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An Emerging Start-up Pattern March 30, 2008

Posted by Jussi Huotari in : startup, web2 , add a comment

As you probably know, we changed the name of our online travel service from Vailoma to TripSay. The rationale behind the name change was to get a name that’s easier to remember and that gets associated with travel also by people who don’t speak fluent finnish.

Anyway, it seems that an other travel start-up changed their name at almost the same day. This coincidence is clearly a sign of an emerging pattern in start-up space. As Tim Hughes of The BOOT puts it:

A new start up pattern is emerging overnight in the content space. First you form a team, then you get a little funding, put out a beta site and generate some buzz. Then, naturally, you change your name. Within days of each other we had news that community and guide content player Vailoma is now called TripSay (announcement) and content/review aggregaor Kango is now called UpTake (announcement).

Yes, naturally. :-) Have to agree with Tim’s analysis. As I wrote in the comments, I wonder if we’ll get more followers to this pattern…

Digital World in Analog Terms

Posted by Jussi Huotari in : web2 , add a comment

In these digital times it sometimes helps to explain things in analog terms. How to tell about a web 2.0 start up to people who associate business on web with selling dog food at a loss to huge number of potential (vs. buying) customers? One solution: find an analogy from the “real” world. Here’s my case example:

Building a web site is somewhat similar to creating a new paper magazine. In both cases you follow the same steps:

  1. Print or publish the first version of your content.
  2. Attract readers to sample the content you provide.
  3. Do your best to convert the first time random readers into subscribers or returning users.
  4. Sell advertising space on your medium.

Once you get the reader base big enough you’ll be able live off the advertising and/or subscribtion revenue. The same goes for a web site. Of course there are a number of other proven business models but I find this local newspaper analogy easy to explain when my grandma asks what my company does… ;-)

Okay, so the business depends on getting readers and converting them to “subscribers”. Andrew Chen introduced an interesting metric useful in this context: activation efficiency. In his blog, Andrew says:

So let’s define a new metric, which I’ll call “Activation Efficiency,” using the marketing parlance of how many contacts you can “activate” into leads and then into sales:

  • Activation Efficiency = total retained users / total acquired users

where:

  • Retained users means total # of users that had 2 visits or more, let’s say
  • Acquired users means the total number of uniques that come in through your viral loop

Now that sounds like a metric to keep an eye on! As he points out, it doesn’t matter if you get 1.000.000 users if only 0.1% activate. Better to acquire 100.000 visitors and activate 10% of them!

Designing a Web 2.0 service March 24, 2008

Posted by Jussi Huotari in : web2 , add a comment

The “million dollar question”: What makes a good social media web site? Providing a useful service and putting in the standard social media concepts such as social graph, wisdom of crowds and UGC are the pre-requisites but hardly enough if the site doesn’t provoke people’s interest. The diminishing attention span of the Internet public calls for simplicity and differentiation. Oh, and the first time user’s Wow! effect wouldn’t harm either…

There are three criteria for making a web site a success:

  1. The service must be a question! A question demands an answer and we do want to engage the user to a dialogue. And, pay attention, the question must be to the user, not from the user! Examples of good questions: “Where have you been?” (whereivebeen.com); “Where are you now?” (wayn.com); “What are you doing?” (jaiku.com). When I come by a new service, I want to know what the service is about and whether it’ll be useful for me. A question from the service to me is a clear message and if it’s interesting, I’ll take the time to answer.
  2. The service must have a value proposition! The user must understand what she’ll get from using the service. Otherwise, why would she answer the question? The service must tell a convincing story of what it has to offer to those who answer its question. Whereivebeen.com says “easily track your travels”. Wayn.com tells a story of hooking up with others travelling to where you are. Note: this criterion is not about the service’s usefulness but about the story it tells!
  3. The service must support ego gratification. Why do people generate content on social media sites? Because they want others to notice them. They want show off: “You know, I’m an expert on this issue.” or “Yeah, of travel I’ve had my share.” Some people may prefer another way of putting this: something along the lines that people share their expertise because they want to help others. And that is as true but doesn’t change the fact that the service must support showing off to and helping others!

That’s all. Design your web site according to these three criteria and your site will be a success.

What about items not included on the list above? Ease of use, fancy graphics, short response times, and technology choice. All of these are important but definitely not crucial! It doesn’t matter if you have the easiest to use calendar interface that works like a breeze if people just don’t get your question and story.

What makes social media?

Posted by Jussi Huotari in : web2 , add a comment

Social media is one of the Web 2.0 core concepts. As such, understanding the concept thoroughly is one of the keys in developing a successful Web 2.0 web site.

Basically social media denotes a site that gives its users tools for interacting with each other. Thus basically any blog or wiki or photosharing system is a social media. But what about the services or sites utilizing many components of the social media concept? Such services are designed around a common interest such as travel or sports and their success depends on user community building.

Wikipedia defines social media as “an umbrella term that defines the various activities that integrate technology, social interaction, and the construction of words and pictures.” That’s quite a mouthful so let’s break down the explanation to its components. In my opinion, the three core components of social media are:

The best (in terms of size and growth of user base) social media services combine all of these three components.