Joseph Essas, the blog…

In the last couple of years, we saw an explosion of Daily Deals type of sites and services – Groupon, LivingSocial, Yelp, Facebook and many other joining the trend. In essence they all play on the variant of: you get daily email with deeply discounted coupon, you pressured by fast expiring date, and the coupon is only activated with minimum threshold of participants, which encourages you to spread it around. Coupons are very local, and hyper targeted.

As many more companies jumping on this band wagon, and demanding huge valuations as as result – it seems appropriate to take a look on what this model really is – and how can every business benefit from it.

If you look closer – Groupon innovated with a brilliant twist on an age old direct marketing model. Here are critical components of Groupon business model.

(1) deep discount
(2) expiration date
(3) consistent design and targeting
(4) minimum participant threshold – hence social virality
(5) transacting through the platform
(6) thousands of local salesmen – feet on the ground

5 and 6 are real breakthrough in my mind. Transacting through the platform – is the key differentiator between Groupon and just your plain old email spam marketer. What is the difference between a sophisticated email spammer and Groupon? You get email offers from both, they both are targeted, both require click-through to transact. The difference is that Groupon actually captures the transaction, which makes is immediately useful to small local business, and with number 6 (feet on the ground) they are able to upsell the model to every business, regardless of their technical sophistication.

Email spammer as a contrast – only deals with able online businesses, takes a risk on CPA deals, since there is an unknown of a business to convert a customer, due to poor ability or poor transactional platform, and ultimately does not capture the full revenue but only small fee on a CPM/CPC/CPA basis.

I’m not going to discuss here – if the model is good or bad for local businesses. What is really interesting to me, is how ability to capture the full transaction – literally transforms a business from $100mm business to $20B business.

Groupon prides itself on 150mm subscribers. Those are not really subscribers – they are just email lists. Subscribers in more traditional definition, are the ones who actually pay a regular fee to particpate in the service. Here we are dealing with “opt-in” email customers. Every only direct marketer has 100s of millions of those emails.

So key is really all the points above. Capturing the phycological effect of expiring deep discount, with social virality and transacting the full value through your platform makes it unique and very interesting.

In fact many businesses started to use a similar model – Gilt Groupe for example, uses deep discounts, club exclusivity, expiration date, and again full transaction as their model.

In Groupons case – huge barrier to entry is not the millions of “subscribers” but actually feet on the ground. This is very hard to replicate at scale effectively – and they get a big credit for it.

As we continue to innovate in online world – it’s worth to keep in mind those critical components of success of those recent business models:

– consistency of user experience
– ability to capture full transaction value
– big list of “opt-in” users
– social virality – put your users to work to get the benefit

In the past several months, Apple and Google spent a lot of energy declaring how many iOS or Android devices they have been activating every month.

It went sort of like this: In May, at Google I/O, Google announced it was activating 100,000 Android units a day. By June, that number had jumped to 160,000. And in August, CEO Eric Schmidt, announced Android activations were up to 200,000 units a day.
Obviously Steve Jobs didn’t like it that much. So in his last public appearance, he announced that Apple actually activating 230,000 new iOS devices a day. Steve also spent good amount of time, questioning Google’s methodology of counting in the first place.

The truth is, Google is not new to the “counting” party. Back in 2003-2005, Google and Yahoo spent a lot of time arguing who has more documents indexed in their respective search engines. Since I was part of Yahoo search back then, I have fond memories of counting documents on our respective home pages (and questioning each other methodologies in the process).

I think it started with a “1B documents indexed”, and then went to 2, 4, 8… Then Yahoo proclaimed that they have 20 billion documents, and Google spokesperson responded right away with:

“Our scientists are not seeing the increase claimed in the Yahoo! index. The data we have doesn’t support the 19.2 (billion page) claim and we’re confused by that.”

And that was followed with Google declaring that they have 3x number of documents than Yahoo, and the whole thing is silly anyway. So Google removed the index docs numbers from their homepage all together. To which Yahoo responded with:

“We congratulate Google on removing the index size number from its homepage and recognizing that it is a meaningless number. As we’ve said in the past, what matters is that consumers find what they are looking for and we invite Google users to compare their results to Yahoo! Search at http://search.yahoo.com.”

I would predict that Apple / Google recent numbers exchanges will end up similarly pretty soon. And one of them would declare that they actually only care about consumer experience.

In any case, it provides some level of entertainment in the meantime.

Thanks to gracious Google Mobile team, I was able to play with Android for the last couple of weeks. Specifically with Motorola Droid. Here are some observations and comparisons in usability of iPhone OS vs Android OS.

I’ve been an iPhone user for the last 2 1/2 years, so I will not go into detail on what is good or bad about the iPhone. Let’s just assume it is a platform that I am very familiar with.

Android ended up being a very interesting experience. Immediate observation is that it was less intuitive to get going, definitely for an iPhone user. Gestures which I accustomed to, sometimes work and sometimes not. General feel of the screen, is a bit strange as well. It feels a little slicker than iPhone, but also more sensitive, which results in unintended clicks. Even my 10 year old, played with it for 2 minutes, and then started asking – how do I do this, how do I do that. Eventually I’ve let him figure it out on his own, but he was much quicker with an iPhone couple of years ago, when he was 8. That shows me – certain barrier on ease of use for a regular consumer.

I was generally impressed with configurability of Android. User is in control of many aspects of the OS, which is a breath of fresh air coming from an iPhone. Settings menu is much more organized than the iPhone, I have access to all kinds of Call and Network settings, Applications Settings etc. For example I found very useful to be able to see which services are running in the background on the phone, how much memory they consume and being able to control deep settings of those apps. That’s nice.

Typing was also an interesting experience. Droid has a physical keyboard, which I actually found to be quite annoying. I was constantly misspelling words, and since I was an avid Blackberry user, I can’t blame it solely on me being too used to an iPhone virtual keys. For some reason physical buttons on Droid don’t have a good feel to them, which makes typing a challenge. Virtual keyboard was actually even better than iPhone’s. I found “word suggestions” feature to be extremely useful – and my typing was actually faster.

Droid has 4 buttons on the bottom of the phone. I found it to be confusing. “Home” has the same functionality as iPhone’s one button, but then there is “contextual settings” button, and “search button” (which you can access through contextual one as well) and “back” button. I would much rather have Home button play the back function, by clicking it once, and serving the Home function by holding it for 2 sec. I would also remove the Search button and move contextual menu to the side of the phone.

Downloaded apps are less organized on the Android. There is basically one space where all your apps are organized alphabetically. You need to work really hard to reorganize them. I find iPhone’s multiple app screens to be much better strategy in organization. Technically you can accomplish similar thing on the Android but its harder.

Integration with Google Voice is fantastic. Very easy – and it completely takes over the phone, if you choose to do so. I configured it to make all international calls using Google Voice and domestic using Verizon account – and it performs flawlessly and seamlessly, without me even thinking about it. Very nicely done.

Integration with Gmail is also very nice. It feel like you are using native Gmail browser based app. All same features, labels etc. Technically you can use browser based HTML5 Gmail on the iPhone, but it’s slower and clunkier than the native email app on Android.

Top bar on Android has all the notifications (new email, new update etc). You need to drag it down to see those. I find it actually to be not very intuitive and somewhat hard to do since it too thin. You can also get to notifications through contextual menu. I think iPhone implementation of little red dots showing updates for every app is much nicer UI.

Maps has built in navigation which works pretty well. In general Maps app looks sharper and clearer than the iPhone one.

Android’s Market (equivalent of iTunes app store) does not have near the variety of apps that iPhone has. I expect it to change rapidly, as developers will follow the platform which has growing number of users. With that I expect an app usage on the Android to be smaller than on iPhone. It just seems more intuitive to use an app on an iPhone and it seems just a bit harder and clunkier on the Android – which I believe will affect consumer behaviour.

Verizon service was definitely better than AT&T. It was more reliable, calls were not dropping, and it worked better in harder to reach places (like NYC subway).

All in all – Android is very impressive as a standalone platform. It feels less impressive, oh though solid as a competitor to an iPhone. The argument that its open – is fantastic to developers, but in my opinion, its somewhat mute to a regular consumer.

If you have an iPhone – my recommendation would be to stick with it. If you have an old phone, you should absolutely consider an Android based phone (but please, not on AT&T network, which is terrible).

If you are developing mobile apps – you should absolutely drive your team to develop for both platforms, as I believe Android will be very successful.

One of the most amazing features of digital revolution of the last 20 years – is immediate access to information. Over the years we got our information faster and faster: FAX, BBS, Email, SMS, Google, iPhone, Facebook, Tweeter.
Every iteration not only it gets faster, but it also makes us think less before we are trying to retrieve it and produces some element of expectation of instant gratification.

Sometime I’m thinking about what did we do before all the information was available to us? We actually had to research a subject through books, go to the library, think about what we are looking for, actually study a subject – so we will not have to look it up in a book every time… we tried to memorize facts and formulas so they will be available for us when we need them.

One human attribute which I think this revolution affected in a negative form – is Patience. We don’t have patience today to wait. I personally can’t stand websites that don’t give me my data instantaneously, page load delays of over 0.5s drive me nuts – and an idea that I will not be able to find what I’m looking for in less than 5 minutes – would make me give up on that search in the first place.

But patience is a required element – for acquiring knowledge, for self-improvement, for getting skilled at any topic. I look at my kids today – and I’m not sure how to instill it in them.

Is that a good thing?

Several friends reminded me of 25th anniversary for Commodore 64. That brought a whole bunch of nostalgic memories. Endless evenings I spent in our apartment in Israel with that beige box (and later with C128) – learning BASIC, assembler, CP/M, copying games code from magazines, writing my own first program – converting lunar calendar dates into solar… My parents found it hard to understand – what was so special about writing those little “sprites” on the monochrome screen – for me it was magic.

I can definitely say that Casio FX-720P in 1981 and C64 couple years later – developed an interest for me in programming, electronics, and the whole new industry that was just forming. The rest is history.

Now, if I can only convince people that 300 baud modems and BBS was the Facebook of my time…

Since early last week, every time I access Google from home – it only shows up in Japanese. I’m sure it’s some kind of fancy IP geo-recognition software that for some reason assumes that my Time Warner Cable IP is in Japan.

However, what I’m absolutely annoyed about, is that there is no way (at least I didn’t find it yet) for me to switch back to English. Every request to http://www.google.com – gets redirected to http://www.google.co.jp, and some (not all) other applications gets redirected to it’s JP version as well. In fact I’m writing this entry in Blogger localized in Japanese, which means I don’t understand a word in it’s interface. (If this entry made it to the blog – that means i found the “Publish” button).

I’m really surprised – how hard it is to make a button – “View in English” (They do have it on Google JP homepage, but not in Blogger)? What if I’m in JP, connecting from local hotel? And how hard it is to fix the actual geo-location software?

Now – what really makes me wonder – is that I’m actually logged in into my Google account. Which obviously should have the knowledge that I’m an English speaking person. So either Google is not taking that into account when showing me localized interfaces, or worse – it does not have as much demographic data as people assume.

I’ve heard many buzzwords in my life, but over last 10 years I couldn’t point my finger at what exactly bothers me. I still can’t – however, at this point I’m convinced that any company that uses too many of these words – has no idea what they are doing, and lost (if ever had) its direction:

agile
end-to-end
scalable
solution
ecosystem
monetization
decisioning
paradigm
next-generation
leverage
framework
A good friend told me once: if you can’t explain a concept to a 7 year old, you don’t understand it yourself. I don’t think 7 year olds, know any of the words above.

If I would ask you: which is the most innovative company in the world? I think majority would reply: Apple.

It is pretty fascinating how Apple turned around from being a sort-of-cool-but-nobody-cares to de-facto standard of innovation in recent years.

Clearly, major part of it is Steve Jobs, and his marketing skills. I always was of the opinion that it does not make much difference if you have the best or coolest technology in the world, what matters is how good can you sell it.

Microsoft has been dominating not because of solid technology platform, but because of Bill Gates’s monopolistic marketing tactics.

Apple products are beautiful and easy to use (oh though not the best from hardware perspective), and Job’s selling skills are second to none.

I also think, that Apple is very good not only at inventing cool products, but identifying interesting ideas outside of Apple world, and quickly embracing them. NIH (not invented here) – is really not part of their DNA.

And that is in my opinion – the trick to a successful company.

Many people can come up with good ideas once in a while, but very few can have a consistent combination of own ideas, other people ideas all melted into single vision and consistent execution.

Over the last couple of years there has been tremendous push to present information in visually appealing way. All new technologies like AJAX, Flash, WEB 2.0 web services etc, are all trying to address this in various forms. I think Google was really an early adopter of this trend, despite that Search is purely text based. AdWords was brilliant in a way it allowed advertisers to manage their campaigns through AJAX interfaces. Gmail took email to the next level in terms of ease of access to your emails, which is part of visual presentation, in my mind.
Google Earth, Google maps are other examples of presenting information in much more appealing way. Recent acquisition of Gapminder also points in the same direction.

However, the web is still a very textual environment. But all recent trends point out that new generation of users is looking for much more than just text. Youtube, Myspace are all examples of that. Explosion of Photo management sites like Flickr, slideshows online like slide.com are all attempts to visualize users life, and present it for quick consumption.

I think the next evolution of the Web will be around connecting visualization dots across the web, and automated ways to present information in visual ways.