THE DREAM IN ACTION

Why raise $30 million to hire an enormous, nationwide sales force if you could use the power of existing sales teams for a fraction of the cost? Recently, I’ve been thinking about how startups can leverage other, larger, companies to build out their model. After all, a startups purpose for existence is to test their model. So why wouldn’t a startup leverage every existing system possible to keep costs low and test the model?

An increasing trend in startups, for good great reason, is to use Facebook Connect to leverage the existing social graph. Look at Foursquare, HotPotato, or OMGICU, all great examples of instantly connecting via FB connect to pull in all of your friends from likely your largest existing friend network. The time and wasted money that these startups would spend developing a brand new social graph is ridiculous.

There are so many opportunities for rapid growth through this type of “existing system leveraging”. With Foursquare I’ve been working hard to get as many venues involved and offering specials in the application as possible, so why wouldn’t I take my own medicine here. I try to use, excuse me, partner with the people who already have relationships with these venues. It turns out there are marketing teams who have great relationships with large groups of bars and restaurants, working directly with these people may bring in 10-20 venues in one fell swoop rather than me pounding on each venues doors individually. Or, another example is liquor distributors? They have strong relationships with bars and can possibly influence the end price of the product to a customer who say, checks in on Foursquare…get it. There are sales teams that work with these people and have a system in place already like Coke, or Zoom media (those ads above urinals), etc. etc. etc., the list could go on.

Whether you’re building a social app, or a utility that sits on top of the ’social graph’ I’d encourage you to look at ways to use existing systems, social or otherwise, as your best distribution channels. The cost is likely lower, and the impact likely higher.

What existing system have you leveraged?

Last week Mashable ran a poll to find out which location based service YOU like the most (I say YOU because I’ve learned that the folks that read this blog are likely the type to also peruse Mashable on a regular basis). I was very please to see the result here, obviously, and I’ve been giving the battle for best location service a lot of thought. What does each service have, not have, and have the potential for?

I decided to use something that is very easy to analyze, a car, to explain what I think each service offers…or doesn’t. I’d love to hear your thoughts in the comments.

Gowalla is too gamie. The feedback I’ve gotten from all of my friends who use Gowalla is that it’s so tough to figure out. There might be free iphones and tshirts hidden around town but those gimmicks fade quickly. Because of it’s overly gimmicky nature, like the PT Cruiser, I think it’s shelf life is very short. Where other services will beat Gowalla, and likely already have, is that they’re useful, they’re a service and people only play games for so long. There’s got to be user utility otherwise I’m out.

Yelps recent entrance to the location services game is on the surface appealing. They do have a lot of venues to work with but it’s clunky, not social, and ultimately not fun. Although mini vans are super effective cars, they fit kids, surf boards, Christmas trees and almost anything else, but they’re not fun to drive at all. Trust me I drove one all through high school, and although I was awesome (or so I thought), my ride was not. :) Yelp is too much on the service side, the game mechanics that other services bring to the table will win out in the end. Phin Barnes of FRC recently wrote about how gaming mechanics will be critical to all social applications in the future and this is where yelp fails, no community.

Ultimately Foursquare has the best combination of social and utility. It may not be the smoothest ride (yet), but it gets the job done better than anyone else and it’s fun, a powerful combo. The foursquare app can fit your friends and your fun into one ride. Like an SUV foursquare is enjoyable, you can be proud of what you’re driving because the community is a strong one, and your friends will think your cool :)

Although I’ve used all three of these applications, foursquare still blows the others out of the water. Yes, I’m biased (disclosure, I’m working w/ foursquare) but, I don’t see how the others are going to cross the chasm into true social utility. Because foursquare was built for that purpose from the ground up it will win.

In January of this year, I decided not to do resolutions but instead to pick 12 people I wanted to meet this year. Now it’s time to grade myself, reflect on the cool people I’ve met, and look for future opportunities to meet those folks I missed.

Here’s the challenge I gave myself this year… (written on Jan 1-7, 2009)

Instead of making big New Years Resolutions for 2009 I decided last November that I would attempt to call out and meet 12 specific people in 2009. I figured those relationships would be much more valuable than any half ass’d resolution. So, over the last few months, up to the night that I posted this I worked to identify 12 people that I respect and could learn the most from, so here they are. If you’re on the list, please contact me…we’ll be in touch.

So, let’s go through the list and see how I did…

Gary Vaynerchuk, WLTV, NYC

I did it! Gary had an event in Chicago after the launch of his book ‘Crush It’ and we met, check out this vide0 (and pic above)

Nate Westhiemer, Rose Tech Ventures, NYC

missed, but I’m headed to NYC next week and hoping to connect then.

A.J. Jacobs, Author ‘The Year of Living Biblically‘, NYC

I did it! And meeting AJ was one of the highlights of this list, check out these posts about meeting AJ.

“Back in March of this year I made it out to New York City and I had the pleasure of meeting AJ Jacobs for a drink, well a coffee and we met at a vegetarian joint called Blossom. At the time I was planning to write a book (delayed, not canceled) and his advice was remarkable. During our conversation in NYC’s upper west side, AJ was the most humble and encouraging person I’ve met. He was willing to help out with my book and anything else he could. AJ was a true pleasure to be with.”

Loic Lemeur, Seesmic, SF

missed, I was only able to get to SF once this year and unfortunately Loic was in FR.

Jason Fried, 37signals, Chicago

missed, however I’m hosting the first Chicago Tech Meetup on January 20th and Jason is speaking. I’m really looking forward to meeting him there. After reading the 37Signals book, ‘Getting Real‘, I have an incredible respect for Jason and won’t miss their next book ‘Rework‘.

Daniel Debow, Rypple, Canada

I did it! Daniel and I met in Chicago when he was here for a conference, he’s an awesome dude building a really cool startup. Also, Daniel was super helpful in introducing me to Jay Goldman and Dennis Crowley. Daniel has always been a great encouragement and given me really solid advice about startups and career stuff, meet him if you can.

Walt Ribeiro, The Internet’s Music Teacher, Philly

missed, I never got to Philly and Walt has been busy with the amazing ForOrchestra, check it out.

Dharmesh Shah, Hubspot, Boston

missed, I never had an opportunities to meet Darmesh this year, but I have followed the wild growth of HubSpot and continue to read his very helpful startup blog, OnStartups.

Mike Volpe, Hubspot, Boston

missed, however a good friend of mine in contemplating a role with HubSpot and reported that Mike was as awesome as I had thought.

Fraser Kelton, AdaptiveBlue, NYC

missed, although we’ve spoken on the phone many times, we never met in 2009. However I think I’ll be spending a bit of time in NYC this coming year and fully expect to make this happen. I’ve thoroughly enjoyed helping Fraser with feedback on GetGlue. They’ve turned a cool technology into a very useful tool for content sharing and discovery.

Dan Patterson, ABC News & Creepy Sleepy, NYC

missed, never really had an opportunity to meetup with Dan, although his work is still very fascinating to me.

YOU…

I got to meet SO MANY people this year and it’s all because of Twitter and making web connection real offline, a practice I fully intend to continue through 2010. So including “you” I’ve met 5 of 12. Not as good as I thought, but a solid start. If you were going to do this in 2010 who would be on your list?

Most people know that Google’s precious search algorithm is a secret, sacred, thing that they’ve worked very hard to protect. In fact their behavior around that algorithm has been similar to Golum’s behavior towards his “precious” ring. You know, the one that will ‘rule them all’. This algorithm and others allow Google to provide very focused advertising based on your search terms.

In computing, an algorithm is an effective method for solving a problem using a finite sequence of instructions.

However, the way I see it, their dominance in providing web advertising using the “precious”, all machine, set of instruction won’t last forever. There are human powered systems that can adjust quickly for variables, change over time, and become increasingly “sharp” as they learn. Simply, they can learn better than just a computer. A great example of this type of human powered system is a NYC based startup Hunch. Effectively, they’ve created a system where they can collect an infinite number of decision trees, all generated by humans, and then predict future decisions based on passed decision sequences.

So, what am I getting at? Well, as you know I’ve been working closely in the local advertising space through my work with Foursquare and I can’t stop thinking about how large of an opportunity this is. If a bar or restaurant can advertise directly to the folks driving by as they’re deciding where to eat, that’s better than any billboard, radio spot, newspaper clip, full page magazine add, event sponsorship, Adsense ad in my Gmail or Google search, and I could go on… It’s simply the best possible advert you could get, as an advertiser or a consumer, unless I’m missing something. Here’s an example, when companies spend money on other ‘focused’ internet advertising they pay for say 100 impressions. This means that 100 people saw that ad, and the common click-through rate is about 1/100, even on the ‘focused’ ads. Now, what if you were able to directly reach potential customers who frequent your ‘type’ of establishment, fall within a very specific demographic, and only if they’re walking distance from your location!!! Right now you’re saying, “WTF are you serious…”, and I am.

With the blowing up of location based services like Foursquare, Loopt, Brightkite and a few others, this sort of data is readily available. People are using these services to share their location, their purchase preferences, their unfiltered thoughts about almost everything they do and businesses can learn A LOT from that. Now you see why all these nerds (me) get excited about data; because you can change the world with it. With this data you can turn industries upside down, and the ability to reach consumers in this intimate way is one of those opportunities.

It’s all a matter of who can reach the masses, who can create a product intuitive enough for “Joe the Plumber” to use. Google’s Adsense technology is fairly simple, but still local businesses don’t use it. The potential for human powered mobile, local, advertising is in the words of Austin Powers, “dead sexy”. My mouth is literally watering. I can’t wait to be a part of this movement.

Update: This post is going to be syndicated, and I made some additions/updates for that reason. 1/5/10