Advice to people at the beginning of their careers: do not imagine that you have to know everything before you can do anything. My own best work was done when I was most ignorant. Grab every opportunity to take responsibility and do things for which you are unqualified.

Advice to people at the middle of their careers: do not be afraid to switch careers and try something new. As my friend the physicist Leo Szilard said (number nine in his list of ten commandments): “Do your work for six years; but in the seventh, go into solitude or among strangers, so that the memory of your friends does not hinder you from being what you have become.”

From More Intelligent Life, by way of garry’s /sub/posterous.

Like Gilt, they offer quality products at a discount to standard retail, and their site features rich descriptions and photos.

They’ve also taken advantage of some best practices in flash sales, including:

• Daily emails to introduce the latest offering and drive traffic
• Limited quantities
• Time-limited sales
• Countdown “expiration” timer after you’ve added something to your cart

The last item is key, as I believe it’s one of the things that makes Gilt so successful: urgency.

Items are reserved for a limited time (10 minutes) when you add them to your cart, but once the time expires your items are no longer reserved and anyone can buy them right from under your nose.

Seeing that timer count down the seconds creates a sense of urgency and drives many people to buy things they might not otherwise, simply out of fear that they’ll lose a great deal to some other shopper. Having had a couple items purchased out from under me on Gilt, I know first hand the feeling of loss, which only reinforces the urgency on subsequent sales.

Lot18 is obviously taking advantage of this same tactic, but they have one glaring flaw.

With Gilt, when the timer expires the items remain in your shopping cart, but are marked as “no longer reserved” in red text. That means they’ve been released back into the wild and could be purchased by anyone. It looks threatening and is often enough to make you pull the trigger if you want the items.

With Lot18, however, when an item expires it is deleted from your shopping cart entirely. It doesn’t matter if you had 1 bottle or 5 cases in your cart – everything gets deleted when the timer runs out, and there’s no history of what you looked at or added.

I’ve experienced this first hand on Lot18 a number of times, but the reason I’m writing about it now is that yesterday I was halfway through the checkout process when the timer ran out on me and all my cart contents were deleted. I had just selected my shipping address and was about to confirm payment details when I hit an error page telling me the timer had expired.

I had to start all over again, and it was infuriating.

This may seem like a small problem, but in fact I think it’s indicative of a bigger issue. Lot18 is breaking a cardinal rule of e-commerce: make the checkout process as frictionless as possible.

Most smart retailers like Amazon and Gilt keep items in shopping carts as long as possible. The shopping cart almost serves as a way of bookmarking items that you like, so you can return to purchase them at any point. Heck, Amazon takes this to an extreme and even has a “save for later” feature that archives items instead of deleting them from the cart entirely. The goal should be obvious: putting things in front of customers reminds them that they might want to make a purchase.

Lot18, on the other hand, not only deletes items as soon as the reserved timer expires, but it includes the checkout process in that time limit! It doesn’t matter if you’re entering payment info – if you’re too slow, you get kicked out and have to start the entire buying process from scratch, finding each wine you want, selecting the quantity, adding it to the cart, and then re-initiating the checkout process.

I emailed Lot18 about this flaw, and I received a standard response saying the timer was necessary given limited inventory and the need to release items back into the pool of available wine. Yeah, I get that, but it doesn’t address the actual problem.

I suspect this is a flaw in Lot18′s fundamental architecture. Gilt built the timer and reservation process separately from checkout, whereas for Lot18, adding to cart = reserved. So “un-reserving” an item probably requires deleting from the cart.

These two things should be decoupled. Reserving should not be handled the same as adding an item to the cart. The shopping cart should always contain a list of items I’ve added, unless the item is completely sold out and unavailable (and even then, Gilt let’s you add yourself to the “waiting list” in case it becomes available again).

I’d be very curious to split test this feature on Lot18 and see whether it makes a difference on conversion. I also wonder what their cart abandonment rates are and how many people make a purchase after the timer expires.

I don’t know what back-end choices Lot18 has made in building their timer and shopping cart, but this should be an easy fix and one they should seriously consider implementing. Interrupting the checkout process is a major no-no. If someone’s trying to give you money, don’t stop them!

For those unfamiliar with FoundersCard, it offers founder-types and entrepreneurs select deals on everything from travel to business services. Uber had set up a discount for 15% off the first 100 rides for FC members. The goal was to entice early adopters who would evangelize Uber’s service.

From my anecdotal experience, it worked beautifully. My friends and I sang Uber’s praises far and wide (and drummed up quite a bit of business for Uber in the process).

Tonight, however, Uber notified all FC members that regardless of how many ride discounts a customer has remaining, Uber is reducing the number of discounted rides to 10 (or less than 10 if that’s all that was remaining). I still had 69 rides remaining.

As FoundersCard membership has expanded, Uber was probably finding themselves giving away 100 x 15% to a wider and less exclusive audience. I totally understand that Uber can’t be giving away 15% to every founder wannabe and late adopter.

In my humble opinion, however, this change could have been handled much better. Uber made several mistakes that could have been easily avoided.

1. Customer Segmentation 101

First of all, Uber should have realized that the FoundersCard members and Uber’s target customer base are effectively the same. Uber might have had an instinctual sense this was true, given that they offered a discount via FC to acquire users in the first place, but they might have failed calculate the full potential impact of 100 rides x 15% off x #Users on their bottom line.

For a company who brags about being data nerds and good at math, this is a bit embarrassing.

2. Stem The Bleeding

No doubt Uber must have been giving 100 x 15% off to a significant number of their customers. (see point 1 above)

If that’s the case, though, Uber should have just turned off the tap much earlier. If you start seeing everyone using a FoundersCard discount, then quietly modify it for all new members to be 10 rides at 15%. Or remove the discount entirely. This limits your future exposure while keeping your earliest adopters blissfully ignorant and happy with your brand.

3. Broken Promises

Instead of quietly modifying the discount to something less juicy for latecomers, Uber made a blanket decision to reneg on their promise to EVERY FoundersCard member, regardless of when they joined. So stragglers and early adopters alike are getting the same raw deal.

One could argue that 10 x 15% off, plus all those historical savings, is still very nice and more than Uber had to do in the first place. But that’s not the point.

Uber entered into a contract of sorts with their members. They made a promise to us of 100 discounted rides. Now they’re breaking that promise. Those of us who run companies understand balancing a bottom line, but do the math before you annoy your customers. Rational or not, this FEELS like Uber is nickel-and-diming their best, earliest customers.

That leaves a bitter aftertaste.

4. Fictional Savings?

One of the most awesome things about the 15% discount I was enjoying was that it made taking an Uber a no-brainer for me. Whenever I was on the fence between calling an Uber or taking a cab, I would just call an Uber. In fact, it got me to take Uber several times when I could have just waited a few extra minutes and hailed a cab. Instead, I said “Screw it, I’m going in style!” and took an Uber.

In the back of my mind I rationalized the extra cost by knowing I had a slight discount. And when that discount ran out organically, I probably would have just kept on riding out of habit and a passionate love for the brand. I might not even have noticed it ran out!

Now that our attention has been painfully drawn to the fact that the discount will soon be gone, I suspect many infrequent users are going to think twice before taking an Uber. Those on the fence might opt for a cheaper, if more inconvenient, option. Given their love of math, I hope Uber crunched the numbers on this one carefully, because there’s a chance they just lost a lot of users who were on the bubble.

5. Bruised Brand

Perhaps the biggest problem with this situation is the black eye Uber just gave its brand.

Uber’s brand is all about style, luxury and feeling like a baller (even if only for the length of a ride). Uber is selling convenience and affordable luxury, but even more than that they’re selling a FEELING! The feeling of awesome.

You know what doesn’t feel awesome? Having a discount you were promised yanked from underneath your feet.

Being penny wise doesn’t fit with Uber’s brand.

Reneging on a promise doesn’t fit with Uber’s brand.

And lumping your earliest adopters and evangelists into the same bucket with wannabes and hipsters who came late to the FoundersCard party does not fit with Uber’s brand.

In Conclusion

For the record, I still love Uber. I know several of the people who are running it on a personal level. They’re smart, hard working, genuine people who care passionately about their users and are building a great company. I applaud their efforts.

That said, I think they fumbled this one. It feels clumsy to me. We all make mistakes, and this one isn’t going to totally derail Uber, but it does not fit with the brand image they’re trying so hard to create.

That said, this isn’t going to stop me from riding Uber, and it shouldn’t stop you, either. If you haven’t already, go sign up and experience the awesomeness for yourself.

In it he generously offers those who were inconvenienced free admission to the next SF Beta for them and a guest. It’s a nice gesture, but I don’t see how offering TWO admissions for every one previous attendee is going to solve overcrowding!

Attendance caps obviously help, but free tickets will just make things sell out faster. And limiting the free tickets to a single date compounds the problem. Hey Christian, how about giving out a code for redemption at any future event?

Hi again,

First off, apologies for the higher-than-average number of emails.

Over the last 24 hours, I have recieved a number of comments about the recent crowd levels at SF Beta. Many of you wrote to me about Tuesday’s mixer, saying that the crowding impacted your ability to enjoy and get value out of the event.

We have been fortunate to see SF Beta attendance reach record levels over the last year, for which we are extremely grateful. That said, it appears that we are now at a point where the quality of the event is suffering from the number of people in the room.

Moving forward, we are making two adjustments to address this. First, we are imposing a strict 550-person cap on attendance, approximately 20% below our current level of 650-750. Second, we will request that attendees check backpacks and laptop bags at the door, making it easier for everyone to navigate the room.

If you felt that your personal experience of Tuesday’s event was adversely impacted by the crowding, please let me know. We will extend a complimentary pass to our next event, on September 13, for you and a guest.

Thanks,
-Christian

Christian Perry
Producer, SF Beta

Credit card companies are the original location-based service

Decades before Foursquare trained us to check  in on our mobile phones, the credit card companies trained us to swipe our cards. Before NFC was even a concept, the card companies had infrastructure in place to read cards and phone home in real-time with answers to where, when and how much. The result? A treasure trove of data on user behavior and purchases.

Fast forward to today’s world, where game mechanics, social graphs and mobile apps are all the rage. Everyone’s trying to build a killer product, get lots of eyeballs, and then monetize. How do most of them monetize? Advertising. And what makes for good advertising? Insight into user behavior.

The bottom line: most “social networking” companies are trying to get at the same data that credit card companies already have.

They’re just coming at it from a different direction.

Credit card companies access behavioral data directly through purchase histories, while social media companies use game mechanics and psychology to encourage users to self-report their interests and actions.

A company like Foursquare or Facebook builds a killer product, with a social graph and game mechanics to get people hooked and keep them engaged. Human nature, psychology and network effects bring in tons of eyeballs. Part of the product experience includes fun activities like checking in, sharing tips, and becoming a “fan” of your favorite products and celebrities.

While playing with these fun social technologies, the user gets a cool new way to stay in touch with friends, discover new places and things, and share her social status with her network. In return, the company gets a mountain of data on what its users do, where they go, and what they love. It’s marketing gold.

As I wrote in another post, the future of advertising and social commerce will likely be tied to measurable user behavior. Now imagine what you could do if you layered the social graph and online actions on top of real-time purchase data!

Foursquare + Amex: A Match Made in Heaven

For those who don’t already know, Foursquare announced a partnership with American Express just before SXSW in which you could save $5 when you spent $5 or more at one of their approved merchants in Austin. It was also the first public use of Amex’s Smart Offer API.

This as a brilliant move for both parties for all the reasons I alluded to above, and then some.

Most credit card companies are freaking out right now because of the Durbin Amendment (interesting infographic at the bottom of that link), which would severely limit interchange fees and will probably harm consumers and credit issuers alike (say bye-bye to your credit card rewards programs). It will also likely increase debit card transactions, which would leave Amex out in the cold, since they have no debit business.

So most credit card companies are scrambling for ways to: 1) make new use of existing assets (transaction & user data, anyone?), and 2) innovate (to get more business)!

On the flip side, Foursquare needs a way to monetize. And while Foursquare is well positioned to monetize in many different ways (advertising, travel guides, loyalty programs, discount deals, etc.), partnering with a payment provider is a genius next step.

Everyone in the payments business is trying to figure out mobile payments right now. Pure payments companies like Amex or Paypal, however, can currently only offer a way to process transactions. They might try to add a social layer on top of that, or partner with companies to create deal programs, but they’re not experts at social. Foursquare already has the social graph, user behavior data, and a lot of merchant goodwill.

A combined Foursquare + Amex solution could be a killer payments app, combining the robust features of a payment processor with: game mechanics; loyalty; a social graph; and established relationships/deals with merchants.

It’s the holy grail of mobile, social payments.

Imagine getting cash rewards for loyalty, or being pushed a coupon for a latte when you check in to the shoe store next to Starbucks. Swipe your Amex card and get a discount while automatically checking in to Foursquare. Boom! You just played Foursquare and grew Amex’s credit business in one fluid motion.

Of course, there’s little stopping Facebook Places or other competitors from trying the same. Partnerships between social media companies and payments processors would give both sides the missing data they each are longing for. Payment companies get data on their users, and social media companies get access to the real money transactions.

Then, once your payment account is tied to your favorite social networking app, the logical next step is paying your friends directly from within your Facebook or Foursquare mobile apps. Pay Johnny for your share of the pizza party with debit, credit, or… Facebook Credits?

No doubt this is why some posit that Facebook might become a bank. It certainly has enough users for critical mass, but building a payments system is a really hard problem, and one that is outside of social companies’ core expertise. A much quicker solution — and one that could also provide access to transaction data in the offline world — would be to partner with existing payment processors. Ignoring for a moment the pesky details of consumer privacy, the marriage of social media and traditional payments processors could be an amazingly powerful thing.

I have no doubt that we will see the marriage of social and mobile apps with payment providers in the very near future. The only question is what exact form these partnerships will take.

I’m loving Foursquare right now, not only because they have a great app and a stellar team of people, but also because they are incredibly well positioned. They have a two-sided market (creating value for both consumers and merchants), a growing base of very loyal users, and a lot of goodwill – not to mention an early partner on the payments side of things.

It will be very interesting to see how things evolve, and how even bigger players like Facebook, Google and Apple try to get into the payments space. This is an exciting time, and I think we’re only just at the beginning.

The next phase, he maintains, will leverage people’s interest graphs. He specifically mentions Hunch’s prediction engine, Apple’s “Ping” platform for social music sharing and discovery, and Facebook’s social graph as potential predictors of interests and spending habits.

I think Om’s on the right track, but I’d take it a step further. I believe that the next phase of social commerce will be based on more than social graphs and interests – it will be based on actual behavioral data.

People are growing more comfortable sharing information about where and with whom they spend their time. Foursquare is not just a game or a way to find your friends when you’re out drinking. It’s a database of places you’ve visited and likely spent money. In short, it’s an extensive record of how you choose to use two of your most precious resources: time and money.

Foursquare and Facebook Places are capturing real-time information about actual behavior, not just “intent” (like a Google search, for example). This data of how, where and with whom we spend time is incredibly valuable, and it will likely prove to be an excellent predictor of future behavior and future purchases. Just because I’m friends with someone on Facebook doesn’t mean we have the same spending habits. But if a stranger and I are visiting the same bars, coffee shops and clothing boutiques, it’s probably safe to say our tastes and demographics are aligned.

The old adage “tell me who your friends are and I’ll tell you who you are” might still hold true, but I think the future of social commerce will adopt the motto “tell me where you spend your time/money, and I’ll predict your next purchase.”

I think it’s quite clever on their part, and it feels like a natural evolution of the gaming ecosystem as advertisement starts to creep into the gaming experience. Social gaming has already seen some partnerships with large brands, like the Farmer’s Insurance blimp in Zynga’s Farmville, or deals with charities whereby they reap the benefits of virtual goods sold in the game. Some console games also have deals with advertisers that show brand ads on billboards in a stadium, for example.

But what if you combined a commercial brand with a virtual good that cost real money?

Let’s say you’re playing a sports game and your players are tired, so you need to re-energize them. Well, you can perform some “grind” action, or have them drink water, but you now also have the option to let them drink Gatorade. Drinking Gatorade will give your players an extra boost, superior to water or resting, and will give you a slight edge in the game. The catch is that the Gatorade option costs game credits.

Now some might say that paying for branded goods would be crazy because, after all, advertising is annoying and painful and we tolerate it only so that we can enjoy things like free television. We don’t pay extra to have ads shoved at us. If anything, we pay less when ads are involved, right?

Not quite.

In fact, we, the consumers, pay advertisers all the time. Not only do we buy their products, but we proudly wear their giant logos, and flaunt their designs. Why? Because it signals status. For the same reason that someone will shell out $50 of hard earned money for some awesome suit of armor in a MMORPG, or purchase a limited edition mansion on Farmville, other people will spend $500 or more on a purse because it has Louis Vitton’s logo stamped all over it.

As humans, we are drawn to social hierarchy, and we love status. “Aspirational” brands are just that – something for people to aspire to. Anyone can ride a bicycle. But it takes some real scratch to drive an Audi R8. Cruising down the street with your R8 purring will definitely turn some heads and might even get you laid. In a game, however, its superior performance might help you win the race.

So is it really such a stretch to think that people would pay a premium to unlock a branded virtual good in a game that provided some premium features or game play? I don’t think so. In fact, I believe that branded goods that cost real money could be wildly profitable, assuming they’re built into a game in a way that doesn’t spoil the core game mechanics.

The best part for game developers is that it could evolve into a two-sided market. Will I offer Gatorade or Powerade to my users? RedBull or 4Loco? Depends on which one of them pays for exclusivity. Then you can turn around and sell the branded virtual good on top of that. It’s a win-win.

I haven’t heard of anyone doing this yet, but if any of you know of real life examples of this, please let me know in the comments.

With this in mind, Mullany’s equation for freemium businesses looks like this:

Price Paid by Premium User – Cost of Proving the Service to the Premium User – [ (1/Ratio of Premium:Free Users) * (Cost of Free Service Per User + Cost of Marketing to get a Free User) ] = Profit Per Premium User

Check out the full article over here.

Imagine my surprise, then, when nine days ago I woke up to discover that Twitter had suspended my account. I received no notice from them, and there was no apparent reason for the suspension. I’ve only ever evangelized Twitter to all my friends, and I’ve never done anything shady, so I figured the suspension must have been an accident.

Now, I know some people who work at Twitter, and even a few of their investors. But I also know the Twitter people are busy folks, so I didn’t try to get special treatment, but instead followed the advice on their site and submited a support ticket, alerting them to the fact that I was accidentally suspended.

Well, no sooner had I submitted that support ticket and refreshed the page than the ticket was marked “solved”. But my account was still suspended! No response, no explanation, and no solution – they just auto-closed my ticket.

So I reopened the ticket with a puzzled reply, and started to wait.

Three days later I still hadn’t heard a thing, so I emailed suspended@twitter.com to explain my situation. And I waited some more.

The next day I got a reply from Twitter saying that a bunch of accounts had recently been suspended, but that they should now be back to normal. Unfortunately, my account was still suspended. So I replied again, and waited…

Fast forward to today (9 days later). Still not a peep from Twitter. Fortunately, though, they’re located in SF, and I happened to be near their office, so I popped in to visit my friends there. I explained my situation, and my kind friend took pity on me and chatted with the support folks. Soon after I left the Twitter office, my account was reinstated. Hooray!

Sort of…

I’m finally back in the twitterverse, but now I have a new problem: none of the people I follow show up in my timeline. But if I unfollow and “re-follow” someone, they start showing up. I’m hoping the problem will fix itself, since I really, really don’t want to have to re-add all 490 people whom I was following before.

(sigh)

I like Twitter. I’ve always seen its usefulness and have evangelized it to friends who often scoffed as I sang its praises. As one of its very first users I’ve been through a lot with it – chronic down time, beloved features that have come and gone, user backlash, “Oprah-fication”. I’m still a fan, but there definitely comes a point when it starts to lose some of its luster.

This recent suspension, being so random, unexplained and unnecessary, definitely took the shine off of Twitter for me. And while I’m sure the good people in the support department are inundated and overworked, I’ve had nothing but horrible experiences with Twitter’s customer service. This was not my first time submitting a help ticket. Two previous, unrelated help requests were never even answered and still remain unsolved months later.

I understand that Twitter’s still a free service and expectations should be adjusted accordingly, but when you alienate your user base – especially early adopters and evangelists, that’s never a good thing. I’m crossing my fingers that maybe something will change for the better. But honestly, I don’t have high hopes, and that makes me sad.

[update: major thanks to my friend, Helga, without whom I might just have gone insane. Thank you!]

The source of the YouTube video content? None other than the AP’s own YouTube channel.

That’s right – the AP’s right hand doesn’t even know what it’s left hand is doing. I guess no one told their legal department that they actually have their own YouTube channel on which embedding is turned on… you know, to help videos spread virally across the web.

As funny as this all is, I mostly just find it frightening and depressing. That the Associated Press is so completely clueless when it comes to new media and how the Internet works is not a good sign. And draconian crackdown efforts which backfire so completely and publicly do way more harm than any embedded YouTube video ever could.

Zappos CEO on how to build a brand online without spending a fortune on ads (BrandWeek)

37 Signals has a creative way to reduce credit card chargebacks – via @superamit

The most recent development from them is a tight integration with Twitter which lets people use a syntax similar to Twitter’s direct message function to send payments to other Twitter users. For example:

p @peter $0.25 because he finds cool new websites

This would create a promise of paying me $0.25 via Tipjoy. One can use any combination of p or pay, an @username, and a dollar amount prefixed by $ to send money to a Twitter user. Of course, one can also send money to people via an email address or URL, as explained on Tipjoy's FAQ page.

Perhaps my favorite part of Tipjoy, aside from the ease with which one can send micropayments, is the built in tendency toward viral growth. You see, Tipjoy doesn't require the recipient of a tip to be a member before they can receive money from someone. When you send money to someone who's not already using Tipjoy, they get a message from Tipjoy (via Twitter, email, or some other means) telling them that they've received money. Therein lies the beauty.

Who wouldn't want to claim money that's been sent to them by an admirer or a debtor? It's a great incentive to get people to sign up for Tipjoy. The big question is whether that, along with its ease of use, will get enough people using Tipjoy to make them profitable. Tipjoy takes a 3% cut of all payments sent via their service, but only takes that money when a user cashes out his/her funds.

I'm very curious to see if Tipjoy's tight integration with Twitter (as well as their other easy-to-use methods) will get enough early adopters using it. If so, it could catch on among mainstream users, and from there it's quite conceivable that Tipjoy could see the same kind of hockey stick growth that Twitter has recently enjoyed.

Frankly, I'm a little surprised Twitter hasn't come out with a micropayment solution of their own yet. They seem to be playing along with Tipjoy, so it's possible (if unlikely) that they're getting some sort of benefit from the deal, but Twitter is perfectly positioned to add new features like this to begin monetizing their service. Of course, I have a ton of ideas on how Twitter could begin to monetize their service, but that's another post just waiting to be written!

I’ve always wondered where these people come from, and how it is they always happen to have an inventory of umbrellas for sale stashed somewhere nearby, just in case it rains.

I’ve experienced this phenomenon in San Francisco, New York, Chicago, and even Rome – where I was once caught in a surprise downpour and actually bought an umbrella… for a mere € 2! It continues to fascinate me, and I would love to know if this is part of some larger street vendor group who sell seasonal and climate-appropriate wares, or if it’s just a bunch of people around the world who have had the same idea.

Early in the day we were mobbed by people, sometimes standing four-deep, to hear about the Zivio and to experience it hands on. It wasn’t long before we ran out of our large stock of headsets, but all day long people kept coming by because they’d heard about our headset and wanted to see it for themselves. I wish we could have accommodated everyone, but some had to leave empty handed.

It’s been a great day here at the conference so far. I met some great new people, connected face to face with some Twitter friends, like the amazing @pistachio, @queenofspain, and @leahjones, and ran into some old friends like @CathyBrooks and Sarah Austin of pop17.com.

It’s fun to see such an amazing group of lady bloggers getting together. Their enthusiasm and energy is contagious. Things are winding up right now, so I’ll cut this post short and adjourn for some post-conference cocktails!

I give them kudos for addressing these questions publicly and for permitting transparency into their operations and technical challenges. As I see it, however, they’re still not out of the woods yet, even if I (and most of the Twittersphere) am pulling for them in a big way.