Pretty great.  Probably here to stay.  Not going to replace Facebook.

Before I say anything else about Google+,  I want to point out two great posts which put a lot of color around my thoughts, covering views from both architects’ and power users’ perspectives:

The first is a must-read article sent to me by Phil Shevrin (who also taught me how to organize my circles) about a researcher who left Google to go to Facebook named Paul Adams.  Paul conducted extensive research on people’s social graphs when he was at Google and his work helped design the user experience on google+, specifically the circles feature.   The presentation is long, but the insights are definitely worth your time.

The other article is a response to the user experience by Mark Hurst. It’s also very enlightening and echos a lot of my feelings on the platform.

While Hangouts and Sparks are important features on Google+, I’m really interested in the stream right now (inbound and outbound content), so here’s circles:


The idea for circles seems to be inspired by an idea that Paul Adams articulated well in his presentation:  the idea of grouping everyone together as “friends” without the ability to put our relationships into any sort of context is not an accurate reflection of how we organize our real-world relationships.   Our friends from high school are not the same as our family or our friends from work.  The circles feature on Google+ forces users to make decisions about their relationships by having them  assign their contacts into different circles.  This design is intended to allow users to control what content they share with whom; a tool that allows us to behave online more like we behave in the real world.

These are the circles I’ve created so far (my friends at GW need to pick up the adoption pace a bit…)

My Circles So Far

I think circles is a great idea, but not for the reasons that Google designed them.    Google intends for us to share content with select relationships,  but I am not ever going to share anything on Google+ that I wouldn’t share with everyone and I think I’m probably in the norm.  I’m just too concerned that I would make a mistake, accidentally overshare, etc.  I’ll keep my personal content in a (slightly more) personal channel: email.

What I do like about circles is that I can curate my inbound content. Like Mark Hurst says, my biggest complaint with Facebook isn’t that I can’t limit content sharing, it’s that I can’t easily curate my incoming content, so the most frequent posters get the main real estate in my stream (or I get fed the Top News algorithm’s best guess).  People who post less frequently end up getting buried; this also happens with Twitter.  Google+ allows me to easily toggle between professional acquaintances and family, so I don’t miss anything that I want to see.  I love that.  I think that people need to be educated about how to use circles in order to get the intended value out of them, but it’s a great stream control and I think people will like it if they invest the time to set them up.

Mobile App Is Terrible

One other thought, I think that Google+’s long-term success is dependent on their success in mobile.  If their iPhone application is any indicator of how they plan to tackle the channel, I am not optimistic that they will be an order of magnitude better than Facebook.  Their current application misses the value that circles provides: inbound content control.  Users can’t control which circles they read content from, it’s all jumbled together in the app and the only available sorting of “incoming” and “nearby” has no connection to the web product.  Right now, my entire Google+ iPhone app stream is filled with journalists.  That’s not useful:


Changing With the Market: Netflix

I read this headline from CBS (“Netflix Socks Subscribers With 59% Price Hike“) and I thought it was good inspiration to think about adopting to a changing market.

Netflix is a fascinating success story; a company that continues to defy the laws of business physics, or at least manages to bend them in their favor. Starting in 1998, Netflix built an online ordering platform and got so good at turning a disc around in the mail that it essentially wiped out Blockbuster; a very large and formidable competitor. Timing the company’s inception with flooring prices of DVD players, Netflix was able to flip the traditional rental model on its head by offering a no-late-fee, subscription-based service, growing to over 9 million subscribers between 1999 and 2008 and exploding to 23 million subscribers today.

But times change.

The DVD rental model was a transition business, and the DVD rental business is dying. Netflix’s long-term play has always been streaming content. It used its powerful customer base and its online DVD selection platform to draw users into their streaming service (a competitive advantage that was brilliantly leveraged). After years of this practice, the company has now effectively established a two-segment market: subscribers who order DVDs and subscribers who consume online content. It’s probably true that many of us get both services right now, but I think that this pricing segmentation will put most of us on one side or the other.

Aside from the fact that the economics of these two businesses (rentals by mail and online streaming) are different, the customers are now different. Netflix is formally recognizing this and is in the process of killing it’s legacy business and doubling-down on the future. Under the new system, most of the current DVD-only subscribers will move to the online service or go to Redbox. Either way, Netflix is building on the future and moving itself away from being a DVD company. There isn’t a sustainable future in renting DVDs.

I’m not entirely certain that this strategy will work for them in the long-term (sitting between the cable operators and the studios makes them a middle man), but I applaud the company’s willingness to commit to the change and adapt to the new marketplace. I discussed this in an earlier post about creative destruction, but I think it takes real leadership on the part of Reed Hastings for a company avoid killing the new business in an effort to save the legacy cash flow business.

Besides, if the whole segmenting thing doesn’t work out, they’ll still have tech writer, musician and Netflix aficionado Kyle Monson, who probably speaks for a lot of Netflix’s current customer base:

The ever-brilliant Kyle Monson
The ever-brilliant Kyle Monson on Twitter

That’s some serious brand loyalty.

Singles vs. Homeruns

As a rule, venture capital money likes really big ideas.  Due to the high-risk nature of the asset class, in order to attract VC money there should be some possibility that a company can grow into a billion-dollar business one day.  It’s true that venture capitalists have started swimming a little further up stream into the seed stage, and because companies have become less expensive to start, this rule is probably a little less true than it used to be because a moderate amount of money, invested early at a reasonable pre-money valuation can generate strong return multiples.  Generally speaking, however, founders should design companies that  “swing for the fences”.

Execution, however, is not a home-run derby.  In my opinion, the best business managers are really good at hitting singles.  By establishing milestones and achieving them in a pre-determined time period, companies can build on a foundation of tactical executions and keep growth on track in advance of their next round of financing.  You can’t have an objective of “Become the next Google” without supporting that objective with tactics.

When venture firms draft memos, they typically include a section that states the conditions they would like to see met in order to reinvest in a company.  This is a process designed to help take some of the emotion out of reinvesting.  These conditions are rarely grandiose.   I can promise that you’ll never see a condition in a memo that reads “company should have become the next Google.”  Usually the conditions that investors like to see when considering reinvestment are a series of aggressive but reasonable, quantifiable objectives.

When founding a company, founders should think a little bit like investors by trying to figure out what quantifiable objectives they would like to see met and by when, and be honest and disciplined about measuring their company’s performance against those objectives.  Not meeting them doesn’t mean failure, but it may help you refine your strategy, hit some new singles and eventually win the game.

Going Around the Wall: Foursquare and AMEX

I once had a manager who used to yell to “go through the wall!!” when we hit challenges.  That’s often the right advice, but it’s not always the best way to expend your resources.  When you’re a startup with limited resources,  it’s far more effective to go around some walls.

Over the past few years, companies have been lining up to take shots at the discount space for obvious reasons: it’s a large addressable market and there’s high demand from marketers of all sizes to use social and Internet services to drive in-store traffic.  Discount listing services like Groupon and Living Social have just started delivering on that promise, and other startups are jumping into the fray.

The problem with bringing the real world and the Internet together is that there are often huge walls preventing integration.  For example, Groupon handles its sales to retailers through a massive salesforce of over 3,500.  To implement the transaction, Groupon has to manage the sale online and handle payouts to its partners.   This process is cumbersome and complex.  If a startup isn’t built around being an financial intermediary between retailers and customers, it can be a big, expensive wall to get through if you want to play in the space.

To add complexity to the issue, a lot of big retailers aren’t interested in having Groupon handle their transactions as an intermediary.  They’d prefer to to use their own POS systems to manage their transactions, but no one has figured out an effective way to distribute online coupons.  Everyone that I’ve spoken to in CPG marketing prefers free-standing-inserts (FSIs) because the redemption rates are predictable and there are a fixed amount in the world.  Moving these offers to online delivery systems always present complexities that the customer and the marketer seem to want to avoid.  If you want to offer discounts automatically through a smartphone application,  POS integration is required and a lot of systems (at casual dining restaurants, for example) aren’t set up to scan barcodes.  Headaches and complexities abound.

With those challenges in mind, the folks at Foursquare continue to impress with their ability to move around walls instead of trying to go through them.  Their recent deal with AMEX removes the transaction processing challenge from their equation.  With this deal, there are no barcode/POS integration challenges and no online transactions for Foursquare to manage.  The cashier at the store doesn’t even need to know about the discount and the customer doesn’t have to walk around with coupons in their pocket.  There’s no online coupon to download and print out and the redemption of the discounts is easily tracked.  Customers simply sync their AMEX card with their Foursquare account and start saving.

I think this deal represents truly innovative thinking on the part of AMEX and Foursquare, and should serve as a model to startups on how to go around walls.