Last week I experienced my first taste of controversy in this arena. I contrasted Posse to Foursquare in an interview with Fast Company, who ran it as a feature with the headline 'What Foursquare would look like if it had been founded by a woman'. The article sparked a barrage of comments and tweets arguing why Foursquare is or isn't a good product for women and how Posse shapes up. It's the first time we've been so publicly compared to a competitor; the experience was both flattering and scary – a tiny Australian start-up set against a US industry heavyweight. Posse is not a revolutionary idea; many competitors are trying to solve the same problem as we are. And being first in line to seek a solution to a problem isn't always best. I found this recent Techcrunch article interesting: it points out that almost all of the nine tech companies that have exited for more than $1 billion in the past four years haven't created a new product category. Rather, they have developed in areas where the existing solution isn't up to snuff. Facebook provided a better experience than MySpace or Friendster, and Zappos just sold shoes in a better way with better service. We designed Posse because we felt the existing solutions weren't working for us. Now that we've officially launched in the US, it's natural that we'll be compared to competitors. In my blog today, I wanted to reflect on the process we used to design our product and how we took inspiration and ideas from others, like Foursquare and Yelp. 1. Define the problem and the audience We started with a hunch that some people preferred recommendations from friends to reviews from strangers on Yelp or TripAdvisor. We also thought that the process of asking for recommendations from friends through email, SMS or Facebook was cumbersome and inefficient. We set up an initial 10 focus groups to test our theory and asked questions like, 'Describe the last time you were in a new place looking for a restaurant or hairdresser. What did you do first?' The most common answers followed a pattern of, 'tried to contact a friend who knows the area,' then, 'couldn't get hold of them so ran a Google search or checked Yelp'. We also asked group participants to recommend places to each other on the spot, so we could understand exactly why they enjoyed sharing recommendations. Not everyone had a problem with this. Some were happy to use Google or Yelp to find places. The people who were dissatisfied tended to be like us: slightly fussier urban types who wanted to visit the best bars, restaurants, fitness centres, hairdressers and so on. They needed recommendations from friends and almost panicked at the thought of going somewhere cold. We continued the interview cycle until we identified four audience definers: gender, age, behaviors, and 'preferences'. By this I mean, what they sought in recommendations from friends and why they enjoyed giving recommendations to friends. Three of the four audience segments turned out to be female, so while we didn't design Posse just for females, we expected that the majority of users would be women. This may appear cold and calculating: breaking down users into audience segments, then designing features and artwork to appeal to those users. It certainly helped us understand who would want to use our product and why they'd use it instead of the competition. 2. Who has previously tried to solve the problem? Why did they succeed or fail? For this exercise, we mapped out every platform, past or present that had tried to solve social search. Yelp and Trip Advisor obtained lots of reviews and great data but failed to get a high enough proportion of their users writing reviews to show what your friends think of places. Both sites seemed littered with irate customers writing negative reviews. These upset the merchants, and many users we interviewed were skeptical about who was writing the reviews. Apps like Stamped and Fondu emerged to solve the social recommendation problem, but appeared to fail because not enough people were making recommendations to sustain long-term engagement. The only platform we could find that had managed to crack the problem of persuading lots of socially connected people to give it content was Foursquare. To understand how, we interviewed 100 Foursquare users. We invited friends who used the platform and put up posters around our office building offering to pay anyone who used Foursquare $50 for an interview. I wanted to know what was so compelling about checking in on Foursquare. We found that the overwhelming number of people who responded to our ads were male (+80%) and I was amazed when they described how they used the product. One guy told us about how he drove out of his way home every day to check-in at a supermarket where he was the Mayor. Others said they would check-in to places that they didn't even visit as they walked past. They were addicted and didn't understand why. As I struggled to make sense of check-in addiction, I couldn't help but notice the parallel between what these guys described and the behaviour of my small male chihuahua 'Steve' who dragged me to random posts, marking that he'd been there more than other dogs. Many women using Foursquare wanted to secure recommendations from friends for the best bars and cafes but found it frustrating that the most popular places around them were subway stations, people's offices or alleyways. They also didn't like 'checking in', broadcasting where they were, and were irked by random guys asking to be friends with them. I'm not saying that Foursquare, Yelp, Trip Advisor and many other local discovery platforms aren't great products that are loved by lots of users. Foursquare in particular was revolutionary in the way they use game mechanics and design to make participation in their platform fun: Posse and many others since have taken inspiration from these ideas to develop other products. I'm just saying, this is a process we went through: analysing the competition to design what will hopefully be a better product for a certain part of the market that doesn't seem to be well served by the existing players. Story continues on page 2. Please click below. Above: Steve the dog. 3. Designing the principles behind our solution Once we'd defined our problem, our audience, and analysed the competition, we created a list of principles. These principles underpinned the product for which the platform we designed would work. They included statements like: >Our audience make recommendations to signal social status. >Our audience like to collect and display their favorite things (Pinterest/Wanelo). >Our product category is so competitive that our product must be delightful and fun so people want to share it with friends. >Our audience doesn't want to earn currency for making recommendations but love recognition with authentic unexpected gifts from their favorite retailers. There were many others. 4. Designing the product With these principles in place, we set about designing the actual product. It all came together surprisingly quickly. The whole team took part in daily product design and we brought in lots of outside help for fresh perspectives on ideas. This whole process of defining the problem and audience, analysing the competition, designing our product principles and then the product took around four months and involved more than 200 outside interviews before the first line of code was written. It's something I didn't do the first time around when I built a site for selling music tickets. While we're constantly evolving and coming up with new feature ideas and design improvements, the fundamental strategy behind the product is solid and hasn't changed. Execution is the next big challenge and we're getting better at that too. We're still a tiny team with an early product that doesn't really stack up against the competition yet. Who knows if we'll make it? We're giving it our best shot. I know most people who read this blog are in the process of starting a company. I think that an in-depth analysis of the competition is vital, without fearing to enter a product category because of the big incumbents there already. We've found it helpful to take inspiration and learn from the successful trailblazers in our field, and if others do the same then we'll all end up with better products as a result.
It's been a while since the tech industry has seen a massive takeover deal, but this weekend delivered: cloud-storage group Dropbox agreed to acquire the popular new email app Mailbox for a price rumoured to be as high as $US100 million. The price is a huge premium for the app, which has only been available for a few weeks. But it also shows businesses in Silicon Valley are still willing to shell out massive amounts of money for very early, or even premature, ideas. Mailbox has become popular for its mail system, which allows users to delay receiving messages until certain times to help clear inboxes as quickly as possible. Mick Liubinskas, the co-founder of Australian start-up incubator Pollenizer, says email has become "one of the biggest areas of opportunity". "There are a lot of people attacking this in many different ways and it's a very good one to crack as well," he says. "But it's also a problem, because how do you disrupt something that's so embedded?" Reports, first from The Wall Street Journal, started emerging over the weekend that Dropbox had acquired Mailbox, where the company confirmed Mailbox would remain a separate app. Dropbox chief Drew Houston said he believed the acquisition would help the app grow "much faster". Houston also said he believed the deal would help Mailbox add new features quickly, such as handling attachments. In a blog post, he said the app's simplicity caught the company's attention. "Dropbox doesn't replace your folders or your hard drive: it makes them better. The same is true with Mailbox. It doesn't replace your email: it makes it better. Whether it's your Dropbox or your Mailbox, we want to find ways to simplify your life." With both Dropbox and Mailbox working so closely with cloud-based services, an acquisition makes sense. Mailbox is created by Orchestra, which was founded by Gentry Underwood. The app caused a splash during its release by creating a digital queue, with users having to wait days or even weeks to access the app – the company wanted to avoid any downtime caused by a rush of users. It was a smart move, bringing attention to the app's main feature – the ability to not only archive email quickly, but also tell email messages when they should be sent. For instance, users can decide to read an email later that day, or even in a few days. The Mailbox servers handle the message in the meantime, and then send the message back as per the user's instructions. Orchestra had already raised $5 million in funding from Charles River Ventures, SV Angel, Kapor Capital and Crunch Fund. The app already has 1.3 million users. The amazing part of the deal is the price, with TechCrunch claiming the deal was done for "well over" $50 million, to as high as $100 million, although All Things Digital says the structure of the deal makes an actual valuation difficult. The deal is in many ways a throwback to the past few years when small, relatively unproven businesses won millions in funding, such as the $1 billion Facebook-Instagram deal. More recently, however, those deals have become rarer. Telsyte analyst Rodney Gedda says the acquisition is a smart one, as email has been ripe for innovation – it's essentially the same product as it was 20 years ago. "It was designed for simple messages that weren't time-critical. It was never designed for collaboration and sorting in the sense that a structured data application would be." Some have tried to advance the email process, such as Google with Google Wave, although the tech giant eventually shut that project down due to poor usage. The biggest change, Gedda says, is the move to cloud-based services. "The challenge now is to build upon that base line of email to make it more functional, collaborative and user-friendly, and then extend it to any device." This story first appeared on SmartCompany.
The average age of companies that the owners sell at more than $1 billion is seven years, according to US venture capitalist Jacob Mullins, who has revealed the common characteristics of $1 billion consumer tech companies.
Local online retailer Shoes of Prey has taken a step towards the bricks-and-mortar world, teaming up with department store giant David Jones as the two companies explore new ways to boost sales.
A former winner of Startup Weekend is among the 10 ventures selected to take part in the second ANZ Innovyz START program, which is once again dominated by Adelaide-based start-ups.
US-based incubator AngelPad is accepting applications from around the world for its next round, after revealing the 62 start-ups it backed in 2012 raised a total of $56 million.
Anthony Goldbloom, founder and CEO of Kaggle, tells TechCrunch how the Eurovision Song Contest and a stint in journalism helped him devise one of Australia’s leading tech start-ups.
Venture capital firms in the United States raised $20.6 billion from 182 funds in 2012, new figures show, with Australian start-ups among those that benefited from the surge in investment cash.
A new Facebook feature dubbed Publishing Garage will see the social media giant work with businesses to improve how they use the social media platform to market themselves.
US-based platform AngelList is reportedly in the process of raising a major round of financing at a valuation that could top $150 million, with Google Ventures among the rumoured investors.
I'm writing today from the plane travelling between San Francisco and New York.
Venuemob and 121cast are the first Australian tech start-ups to receive funding from the Optus Innov8 Seed Program, pocketing $450,000 and $250,000 respectively for their innovations.
Apple's latest gadget has hit Australian shores, with iPad minis being delivered to customers and stores across the country.
A female entrepreneurship group says while it supports the idea of training women to become angel investors, as seen in the US, we first need to train women to think like entrepreneurs.
Facebook has acqui-hired the founders of Y Combinator start-up Carsabi, who are attempting to sell the service to focus on their new jobs, which could include Facebook’s new “Gifts” feature.
US-based crowdfunding platform GoFundMe is looking to accelerate its growth with a new partner program, amid reports it is currently raising about $3 million in campaigns every month.
Californian start-up YourMechanic took out the top title at TechCrunch Disrupt SF 2012, while other standouts included a self-balancing bicycle and a predictive database for app developers.
Twitter co-founder Jack Dorsey has urged budding entrepreneurs to “pick a revolution and join it” at this year’s TechCrunch Disrupt in San Francisco.
Getting start-up funding can be tough when you’re a solo operator. Investors are often reluctant to stump up the cash.
US-based accommodation website Airbnb has “acqui-hired” Y Combinator start-up DailyBooth for an undisclosed sum, in what is believed to be Airbnb’s first acquisition.