I Have An Idea for An App...
I decided to put my story and thoughts in writing because of how many young founders reach out to me. My goal is to provide a framework that will help them understand how to realistically get an idea off the ground. It's a 5-part series I shared on Medium.
Part 4 - Coming Soon
Part 5 - Coming Soon
Social media is fucking with our brains.
I've worked in and studied tech, specifically consumer apps, with great tenacity the last several years. There is a fact that can't be disputed. Social media apps are designed for addiction. This addiction is less obvious than drinking yourself to sleep every night or stepping outside for an 8th cigarette, but it's an issue we should take much more seriously than we do.
I feel strongly about this issue because I am an addict. My digital drugs of choice being Twitter and refreshing my email. Part of that can be accredited to my entrepreneurial ventures and being addicted to "productivity". The other part craves information, education and entertainment tailored to my vast interests in sports, technology, venture capital, business, hip-hop, political narratives and culture.
Those are innocent enough reasons to check my phone. But like anything in life, there are unintentional consequences for the decisions we make. It doesn't help social media companies thrive off our addiction. Their ability to retain users and drive engagement fuels fundraising from investors and revenue from advertisers. Brilliant people are sitting behind a computer at every office in Silicon Valley getting paid a lot of money to figure out how to bring you back to their app more.
Here's a few things I've personally felt that signal social media addiction to me.
Signs of Addiction
Have a hard time sitting in silence.
Use it as a distraction.
Use it as a way to avoid others.
Comparing yourself with others.
Constantly refreshing because you've gone through everything and want to see everything that's happened since you started your session.
Interrupting moments for posting more than enjoying them.
Checking social media unintentionally as you had another task to do on your phone.
Thinking about checking it when you haven't for a few minutes.
It's the first thing you check in the morning, last thing you check at night.
Numb to the present.
I've been asked why I'm on Snap and don't have a personal Instagram account. That may change, although I would use my presence very differently than how it's used typically. Here is my reasoning.
They're basically the same, right? They couldn't be more different in my eyes, although I recognize Snap does have addictive qualities and similar features.
It boils down to incentives.
Instagram is an ongoing highlight reel of our lives. Vanity metrics (likes, comments, followers, ratios) are public and easily comparable to others, making it a naturally (yet subtle) competitive environment. We're socially incentivized to create the best possible digital scrapbook of ourselves in order to reap significance and validation. 'Our best life' has to be on full display. We are our own PR team seeking to shine the brightest light on us.
Snapchat is designed to capture ephemeral (a word Evan often uses to describe their product) moments. Philosophically, I align with the intent behind Snapchat's current platform. We are who we are in this moment. I am capturing my life in this moment, and like most things in life, it's here today and gone tomorrow. It does not define me. Snap's exist in a short-time frame making us less likely to manipulate the moment to perfection because the incentives aren't as great. That creates more authentic displays of us. Also, people (on average) have far less friends on Snapchat, making it a more intimate and private space for sharing. There is no public friend count, RT or likes. We see the content for what it is without a peanut gallery.
I have personally struggled with technology since AIM. I remember coming home in the 5th grade and rushing to turn on the computer to see who was online. It was magic as everybody else was doing the same. There's certainly positive aspects of social media, even Instagram. The access to people you don't know and ability to create relationships is cool.
Homework and essays in high school often took much longer than they should have for me. Facebook was my greatest procrastination tool, one click away whenever I encountered a sentence I didn’t know how to start or a math problem I felt stumped by.
Coincidentally enough, a few weeks ago I received a notification of a post I made in 2011. It was from an idea I had even farther back than that, 2010, but did not explore. I asked if anybody knew a ‘computer engineer’ (that’s not what they’re called lol) that could help me with a really important product. The idea was for a widget that would block certain sites during specific times or for a specific allotted time. I needed this product. I'm very sure I was not the only one.
I do wonder how much more fruitful my life would be spending my time on social media elsewhere - reading books, writing, ideating, learning something new (a language, programming). Creating rather than consuming.
Writing is a way for me to project my vulnerabilities and fears. I know they don't apply to everybody. The reason why I love Twitter is the same reason I know there's a lot more people like me, addicted to social media, than there is not; I'm always paying attention. For better or worse, I'm obsessively curious about why people do what they do. My eye test says this is a problem, especially among younger people who have only known a world in which this technology exists. My cousins, teenage girls, tell me about the crazy things people do for a like or deleting a photo because it doesn't get the numbers they expect. Social media preys on our desire to be liked and validated. These desires existed well before social media entered the picture, but now its quantified. Rapper Kyle sums it up nicely in the song Like, "Instagram really have a tendency to give people superficial dependencies" and "tryna get a fix from a click, that's just how it is."
One thing that is troubling to me is how little awareness we have about the affects of social media. In a recent conversation I had with someone very close to me they argued it affects everybody else... but not them. This is part of the problem. Because the affects are not obvious or immediately harsh, like waking up at 11am with a hangover on a Tuesday, it's not thought of as a problem. Or maybe it's because so many others are addicted that it's been normalized and we're on our phones just as much as everybody else, so what's the problem?
Best Practice for Social Media Use
Be real. - This is the hardest piece of advice. I don't even know if I can follow it. Not only is it the best social media strategy, but it's best for you mentally. You'll attract people who want to be in your astronomical orbit and build far greater relationships.
Use social media, don't let it use you. - Social media can be a great business tool. Whether it's for making money, getting feedback off of your creations, or generating inbound interests, I respect the hustle. I don't blame Budweiser for making beer anymore than I fault Instagram. We as the consumers need to practice a bit more self-control.
Time yourself. - At my best, I'm able to get the most out of social media without letting it control me for longer than it should. I'll set a timer for 7-10 minutes and when that times goes off, move off from the app.
So what is the solution? Whose responsibility is it to help us curb this wildly addictive and manipulative behavior? Democratic presidential candidate Andrew Yang proposed an idea that initially intrigued me. He proposed a social media czar.
He’s an interesting candidate to me for this very reason; he’s approaching problems our country is facing like no other candidate. While I’m not sure the role or reach of a social media czar, it’s certainly an appropriate issue to confront considering the impact it has on nearly everybody’s life. On the flip side, the potential for abuse is tremendous. Each day it feels like 1984 is becoming more prophetic.
This morning, I heard birds chirping. It sounded wonderful... and foreign. Can't remember the last time I heard them sing like that. I don't think it was a coincidence that my phone was too far away for me to reach. I just sat there and listened.
My brain cannot simultaneously enjoy the natural gifts of this world while being occupied with the artificial digital gluttony I often inject.
Newspapers are dying.
We’ve heard that the last 20 years. Everything is going online. Many newspapers tried bucking this internet thing instead of embracing it. They're paying the price now unfortunately.
I grew up reading the sports page of The Seattle Times before school. Newspapers are nostalgia for me. A reminder of simpler times when I would chomp on a bowl of cereal with my only care in the world being where the Mariners were in the AL West standings that morning.
It may be 15+ years late for the newspapers, but there is a fascinating pivot a few newspapers are making and I'm not sure anyone is noticing.
As I scrolled through the top podcasts in the Apple Podcasts app, a true crime podcast called The Man In The Window owned five of the top 10 or 15 slots of most popular episodes. My girlfriend and I were driving from Pittsburgh to Detroit to see her family so we had some time to get into that series (which was gripping).
The opening credits say the podcast is produced by Wondery, a podcasting company, with the Los Angeles Times.
What struck me was that even after living in LA for two years, this might be the first piece of content I've consumed from the LA Times. I haven't read an article or follow them on Twitter so I don't see anything from them. Still, this partnership with Wondery made sense after a minute. Newspapers are the platform, but they are not the thing.
Stories are the thing. With the rise of podcasting, newspapers are well equipped to leverage their archives, editorial discipline and storytelling to a larger and more engaged audience.
While the NY Times has a successful daily podcast that gets people caught up on the news, Man in the Window is a different kind of podcast. It explores one of the worst criminals in America's history, utilizing old newspaper stories and sources from the 80s. I don't think this story gets told as well as it does without help from the LA Times. It's a great example of how newspapers can create their own unfair advantage. I imagine this model could lead to a pivot for smaller newspapers.
A pivot to this degree would require an investment that these papers are not likely to make given how cash-strapped they are, but it’s an interesting idea to think about. A journalist would be in charge of finding a compelling drama that strikes a chord with the community and they’d be accompanied by an audio engineer to package it up. It could be the talk of the town for 6 months.
A podcast like this could command higher prices from advertisers, especially local ones, given how targeted to the city/surrounding area the podcast is.
Local journalism is extremely important to our democracy and holding people accountable. My hope is that a pivot, if any smaller paper is bold enough, is able to support the paper and more in-depth stories that benefit our communities.
THE MINORITIES IMESSAGE STICKER PACK - DEBUTS AT #2 IN THE APP STORE (Click title to see original post and photos. Originally Posted on BurkeBrosCreative.com)
Proud to share that the iMessage sticker pack we created with The Minorities was the #2 Top Paid sticker pack in the App Store.
How this came to be is a funny story. I called them through their Instagram account after binge-watching their videos over a weekend. Surprisingly, they picked up. I talked with Zeb for a little bit and he couldn't have been nicer. We didn't talk very much business, but I told him with their channel growing so fast that I'd love to stay in touch in case an opportunity came across my eye.
A few months later I got a PR request for RentHoop, my app for finding roommates, with a focus on Sacramento. I connected the journalist with The Minorities and it turned into great PR exposure for both of us on CBS-13 Sacramento.
We had about a half-dozen conversations over the next six months. As their content is rather edgy, I had a goal of diversifying their revenue stream. They sell a lot of merchandise which is a good money maker for them, but requires them to handle all the packaging and shipping. Their house is filled with boxes and boxes.
I forget how the idea of creating iMessage stickers came to me, but they did one day which is weird because I've known about them since Apple released the feature in 2016.
As engaged and beloved as the Minorities are, iMessage stickers made perfect sense. Especially because most of their best moments come from hilarious facial expressions.
Throughout the process of creating the stickers, we realized we were building a scaleable intangible product. We came up with a name for it.
Stickers are a form of expression the same way a sticker, keychain or sweater is, only digitally. Because of the digital part, that also means you don't have to fiddle with logistics or shipping. We believe this is the way of the future as our phones and technology become even more integrated with our personalities and how we express ourselves.
We were cautiously optimistic about the launch. The Minorities have a 99.4% thumbs up rating and over 600,000 subscribers on YouTube so we figured that their fans love them and there's a lot of them.
We skyrocketed to #2 in the iMessage App store.
The feedback has been incredible so far, 20-5 star reviews and counting. We charge $1.99 for the stickers. The great part is that as their brand goes, so will their sales. In this way, they're making money off stickers when they're sleeping. We like we're able to do that for our clients.
Lyft S-1 Analysis from Someone Who's Driven for Lyft
Startups are a matter of survival. That's what drove me to driving Lyft.
Motivations for Driving Lyft
If you're here on my site, you know about RentHoop. It's a low-frequency-consumer app which is notoriously hard to monetize. Rather than use company funds to pay me, I wanted to continue to support myself however I could. I also didn't want to attach myself to a job because I travel quite a bit so I needed something that was flexible.
Lyft appealed to me in a different way, too; as an interesting cultural experience. More on this later, but this is where my Lyft journey starts.
I first heard about a program called Lyft Express through Facebook Ads about halfway through 2018. Lyft Express allows you to rent a car and make rides through a Lyft partner, Hertz.
I live in Hollywood, California and decided it was easier to live my life without a car so their ad targeted the right person. Living in a city like LA without a car was previously unimaginable, but with how affordable ridesharing is and my apartment being really close to public transportation, it made sense for me. Finding parking at my apartment complex is a nightmare so I wanted to deal with that as little as possible as well.
The signup bonus from that particular ad was $1,250 after 300 rides in the first 90 days. It which was an attractive and relatively lucrative sign-up bonus, so I signed up. Kudos to your Facebook Ads team, Lyft, they got me.
I'm going to break down statements from Lyft's S-1 and the economics from a drivers standpoint. Given my experience with startups and my obsession with behavioral economics, I thought I'd dive deeper into how it all works given there's not a lot of great information out there.
"We believe that the world is at the beginning of a shift away from car ownership to Transportation-as-a-Service, or TaaS."
Personal Anecdote: In my case, this is most definitely true. The costs of car ownership (vehicle, insurance, gas, PARKING IN LA) are outweighed by the convenience and marginal additional cost of taking public transportation or ridesharing.
"To advance our mission, we aim to build the defining brand of our generation and to promote a company culture based on our unique values and commitment to social responsibility."
Personal Anecdote: One of the go-to questions ridesharers ask drivers is, "So do you drive both Uber and Lyft?" I don't Uber, but that question usually results in me asking if they have a preference between Lyft and Uber. A surprisingly high amount of people are ride-or-die (see what I did there) Lyfters.
A guy I picked up from the airport summed it up best.
Lyft is like getting a ride from a friend. Uber is like getting into a cab.
There was a good amount of people who refused to even have Uber on their phone. I'm a price-shopper, so that surprised me. A lot of people had stories on miscommunications or rudeness from Uber drivers, but not a bad word to say about Lyft drivers. Uber's PR mishaps the last several years have not helped while Lyft has mostly stayed out of hot water.
Something I've heard from drivers is how much better the Lyft passengers are. There's a culture of respect. Uber passengers are more likely to be grubbing, spilling or acting entitled with the music or temperature.
Culture matters and is one of the advantages Lyft has over Uber.
Here's one more thing I found absolutely fascinating. Although Lyft has a better reputation, Uber is the brand synonymous with ridesharing.
"Hey, I'm in an Uber right now," was a phrase I heard repeatedly in my Lyft.. Sometimes they would correct it, but only once did I hear somebody use Lyft instead of Uber.
"Technology has enabled online platforms that provide workers with independent and flexible opportunities to generate income on a per-job basis, allowing them to earn money on their own schedule."
Personal Anecdote: The freedom to drive and make money whenever is a huge benefit. It's common for most people to drive part-time as well as in-between jobs. There's a good amount of freelancers, contractors, actors (in LA) and the like who do it to bring in a little bit of scratch on weekends or when work has slowed down. Lyft cites tht 91% drive fewer than 20 hours per week.
"Our business depends largely on our ability to cost-effectively attract and retain qualified drivers and..."
Personal Anecdote: As with most businesses, Lyft is always looking to reducing its CAC while increasing its LTV. I was an expensive driver to acquire. I got a $1,250 driver bonus and they spent money on Facebook Ads to get me through the door.
The new driver bonus dollar amount radically differs by market, time of year and ad. I was "acquired" in the heat of July when Los Angeles is bright and beautiful and tourism is in full swing, so demand for rides was high. To satisfy that demand, Lyft needed to increase supply and they did that through higher-than-they'd-like driver incentives like the $1,250 I received. Of course, they only pay that bonus if you hit the milestone, which in my case was 300 rides. My guess is that they break-even or get close to it at that number of rides. Often driver signups rewards are close to the $500 range.
As far as LTV goes, Lyft fared out well in my case. My report for the year shows Lyft platform fees of $2,685 and Service fees of $2,719.04. It doesn't say what "Service fees" include so hard to tell if it goes straight to Lyft's bottom line.
...and increase utilization of our platform by existing drivers."
The incentives of Lyft Express encourage drivers to drive more than full-time hours in order to make a decent wage.
I crunched some numbers in Excel to see the economics of it.
In an average week, I'd drive 58 hours and make $1,110. Depending on the mileage and kind of trips, I'd have to fill up every other day so gas takes off about $150.
That's $960 including tips and the maximum bonus in 58 hours.
There are three tiers of bonus as you can see below.
The top bonus is $200 for the week. That covers about 80% of the cost of the car which is $250 out the door after taxes and fees.
If I didn't hit even one bonus, my $960 would turn into $760. That's $13 an hour. The "flexibility" and "autonomy" of driving Lyft don't make sense at $13 per hour, especially if you're living in an expensive city like LA.
If I hit the 135 ride bonus, my hourly pay increases to $16.50 an hour - a 25% jump. That's significant.
Significant incentives encourage usage from drivers like myself and, as Lyft says, "increase utilization of our platform by existing drivers." Lyft Express is a product that helps them do just that.
And although the rates per mile (Lyft pays on an estimated per mile and minute basis) are slightly higher if you're driving your own vehicle, I can't imagine what depreciation does to your hourly rate.
"We offered in-app tipping to help drivers maximize earnings."
I'm a fun Lyft driver (my rating has never been lower than 4.94 stars and is usually at 4.99) and made only $90 per week in tips. That's about $.67 per ride. It's not a societal expectation to tip your driver, even a good one, the way you would a barber or server so most people just don't tip.
I'm usually not preachy, but you should tip your driver every time even if it's only $1.
Without tips, my pay would be 10% lower and they're already pretty low for a service as important as getting someone from A to B.
"To attract and retain qualified drivers we have among other things offered signup and referral bonuses..."
As mentioned earlier, the cost to acquire a new driver is a massively important metric for Lyft. Seeing how much the bonuses are for referring a driver, I put out a YouTube video showing how much I made in a week and other information about driving Lyft in hopes of having people signup using my promo code.
Surprisingly, 16 people have signed up using my promo code from 5,000 views. That's a really high view-driver signup ratio and that doesn't even include the people who watched the video who didn't use my promo code.
Receiving the bonus requires making a certain number of rides in a 90-day period. Guess how many people have reached their bonus?
Even if Lyft increases their signups, it still takes time and money to move those potential drivers down the funnel and convert them to actual drivers. This is another reason why their CAC is so high.
"We face intense competition and could lose market share to competitors..."
Ridesharing is an incredibly sensitive marketplace. Riders rely... no, that's not consequential enough of a word... demand affordable rides, short pickup times, easy pickups and competent drivers. People are going to work or school, picking up their car from the shop or coming home from a night of drinking. These are scenarios where their life hangs in the balance. They cannot afford to be late to work again or miss this class or get to the government office after it closes.
On the other side, drivers rely on rides with minimal pickup times, living wages and respectful passengers. People pay their electricity or even housing bill, as I was, with wages from Lyft.
Lyft must balance the many needs of both riders and drivers while remaining competitive. Pricing feels like a zero-sum game. Riders want the lowest price possible and drivers want the highest price possible (thank you, Sherlock). That's incredibly difficult to balance when competing against a company as well-capitalized and scaled as Uber. Reports say Uber is going to be even more aggressive offering incentives and discounts to both sides of the marketplace as an attack on Lyft's growing market share.
"Inadequate or unsatisfactory user support experiences..."
"We rely on third-party vehicle rental partners for our Express Drive program..."
At the Lyft Express zone where I'd pick up the car, there is a sign on the desk that says something like, "Don't say mean or vulgar things to us, treat us like your Grandmother." Even though that's verbatim, weird, right? Also, there's a security guard, sometimes multiple at the pickup zone.
After dealing with Lyft customer service at different touch points multiple times, I now know why they have both of those things.
Lyft customer service is AWFUL.
They expect you to want to kick their ass and cuss them out. In what other walk of life do you need a security guard and a sign that says, 'don't cuss us out or we won't serve you?' A club. Or a bar. Or a sports game. Basically any place where people drink and lose their minds. Working with Lyft customer service has the same effect.
There are a number of issues that can only be handled by customer service reps at Lyft Express zone. Of course, they don't have a phone number. You have to physically go in for them to not be helpful because they also have no authority to make most decisions. Calling the corporate support line won't help either as they'll recommend you to go to the physical location.
I recently had a situation in which the car I rented wouldn't start and had to be towed. I rented the car on Friday and drove it with no problems until the check engine light made a surprise appearance on Sunday night. Not surprisingly, they're closed on the weekends so I had to wait until Monday to do something with it. I went out to my car on Monday morning to start the car and... nothing. Click click click.
I waited about an hour and went back out to the car. After about 15 minutes it finally started and the check engine light mysteriously vanished. Still, the car was giving me the heebie jeebie's so I drove it back to Lyft and asked them for help.
At first, I had to defend myself as the rep (this was the Hertz rep) accused me of causing mechanical damage to the car. I was like "bro, I'm bringing the car back to you not one business day after I rented it. How do you suppose I am the cause of it not starting." He back-pedaled a little, but it wasn't a great start.
He directed me to take the car to their shop that does all their maintenance. I drove over there and they said they wouldn't get to it today and to come back tomorrow. Since the car was magically working, I drove it home.
The next morning I walk down to the car and... it doesn't start. I'm attempting to start it for 90 minutes before I tap into the driver support tab on my app. The Lyft person is nice enough until they explain that it will cost me at least $79 to get it towed.
I'm shook that I have to pay for the towing of a lemon with issues obviously outside of my control.
I dial Hertz emergency line and see what they can do for me. As it turns out, they said they would do it for free. Lucky me.
Still, I have to close out my rental with Lyft. There is no phone number, email, fax machine, carrier pigeon - only in person which means I have to take a Lyft there.
The Hertz rep scolds me for ten minutes on not bringing back the car to the Lyft Express zone after the service company said they were full. I tell her the car was working fine at that point and I wasn't given instruction to take it back in case that did happen.
It takes several days to close out my previous contract, something to do with the car needing to be towed to a certain location, preventing me from renting a new car.
I rent a new car on Thursday, three full days down the drain.
As it turns out, Lyft turned off my rental rewards (remember the chart I showed above?) and Hertz charges me for two days I didn't have the car. So as you can imagine, my pay dramatically decreases. I argue with both Lyft and Hertz about the issue. Both point the finger at the other. Neither do anything about it. I've spent 4.5 hours and had 3 emails ignored.
Neither Lyft or Hertz owns the customer relationship. Drivers often feel helpless.
I don't tell you this story in hopes you'll pity me (okay, maybe a little), but to share the driver experience and how people making close to minimum wage "running their own" business get such little support from Lyft.
With Lyft going public last month and Uber in the near future, I thought it was important for me to share my experience. Hopefully it makes you think twice about how you use those services as well as what to consider if you're thinking of scooping up some stock.
While there are trade-offs, one thing I will write about another time is how much my life was enriched by all the great (and weird) people I met. People from all walks of life who shared some of their most intimate stories and feelings.
What to Build
One of the areas in which I've grown the most is building products.
When I first started RentHoop I was optimizing for launching as early as possible. This meant that our app was bare, collected minimal info and had no paywall. Our goal, simply enough, was to launch. And that's what we did on that glorious day of May 2nd, 2016.
As RentHoop has evolved, so has my thinking and what we optimize for. Going through sprints and optimizing for certain metrics and goals is a healthy way to build a product. At times we've optimized for pushing one metric related to engagement, but you can spend time optimizing for a whole bunch of different things like growth and monetization.
What I've found to be most interesting about startups and building products is how to broadly apply these ideas of "product-market fit" to nearly every other kind of business. Here's a numbered list of how I've begun to think about building products.
1) "It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them." - Steve Jobs
- I found this to be true of a feature we built for RentHoop called Dealbreakers. It's a fan and press favorite, the first feature of its kind in the roommate space. It was inspired by my step-dad, Doug, and validated by a few things. Reading Craigslist ads, nearly every post specified a few things people didn't want in a roommate and housing situation. People were already labeling their dealbreakers on other platforms, just not in a structured way. Secondly, it reminded me of a reality TV showing about dating, Millionaire Matchmaker (S/O to my sister who got me hooked in high school after getting my wisdom teeth pulled out).
The matchmaker, Patti Stanger, asked nearly every one of her clients about their "non-negotiables." Just as in dating, we all have preferences, some that cannot be compromised no matter what. Nobody asked us for the feature dealbreakers. We noticed a pattern in nearly every roommate wanted post and built dealbreakers to make that process easier for users to identify. We also imposed a constraint letting users choose only 3 out of a possible 9 dealbreakers. In user video recordings, you can see users change their dealbreakers once they realize they can only choose the three most important dealbreakers.
- Below is another quote by Steve along the same line. If it was as easy as people telling you exactly what they want, every company would be Apple.
2) "If you know in advance that it's going to work, it's not an experiment." - Jeff Bezos.
- There are some things that so obviously benefit the product that they need not be tested. The very early versions of RentHoop didn't include us collecting Max Budget in onboarding. Budget is clearly one of the most important parameters for finding a roommate. There wasn't much to test - not only did we need to collect it and display it to users, but we had to include it as a filter.
- Bezos' statement also applies in another way. If you know in advance that it's not going to work, it's not an experiment. In a conversation I had with a colleague, they wanted to run an experiment that required (in my mind) a certain amount of scale. Given the difficulty of what we were working on, without the added complexity of what they wanted to test, it was inevitable to get data that would not reflect the benefit of the feature.
- The only thing worse than no data is bad data.
- Piggybacking on what Bezos said about making "big bets," a startup is a lot like poker.
- You don't have a ton of money or time. If regardless of your hand, you bet a few chips each hand, you've spent way too many chips staying in on hands with 3's and 7's. This is where testing leads to diminishing returns. You really aren't able to extract enough data or insight into whether that test validates or invalidates your hypothesis. It's okay to bet on a few hands and get the temperature of the table, but at some point you have to make a big bet and sometimes stay with it despite the data. What exactly is that line? Hard to say, but this is where people make decisions based on their gut and intuition.
My favorite example of this is popular television shows that changed the landscape of pop culture, but almost never happened. Seinfeld started off very slowly. NBC moved its time slot eight different times (Source: LA Times) until it finally hit its mark in its third season, to Thursday night following Cheers. Had NBC pulled the plug, they would have lost out on over 3.1 billion dollars of syndication fees (Source: CNBC) and we would have lost out on the many memorable quotes ("But, I don't want to be a pirate!").
Friends almost never made it out of testing! You can flush that $1 billion of syndication fees (Source: USA Today) down the drain if it doesn't get the green light.
3) Ask the right questions
- Although I still believe innovation rarely comes from user feedback, talking to users definitely has a purpose and has helped us with usability among other things. We've gotten, literally, thousands of people's feedback from RentHoop. Some of it is genuinely helpful. We grouped the feedback into several buckets and made several changes to our product that dramatically enhanced the user experience.
- In the screenshot above, the producers asked the audience whether Monica was a slut. While that may be important to gauging the overall feeling about Monica, those answers also only mean so much. One person thinking she's a slut is not indicative of whether the show is a failure etc,. Perhaps there were more important questions they could have asked like "Would you hang out with Monica?" or "Does Monica remind you of somebody you know?"
- Since I was a kid I've been enamored with our justice system and a court room. Some of my favorite movies/shows are centered around lawyers and trials; A Time to Kill, A Few Good Men, The People vs. OJ Simpson and The Lincoln Lawyer are absolute classics. One thing you'll take away from movies like that is lawyers are supposed to ask questions in certain ways (although sometimes they don't on purpose knowing the effect it will have on a jury). The opposing attorney can strike questions and answers from the record with objections that we've all heard before; speculation, leading, hearsay and relevance. In asking for feedback, you similarly have to be meticulous about wording the question without bias. A loaded question that steers a respondent in one way or another doesn't help you make the best decision possible.
4) "They will solve B+ problems instead of A+ problems. A+ problems are high-impact problems for your company but they're difficult. You don't wake up with a solution so you tend to procrastinate on them. So imagine you wake up and you create a list of things to do today, there' usually A+ on the top, but you never get around it. You have a company that's always solving B+ things... but you never really create that breakthrough idea cause no one is spending 100% of their time banging their head against the wall everyday until they solve it."
- Keith is a tremendous operator I have a lot of respect for, he's one of my favorite follows on tech Twitter.
- This is something I think I could have done better in the past and am working on righting now. Making big bets requires absolute focus. Without that, you won't get close to solving hard problems. Constantly solving small problems is a good thing, but ultimately will not lead to adding exceptional amounts of value to customers.
- In a consumer product it's easy to procrastinate on the big things. You can always put off monetization and even testing it, knowing the product won't add a ton of value without scale. Still, having an idea of what users will pay for and how much provides insight that shape the product and context around unit economics.
5) "One early challenge, he remembers, was getting hosts to actually reply to guests' messages on the service. The solution was to make a user's response rate--"the host responds to 75% of messages," for example--visible on the site." - Nick Grandy regarding AirBnB in The UpStarts
- I find it ridiculous hearing people demand technology to solve human problems. Ghosting, or not responding to someone, has existed far before AirBnb, Tinder, Instagram DM or RentHoop. People are too lazy, flaky, annoyed, busy, unorganized, judgy, "over it" to respond. I remember seeing a metric at Porch (this is from years ago) showing how few homeowners actually got ahold of one of our pros. It was astounding to me that a company that raised $100 million couldn't solve that problem in a more meaningful way. Now that I have better access and insight into metrics for RentHoop, I see how hard of a problem this is to solve and how important it is to signal the important of messaging people back.
- Product problems require context. It's hard to judge the success or failure without comparing the data to something else relatively similar.
- Translating the offline to the online is terribly difficult. This is a very high number, but it doesn't shock me. Many people use Tinder as a way to just validate they look good and people still want to do them. To actually get up off the couch and go on a date takes a valiant effort on both sides. One of my favorite things about an app called Hinge, which was just bought by Tinder's parent company IAC, is the in-depth and personal questions they ask that help you get to know a person ahead of time. They've streamlined the ability to start a conversation, one that can usually begin pretty awkwardly without an in.
The Future of Sport
Hollywood has undergone a seismic shift since the invention of the internet.
A small number of studios controlled what TV shows and movies got bankrolled and distribution. If one of the studios didn't play ball, you didn't.
With widespread adoption of the internet, Netflix, Hulu, Prime, YouTube, Twitter, Instagram and traditional networks, there is mountains of content. Leverage has flipped from the studios to the creators. Social media has empowered artists to be their own marketing machines and operate without the financing and infrastructure of larger players. Joe Rogan comes to mind as a powerful example of someone who built an empire without major backing from an organization.
Although I didn't watch the Phil v. Tiger pillow-fight (not great golf was the resounding consensus), the result was a heavily-promoted, discussed and sponsored event that has the potential to shake up the sports world in a way similar to how Hollywood was disrupted.
Sports leagues like the NBA and PGA provide infrastructure. They manage the media, legal complexities, upfront costs, business relationships, and TV rights that allow the players to focus on playing. Those are many of the same things the studios provided back in the day. You couldn't have a lucrative event without those things.
Tiger v. Phil is a window into the future of a world where athletes don't need the sports leagues. Sport leagues will probably always exist, but their importance may be diminished as the players themselves have enough star-power (as do Tiger and Phil) to basically guarantee the success of an event.
Bleacher Report, a digital sports media company owned by Turner, broadcast the event online for $19.99 as a pay-per-view event. A major malfunction forced Turner to issue refunds and make the event available to all. Viewership numbers haven't been made public, but my guess is that there was a lot of competition to own the distribution rights for an event this juicy. Traditionally, they would need a PGA to help secure distribution. If Tiger calls about an event like this, what media company is stupid enough to not listen?
Tiger Woods can move the needle like no other athlete in the history of sports (Source: 538). Phil Mickelson is no slouch himself, the second most popular golfer over the last two decades. Two titans battling is a headline that sells.
The event was well-promoted to general sports fans and gamblers who could make prop bets during the match. Similar to a movie star promoting their project on late-night shows, Tiger and Phil appeared together on sports shows like PTI to promote the event.
"Capital One the Match" was the official name of the match. Catching unique shots of the action was the "Drone View by AT&T," and the tracer will be the "TopTracer, presented by Capital One." There was a $9 million bet on the match that made for a good PR headline, but even the loser is due to make a butt-load of cash either way.
Why this is so fascinating to me is because we will see this happen in sports I actually care about. One of the draws of the event was supposed to be the intimacy of the event--no crowd, just them playing mano-a-mano. Where it failed was much of the rivalry and conversation during the event felt forced.
Consumers are seeking intimacy.
LeBron James understands that more than anybody in the sports world right now. His HBO show, The Shop, shows revealing and authentic conversation in a barbershop with A-list celebrities - Drake, Snoop, OBJ and many more - that touches on topics they've never discussed publicly before. Drake airing out his beef with Kanye West and LeBron declaring himself the GOAT became major social talking points.
LeBron's not granting interviews to help Sports Illustrated sell magazines anymore. He's talking about stuff on his own media properties which he's making bucks off of. Leverage has flipped.
We'll see an event like Tiger v. Phil except with basketball players in the next 3 years.
Would you pay $19.99 to watch LeBron play Kevin Durant 1-on-1 in August? Or Steph Curry play Damian Lilliard? I definitely would.
Other than language in their contract that prevents an athlete from playing their own sport and not giving a cut to the league, there is little barrier for someone like Steph Curry to organizing and cashing in on an event like this.
Soon, we will see more athletes do this. The promotion will be easy. The distribution attainable. Most of the major stars already have sponsors who will want in on the event. Think Chris Paul and James Harden with State Farm. The whole freakin' basketball hoop will be State Farm branded.
Whether you call it the Hollywood-ization, the boxing-ization or millenial-ization of the world, Tiger v. Phil is the start of a major new trend.
I sold differently than anybody else when I worked at Porch.
My goals were layered, contrary to many salespeople who are solely determined to get the biggest commission checks possible. Mine were rooted in a desire to inch the company towards product-market fit (didn't know that was the name of it at the time) which can only be done through happy customers.
That's hard to do without context. Salespeople had very little data and guarantees they could make so it was the wild, west, west. Find companies who will pay for leads. That vague parameter created a lot of issues.
Having worked closely with account management before moving into sales, I had insight into what happened post-sale. It wasn't always pretty. Account managers had the tough task of setting realistic expectations, something most salespeople aren't known for. With that context, I sought to narrow my parameters of who I would sell too. That started with finding out where demand exceeded supply.
Through conversations with account managers and hours of account analysis, I found the pro-types and geographies that were almost guaranteed to have excessive demand. My parameters became much more narrow; handymen in Los Angeles.
There was a handyman in Santa Monica who got 300 leads in 30 days for $200 a month. Those are insane numbers. Even if 90% of the leads didn't turn into anything, he easily got enough opportunities to turn that $200 into much more than that.
My confidence elevated dramatically knowing I was delivering something of value. I was selling something that would help this person win. It could change their life and the trajectory of their business. And for me, that helped me make more money satisfying the bottom line that my bank account and the company demanded.
I became a fan favorite of account managers. I can't recall any of my pros not making it through onboarding or the first 3-months, our standard commitment length. I was more than a salesperson. I was a product manager, increasing retention and connection rates. I was a marketer, creating positive experiences for our pros that they would likely share given how tied in the home improvement space is. My value went beyond the bottom line.
This is not the easiest skill to explain. There's not really a name for it.
I read a Sports Illustrated article about Bill Belichick and Nick Saban, the two greatest pro and college football coaches of all time respectively, and this very skill stuck out.
Football and business are very similar in this aspect. Everything is tied together. You are only as strong as your weakest department, whether it be defensive linemen or inbound marketers.
With RentHoop, I've had even more experience understanding how one thing affects another. How one metric that seems like a product metric is heavily dependent on marketing doing their job. Or engineering speeding up loading time.
They're all connected.
Yelp. Amazon. AirBnB. App Store. Google. Uber. Lyft. Facebook. Trip Advisor. Zillow. BBB (Not Big Baller Brand). Angie's List. Porch. Tens of billions of dollars of commerce are fueled by reviews.
Is this someone I should do business with?
Reviews, simply, answer that one crucial question better than anything else. It's a question humans have been asking since the very get go. Today, we have more options as consumers than ever before. Discerning the good from the great from the best from the worst is a task best-suited to the internet.
Service-based, experiential, or high-variable performing-products are heavily researched and dependent on positive reviews.
Word-of-Mouth has always been the best form of marketing. Your shit is so fire your customers spread the word for you. Naturally, people get a kick out of being the one to share the inside scoop on a popular restaurant or something they've enjoyed a lot.
Optimizing for WOM is one of the best long-term investments a business can make. It doesn't happen overnight. The formula to create such value comes at a cost, contrary to what many people believe. Businesses have to make compromises all the time. In some cases they'll have to give up short-term gain, stick to their values when it seems to work against them, bend over backwards for a customer when they may not deserve it and consistently deliver great experiences over a long-period of time. All those things come at a cost in the form of time, money and energy.
Reviews are the kissing cousin of word-of-mouth. Although I'm much more likely to take up a friend on their recommendation of the best fried chicken spot in town, an authentic and glorifying review on Yelp of crisp, tender chicken strips from a random person is enough to at least get the restaurant on my radar to visit at some point.
The biggest businesses in the world provide a platform for an ecosystem of reviews.
Before the internet I had to rely on people in my circle for recommendations and reviews. Today, I hop on Yelp or Amazon or Google to decide what I'm going to eat, buy and download based on what random people are saying.
Just as with any positive force for transparency and democracy comes the opportunity for abuse and manipulation.
Yelp's business revolves almost entirely on reviews so let's start there.
getting people to write reviews...
Has always been a challenge to any review-based marketplace. Without an incentive, it doesn't serve me to take time out of my day to rate and review the Mexican restaurant across the street. I don't get anything out of it.
Unless, two things happen. 1) I have a horrendous experience that is so infuriating I want to hurt that business. 2) The experience was so satisfying that I can't not share the good news.
Makes for polarizing reviews.
Yelp did a few things to get people to write reviews not only when they had one of those two reactions. First off, their product mimicked our need for validation, praise and "likes." It's easy to see this all around social now - Instagram, Facebook and Twitter, most notably. Yelp empowered people to build profiles and garner likes, laughs and "badges" to their profile. Yelp made it so that writing good reviews made people feel good about themselves. This gamification was absolutely brilliant and is one of the only ways to incentive people to write reviews without paying them.
They lifted up power users who 1) wrote the best reviews (as determined by other users) 2) wrote the most reviews with outings and parties exclusively for them which drove a feeling of community, especially in the early days.
Yahoo Answers was a big review-based site back in the day. It lacked profile photos of actual people, something Yelp did early on, that adds a level of realness (although it can still easily be faked) to profiles and reviews. People writing many reviews shows the sticking power and credibility of their reviews. I'll expand more on this, as there are many review-based sites who never reached the popularity Yelp did, Yahoo being perhaps the best example.
A restaurant review can be very layered, like an onion. There are many factors to a good dining experience; the ambiance, smells, menu, portions, taste, desserts, drinks, service, location, parking and pricing. Reviews can go beyond, "I like this restaurant." People on Yelp went above and beyond in their descriptions, sometimes jokingly, to create internet hilariousness.
Yelpers have personality. Like any good salesperson, TV star or radio commentator, dynamic personality is what captivates attention. People with that trait want to be recognized and rewarded for that. Yelp empowered those people to show their personality in ways you wouldn't find elsewhere.
Is a challenge as marketplaces fight the chicken-and-egg problem. Yelp initially focused on what is the most high-volume, variable experience that we consume - food. People go out to eat all the time. If you go out 3-4 times a month, you have that many opportunities to write reviews. This is not the case as with most industries. Restaurants was the perfect vertical to start with.
As with many marketplaces, one of the keys to achieving product-market fit is density. 1,000 random people in the U.S. using Facebook doesn't mean anything to anybody but the creators. 1,000 people at a specific location like Harvard means something. Because those people know the other people on the site, there's a level of trust and higher likelihood they will share it with others they know who belong in that circle, causing major network effects (Metcalfe's Law).
Yelp was solely focused on San Francisco for the first 16 months. With enough reviews in the San Francisco area, they got some people to start using it and talking about it with their friends. They started small and it snowballed beyond their initial group of friends.
These are reviews that are 1) Written by the business owner in attempt to juice their rating/reputation. 2) Written by someone who was never a customer 3) Written by somebody blackmailing the business 4) Too short to provide any sort of insight into the establishment.
Gamification solved many of these problems (as well as they can be solved). It's easy for a business owner to use a friend's Yelp or create their own just to write a review, even if they make it seem real. Often, people get businesses mixed up and write a review for a company they never worked with. I've seen this dozens of times and it drives business owners crazy. There's also people who basically will do anything for a $15 meal, even if it means blackmail the business owner and ask for a free meal or else... and lastly, someone who wrote something very basic and uninformative.
How to solve
1) Most business owners can find a way to juice their reviews. In-store they give you a free appetizer or drink in exchange for a 5-star review. This is a slight form of bribery, but does Yelp have people in every store waiting to snitch on small mom & pop restaurants? My guess is no. The best way to mitigate this problem is Scale. With enough reviews, the general audience sentiment will come out.
Aside from that, one of the most controversial features Yelp has is their algorithm that filters reviews. Their algorithm will throw a review in a tab that is basically hidden making it really hard to find while not including the rating in the average. Their algorithm seems to put reviews there if the user's profile is not filled out, it's their first review, and/or a combination of other data points that they have.
2) Yelp realized, at some point, it needed to give business owners the opportunity to respond to reviews. Especially with Yelp's business model being an advertising platform, businesses needed to have a voice. If there was a fake review, businesses could kindly speak to that specific situation, remedy that situation or totally discount it if it never happened. This created much more transparency and allowed customers to see how businesses handled the heat. It's quite telling. A business that hisses back with venom is likely to be one that values their ego over their customers. Yelp made this transparent.
3) Solved by #2.
4) Yelp has a minimum character limit to ensure that if you do write a review, you write one that is detailed and actually contributes to their ecosystem.
Yelp has built a community of millions of consumers who trust the platform. I trust them. It's my go-to whenever I need to look up a restaurant. Best part for consumers is that it's free. Costs us nothing! And we get all this information and occasional hilarity.
So Yelp leverages that audience to get businesses to pay them money to advertise.
This is a sensible and successful strategy although it comes with a few trade-offs. What happens when I'm a business who pays a lot of money and I get bad reviews? Why would I keep paying you money to promote my 3-star business when right below my listing are dozens of other companies that presumably have much better reviews?
Scenarios like this are very common. Yelp must forcibly choose between the dollar and integrity.
It is not just Yelp who must do this, but nearly every other marketplace in the world.