of any problems when shooting. Geotagging relies on Skyhook’s database of WiFi locations, which can be sparse in foreign locations.

Manually geotagging pictures

For a while, this was the only option. Take pictures that you’ve uploaded and drag them onto a map. This can be as accurate or as inaccurate as you want it to be.

You can take all of your pictures of Venice and drop them onto the city of Venice. Or you can zoom in to just the right piazza and repeat the process for each picture. I once looked into the background of an old picture, found a business name there and did a Google Maps search to put it in the right place. It can be tedious, fun or both. Flickr and Picasa both support manual geotagging.

Advantages: Doesn’t cost anything other than your time. You have precise control over where each picture is placed.

Disadvantages: It can be extremely tedious. Lining up pictures taken outdoors (such as while skiing or hiking) can be difficult.

Using your cellphone’s camera

This is likely the way that most people get into geotagging. If you have an Android phone or iPhone, your camera can do all of the work for you. Based on the same services used for maps and other location services, the phone will write the picture’s coordinates straight into the file. You can also verify that the location is correct by launching a maps app before taking the picture.

It’s so easy that many privacy advocates worry that people are unintentionally revealing their locations when uploading pictures.

Advantages: Simplicity. Can verify information on screen. No additional cost.

Disadvantages: As good as they are, the cameras on phones aren’t as good as regular cameras. This is especially true for pictures needing zoom or taken in low light.

The best solution would be if the camera manufacturers would work with the phone manufacturers to just read the current GPS data when the shutter is pressed. I’d bet that the iPhone gets a microSD card slot before that happens.

Foursquare 3.0 takes mobile ball to a whole new level

I remember seeing Dennis Crowley at SXSW in 2009 shortly after he had finished a panel on location services. He was on the phone and giddy that they had just reached 3,000 users. Two years and more than 7 million users later, foursquare’s latest pivot is its most important.

Foursquare 3.0 is the most efficient way to get recommendations for places to go in a city. The new release hits many of the themes that I’ve covered in my series on local search, especially user and merchant engagement and the importance of recommendations. (See How the battle for local search will be won for an overview.)

Lately, foursquare has been afflicted by a form of reverse network effects. It’s become so popular among some segments that the game elements of foursquare weren’t appealing to many users. Most people don’t want to play games that they will suck at. When you check in somewhere and see that you’ll need 28 more visits to become mayor, there’s less incentive to participate. (See this discussion of two-sided markets.) In my research, I found that the average number of check ins per unique user at businesses was 1.56. Given that some places require 12 or more checkins in 60 days to become mayor, that’s a clear indicator that repeat checkin activity is being driven by a very small number of people.


In foursquare's new Explore tab, the recommendations clearly explain why a business was selected. In this example, my "friend" Portland Monthly magazine has left a tip.

In foursquare's new Explore tab, the recommendations clearly explain why a business was selected. In this example, my "friend" Portland Monthly magazine has left a tip.

Foursquare added a new “Explore” tab that provides recommendations of nearby businesses. Recommendations provide a real incentive to use foursquare even if you have no shot at becoming mayor. Foursquare will filter through thousands of local businesses to identify those that you might be interested in. (See my post on recommendation engines.) Much like Google’s Hotpot, recommendations come from a number of different sources:

  • Your friends. If you have friends on foursquare, you’ll see tips that they’ve left at businesses. Because you can friend or follow organizations, this can also show you “expert” recommendations.
  • A place graph. Places will be suggested based on other places that you’ve been.
  • Popular places on foursquare.
  • Preferred categories.
  • Time of day.

It is really easy to scroll through the recommendations. Unlike Yelp and Hotpot, you don’t have to flip back and forth among pages. Unlike Hotpot, non-recommended places aren’t mixed into this list.

Are the recommendations perfect? No. Recommendations never are. I’ve gotten plenty of bad recommendations when talking to friends or hotel concierges. But they sure beat scrolling through an undifferentiated list with no guidance at all.

There are two areas for improvement:

The explore view doesn’t incorporate pictures. This will be an increasingly important part of local search. Visuals are a critical element of how people make decisions, especially when it comes to restaurants and nightlife.

With the new recommendations, foursquare would benefit from a much broader social graph. Many people are stricter about who they will become friends with in foursquare because of its real-time nature. But they really don’t care if other friends, co-workers and acquaintances see tips from visits in the past. In my case, I’ve only friended half of the potential Facebook friends on foursquare. These additional people would dramatically improve coverage of social recommendations.


Deals are an important part of the new app. Although foursquare deals have been around for nearly two years, they get a big makeover in Foursquare 3.0. The new application makes specials more prominent in the user interface. A big challenge with the old specials was that mayor deals were out of reach for many consumers and didn’t provide an incentive for trial. See my post, Maximizing the value of deals on Facebook and foursquare.

Four new deal structures allow for better serving both end user and business needs:

  • Flash specials. These are the equivalent of door busters. Once activated, the first X people who check in can claim the deal. These are also especially well suited for use as yield management tools. Slow night at the bar? Offer a special for one night only.
  • Friends specials. Check in with a set number of friends to get the deal. These promote behaviors that are important for foursquare’s growth. They serve as both user acquisition tools and product improvement tools. The more friends that you have actively using the platform, the more useful the recommendations become.
  • Swarm specials. These kick in after a certain number of foursquare users check in at a place. These could be important for future friend discovery tools.
  • Newbie specials. These specials allow businesses to incent trial by new customers. Because they are tied to a relatively persistent identity, they can be much more generous than paper coupons (which might be abused by unscrupulous customers).

As important as a deal platform is, having actual deals is critical. Foursquare is launching the new platform with deals from Barnes & Noble, H&M, Toys R Us, Arby’s, Coffee Bean, H&M, Sports Authority, Whole Foods, Chili’s and Radio Shack.

There’s no word on notification regarding specials. Foursquare currently requires users to actively seek them out within the app. Being able to get alerts of new specials (especially flash specials) will be important.

Foursquare claims more than 250,000 businesses on its platform. This is quite a bit less than the 4 million businesses claimed by Google Places. 5% of businesses I looked at had claimed their foursquare presence, compared with 61% on Google and Yelp.

Best is yet to come

As much as I like foursquare 3.0, there is a lot of opportunity left. The biggest of this is collecting more data to make better, more intelligent recommendations. Foursquare will be launching a new partnership with American Express at SXSW. The initial scope is limited to special offers for AMEX cardholders.

AMEX has the absolute best data of any company in America on where a large portion of the population transacts. Consider these pieces:

  • Many businesses set up a merchant account ahead of time, so they know when a business is going to open.
  • They can estimate hours of operation with reasonable accuracy. (Based on swipe data.)
  • They know the average purchase amount.
  • They know the mix of locals vs. out-of-towners.
  • They know the mix of personal cards vs. corporate cards.
  • They know if a business goes out of business. (The swipes stop happening.)
  • They know which businesses people return to and which they don’t. (Implicit quality rating.)

All of this data could be fed into a recommendation engine like foursquare’s.

A hypothetical foursquare AMEX.

A hypothetical foursquare AMEX.

With the way AMEX issues secondary cards, it would be possible to create a card that would automatically check you in on foursquare when you swipe your card. (While protecting your privacy on other purchases.)

At the extreme, you could have a co-branded foursquare card designed around social features. These could include automatic check ins, cardmember specials and a rewards program based on purchase and check in activity.

Sound crazy? Maybe. But back in the mid 2000s, AMEX launched city-centric cards for New York (IN:NYC) and Los Angeles (IN:LA) in a bid to attract younger customers. These cards weren’t successful and are no longer available.

But back then, foursquare didn’t exist.

Part 1: Local search is starting to get more social
Part 2: How the battle for local search will be won
Part 3: Google Hotpot a strong competitor to Yelp
Part 4: Statistics on business and consumer engagement in local search
Part 5: Foursquare 3.0 takes mobile ball to a whole new level

See also:


Local restaurant tries do-it-yourself Groupon

I was checking Twitter today and came across this local restaurant trying a Groupon-like offer on its own:


Wildwood in Portland is trying a do-it-yourself Groupon with its Twitter and Facebook followers.

Wildwood in Portland is trying a do-it-yourself Groupon with its Twitter and Facebook followers.

Wildwood is an upscale and top-rated restaurant in Portland. It has 4 stars and 101 reviews on Yelp and 5 “Best Ever” awards on Hotpot.

It has 745 likes on Facebook and 632 followers on Twitter. These are well above the market medians of 398 and 352. (It’s impossible to say what the unduplicated reach is across Facebook and Twitter.)

So how is this different from running a Groupon?

  • More revenue for Wildwood. It gets to keep all of the revenue generated. In a typical Groupon deal, Wildwood would get about $15 for each $50 gift certificate sold. Here, it keeps the entire $30. Given that food costs are typically 30% of a restaurant’s expenses, Groupons are break-even at best just on incremental cost.
  • More restrictions on redemptions. Groupons usually have longer redemption times and fewer restrictions on redemption. They are often valid for a year and can be used at almost any time. These certificates are only valid for dinner on Sunday, Monday and Tuesday and not valid for alcohol. It’s essentially a yield-management play, used to fill seats when the restaurant would otherwise be empty. Some restaurants use OpenTable’s Dining Rewards to accomplish this. These factors combine to increase the restaurant’s profitability on the deal.
  • More qualified customers. The restaurant is essentially reaching people who have already expressed some interest in it. Some of these are undoubtedly existing customers.Groupon brings in a much broader range of customers. That is both a blessing and a curse: some will be potentially new customers who will become repeat visitors; some will just be deal seekers who are unlikely to return. For many businesses, the primary market area is a 5-mile radius. Groupon’s coarse geographic targeting amounts to casting too broad a net for many local businesses.
  • No online purchases. The deal requires that customers visit Wildwood to buy and pick up the gift certificate. This is both good and bad: it means that customers are more qualified because they have to visit twice. They are more likely to live nearby and thus more likely to be repeat customers. But it also serves as a significant deterrent to purchase.
  • Limited viral distribution. Wildwood may reach some new prospects as other retweet/share the link. Twitter accounts like EaterPDX sometimes share such announcements. At the time of this writing, two people had retweeted the offer, for an additional 1,000 potential impressions. But it’s not likely to spread as virally as deals on Groupon and LivingSocial do. Both platforms offer built-in financial incentives for sharing deals with others.

I’ll check in with the business later in the week to see if they’re willing to share the results.

As I wrote earlier, businesses and consumers are directly connecting with each other online. In some ways, you can consider Groupon an arbitrage business — using its skill in marketing and online customer acquisition to deliver traffic to local businesses. (Much like ServiceMagic and 800-DENTIST.) As local businesses get more sophisticated and adopt tools like Facebook and Twitter, this will put margin pressure on Groupon and its peers.