Perceptive.ly

Next Episode

I’m extremely excited about the next episode: joining SoftBank Capital for the summer and then starting business school at Yale in the fall. My last 2+ years as an associate at North Atlantic has been amazing and I owe a lot to the partners David Coit and Mark Morrissette. I never really thought I’d end up back in Maine after going to college up here, but being in Portland at NAC has been awesome and I have learned a ton about the venture capital business and entrepreneurship from David and Mark as well as the great management teams of our portfolio companies.  At the beginning of June, I start at SoftBank in NYC and will be working with the early stage team (Joe and Nikhil) as well as the growth stage team (Matt and Scarlett). Let’s get ready for the next episode.

Note: Unlike Wordpress, Tumblr unfortunately doesn’t allow Soundcloud music to be embedded in text posts. This is a problem. The soundtrack that accompanies this post can be found here: https://soundcloud.com/karimnelson/dr-dre-the-next-episode-feat-snoop-dogg-nate-dogg

Evolution of Online Advertising

Online advertising is a complex and fragmented landscape, filled with lots of jargon and acronyms (DSPs, SSPs, RTB, etc). The daunting Luma landscape illustrates the complexity and fragmentation well. In addition to the complexity and fragmentation, there has not been much customer loyalty associated with companies in the space due to poor customer service and a lack of transparency in the market. Advertisers and publishers have been quite metric driven and both have been known to jump around from one “shiny new toy” to the next. For these reasons, North Atlantic has generally shied away from online advertising companies for the past few years.

But I have learned that you should never rule out a type of company based on past stigmas about the group. Things can rapidly change, and often the disruptive and differentiated companies are the ones that break down the stigmas associated with the group. I would characterize Triggit, which just yesterday announced North Atlantic’s investment, as that type of company. Triggit is a demand-side platform (DSP) that enables advertisers to run retargeting-driven display campaigns. Triggit is a leader and innovator on Facebook’s real-time bidding exchange, FBX, which is in the early days of its growth, and the company also helps advertisers on other RTB ad exchanges, like Google’s AdEx.

The areas where DSPs have historically been very bad (customer service,  pricing and creative) are the areas where Triggit shines. Triggit provides its customers tremendous customer service and transparency and flexibility on pricing and creative, which has allowed it to gain significant customer loyalty from several large customers (primarily online retailers and travel sites with millions of monthly visitors and hundreds of differentiated products).

Most people hate ads online. But companies like Triggit are making ads better for advertisers, publishers, and consumers. Advertising is the lifeblood of the internet, and I strongly believe that RTB exchanges will become the accepted way for social networks to monetize (think Tumblr, Pinterest, etc). Keep an eye out for Triggit (and take note of whether or not the ads on the right side of your Facebook screen, and in your news feed, are getting better and more relevant to you).

Growth Stage B2B Heat Index

For job seekers, VCs, or anyone else who is trying to evaluate a private technology company, it can be difficult to get a sense of how companies are doing without talking directly to the companies and getting information from them. Private companies aren’t required to disclose any information other than fundraising events, so outside of talking to folks at the companies, customers or analysts that cover the companies, the only touch points for outsiders evaluating companies are financing rounds and media coverage. Scouring TechCrunch, Pando Daily, AllthingsD, Mashable, etc for articles about companies can be helpful, but there is also a lot of fluff on those sites.The tech media tends to be biased towards certain companies, and companies that don’t have the right relationships tend to get overlooked. In the B2B space right now, the companies that have raised lots of money by well known investors get all the love: Box, Palantir, Square, and Stripe are the big four that come to mind. While these are all great companies that deserve the recognition they are getting, there are many other companies flying under the radar that people should know about. It seems to me that there has got to be a better way for folks to learn about and track the progress of great private tech companies.

I have set out to try to provide more transparency on growth stage B2B tech companies with the B2B Growth Stage Heat Index. This is a purely quantitative index currently based on two simple publicly available metrics: Alexa 3 Month Traffic Ranking and Google Trends peak search interest. The weighted average of these two numbers was aggregated for over 500 B2B growth stage companies. The heat index reveals a lot about how well B2B companies are performing. Today, the great majority of enterprise software companies offer web-based products, where users log into the website to use the product. Many have lightweight, and often freemium products. Disqus is a great example of this. Disqus powers the comments section of this blog, and I have a free account. I suspect that the majority of Disqus users have free accounts. But I also think there are many free users like me that love the product, are loyal to the company, and would be happy to pay in the future. 

The top 15 are listed below, and a link to the top 50 with more extensive data is at the bottom of the post. This index says nothing about revenue growth, gross margins, and profitability, which is private information that will ultimately determines the success of the companies. It is certainly possible for a company that is high on these rankings to have a bad business model that doesn’t translate to good financials.  But I suspect there is a high correlation between these rankings and the financials of companies.

May 2013 Growth Stage B2B Tech Heat Index 

1. Disqus

2. Infusionsoft

3. Hubspot

4. Reverbnation

5. Viglink

6. Qualtrics

7. Snagajob

8. Appnexus

9. Instructure

10. Wordstream

11. Cvent

12. The Resumator

13. New Relic

14. Box

15. Criteo

This index is a work in progress, and I am playing with other public metrics, like Twitter followers, Facebook likes, LinkedIn employees, and others. I know that Alexa rankings have been criticized in the past, but to my knowledge, Alexa provides the most accurate public traffic data on the web. Danielle Morrill was an inspiration for this post, and she is doing an awesome job tracking the momentum of early-stage startups on her blog. Make sure you check out www.DanielleMorrill.com if you haven’t yet. The one issue I have with her index is she isn’t clear on how she is calculating the index. Hopefully she is more transparent on that in the future.

The link to the list of the top 50 below. It includes location, capital raised, as well as the Alexa ranking and Google Trends search index number. If you are interested in the data on the 500 companies I indexed and would like to see how this index evolves over time, be sure to follow me on Tumblr or Twitter.

Top 50:

 https://docs.google.com/spreadsheet/pub?key=0ApAcZ4e_rZ65dFRaRGIwQmtYVll6S3ZHblhadG0tdXc&single=true&gid=0&output=html

Alternative Assets 2.0

Until recently, only high net worth individuals have legally had access to alternative assets. By the historical definition, alternative assets are: hedge funds, private equity, and venture capital. These are “alternative” to traditional asset classes such as equities, bonds, mutual funds, and ETFs, which everyone has access to. The logic behind restricting alternative asset investing to only the wealthy is that the alternative assets tend to be illiquid, and are viewed as more risky than traditional assets. The question about whether or not this makes sense is beyond the scope of this piece. But the good news is completely new asset classes are being created that either allow or will soon allow the masses to get involved. These new asset classes certainly have their risks. But more choice is better for the masses, and if approached thoughtfully, investing in alternative assets 2.0 could produce better returns for investors than traditional assets. Below are the four different asset classes that make up “alternative assets 2.0,” and a few companies in each class that are worth checking out.

P2P Lending (Lending Club, Prosper)

While many of the alternative assets 2.0 classes are highly speculative, more risk-averse folks may be attracted to yield-producing P2P lending markets like Lending Club and Prosper. At a time when bank interest rates are at or near all-time lows, investors have an opportunity to get better returns (between 5% and 12% interest) by lending money to folks who borrow for things like debt consolidation, home buying, car financing, and wedding expenses, among other things.

People (Upstart )

People is the most nascent asset class of alternative assets 2.0 and is being pioneered by a year old company called Upstart. Upstart allows people to sell shares of stock in themselves in exchange for a percentage of future revenue. Investors on the platform invest in people based on an assortment of historical data, like education, experience, and interests. This idea has been attempted before. In 2008, Minor League baseball player Randy Newsome founded Real Sports Investments to sell shares of himself. Real Sports received a lot of attention initially but flamed out pretty quickly. Upstart is taking another crack at the model, and they have a strong team and quality investors behind them.

I have been scouring this platform and have yet to pull the trigger on an investment, but plan to in the near future. The platform is straightforward and intuitive. I do wish there was more social integration though, as users shouldn’t have to Google names to find Twitter and Facebook profiles.

Crypto-currencies (Bitcoin, Litecoin)

This is an asset class that has received lots of publicity as of late. Crypto-currencies are new forms of money that use cryptography to control creation and transactions, rather than relying on central authorities like traditional currencies (dollar, pound, etc). Bitcoin is by far the most popular crypto-currency to date, but I expect others, like Litecoin, to emerge as well. The process for individuals to invest in Bitcoin is not incredibly difficult, with sites like Coinbase.com making it easier, but there still is some friction involved, especially in the case of Litecoin and other less popular crypto-currencies. I expect entrepreneurs will continue to create services that will reduce the friction in investing in cryto-currencies in the future. This will positively impact the currencies in the long run.

Startups (Funders Club, WeFunder, Angel List )

Of these 4 classes, this is the one that is not yet accessible to unaccredited investors. Part of the JOBS act, which passed in 2012, says that unaccredited investors are allowed to invest in startups. This is expected to go into effect this year or early 2014. When it does, platforms like Funders Club, WeFunder, and Angel List will provide access to the private markets for the masses, creating another class of alternative assets 2.0. 

What asset class in “alternative assets 2.0” are you investing in? Don’t hesitate to let me know on Twitter (@NTMoney) or in the comments!

Salary at Venture-Backed Companies

Salary at venture-backed tech companies is a topic that is not talked about often, but I’d like to shed some light on it because I believe it is more important than most people acknowledge. Ideally, management teams are driven by a desire to solve a problem and change the world for the better and salary is of minimal importance. But in reality, salary is a major motivating factor for many tech entrepreneurs and employees. The decisions that the board of directors and management of a company make regarding salaries can have a major impact on the long-term trajectory of the company.  This is something that may not be apparent to operators of companies, but it has become apparent to me during my time as an associate at North Atlantic, where I get to see the inner workings of all of our portfolio companies. It is important to note that my experience is with companies that have annual revenues of more than $5 million, so this piece does not apply directly to seed stage startups, although I imagine similar dynamics are at work.

Salary is a tricky nut to crack. If you offer too little compensation, you may not attract the talent that you need to be successful. But if you offer too much compensation, management and employees may begin to feel fat and happy and lose the motivation to maximize long-term value for shareholders. It is essential for companies to create a great culture by finding a happy medium: high enough salaries to attract quality talent, but not so high that the management team may be less inclined to stay hungry, work hard and take risks. 

As a board member, how do you figure out that happy medium to pay senior management team? And as a management team member, how do you figure out what to pay employees? The answer is that unfortunately there is no clear answer, and this is still very much an unscientific process. It is often a combination of asking around to peers, and possibly using some lightweight products like Salary.com or Indeed (http://www.indeed.com/salary) to get a sense of what the market price is.  Other startups have launched products to attack this problem as well. Most recently AngelList offered its own salary product for startups.

The reason that the process is so inefficient is that salary is still a very politically incorrect topic to discuss. Even the most transparent private tech companies, like HubSpot, make all their company information, except salaries, available to the entire company. Why does salary information have to be private? I don’t think it does, and I am convinced that it should and will become more transparent in the coming years. Salary should be a measure of how much value one is adding to a company, and that information should not be a secret.

Ultimately, there needs to be a more efficient way for stakeholders to determine salary for employees. I don’t have an answer for what that is yet, but in the spirit of more transparency surrounding salaries in tech, below I have listed the average salaries of CEOs,  President/COO/CRO, CFOs, CTOs,  and VPs of Sales at NAC portfolio companies. I encourage other VCs to do the same, as this information will benefit the whole tech ecosystem. This is obviously a limited sample size, but I believe it is fairly representative of “expansion stage” B2B technology companies, as NAC currently has portfolio companies throughout the country (San Francisco, Boston, Orlando, Durham, and Albany). If companies are consistently paying management teams 30% away from these averages in either direction, there is likely a problem at the company.

AVG CEO - $260,833

AVG President/COO/CRO - $223,333

AVG CFO - $196,071

AVG CTO - $185,429

VP of Sales - $175,833

The scope of this essay does not go beyond salary. Obviously, at venture-backed tech companies, the other big component of compensation is equity. Equity compensation is generally pretty straightforward: the more equity compensation at the early and expansion stages, the more motivated management is to create long-term value. High salary and low equity ownerships is rarely a good situation.

How Much Does Location Matter in Tech?

“If you have a big idea, and you’re smart, you move to Silicon Valley.” Ben Horowitz 

Conventional wisdom says that in technology, it’s all about location. Leading tech minds like Ben Horowitz and Paul Graham claim that if you want to build a successful technology company, you must be in the Bay Area. In a recent conversation with Steve Stoute  Ben said, “This (technology) is a very competitive business. If you want to compete, you need every advantage you can get and you must be where the best engineers in the world are. You’ve got to be where you can have access. Here (Silicon Valley) is the best. There’s other places (New York, Boston), but you can’t do it anywhere.”  In addition to the Bay Area, Boston and New York are the two other highly thought of technology hubs. Most people believe that starting a technology business outside of these regions is a bad idea.

It is surprising to me that in 2013, even the most forward-thinking minds in tech say that you must be in a particular location to build a successful tech business. Technology is democratizing education (companies like Khan Academy, Skillshare, ConnectEDU, Udacity, etc), health care (Sherpaa) and many other sectors, but for some reason, thought leaders in tech like Ben claim that to be a successful entrepreneur in the industry, you need to be in a certain location. Why is that?

The obvious reason one might think technology leaders voice this opinion is because historically, the most successful technology companies have been built in the Bay Area, Boston and New York. Google, Facebook, LinkedIn, Amazon, eBay are some of the largest and most successful tech companies and they were all built in the Bay Area.  Just this past year, the top 10 largest tech IPOs were all from companies based in the Bay Area. The thought is that the talented people that built those companies stay there and so that is where the next great companies will originate. There is no doubt that past success and the talent is part of the reason why he so adamantly expresses his belief that entrepreneurs need to go to the Bay Area. But the fact that something has happened in the past doesn’t mean that it needs to happen in the future. By definition, technology is all about disrupting historical patterns.

The less obvious and more likely reason that this opinion is voiced so commonly by thought leaders is that it is in the best interest of the leaders in these regions to voice the opinion. Ben lives in the Valley and it is most convenient for him to invest in companies that are close to where he lives. So when he says you must come to Silicon Valley to build a great company, I think it should be taken with a grain of salt. You don’t hear him saying that you have to go to an Ivy League school to get a great education, because that would conflict with the mission of Udacity, an Andreessen Horowitz company based in Palo Alto that is democratizing educational access. But he does say you need to live in a certain place to build a really successful company, because although it is contrary to a “democratization of the world” view, it is in his best interest.

The reality is that you can build a tech business anywhere, and there are lots of examples of great technology businesses being built in this country outside of the technology hotbeds of the Bay Area, Boston and New York.  There have actually been more multi-billion IPO exits outside of the regions than there have been in New York in the last five years. Groupon (NASDAQ: GRPN), based in Chicago, IL, Fusion-IO (NYSE: FIO), based in Salt Lake City, Utah, Exact Target (NYSE: ET), based in Indianapolis, IN, and Millenial Media (NYSE: MM), based in Baltimore, MD all IPOed at multi-billion dollar valuations. Surprisingly, New York has not had any multi-billion dollar tech IPOs in the past five years! 

When thought leaders like Ben adamantly say that you need to move to the Valley, people listen, and that perpetuates the Bay Area’s dominance. This is good for that region, but bad for the rest of the country and it is important that people know more about companies outside of the regions that get all of the media coverage. Below is my list of the top 25 companies outside of the Bay Area, New York and Boston that are likely to have substantial exits in the next few years. You may be surprised to learn that states like Kansas, Rhode Island, New Hampshire, Utah, Iowa and Arizona are home to rapidly growing tech companies that are leaders in their spaces. It is likely that I am missing some clear breakout companies, and if I am, please let me know!

Appia- Durham, NC

Apptio- Bellevue, WA

AtTask- Lehi, UT

Autotask- Albany, NY

Avalara- Bainbridge Island, WA

Balihoo- Boise, ID

Braintree- Chicago, IL

C2FO- Fairway, KS

ChannelAdvisor- Morrisville, NC

DataGravity- Nashua, NH

Dwolla- Des Moines, IA

Dyn- Manchester, NH

Foresee- Ann Arbor, MI

HelloWallet-  Washington, DC

Infusionsoft- Chandler, AZ

Instructure- Sandy, Utah

Monetate- Philadelphia, PA

Pentaho- Orlando, FL

Swipely-Providence, RI

Snagajob- Glen Allen, VA

SpringCM- Chicago, IL

The Resumator- Pittsburgh, PA

TOA Technologies- Beachwood, OH

Troux Technologies- Austin, TX

Voxeo- Orlando, FL

Disclosure: This list was put together based on insights gathered during conversations with entrepreneurs, VCs and analysts. I also used Crunchbase, Gartner, LinkedIn and Alexa as resources. My firm, North Atlantic Capital,  is an investor in 3 companies on the list: Appia, Autotask, and Voxeo.

If I Had Glass

Over the weekend I was excited to get a tweet from @ProjectGlass letting me know that I was selected as part of the Explorers Program, a group of roughly 8000 early testers of Google Glass. There have been various reports speculating about how Google selected the explorers, but based on my relatively low follower count and unimaginative tweet, my guess is that there was a good degree of randomness to it. Nonetheless, I am pumped to get my hands on a pair of the glasses. It feels like Glass could be a revolutionary consumer product much like the iPhone was.

Aside from my excitement as a consumer, I am also extremely interested in the developer ecosystem that is going to form around Glass. If Glass takes off like I think it could, there is a good chance there are going to be some Instagram and Twitter type businesses built around Glass. In this video, Google highlights some details about the Glass API that developers should get familiar with. I look forward to meeting developers working on Glass apps in the coming months.

The Age of Context for Businesses

Six years ago, most people wondered whether social media was a trend or a fad. Early adopters recognized social media’s ability to improve lives in countless ways, but the mainstream was freaked out by its implications: it is a violation of privacy; it promotes less human interaction, etc. These concerns were rational, but rational people often miscalculate how quickly and drastically a new technology can change behavior. Even the most ardent social media supporter six years ago couldn’t have predicted the impact social media would have on our lives today.

Today, early adopters are using technology to understand themselves better. Robert Scoble calls this era the “Age of Context.” Software is beginning to understand us as individuals better than we understand ourselves by aggregating and analyzing our personal data. This data is in turn used to help us make better decisions. Currently, the mainstream sentiment toward the “Age of Context” is similar to the mainstream sentiment toward social media: “that is weird”; “this is creepy”; “I don’t need that.” But I believe that over time, similar to how the mainstream view of social media changed, people will come to realize that the positives outweigh the negatives. The “Age of Context” is here to stay.

The consumer applications that help us better understand ourselves have gotten most of the publicity thus far. Nike+ FuelBand, Zeo, Highlight, Sleep Cycle, Moves, and Chronos are just a few of the consumer apps in the space. I am a fan of all of them. And I’d be remiss if I didn’t mention Google’s Project Glass, which looks like it has the potential to be the game changing consumer product in the “Age of Context.” But I think applications that solve context problems for businesses have been overlooked. Today, most businesses know shockingly little about their customers. In the future, I think that businesses won’t be able to imagine not knowing everything there is to know about their customers. Technology businesses that allow companies to compile data on their customers and provide actionable insight on how to increase ROI on these customers will be hugely valuable. There are two particular companies in New York City in this space that stand out to me as having an opportunity to build huge, lasting businesses:

CrowdTwist- CrowdTwist arms companies with a white label SaaS solution that aggregates valuable information about customer engagement both online (online purchases, Facebook likes, tweets, etc.) and offline (visits, purchases, etc) so that companies can determine who their most loyal customers are, and reward them accordingly. This information and targeting can generate significant ROI for companies. Current customers of CrowdTwist include Pepsi, JC Penny, and the Miami Dolphins. The Miami Dolphins are a great use case that demonstrates how a professional sports team rewarded its most loyal fan. I’m a huge Patriots fan, and would love to see the Pats be the next team to implement such a loyalty program. 

Sailthru- Sailthru collects data from email responses, website visits and app use in order to drive sophisticated analytics so that companies are able to market to their customers in a more personalized and effective manner. All of the traditional email marketing companies these days claim to offer “one-to-many” personalized email capabilities, but Sailthru is the only company that has this capability in its DNA.  Media companies such as AOL, Business Insider, and NY Post are all customers, and I expect other verticals to adopt Sailthru’s technology in the future.

Both of these companies provide context for businesses so that they can operate more intelligently and effectively. They both have SaaS offerings that are attractive for businesses that may need to test the waters of a new technology before diving in fully and investing a lot in it. 

If you are working on an“Age of Context” company,  in either the consumer or B2B space, I would love to hear from you.

Gigwalk Product Design: The Power of Simplicty

The majority of the technology products we love and use in our every day lives today have one major characteristic in common: simplicity. Apple’s “Home” Button for the iPhone, and Google’s single “Search” bar are the two products that immediately come to mind when thinking about this phenomenon. Time and time again, simplicity of product design wins in technology.

When examining the myriad of different mobile products for non-specialized on-demand labor seekers, Gigwalk’s simplicity truly stands out. Gigwalk is the easiest way for people to complete quick tasks for money. Download the application to your mobile phone (Android or iPhone), sign up by providing two pieces of information about yourself (name and PayPal account email so that you can get paid), and Gigwalk immediately presents you with the tasks closest to you, sorted by asking price (the app utilizes Apple’s Core Location API to find out where you are). The tasks on Gigwalk can be completed immediately and paid out within two days. Tasks include identifying where a brand of vodka is placed on the shelves of a liquor store ($8), snapping pictures of and answering questions about an electric vehicle charging station ($5), and evaluating a parking garage ($5). I made $35 this week for less than a half hour of work by snapping photos of a few local restaurants. It was the easiest $35 I have made in my life.

Simplicity of product design is so important for a company like Gigwalk because completing a task for money with a mobile phone is a new behavior and most people are naturally averse to new behavior. In the on-boarding process, the friction must be minimized in order to sell users on taking part in new behavior.  When attempting new behavior, human nature dictates that most people will give up at points of resistance. Gigwalk gives the user very few reasons to give up because the application is so simple to use.

I have long believed that the nature of labor is changing. We are still in the early innings of this change and I think that ease of use and simplicity of design is essential for this behavior to get beyond the early adopters. I encourage people to go out and download the Gigwalk app if you haven’t already. You won’t regret it.

Software Eats Fitness Tracking Devices

Exactly one month ago, Finnish startup ProtoGeo Oy quietly launched a mobile application in the iOS store called Moves. The Moves app offers iPhone users the easiest possible way to track physical activity that exists in the market today. There are several great hardware products in the market that track activity, such as Nike’s Fuelband and Jawbone’s UP (on the expensive end of the market) as well as Fitlinxx’s Pebble (on the cheaper end of the market), but Moves is one of only a few software applications that I am aware of that tracks activity in the spirit of Mark Andreesen’s “Software eats the world” theme. Moves is cheaper (free) and more user friendly than the hardware products in the market, and is being rapidly adopted. According to a tweet from Lifeline Ventures partner Timo Ahopelto, the company reached 1 million downloads on February 22nd. To put that into perspective, it took Twitter 2 years to get to 1 million users.  

Moves utilizes Apple’s Core Location API to track walking, running, and cycling with minimal effort from the user. Download the app on your phone, and it just works in the background.  Unlike the Fuelband, UP, Pebble, and other hardware products, you do not need to put a device on your body, open the app, or tell it what to do.  Keep your iPhone on you, and when you want to check your activity, you can pull up the app, and the activity from the current day is presented to you. You can see how many steps you’ve traveled, how long you have been active, and how many kilometers you’ve traveled. You can also see the places you traveled, and the times that you traveled from one place another. It is a lot of information but it is presented to you in a way that makes it very simple to get the exact info that you want about your own activity. I personally track steps every day and observe historical trends. In the past month, I have been motivated to be more active simply because I know my activity is being logged.

While I think the app is fantastic (particularly the user interface), I also think that the user experience could be improved to make the product more valuable to users and make users more engaged with the product. Thus far, the founding team has deliberately avoided taking the “social” route. They know a thing or two about social gamification, having built one of the Internet’s most popular virtual words, Habbo Hotel.  Right now, the team is consciously focused on providing users insight into their own lives, rather than pushing game mechanics at them. I think this makes sense initially; simplicity is their distinct competitive advantage right now. But I think game mechanics need be worked into the experience without being the focal point of it (perhaps by offering the features only in the “paid” version). Specifically, I would urge the Moves team to consider incorporating social integration and a social engagement loop to the user experience.

Social Integration

They should add integration with Facebook, Twitter, and other social platforms. This isn’t a novel idea, as most apps these days do have some type of social integration. But currently, there is no social component to Moves.  I think people generally like to talk about their exercise and bond with others about it, so to me, social integration makes perfect sense. It should be possible to login through Facebook and Twitter, and you should be able to invite your friends on other networks to join the app, and join your “friends group” on Moves.

Social Engagement Loop

It is not enough for an app to simply have social integration.  Successful social products must have effective social engagement loops as well.  I urge everyone interested in the topic to check out Ryan Hoover’s great answer on Quora to the question “How has Turntable.fm grown so rapidly with no marketing?” It is a gem, and set the framework for a lot of my thinking on social engagement loops as it relates to Moves.

1.) Visible Progress/Reward

•  Activity Points- Currently, Moves tracks steps, time traveled, and distance for walking, running, and biking. It splits up each activity. This is certainly valuable data and many users probably like the fact that the information is broken down. But I think there should also be one simple total “Activity Score” that combines all of your movement (similar to Nike Fuel).

• Leaderboards- There should be “Leaderboards” so that you can see how your Total Activity is stacking up against friends and people around you.

2.) Motivating emotion

• Brand rewards- Brands could advertise on the platform by offering rewards to people with the most activity in a given location over a given time period. For instance, Gatorade could offer a free 12 pack of Gatorades for the highest scoring person in Boston in a given week.

3.) Social Call to Action

• Challenges- I love the idea of being able to “challenge” friends. Most people enjoy competing with their friends, and if it involves increasing exercise as well, sounds like a win-win to me. Issue a “challenge” to a friend to see who run further in a given week. Loser buys dinner.

4.) User Re-engagement

• Email Notifications- Set notifications for what you want to know about friends activity. Also, be alerted when you have been notably inactive. The crazy thing about my inactivity, I have found, is that I don’t realize it. A little awareness about yourself, and yourself relative to peers, can make a huge difference.

• Social Recruiting- Most people enjoy doing things with friends more than doing it alone. If there is added value to me to have my friends on, I will definitely be likely to spread the word more aggressively about the service, and make sure my friends get the app.

These are just some of the ideas I have for Moves that could drive engagement and increase value to users.  As I mentioned, the founding team is MUCH more experienced at this stuff than I am and I’m sure they’re thinking about some of these things as we speak. But as a faithful user of the app, I would definitely pay a couple bucks to have the features that I’ve described, and I don’t think I’m alone.

Regardless of which path they choose, I am currently incredibly bullish about the Finnish startup and I look forward to future iterations of the product.