Written by Ariel Seidman on July 14th, 2010
Riding Groupon’s recent success competitors are popping up practically daily (see the competitor list here). 
In the early days of commerce Amazon faced well funded competition from the likes of Pets.com, Buy.com, Furniture.com, and thousands of others. Many of these are not around anymore and others are simply shells of of their former selves. Amazon built up its defensives with broad product coverage (tons of categories and the marketplace) and innovating in features and services like product reviews (hard to replicate) and Amazon Prime (customer lock-in). So, what will Groupon do to quickly start establishing its defensibility? Here are three ideas:
- Multiple Parallel Deals: This is another way of saying broad offer selection. With only a deal or two a day per city (~50 or so cities) the activation energy a competitor needs to catch up is fairly small (sales force and some search marketing spend). If they had more liquidity on the supply side (hundreds of deals per day per city) it would be very hard to create this kind of supply with a sales force. To do this effectively they need to build a recommendation engine that ensures that I never see a deal for a pedicure.
- Turn Competitors into Sales Franchises: Local businesses don’t have the time or desire to transact with multiple group buying sites. Furthermore, Groupon’s competitor’s are starting to plateau, as this happens will seek new ways to generate incremental revenues. Groupon can avoid a bloody fight with these competitors by turning them into a local sales franchise. They bring deals to Groupon and in return get a cut of any deals sold. Of course, these local sales franchises have to use all the listings and contract management systems Groupon provides.
- Build Local Business Reviews: For each deal many hundreds of people experience the service. If 10% of these wrote a detailed review they could quickly become an excellent source of business reviews. Today’s Groupon in San Jose is running a deal for Cindy’s Yoga (see here) that 792 people purchased. If ten percent of purchasers wrote a review (or 79 reviews) Groupon would have 36 more reviews than Yelp’s listing for Cindy’s Yoga (see here).
Posted in Product, Strategy | 4 Responses »
Tags: commerce, group buying, groupon, social
Written by Ariel Seidman on July 8th, 2010
No matter how bad a product feature may be removing it is 3x harder than putting it in in the first place. Here are four ways to remove unwanted product features.
- Bury It First: Reduces usage to the point where it will make it less painful to eliminate. Netflix tried removing a feature and customers complained so loudly they brought it back and buried it — see here for full details
- Throttle It: Limit the capabilities of the product. Many years ago HotJobs had a job listing product that recruiters abused by refreshing the job daily to make it appear like the job was in fact new today boosting the relevancy of the job listing. Rather than completely eliminate this product we initially throttled the number of times the recruiter could perform the refresh action and made it transparent to the jobseeker that the job listing had only been refreshed.
- Take It On the Chin: If a small percentage of users are holding you back from innovating on behalf of a much larger percentage of users, kill the feature, communicate it and move forward. Some innovative sites like Digg fell prey to a very vocal set of users who demanded the product not evolve.
- Replace It With Something Else: When Facebook App Notifications were eliminated, they provided other ways for App developers to connect with users. Nowhere near the same level of distribution but some alternatives…I hear the moans from Facebook App Developers.
Adapted from my answer on Quora. Follow me on Quora here.
Posted in Product | No Responses »
Tags: product management, software
Written by Ariel Seidman on June 25th, 2010
37Signals recently launched an iPad app called Draft. Draft is a simple sketching application with built-in integration to Campfire, another 37Signals product. Now for the controversial part: Draft costs $9.99 while Adobe offers a similar app for free. This pricing strategy is a mistake.
Their objective centers around maximizing profit from the complementary product (Draft) rather than the core subscription product, Campfire. This is akin to Bloomberg trying to charge a hefty premium for content — Bloomberg news content is a complementary product to their lucrative subscription Bloomberg Terminal business.
The objective should be to get every Campfire user with an iPad to purchase the Draft app. Price it low enough to make it a no-brainer decision for these users. If every Campfire user (with an iPad) purchased the Draft iPad app Campfire would become far more valuable. Campfire users would post more content via Draft and more conversations around the content creates deeper customer lock-in. As Campfire becomes more valuable customer are less likely to cancel their subscription. 37Signals knows better then anybody else that losing a subscription revenue generating customer is very hard to replace.
Given the amount of controversy this $10 price point is generating the last thing 37Signals needs is Campfire users thinking twice about purchasing the app — at $4 or $5 these types of users don’t think twice.
[See here for an excellent essay on product complements by Joel Spolsky)
Posted in Product, Strategy | 4 Responses »
Written by Ariel Seidman on June 10th, 2010
Two platforms are emerging the mobile operating system platform and nested within it is the mobile app and ad platform. For over a decade Google played for keeps in its platform (search connects searchers and advertisers), so why shouldn’t Apple do the same? By barring AdMob from the iOS they:
- Limits Google’s Ability to Achieve Mobile Ad Dominance: The mobile ad business is a two-sided network. Apple is ripping away one side of that marketplace (or at least a very large chunk of it — 100M eyeballs). This will limit AdMob’s (i.e. Google) ability to achieve critical mass in the mobile ad space during these formative growth years.
- iAd Accelerator: With AdMob out of the picture advertisers will move their mobile ad budgets to other ad networks and clearly the iAd network will grab some of these dollars accelerating its growth as it attempts to reach critical mass. Remember, in any market with strong network effects the strong get stronger and the weak get weaker. Apple is positioning iAd to get stronger.
- Keeps Ad Innovation Alive (some): A key hallmark of an open system is the increased rate of innovation. By opening iPhone to select mobile ad networks the iOS platform will still benefit from the ad innovation these providers generate.
- Switching Costs for Developers are Still Low: In a mature market developers could incur significant switching costs i.e. if AdMob had 10x better ad relevancy algorithms combined with an advertiser base 20x the combined competition it would be challenging for the others players to match the revenues developers were generating. But in such a nascent marketplace nobody has these kinds of advantages.
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- Other mobile ad networks (Apple iAd, Millennial, Greystripe, and Mojiva) will quickly pick up the slack and provide comparable monetization rates.
- The cost of switching to another ad mobile provider is not significant – a new billing relationship, a couple of lines of code, and new analytic tools to monitor your performance.
- The vast majority of mobile developers making real money (now) are not doing so with AdMob display ads — they are doing it with paid apps.
Finally, do you really believe that app developers would give up access to 100M mobile users who have a credit card on file.
Posted in Mobile, Product, Strategy | No Responses »
Tags: admob, apple, google, mobile advertising
Written by Ariel Seidman on June 9th, 2010
I stopped using Aardvark for three reasons:
- It felt very transactional — it lacked soul and depth.
- It invaded my private space (my instant messenger sessions).
- It performed well at questions that classic search engines and/or discovery site like Yelp usually handle well e.g. what bike stores are in Palo Alto or where can I find a free SVN MacOS client. You can get answers to these questions without nagging somebody.
On the other hand, I have become a Quora addict for three reasons:
- Performs well at questions not well suited for a search engine: opinion, multiple constraints scenarios, hypothetical scenarios, etc. For example startup founders and investors commonly ask “How did company X get traction.” When somebody with knowledge of that company answers it provides insight that a search engine cannot find because that content previously did not exist.
- Provides depth and insight — by keeping questions alive, providing answer summaries, etc. the content can become richer.
- Feels like a natural conversation. Quora is like a party where you can jump in and out of conversations of interest. Whereas Aardvark which feels like a party where everybody is separated by a wall.
This blog post is adapted from my answer on Quora. You should follow me on Quora here.
Posted in Product, Strategy, Technology | 2 Responses »
Tags: Aadvark, question and answer, Quora, Search, social search
Written by Ariel Seidman on June 9th, 2010
I finally got around to putting together my recommended reading list for consumer web product managers. You don’t need to carry the title of product manager — this is for anybody (engineer, designer, etc.) who is the CEO of a user facing feature(s).
Have more recommendations to add to my reading, add them to the comments below.
Posted in Hiring, Strategy | No Responses »
Tags: books, product manager, reading list
