F8 Previews in Review

Earlier this week I published two columns (one on BusinessInsider and one on AllFacebook) previewing Facebook’s F8 conference.

As speculation built that Facebook would be launching a major media service, I worried that Facebook might be focusing on the wrong opportunities:

For the economy as a whole, more media means more advertising opportunities. That’s great for Facebook’s short-term bottom line, but not so great for the rest of us. We don’t like the advertising we have. Too often, it’s an annoying shouting match between competing brands: banks and insurance companies, reeling from a loss of consumer trust, trying desperately to win us back.

Facebook’s great potential is in better advertising. Yet, the social network appears to be ignoring some important foundational steps in that direction.

You can read both posts to learn about the projects that I think Facebook should be giving more time and attention.  I’m not suggesting anything too radical — rather, I am mostly encouraging Facebook to open a few game-changing advertising tools that it has previously tested for general public use.

The big announcements are now behind us, and the tech press is swooning over Facebook’s new gadgets, but we’ll have to let the dust settle before we know if the new tools are as suitable to commerce as they are to media.  To Facebook’s credit, they have opened up a whole new set of flexible tools for developers that should make Stik.com and other high-value social sites better in one way or another.

Hat tips to:

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A Travelin’ Brand: TripAdvisor’s Facebook-Connected Reviews Threaten Travel Brands

My latest guest post has just been published on GigaOM.  The big idea is that online review sites are undermining brands by making it easier for consumers to know the quality of specific locations and individual service professionals.

Here’s an excerpt:

Take this Google search for Super 8 Motels, for example. On the front page, you’ll see ratings that hotel guests have written about particular Super 8s on TripAdvisor, Yahoo Travel and Yelp. Importantly, the reviews vary widely. When I checked, a New Mexico location was rated 4.5 stars, while a Los Angeles location was at 3.5 stars and one in British Columbia had only 2 stars. Such location-specific information undermines brands’ ability to affect consumers’ purchasing decisions with 30-second TV spots and gives TripAdvisor a powerful position.

TripAdvisor is ahead of other travel sites thanks in part to their use of Facebook-connected recommendations, which help websites make sales by establishing instant trust with visitors. As a potential hotel guest, I am interested in the consensus among previous guests, but I am especially interested in what my friends have said. Reviews can be intensely personal — for example, here’s my TripAdvisor review of a beach resort in Mexico — and if you know the author, it makes a huge difference in how reliable you consider the review.

For the Super 8 brand, the end game could be scary: as TripAdvisor accumulates more and more trusted reviews, the best-performing Super 8s, all of which are independent franchises, may eventually realize that their business is suffering from their association with lesser motels. At that point, we might see a “brand run,” wherein the best locations leave the chain, lowering the brand’s value and ultimately leading to its collapse.

See the post itself for a few recommendations for brand managers.

I didn’t have space to discuss which sorts of brands are more or less threatened by reviews sites, but it’s worth pointing out that consumer product brands like Coca-Cola, Gillette, and Doritos are safe.  Online review sites don’t make sense for such items, as everybody already knows the taste of Coca-Cola.

Franchise brands like hotel chains and national insurance agent networks (think Farmers, State Farm, Allstate) – will face the biggest challenges as consumers gain access to location- and employee-level reviews.

One Rule for Social Media: Forget Twitter and LinkedIn; Focus on Facebook

My friend Ben Casnocha once warned: “beware of advice from … professional advice-giver[s], rather than someone in the trenches.” “The best advice on networking will come from someone who is not a professional networker.”

Of course, this depends on your definition of “best”. If you are looking for a portfolio of strategies that will help you get every possible bit of value from social media, stop reading this and return to your social media guru of choice. On the other hand, if you seek simple social strategies that will help build your business with minimal time investment, this one rule is for you.

Why focus on Facebook?

  • Almost everyone who uses the internet is on Facebook. In the US, that’s ~150 million people, compared with 40 million for LinkedIn and 25 million for Twitter. That means there are about 100 million people who are ONLY using Facebook. Since these people have fewer online connections, they are more likely to deal with people in their immediate networks. This means less time wasted with clients who are interviewing a bunch of different professionals.
  • Facebook is about long-lasting real-life relationships. For trust-based industries such as real estate and mortgage, in which professionals do a small number of deals each year, it’s crucial to protect your core customer base of family, friends and friends-of-friends. As Redfin’s numbers show, it’s very hard to win business from clients who have a pre-existing relationship with another agent or broker.
  • Facebook users are addicted to the site. A full 25% of all internet page-views are now on Facebook, dwarfing the other social outlets. Neither Twitter nor LinkedIn, for example, surpass a half percent of page views. This means that your friends are pretty likely to actually see and read your posts. Stik users, for example, have had great luck requesting recommendations from their Facebook friends.
  • At Stik.com, we believe that clients will soon view sales professionals who lack a well-developed Facebook presence as “having something to hide.” Eventually, we’ll laugh at the days when privacy concerns trumped professional opportunities.

And why are Twitter and LinkedIn so much less useful?

  • On Twitter, competition is fierce, so you really need to go big or go home. Unless you are regularly hilarious in just 140 characters — which is hard and time-consuming — your few humble tweets will be forgotten just as quickly as they are pushed down the page by top-tweeters Lady Gaga, Ashton Kutcher, Barack Obama, or (heaven forbid) any of these robo-tweeters.
  • LinkedIn is about expertise and hiring, and LinkedIn’s business centers around getting corporate recruiters to pay for access to talent. Did you know that it costs $10 to send an “InMail” to a professional outside your network? How many clients do you think will do that? It’s still worth filling out your LinkedIn profile just in case, but don’t expect it to be a lifeline.

We’ve built Stik.com on the Facebook Platform to help sales professionals capture business from family, friends and friends-of-friends, with a lot less upkeep than most social media gurus proscribe. When clients search for a professional on Stik, they’ll find people that their friends know and they’ll read personalized recommendations that stand the test of time. We’re often asked if we plan to integrate Stik with other social networks, and we do in some limited ways, but we’re focusing on Facebook because Facebook is the home of the most real, trusting relationships, and you should too.

Social Media Beyond “Conversations”

Facebook is a hot topic in business these days, but most businesses are still trying to “figure it out.”  The problem is particularly acute in financial services.  Among big companies, Facebook participation is hit or miss.  Allstate (~22,000 fans) and Citibank (~7,000 fans), for example, have fewer fans than they have insurance agents and loan officers.  Among small and mid-sized companies, participation is even worse.

Meanwhile, individual Facebook users aren’t having any problems.  Facebook is reportedly on track to become the first with a billion users in 2011, and seemingly all of Austin, Texas is following the 365 Things To Do In Austin, Texas page.What’s going on here?  Rick Grant offers a handful of explanations in this recent HousingWire article, and I agree with his overall assessment.  While it’s easy for banks to cite “lack of clarity regarding financial services regulations” as a reason to stay on the Facebook sidelines, the explanation rings hollow given their reputation for exploiting every regulatory loophole they can find.

The bigger problem seems to be, in Rick’s words, that financial companies “don’t know all that much about forging real relationships with their customers”.

If there is such a thing as conventional wisdom in social media, it seems to be that conversations are the key to social media.  As Rick puts it, companies need to be “proactive in starting and then participating in conversations about issues that are important to consumers”.  This advice is echoed by social media consultants of all stripes, and Facebook has supported this paradigm with a variety of analytical tools that help companies measure and track conversations.  While I certainly recognize that conversations can be valuable, there are big problems with the conversation paradigm that are rarely addressed:

  1. For most people, content creation is hard, time-consuming work.  Social media gurus are like infomercial body-builders — they make it look easy, but their regimens aren’t easy for the rest of us to adopt.
  2. People tend not to trust financial institutions and therefore don’t value “conversations” with these companies.  Rather, people value conversations with other people.  Allstate and Citibank seem to recognize this on some level — they have each replaced the Facebook Page Wall (the home of conversations) with a custom landing tab.

With these problems in mind, my view is that — for many financial services companies, at least — conversations are neither the most important nor the highest-ROI use of social media.  Rather, the low-hanging fruit for financial companies is the opportunity to permanently position themselves as a trusted resource and their sales teams as trusted professionals.  On Stik.com, this means accumulating Facebook Recommendations and Reviews for each sales professional.  Stik profiles are less dynamic than Facebook Pages, but that’s by design.  They are a permanent, public reflection of each employee’s track record, designed to answer the core question on every customer’s mind: Can I trust this person?

The Stik approach may make some branding and compliance experts uncomfortable, as it requires empowering individual employees to solicit recommendations from friends and past clients, but guess what?  Sales and customer service teams are the core of financial companies’ relationships with customers, and Facebook is making a deliberate push to get more users to share professional information.  We estimate that a full 50% of Facebook users will have professional information online within months.  For commissioned sales teams, the rate could be much higher.  The brand-risk ship has sailed, and the most that corporate offices can hope to do is steer it.

If you want to learn more about social strategies that don’t require hourly tweets, sign up for Stik.com or send us an email at info@stik.com.

Stik on Techcrunch

Stik.com was profiled on Techcrunch yesterday.  Leena Rao nicely summarizes the current Stik user experience and reports that she found 45 mortgage professionals in her friend-of-a-friend network.

Leena notes that she wouldn’t trust all of her friends’ recommendations of their friends and would generally “email our mutual connection to see if the [professional] is legitimate” before starting a transaction.  I agree, and indeed we’ve made it extremely easy to contact mutual friends via Facebook message directly from the Stik.com search results.

A couple of commenters also worry that business deals gone wrong could cause problems between friends.  While there’s some risk here, most folks will happily accept a small amount of friendship risk in order to minimize the risk of a bad experience with an unknown mortgage broker or another high-stakes purchase.  People ask friends for recommendations offline all the time, and increasingly I see it happening on Facebook.  For examples, just search the public stream for posts from people who need insurance agents and mortgage brokers.  (Note: you’ll need to be logged in to Facebook to visit these pages.)

Overall, both Leena and the commenters point to the next step for Stik: a rich layer of recommendations and written reviews.  We are already building this content, but currently it’s spread relatively thin over a large number of professionals.  We’ve got some important new features coming to address this issue and we’ll write more about them soon.

No Natural Predators

When I was a kid, my brother and I subscribed to Zoobooks.  I read every word of every issue for the entire year. The animals that impressed me most were those which have “no natural predators.”

I think this is a great way to think about startups. Can you fit into an ecosystem and make it work better, without picking any fights with existing organizations? If so, you may have a winning formula. If not, you may end up like the peer-to-peer lending industry.

As Melody at Transcapitalist has chronicled, the SEC has repeatedly forced these companies to spend millions on “compliance” just to get started. It’s been so bad that a new regulatory body – something that would send shivers down the spine of any just about any lender – was actually welcomed by the P2P players.

Jay and I have been committed to developing a business with no natural predators since before we were Stik.com. We explored many more radical versions of our business, including an online-only mortgage brokerage staffed by a network of graduate students who would provide something closer to ‘customer service’ than ‘sales’, but we ultimately decided against it. Not only are capital requirements prohibitive for first-time entrepreneurs, but I have watched Redfin long enough to imagine what nasty things would have been said about that company.

Instead, we decided to focus on identifying people whose interests are naturally aligned and connecting them in a comfortable medium. We empower both the companies and the consumers we deal with, we threaten nobody, and at least for now there is no Federal Bureau of Introductions.

Nathan’s Thoughts on The Social Network

I finally got around to seeing The Social Network, the first movie in memory that I was legitimately excited to see. (Those who know me know that I don’t like many movies and almost never go to the theater.)

I’m neither a movie reviewer, nor a Facebook historian, but I loved the movie and couldn’t resist posting a few thoughts:

 

In Charlie Kaufman’s Adaptation, one of my all-time favorite movies, an aspiring screen-writer attends a screen-writing workshop and comes away with a lesson that captures my frustration with most movies: “We must find originality within that genre. Did you know that there hasn’t been a new genre since Fellini invented the mockumentary…? My genre’s thriller, what’s yours?”

The Social Network works without a genre safety net. Can you think of another movie that has dared to tell a story with such an obvious ending, all without romance or violence? Somehow, the story captivated me for two solid hours; in fact, as I left the theater, I could only recall two slow moments, one of which was the opening credits.

 

Since I was in Mark Zuckerberg’s house (Kirkland House) at Harvard, a number of people have asked me if The Social Network is “true.” My take is that it gets a lot of the little details right, but is less accurate in it’s treatment of the characters.

The following low-level facts are true:

  • Mark did build a site called FaceMash for which he was disciplined by Harvard college.
  • Mark did email a modest number of friends when he first launched thefacebook.com, and those friends forwarded the site on to others. I received one of those early emails, in which a friend of Mark’s said: “This will definitely be in The Crimson”, referring to the college newspaper.
  • The college newspaper article in the movie was real. You can read the original here: http://www.thecrimson.com/article/2004/2/9/hundreds-register-for-new-facebook-website/
  • The phrase “Facebook me” did catch on amazingly quickly, within weeks, if I remember correctly.
  • Mark really did have business cards that said “I’m the CEO, bitch”.

However, at the same time, Mark is depicted somewhat unfairly. He was known as a brash and cocky guy, but he was certainly not without friends. I am personally good friends with a number of people who were close to Mark before Facebook. Moreover, he’s had the same girlfriend for years. To depict him as a loner is a stretch, at best.

 

I also find it hard to believe that Eduardo Saverin contributed as little as it appears in the movie. He was one of the smartest and most effective guys I met at Harvard – he taught my Calculus 3 class freshman year and came to class organized and prepared every single day. There wasn’t a question he couldn’t answer. Also, a little known fact: at one point, Eduardo held the world record for biggest upset in chess history. In any case, as a Facebook billionaire, Eduardo’s not much of a victim, so I’m glad to see that he’s taken the high road since the movie was released.

 

I am looking forward to the sequel and the march to 500 million users!