Google Wallet head has left the company. Google confirmed the change in a statement.

“We can confirm that Osama Bedier has decided to leave Google this year to pursue other opportunities,” said spokesman Nate Tyler. “He’s achieved a lot during his time here, and we wish him all the best in his next endeavor. Payments are a big part of what people do every day, and we’re committed to making them easier for everyone.”

Bedier joined Google from eBay in 2011 along with eBay’s Stephanie Tilenius. Tilenius left Google last year to join venture capital firm Kleiner Perkins Caufield & Byers.

Payments and digital wallets are an increasingly competitive business, with large players such as eBay, Visa, MasterCard, and American Express as well as startups such as Square, Stripe and Braintree.

Google’s initial product revolved around Near Field Communications (or NFC), a technology that has failed to take off in the United States.

Image credit: VentureBeat

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

It’s been less than six years since Apple released the iPhone. In that short time, we’ve seen smartphones revolutionize the way we go about our daily lives. Many are wedded to their smartphones; leaving one at home seems unfathomable. But despite all of the time we spend on our smartphones, mobile advertising trails online advertising. CPMs for mobile are a fraction of what they are on the Web.

Next Tuesday, I’ll be facilitating a panel on mobile advertising at VentureBeat’s Mobile Summit in Sausalito, Calif. In advance of that, I reached out to some of the leading brands in mobile to get their perspective on where mobile ads are headed.

Pandora

One company that’s turned its business on its head in recent years is Pandora. In 2009,  88% of Pandora listening came from the desktop. Now, Pandora does 1.5 billion hours a month of streaming, and mobile accounts for 80% of those listening hours, according to Dominic Paschel, vice president at Pandora.

Because Pandora has to pay for the songs it streams, “monetization wasn’t a nice to have,” Paschel said. In 2012, the company did $256 million in mobile revenue.

Pandora has been experimenting with new ad creatives unique to mobile devices, such as click-to-add to calendar for NBC’s The Voice, click-to-call for State Farm, and click-to-order for Pizza Hut. Pandora also sells radio-style ads. (Though that isn’t an opportunity for most companies engaged in mobile.) Rebutting a common complaint, Paschel said advertisers have been willing to try new formats on mobile.

The Weather Channel

Alex Linde, VP of digital and mobile apps at The Weather Channel, said mobile is a critical piece in the future of the company. “Each screen has its place — TV for entertainment, science and severe weather, Weather.com and other online resources for research and planning,. But if it is not already, then mobile will be the place you look for a weather forecast,” Linde said.

One of the big concerns with mobile advertising is whether brand advertisers will come on board or it will be the domain of direct response advertisers.

“There are still too many buyers focused on clicks,” Linde said. “A coordinated effort across the ecosystem to help the agency connect mobile ad serving and tracking with measurement and attribution across screens will finally allow the true ROI of mobile to be recognized.”

But The Weather Channel has already been successful with brand advertisers.

“The majority of our mobile revenue comes from the brands,” Linde said. “We see a strong interest from companies that know their business is impacted by the weather — insurance, autos, travel, [quick-serve restaurants], etc. but more and more our advertisers understand the strength of our audience.”

Sephora

Brands are themselves launching mobile apps to augment their in-store experiences. “Mobile is increasingly important to Sephora overall — as a means to shop on the go, assist in your Sephora store shopping experience, and provide quick moments of inspiration while standing in the coffee line,” said Bridget Dolan, VP of Digital Marketing of Sephora. The company has 1,300 stores selling beauty products in 27 countries. “We know that our clients are increasingly visiting us from their mobile devices — over 40% of Sephora.com traffic is from a touch device, and more than 50% of our emails are opened on mobile phones.”

“We consider mobile differently than desktop because you need to make it simple and fast for the customer to get to the product she wants to buy or find the information she is looking for when she is on mobile,” Dolan said. “We really built our Sephora To Go app for iPhone and our mobile site with utility at the forefront — making it easy for her to purchase with a few taps, storing her Beauty Insider loyalty card so she doesn’t need to carry it in her wallet, giving her easy access to her past purchases and Beauty Insider rewards, and even allowing her to scan any product in our store to see ratings and reviews.”

The company also advertises in mobile search and Facebook, but treats them differently from desktop advertising. “We spend a lot of time and energy optimizing campaigns for paid search by device to ensure top rank and relevant creative and calls to action,” Dolan said. “We had also seen success with Facebook mobile advertising to grow our fan base on Facebook.”

As mobile devices proliferate and take on different forms, it’s also important to take that into account. ”Tablets are unique from mobile in that they are used at different times with different shopping mindsets,” Dolan said. “Tablet is more lean back with ‘couch commerce’ and mobile is much more lean forward with shorter bursts of activity.  To treat them similarly is to not put yourself in the customer’s mindset when she is using each device type.”

Trulia

Trulia, which provides real estate search, has seen similar differentiation. “iPads and tablets have more screen real estate which enables more innovative ad integrations,” said Lee Clancy, VP of Consumer Products for Trulia. “For example, we have done a lot of leading-edge ‘mapvertising’ campaigns, which allow advertisers to have a branded presence on our maps, such as displaying specialized map markers showing where Chase banks are located in relation to a specific property or neighborhood, or allowing home searchers to see quickly which homes on a map are Verizon FIOS-enabled areas.”

Unlike many companies that are struggling with mobile monetization, Trulia is finding that it works well. “Trulia’s main advertiser segment is real estate professionals, and the good news is that we’re finding mobile advertising works very well for agents,” Clancy said. “They are seeing tremendous ROI, due to the ‘transaction-ready’ nature of our consumer audience (i.e., consumers who are looking to buy a home within the next 3-6 months) and the inherently mobile nature of touring properties for both agents and consumers. In fact, Trulia is one of but a handful of companies that are actually seeing higher monetization on our mobile products vs. our web product.”

My own take is that mobile is an extremely compelling platform. Sensors such as GPS and gyroscopes allow marketers to learn more about the consumer’s immediate need than ever before. Smartphones are nearly always on us, meaning they’re instantly available — especially when we’re making purchase decisions. Mobile is a way to capture and inform consumers at the bottom of the purchase funnel. Instant access to infinite stores of data can provide the kind of information you could only get from the best-trained salespeople.

One key to success in mobile is understanding how consumer behavior is different in mobile environments and adapting to it.

“Mobile ads really need to be designed from the ground-up as mobile,” Clancy said. “We cannot simply shrink web banner ads and plunk them onto the mobile screen and expect that it will be valuable for advertisers or consumers.”

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image credit: Kostenko Maxim/Shutterstock]

A new chapter in Groupon history began last week with the ouster of Groupon CEO Andrew Mason. After a devastating earnings report on Wednesday, Mason was ousted by the board on Thursday.

As Groupon’s most vocal critic (disclosure: I’m short Groupon), I wanted to take a look at what changes we might see and the state of the business today. Unlike many of my previous posts, this will contain little advice for the company.

The biggest change I expect to see — and one that Mason’s departure from the company signifies — is the elimination of the wide disconnect between reality and management’s claims about the state of the business. While Groupon’s stock was tanking 26% in after-hours trading, Mason was telling investors and analysts on the earnings call, “We’re quite proud of these numbers.” At the beginning of the call, he said “Q4 provided the best evidence yet that customers love Groupons.”

I felt like Megyn Kelly of Fox News when she was talking to Karl Rove giving optimistic projections for Romney on Election Night. “Is this just math that you do as a Republican to make yourself feel better, or is this real?,” she asked Rove. I’ve always wondered if Groupon management genuinely believed the crazy optimistic messages they spouted or if they understood the deep, deep trouble the company is in.

Mason’s departure memo to employees seems to acknowledge the latter. He wrote to his former employees:

If you’re wondering why… you haven’t been paying attention. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that’s hovering around one quarter of our listing price, the events of the last year and a half speak for themselves.

Those rushing to lionize Mason for the transparency of his departure memo should note one thing he left out: He’s walking away from the company with more than $200 million. Not bad for a performance that saw 75% of the IPO value disintegrate in less than a year and that hurt many, many small businesses. Even those that didn’t run Groupons are struggling because of the discount pressure that Groupon has created in the marketplace. I’ll happily be your fall guy for $200 million.

The other big change I expect at Groupon is that the editorial team will be decimated. This was a change I called for in the fall. Groupon and Mason made the mistake many people do: They assumed correlation was causation. Because Groupon started off with an editorial team that wrote whimsical (some would say absurd) descriptions of businesses, they assumed it was a necessary part of the business and hired rapidly. At the time of the IPO, they employed 1,259 editorial employees. That’s a team that would dwarf most newsrooms around the world. As of December, the New York Times employed 1,100 people in the newsroom. (Groupon hasn’t published updated numbers since the IPO.)

Most of those people could be fired without adverse impact to the business. If Groupon still has 1,200 editorial employees, I estimate that it could add $6-$8 million to its quarterly income with this change. According to several sources within Groupon, Mason (himself a music major) was the primary protector of the editorial team.

Beyond those two changes, I view Mason’s departure as largely symbolic. The core structural challenges that face Groupon still exist. As I’ve said from the beginning, daily deals were a faddish business model. Revenue from the daily deals business that investors paid a hefty premium for declined 14% in Q412 compared with the quarter a year earlier. That decline was more than offset (the way Groupon accounts for it) by growth in the Groupon Goods business.

The problem for investors is that the Goods business is a low-margin business. Daily deals provided high double digit margins. Even under Groupon’s best-case scenarios claimed by management, high single-digit margins are expected for Goods. (The actual results in Q4 were materially worse.) The declining high-margin business is being replaced by a low-margin business. It’s not a bad business; it’s just not what investors signed up for.

Consider some of the other things that Groupon has claimed that have turned out not to be true:

We’ll never have to pay for marketing again. This was a refrain heard often from Mason during the lead up to the IPO. It was OK to spend hundreds of millions on marketing, because once Groupon had someone’s email address, they could keep marketing to them for free. Anyone who has ever run a subscription business knows how ludicrous that claim is. As Groupon stated on its conference call, purchases from emails are a declining share of purchases.

Consumers want to be “shocked” by ultra-low prices into buying things they hadn’t considered. Groupon instead is now touting its Dealbank, a database of evergreen deals. You can come to Groupon any time and find these deals. This reduces dramatically the urgency to purchase that the deal-a-day service promoted. I believe it’s also bad for small businesses because it destroys their pricing power if deals are omnipresent. Because Groupon also needs to get customers to check out these deals, it will have to spend on search engine marketing. If you still believe in this space, you might as well invest in Google — they’ll make money on it regardless. (Disclosure: I’m long Google.)

Customers love Groupon and will be with us for life. Groupon had significant customer deactivations.

Small businesses will keep giving us a big cut of their revenue for marketing. On the call, Groupon admitted that it has been adjusting its take rate downward to get better quality merchants on board. If the daily deals business model were compelling, Groupon should have been able to increase its take rate as hundreds of its competitors went out of business.

We can get high margins without having to deal with messy inventory. In the daily deals space, Groupon was able to be a broker and take a steep cut just to refer business. With Goods, it is processing inventory and having to deal with fulfillment. And the cut it gets is razor thin.

Groupon Scheduler, Groupon Now, and Groupon Payments are important parts of the merchant “operating system.” It seems every few months Groupon would trot out a new line of business and claim it would be the next big thing to help its flagging stock price. When Groupon publicly announced payments, its stock shot up. But payments is an incredibly difficult business with low margins. And Groupon’s success in it is somewhat dependent on its success in the daily deals business, which is in decline. Groupon has all but stopped talking about the other two.

Groupon Goods presents another challenge for Groupon. Because consumers can easily compare prices online, it has to be ultra-competitive and it has to beat Amazon. (Which is known for thin margins.)

So even though Goods will grow in volume, it won’t have great margins.

There’s only one man that Wall Street lets get away with razor-thin margins. But I don’t see Jeff Bezos lining up to be CEO of Groupon.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

Andrew Mason photo via DEMO/Flickr

But in many ways, I’m also the best kind of remote employee. I get things done. I’m available for meetings at odd hours. Need to have a conference call with the team in Bangalore late at night? Sure. I don’t clock out as soon as I leave the office. As a product guy, I’m always paying attention to products. It annoys friends when I’m on vacation and I will dissect a suboptimal point-of-sale transaction experience on the spot. I can’t help it. I love what I do.

That’s why I find the recent changes to Yahoo’s work-at-home policy bewildering. Yes, Yahoo has a lot of deadweight. Yes, Yahoo needs to jettison that deadweight. But there is more deadweight that comes into Yahoo’s offices on a regular basis than there is that works from home. (Just based on sheer numbers this has to be true.)

There are plenty of dedicated work-from-home employees out there. One of my closest friends arranged a work-from-home situation with his employer. He’s often cooking dinner while he’s “on the clock.” But he gets his work done. He’s been doing it for nine years. When he started, it was an exception. Now it’s become very common at his company. Because relatively few companies support working from home to this degree, it also serves as a retention tool. It would take a lot for him to give up the flexibility he has.

Virgin Group founder Richard Branson took to the company’s blog to criticize the Yahoo decision:

We like to give people the freedom to work where they want, safe in the knowledge that they have the drive and expertise to perform excellently, whether they at their desk or in their kitchen. Yours truly has never worked out of an office, and never will.

I’ve been a remote employee in more normal situations and I’ve managed remote employees. What I care about is whether the work gets done and done at the quality level that is needed.

The best employees also know what is stupid and what is needed.

In one case, my entire development team was based in Dublin. But I was required to be in the office in Virginia on most days. I had to deal with an hour commute each way so that I could come into the office and email with people half a world way. That is stupid.

In another case, my employer was widely supportive of telecommuting, but my specific manager wasn’t. My team was based in San Francisco but I had to work from San Jose, where my manager was. That is stupid.

When I’ve had remote employees, I’ve trusted them to get the job done. And most of them didn’t disappoint. But the ones who were screwups would have been screwups whether or not they were working from home.

Remote work does have its challenges, but some of these are actually opportunities. I found that when I was working with developers who were remote, I had to be much more explicit in what I documented for requirements. I didn’t take for granted that they understood certain things because they happened to be in the same room. You know what? That also worked better because there were fewer misunderstandings.

If the problem is that you have lazy, unmotivated employees, the solution is to get rid of the lazy, unmotivated employees. But there isn’t a 1:1 correlation between working from home and being lazy and unmotivated.

In a situation like Yahoo’s ultimatum, you have an adverse selection problem. The best, most motivated remote workers will leave because they are readily employable. The lazy, unmotivated ones will find a way to drag their asses into the office and will goof around there. Never underestimate the ability for employees to goof off in the office. I recently toured the Boeing factory in Everett, Wa., and an employee had Facebook on his screen.

The other argument in favor of having employees on site is that it can foster collaboration. I can buy that argument in certain cases, but not in the way large companies like Yahoo work. At an early stage startup, it can make a lot of sense and you can iterate much faster when everyone is in the same room. Ideas that seem stupid at first can get tossed around and turned into something. (Or vice versa.)

But large companies often have offices around the world. When I worked at Aol, at various times I had dev teams in Dublin, Virginia, Ohio, Pennsylvania and Bangalore. Sitting in a company facility on the other side of the world or the other side of the city isn’t much different from working from a home office or coffee shop. Unless Yahoo is committed to putting all of the members of a team together, the claims that this is about promoting creativity (and not perceived control) ring hollow.

Besides, technology offers a lot of ways to help spark collaboration. I use a Twitter a lot for collaboration with a broad network. In corporate environments, I’ve used tools like IM, MediaWiki, and Yammer to brainstorm and collaborate.

We’re in an extremely competitive labor market in Silicon Valley. It seems short-sighted to limit your talent pool to just those who live close to the office or are willing to endure a one-hour slog on the 101.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image credit: Elena Elisseeva/Shutterstock]

I’ve designed products and I occasionally review technology, so I’ve been thinking about how to improve the accuracy of reviews for a while. Here are some thoughts on how both product designers and reviewers can do better:

Product designers

Set up a context for the product. If your product isn’t a mainstream product, be clear about who it’s intended for.

Don’t over promise. If your product has operating parameters that will significantly impact performance, be upfront about them. If your package says “set up easily within 60 seconds,” I will have a stopwatch and will test that claim. “Easily” is a vague claim, but “within 60 seconds” is something I can test.

Idiot-proof your product. Is it possible for a user to unintentionally brick your product? Warn them on screen when they’re about to do so. Most people don’t read manuals or directions. (I’ll have a post on idiot-proofing products later.)

Track usage. This can help you to debug errors and identify product deficiencies. If your product is a video camera, knowing that a reporter was testing on a 15Mbps connection or a 3 Mbps connection is valuable. Tracking should be privacy sensitive. For that video camera, don’t record the video unless that is part of the product’s features.

Research the writer. This doesn’t mean only giving access to reporters who are likely to give you glowing reviews. Many of those people will lose credibility over time. Reviews that point out some flaws have more credibility. But you’ll want to address concerns that might come up from the writer.  If a reporter shows a history of caring about privacy, you can point out how your product addresses privacy.

Don’t make reflexive claims. If you have a review that you hate, talk to the reviewer. Don’t start tweeting about what an idiot the reporter is, how he’s out to smear you, etc. In many cases, it just draws more attention to a review than needed. If a response is warranted, it’s always better when you have solid data.

Reviewers

Assume that every reasonably sophisticated device will be tracking what you do with it. While lying and making up stats is unquestionably wrong, honest mistakes do happen. Human memory can’t compete with data logging. When I review products, I take pictures at every pertinent step. I do this to help me remember details. (My phone automatically time stamps it.) Most of this never ends up in the final review; I use it just to help me out when I’m writing. If I were reviewing a car like the Tesla S, I’d have my own portable GPS unit recording tracklogs. I’d take pictures when I changed temperature settings.

Set up a context for the review that is relevant to the product. No product will make sense for everyone. Some make sense in the bulk of use cases, some make sense in certain scenarios. The focus should be on the use cases that the product is marketed for, not some corner case you dream up. If you’re talking about a corner case, be explicit about it.

Put yourself in the mindset of the consumer who will be purchasing the product. For an upcoming review of a connected baby monitor, I had a friend — a not particularly tech savvy mom — do the setup to make sure it was easy enough for someone who knows nothing about wireless networking. She also has a baby, so I was able to gather details on what was important to her in a monitor.

Be upfront with your biases. I think the business models of Yelp and Groupon are terrible and exploitative. And I note that whenever I write about the companies. But I do try to present scenarios where they can make sense.

Don’t make reflexive responses. Shortly after Musk challenged the New York Times’ claims, the Times responded, “Jan. 10 article recounting a reporter’s test drive in a Tesla Model S was completely factual [...] Any suggestion that the account was ‘fake’ is, of course, flatly untrue.” The “we stand by our story” is a reflexive news organization claim that annoys me to no end. A better response would have been, “We believe that our story is accurate. But we look forward to reviewing the log data provided by Tesla.”

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Image of Tesla Model S c/o Teslamotors.com]

Starting today, cardholders can sync their American Express card to their Twitter account and provide shipping information once, and then they can tweet to make select purchases.

For the launch, AmEx is offering a number of special offers. The best values include a $25 AmEx gift card for $15 and the Kindle Fire HD for $149. (Amazon sells this for $199.) Other products in the promotion are a Sony Action Cam, a Donna Karan-designed bracelet, and an Xbox 360.

AmEx SVP Leslie Berland said the goal is to provide a broad selection of products to  ensure “a holistic impression and reaction from as many cardmembers as possible to test out this functionality.”

AmEx is working with a long-term fulfillment partner to deliver the orders.

Beginning at 3 p.m. PT today, consumers can tweet #BuyAmexGiftCard25 to buy the AmEx gift card. The other products will be released at 9 a.m. PT on Wednesday. After tweeting, consumers must confirm within 15 minutes by tweeting a confirmation. Amazon has a patent on 1-click purchasing; AmEx has just developed 2-tweet purchasing.

This is a form of the much talked about “digital wallet.” In this case, AmEx is turning your Twitter account into a form of wallet.

If it takes off, it could turn into an easy call-to-action for purchases. Imagine a TV commercial that includes a tweet-to-buy hashtag. Few in the TV advertising industry want this to happen, but it could be valuable for infomercial advertisers and home shopping channels. For marketers considering using this mechanism, one challenge is that it doesn’t address the entire market. AmEx’s market share is substantially lower than Visa’s.

“The reason why we wanted to launch this with Twitter is that it’s the most dramatic and powerful manifestation of what our technology can do,” Berland said. “Being able to run a transaction, to make a purchase possible end-to-end within 140 characters and within a step and a half, we think is extremely exciting.”

For Twitter, the challenge is that merchants and AmEx get value without Twitter directly generating additional revenue. But Twitter would make money if merchants used promoted tweets to highlight products available for sale.

Berland said the launch will include tweets from merchants, AmEx, and promoted tweets.

AmEx has been a pioneer in blending e-commerce, payments, and social networks. It has previously launched promotional tools with Foursquare, Facebook, Twitter, and Xbox. My big question is, how much marketing support is AmEx willing to put behind these products. Although they are interesting in their concepts and innovation, I haven’t seen the kind of ongoing support and promotion of these products that is necessary for them to be meaningful.

And the other card networks aren’t standing still. Two weeks ago, Facebook launched an interesting gift card program using Discover’s network.

I’ll be discussing AmEx’s new program with Twitter on CNBC at 11:30PT tomorrow, so you can tune in to hear more.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image credit: SOMKKU /Shutterstock]

The humble receipt doesn’t get much thought. It’s usually a little slip that you get at the end of a transaction. It’s printed on flimsy paper. Leave it out in the sun and most of the text will disappear quickly. It gets crumpled. It gets lost. It also wastes paper to transmit data that could be sent electronically. It’s increasingly an annoyance for those who’ve become accustomed to online shopping.

Fortunately, there’s good news: More and more retailers are offering to email your receipt to you. There’s also bad news: They aren’t doing a great job of it.

Here’s an e-receipt from Nordstrom:

For starters, it took more than 20 minutes from the time I completed the transaction until the receipt arrived in my mailbox. It should arrive instantly. Otherwise, many people will ask for a paper copy just in case.

The item I bought is described as “BTMS-MN SP:STARFISH BM 10149099 728679083086″. Good luck figuring out what that is without Googling it. Knowing what I actually bought, I could translate that as Bottoms-Men. I don’t know what SP is. Starfish is the description. If I were searching my email for the Boss swim trunks I bought, the text in the email would be no help.

Nordstrom is applying the constraints of an old medium to new technology. They are taking the output that would go to the printer and redirecting it to email.

That’s the wrong approach. Descriptions on print receipts are optimized to save paper. There’s an opportunity to do much better.

The transaction data should be translated to take advantage of the infinite space, searchability and interactivity of email.

The email should have:

• Pictures of each item, if available.
• A human readable description. “BOSS Black Starfish Swim Trunks”
• A link to leave a rating of my swim trunks.
• Cross sells for related items. If you liked these trunks, you might like these flip flops.

(Receipts from Nordstrom.com have the human readable description, but not the other items.)

This would improve the experience for the consumer, potentially improve the experience for other customers (through more ratings data), and improve cross sells.

Stores should remember my receipt preferences so I don’t have to provide my email address or even ask each time. Macy’s already does this. When you swipe your credit card, you can say you want paper receipts, email receipts, or both. The next time you swipe the same card, the POS system looks up your preference and acts accordingly.

Ideally, stores would create a seamless offline-online experience. It shouldn’t matter if I bought in store or online. I should be able to pull up my purchase history in my online account.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image credit: Arno Staub/Shutterstock]

That’s why I’m excited to see that OpenTable is acquiring Foodspotting and has named Foodspotting CEO Alexa Andrzejewski as its chief user interface designer. That gives me hope that the Web site — which looks like it was last redesigned in 1999 — will finally be updated.

But as a friend asked me, “Does it matter to Open?” “Not really,” I said. “So, really, you should decry them for wasting the money,” he responded.

OpenTable brings the product designer and the business guy in me into conflict. It is one of the rare companies in the consumer Internet business where design doesn’t seem to matter a whole lot. (Disclosure: I’m invested in $OPEN and have made a nice return so far.)

There are many, many ways to improve the OpenTable product experience. Here are a few just off the top of my head.

• When you first visit the site, you’re given a list of all of the markets it does business in. How long have Internet sites been using IP-based geolocation?
• I can’t set a list of preferred neighborhoods. Every time I want to search for restaurants, I have to select the 3 or 4 neighborhoods in San Francisco that are convenient to me.
• Despite the fact that OpenTable has menu data on many restaurants, I can’t search for a specific dish.
• It asks me stupid questions like, “Is this your first time at this restaurant?” when I’ve previously made many, many reservations through OpenTable at that restaurant.
• It doesn’t incorporate and highlight reviews of my friends who also use OpenTable. (Hello, social search?)

OpenTable has some of the best data out there on restaurants. It has a higher frequency of reviews than Yelp. (Disclosure: I’m short Yelp and think it’s almost as evil as Groupon, which I’m also short.) But it hasn’t focused on building out the product.

A great restaurant-booking tool would incorporate lots and lots of pictures (the screen capture above shows a bit of what Foodspotting’s site has to offer on this front). Dining is not always about food. It’s also about scene. Although OpenTable is unlikely to have true dives (dives generally don’t take reservations), I may be in the mood for a romantic place, or a place to take kids, or a place for a business lunch. OpenTable has filters that allow you to drill down, but definitions of those terms can be highly subjective. Give me 10 photos and I can make a better decision than reading 100 Yelp reviews.

Yes, OpenTable has built out its mobile apps. And those apps are damn convenient. They help address some of the location issues I cited above.

That OpenTable’s user interface sucks is no secret. People mention it to me frequently when talking about local products.

That’s when I put on my business hat. “So what’s your alternative? What are you going to do, call 10 restaurants and check their availability?”

OpenTable hasn’t improved its product because it really hasn’t had to. I call it the reverse Ticketmaster. I don’t know what Ticketmaster spends the insane fees it charges on, but it’s clearly not IT. It’s about as user hostile a Web site as they get. Search tools are terrible. Live Nation even requires you to solve an ad captcha.

Ticketmaster collects its fees directly from consumers. OpenTable collects its fees from restaurants. For each reservation booked through OpenTable’s site or apps, OpenTable charges $1 per seated head. So if four people show up, the restaurant pays $4. (This is in addition to monthly fees for using OpenTable’s electronic reservation book.)

OpenTable has become so dominant in some markets that if you’re a mid- to upper-tier restaurant and you’re not on OpenTable, you might as well not exist. For me, if you’re not on OpenTable in San Francisco, you’re not usually in my consideration set.

I’ve heard some restaurateurs grumble about OpenTable like I grumble about Ticketmaster. They think that OpenTable has become a tax on the restaurant ecosystem. Instead of bringing in incremental customers, OpenTable is just making it more convenient for existing customers, and the restaurants are having to pay for it.

Among the various marketing tools available to restaurants, I consider OpenTable to be the best. Print? Big spend, no accountability. Groupon is almost always a bad deal for restaurants. Yelp’s sponsorship packages are always a bad deal for every category of business. Although OpenTable’s $1 a head may sound expensive, it’s cheap for performance-based advertising as a percentage of spend. Even if only half of the business is incremental, $2 a head is still cheap. With Yelp, if you could accurately track it, you’d find the comparable number to be $100 or more. (Yelp generally charges on an impression basis, at an insane $600 CPM and then delivers terrible impressions.) If you’re going to spend money marketing a reservation-taking restaurant, OpenTable is the best place to do it.

But being perceived as a tax and not as a service should be a real worry for OpenTable. That’s where I think you can truly marry design and business to create a better experience for both diners and restaurants. A better-designed product would use the data that OpenTable has to drive incremental business for restaurants. And that means incremental revenue for OpenTable. Some examples:

• Here are places that your friends have eaten at recently and rated highly.
• We see that you’ve never tried Greek food. Here’s an offer for an appetizer at Kokkari Estiatorio. Because OpenTable is the reservation system, you don’t even have to deal with coupons. A note would be automatically entered in the reservation.
• Daily specials from your favorite restaurants.
• Restaurant Week is coming up. Here are your friends who have expressed an interest in restaurant week.
• Premium-priced dinners with chefs.

I met with OpenTable CEO Matt Roberts last year and discussed some of the company’s product challenges. (Not, as you might expect, over a meal.) He acknowledged that there was some work to be done on the product.

With Foodspotting, he has acquired a design team that can help turn a boring and dated utility into something that helps enhance the overall dining experience. That’s something I’d raise a glass to.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

As online retailers incorporate better technology to improve the shopping experience for consumers, the convenience and experience gap between offline and online gets bigger. Retailers who don’t adopt new technologies and practices risk being left in the dust as online retailers further encroach.

Fake pricing

Many department stores use fake pricing. If you read the fine print on their sale ads, you’ll usually find language to the effect that the “regular” prices are offering prices only and they aren’t claiming anyone ever bought it at that price.

I was browsing through a department store and found a set of flatware on “sale” for $110. (“Regular” price $140.) When I got to the register, the woman behind the counter asked if I had any coupons. I didn’t, but she managed to “find” one for me that knocked the price down to $88. I went ahead and bought it. Because the battery was dead on my phone, I didn’t do what I normally do and check the price on Amazon.

When I got home, I checked Amazon’s price. The “regular” price on Amazon was $80, about 10% better than the super-secret “sale” price I was given.

Mobile phones bring a whole new level of price transparency that makes the fake pricing model break down. If in store, I saw a regular price of $88 and an Amazon price of $80, I’d probably buy it in store anyway. But I was so annoyed with the hoops required to get that price that I just returned the flatware to the store and bought it from Amazon.

To make matters worse, it’s often easier to find Amazon’s price for a product than it is to find the store’s price. Because they change prices so frequently, department stores don’t display the current price on an item’s tag. They usually rely on signs placed throughout the department. If someone moved an item or if your item is an exception, you may be in for a surprise at the register. Or, you might have to do math to figure out what the right price is. (What is 30% of X?)

Amazon frequently changes its pricing, but it doesn’t rely on fake pricing. And the current price is displayed on the item’s details page; no math required.

Size and selection

One of the challenges of in-store shopping is that you’re your own picker. The massive warehouses that companies like Amazon use organize products very well because they are paying the expense of the picker.

When I shop online, I don’t have to worry about digging through a stack of shirts to find my size. I select it from a pulldown and someone else does the work. At department stores, I have to do the work. Because people move things around, they’re often not where they’re supposed to be. Even worse, you might find after spending 10 minutes looking through a stack of shirts that your size isn’t even in stock. (Never mind that you did this after lunch with food residue on your hands and just soiled the whole stack of shirts.)

Although this experience is unlikely ever to be as convenient as online, it can definitely be improved.

For starters, a mobile app could tell you whether your size is even in stock, saving you the frustration of a snipe hunt.

Size-specific RFID tags could be attached to the loss prevention sensors to make it easier to find the right size.

Of the retailers I frequent, Nordstrom does by far the best job of incorporating mobile technologies. You can scan a barcode with the Nordstrom app to see if a product is available. Nordstrom even has seamless inventory tracking across its online fulfillment and its stores. If you are in a store and that store doesn’t have your size, it’s easy to search across the entire system, and Nordstrom will ship it to you for free. Like the Apple store, Nordstrom associates can check you out with an iPod Touch and email you a receipt.

Nordstrom is so far ahead of other retailers that I often forget about the capabilities available to me.

Coupons, coupons, coupons

In order to convince you that you’re getting a great deal and drive a sense of urgency, department stores frequently make use of coupons. Unfortunately, they’re loaded with restrictions that even their own staff can’t understand or explain.

I went to a major department store and picked out a couple of shirts. After waiting in line, I got to the front and presented my coupon. Nope, it doesn’t apply, because the shirts were on a morning special. (Which wasn’t listed among the dozens of restrictions.) Another time, the only explanation the clerk could come up with was, “the computer won’t take it.” When the rules are so complex that your own staff can’t explain them, it’s probably time to reconsider the rules.

The same store has a habit of running two-day morning coupons, valid in the mornings on two consecutive days. But if you arrive later in the day, the coupon won’t apply. You’ll have to come back the next morning.

Time of transition

In a time when it’s getting harder and harder to get consumers in the store, why turn away people who are ready to buy with marketing techniques designed for a different age? When I can shop at home in my underwear at any time of day, why do you want to make it harder than it has to be to shop in your store? I don’t need to be able to shop in my underwear in your store (frankly, no one wants to see that, and I don’t want to see other people shopping in underwear), but stores do need to remove some of the artificial pain points.

There is a danger in going too far, too fast. That’s what’s happened at JC Penney, where former Apple retail head Ron Johnson is now CEO. He radically transformed the store’s structure very quickly. He switched the company’s pricing and promotions from department-store type fake pricing to everyday pricing like Target, Wal-mart, and Costco. Because JC Penney customers had been trained to expect constant sales, JC Penney revenues took a hit.

Johnson’s strategy is the right approach to competing with online retail in the long term, the question is whether JC Penney will be around to see it.

But other retailers can take smaller steps to make in-store shopping more convenient.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image credit: IMG_191 LLC/Shutterstock]

Stored credit card information makes checking out a breeze. Expedited fulfillment like Amazon Prime, which offers free two-day shipping, dramatically reduces the delay in getting products. (In many markets, Amazon can deliver many products overnight.) These changes make brick-and-mortar shopping even less convenient by comparison.

Last week, I had an experience at a large national electronics chain that highlighted some of these important differences.

Some of these can be improved with technology, possibly creating opportunities for startups to plug these holes.

Returns

My first task was to return an iPod Touch. Around 11 a.m. on a Thursday, there were three people in line in front of me and one person working the returns counter. I stood in line stewing about the wait and getting more and more upset at the retailer.

Although returns have long been a hassle for online purchases, that process has gotten much easier. Nordstrom.com includes a prepaid shipping label that you can just stick on the box to send something back. Amazon lets you print out a label from its Web site. If a return was Amazon’s fault, it pays the return shipping. If not, it deducts the cost of return shipping from your refund. Still, that’s a lot more convenient than weighing your return, calculating postage, and going to the post office.

The ideal solution at retail would be to staff the customer service desk appropriately. But I don’t see that happening. A very good solution would be to give customers tickets and let them shop the store while they are waiting to return something or for other customer service. When the staff is available, they would be paged to the desk. This could be done with devices like the pagers that some chain restaurants use. Instead of getting upset with the store, consumers might actually buy something else.

Inadequate/incorrect/misleading signage

After I returned the iPod, I was browsing through the store and found a table with some open-box items. There was a sign that touted 50% off qualifying open-box items. But the sign had no definition of “qualifying”; it said that I had to ask an associate for details. The first associate I found just said it wasn’t his department. (No offer to help me find someone who could answer the question.) After a few minutes, I found an associate from the department who could answer. It turns out the discount applied to everything on the open-box table; if it was on the table, it “qualified”. So why not just say that?

How much does this thing cost?

A frequent frustration with offline retail is that you often don’t know what things cost. With online retailers, the current price is usually displayed right on the product page. In some cases (when there are manufacturer’s restrictions on minimum advertised price), you may have to add the item to your cart before you see the price. But this is just a click away.

I found an Epson projector on that 50%-off table that I wanted to buy. The store’s regular price was $649.99. It had an open box sticker that marked it down to  $585.99. (I did a quick check on Amazon and found that Amazon was charging $600 for a new unit.) But was the price of the open-box unit 50% off $649.99 or $585.99? Unclear.

As it turns out, the projector was still in the store’s system at $649.99. The clerk pulled out his iPhone and manually did the price calculation ($585.99 / 2 = $292.995). He then put that into the register.

If I had gone to the front registers, they would have had no idea about the discount, and this would have resulted in an even more frustrating experience. If the store had decided on a lower price, it should ring up at the lower price automatically, no matter what register I take it to. Target actually does a nice job on this. Each discounted unit is individually labeled. In cases where only a specific unit is discounted (for example, if it is a return), they go the extra mile to cover up the regular bar code so that the cashier can’t incorrectly ring up the higher price.

Manager to home theater

Back to my open-box projector. Because the correct price wasn’t programmed into the point-of-sale system, the clerk had to page a manager to approve the discount. The manager was busy with someone else, so I had to wait on that. Then the manager had to walk across the store to approve the discount.

I can program my TiVo from halfway around the world, but a manager can’t approve a discount from across the store? This seems like an ideal use case for mobile technology. When a price override request is made, the details should pop up on a mobile display so the manager can approve it from wherever she is.

But without that kind of solution on hand, all of the steps I had to go through at the retail store turned what could have been a 10-minute shopping trip into a 45-minute shopping trip. I was relating this story to a friend and his response was that I got a $600 projector for $300, so I should be happy. True. But given finite resources of store personnel, time spent on customers because of inefficient process hurts all customers.

Later in the day, I decided the projector was such a good deal, I should buy another one. There was a new clerk there who didn’t know about the special pricing. I showed him my receipt from earlier in the day and he agreed to match it.

When he ran my credit card, American Express suspected fraud. Apparently, their algorithms think it’s unlikely that I’d shop at the same big-box retailer twice in one day.

Unless big boxes start to close the technology gap, that will become increasingly true.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image credit: SVLuma/Shutterstock]

Belkin, best known for its computing accessories, cases, and routers, is the home-automation company to get widespread distribution of these types of devices.

I’ve been testing its WeMo Switch + Motion (the company sent me a loaner for review purposes). The package includes a Wi-Fi-capable wall switch and motion sensor. They can be used independently or together. The devices can be controlled through an iPhone app. (Android is not currently supported.) Belkin also sells the devices separately.

In my primary test configuration, I have the motion sensor set to turn the light in my home office on when I enter the room. After the sensor detects no motion for a while, it automatically turns the light off.

The big problem with this setup is that neither the motion sensor nor the switch has an ambient light sensor. The light goes on even during the middle of the day when the room is otherwise bright. Even if that problem were solved, $100 is a lot to address such a problem. (I can also turn the light on or off with my iPhone.) The other challenge for home lighting is that it doesn’t control overhead lights, but Belkin introduced a new switch at CES that will add that functionality.

The best uses will likely come from more complex tasks. Belkin supports integration with IFTTT, which lets you incorporate the motion sensor and switch with Internet-connected services. For a short time, I configured the WeMo sensor to tweet that I was in my office when I walked into the room. (Tip: Not even tech savvy people want to see that.) A friend uses his WeMo motion (in conjunction with IFTTT) to send him a message whenever his kid comes home from school.

I’ve been at a loss to come up with other meaningful uses for the WeMo, especially uses that justify the expense. The packaging for the switch shows WeMo being used to remotely control an iron and a curling iron; those uses seems downright dangerous to me.

It also feels like an incomplete product. The hardware has required numerous firmware updates.

At its current price, it’s hard to recommend. At half the price, it would be a lot more interesting.

Austin-based startup Ube is also working on this problem. At VentureBeat’s Demo 2012, the company won a People’s Choice award for a planned line of home automation products, including a wall outlet and wall switch. Those products are scheduled to be released in the second quarter, according to Ube’s Web site.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

Except I deserve a cut when someone messages me. It shouldn’t all be Facebook’s. I should also be able to set my own price. Different people assign different value to their time, and a static rate doesn’t make any sense. I, for one, think that $100 to get Zuck to read one of my messages is a bargain.

Charging for messages creates a more efficient market and helps deter spam. I get a lot of mail, and most of it goes unread because there’s no deterrent and no cost for people to send messages. People send messages indiscriminately. I’m thinking of PR people in particular — many just add any writer’s email address to a list without regard to what he or she writes about.

I filter what I choose to read based on whether someone knows my private email address and who referred them. For the ones that I do read, if it doesn’t grab me in the first couple of sentences, I stop reading. But economics is often the best filter: If you’re willing to spend money to send me a message, you’ve probably done some filtering on your own to ensure that there is a reasonable fit and that I would want to read what you have to say.

I’m shocked that, after all of this time, economic filters haven’t been applied to online dating in scale. One of the fundamental problems of online dating is that many women are inundated with messages. This leads to a low response rate. Men get frustrated with the low response rate. So they spend less time on each message and just send more of them. Which means women get more inundated. And the cycle repeats.

Imagine a different scenario: Each person on the dating site gets 100 credits to use each month. You can spend 1 to 100 credits to reach someone. Once that person reads your message, the credits are deducted from your account. By spending 100 credits, you’ve signaled your intent that you’re serious. If you’re only willing to spend 1 credit, that means something else. Once you have scarcity, you’re forced to make choices. You won’t email every attractive woman who comes up.

This model could work in any number of markets: online dating, job seekers looking to reach recruiters, recruiters looking to reach highly sought candidates, etc.

For what Facebook is testing, I’d want a system where the recipient is able to set multiple prices: one to receive a message, a higher one for a promise of it being read, and a substantially higher one for a guaranteed response. (Think of this as similar to online advertising models: sending is equivalent to a CPM, reading is equivalent to a CPC, and responding is equivalent to a CPA.)

If it actually took off, I could imagine automatically adjusting the price based on affinity. Someone from high school pays a 40% premium, someone connected to Shervin Pishevar gets a 30% discount.

Quora is one site that has been testing using economic principles for attention. You can earn credits by writing great answers and spend credits to get attention for questions.

I’ve been running my own test on Quora: For 40,000 Quora credits, I’ll buy you a cup of coffee. (Conversation with me is optional.)

So far, I’ve had one taker.

[Top image credit: Rob Byron/Shutterstock]

Last year, I named TiVo among the top five well-designed devices and called it the most innovative force in television.

Although TiVo remains the best TV-watching experience out there, there’s a lot of room for improvement. Parts of the experience are stuck in a time warp and feel like no one has touched them since the days when TiVo relied on dial-up. TiVo is oh-so-close to perfect that I’d love to see them cross that finish line.

At the same time, companies looking to disrupt how we watch television can learn a lot from the TiVo experience.

The Good

Much better UI than other DVRs. It’s clear that TiVo spends time on user experience and understands user interface design. (That’s not at all clear when looking at Comcast’s Xfinity DVR interface.) Most screens are beautiful. In addition to visuals, the TiVo UI makes great use of audio cues, including distinctive sounds. Unlike cable company DVRs, I can delete all the channels I don’t subscribe to or don’t care about, making the program guide much more manageable than scrolling through hundreds of channels.

Built in tuners. The best way to get access to all content that a customer has access to is to have tuners in the box. As much as we might want all content over the top, the reality is that pay TV and free over-the-air TV exist and aren’t going away anytime soon. Depending on the unit, you can record up to two or four shows at time. With tuners and recorded content, you don’t have to worry about capricious rules on what shows you can watch, when and for how long.

Fantastic remote. Many consumer electronics manufacturers pay zero attention to the remote. They look through the Universal Electronics catalog and buy something that looks like it’s close enough, change a few buttons and ship it. That’s too bad, because the remote control is the primary interface that most people will use. TiVo designed its own remote. Prominent TiVo features are highlighted on the peanut-shaped remote. It makes good use of color, shape and grouping to enhance the device’s overall usability.

Excellent iPad app. As great as the TiVo remote is, I often find myself interacting with TiVo through my iPad mini. The reason is simple: the iPad app has 2-way connectivity. Instead of using a dumb device to manipulate a cursor that covers up content on my TV screen, I can see information about what I’m watching right on my iPad. It can show a lot more information because of the iPad’s resolution. I can figure out what I want to watch next without having to shrink what’s on TV. The iPad app includes a scrubber control that lets me instantly jump to any point in the program without having to fast forward or rewind. The on-screen keyboard is much faster than “typing” by moving a cursor on screen. Because it uses WiFi instead of infrared (which requires line of sight), I can control my TiVo from anywhere in the house. I sometimes have CNBC on in my living room while I’m working in my home office. If a story is especially interesting, I’ll set it to record from the iPad on my desk.

Netflix, Hulu Plus, Amazon Instant Video, and Xfinity. TiVo is the only box I know of that allows you to bring all of your subscription content into one box. In addition to the regular channels from your cable provider, it support over-the-top content from Netflix, hulu plus and Amazon. This includes Amazon’s a la carte rentals and video purchases, but not the free streaming videos available to Amazon Prime members. (Thanks to Morac for the correction on Prime.) The Xfinity app provides access to Comcast’s on-demand video library, including free on-demand content, Comcast’s Streampix Netflix competitor and pay-per-view movies. Not only is all of that content available, buying it is easier than it is on an Xfinity DVR.

Search across providers. Having access to a lot of content is great. But without a good way to search across that content, it’s hard to make optimal use of it. TiVo’s universal search feature lets me search across all of the content that is available to me. I can type the name of a TV series on my iPad and see a grid of every episode. For each episode, I can see where it’s available. If it’s coming up on free TV, I can click to record. If it’s on Amazon, hulu plus or Netflix, click to watch. Because programmers have different rules for different services, I can easily see that a specific episode isn’t on Netflix but I can get it from hulu.

Second screen experience. The iPad app also has a solid second-screen experience. Apps like GetGlue and IntoNow require you to check into a show. Because TiVo knows what you’re watching, you don’t have to check in. It’s easy to instantly pull up the details on what you’re watching, including the stars and guest stars. Tap on an actor’s name to deep dive into their filmography and career highlights. It’s like IMDB lite.

The Bad

Much of the bad in TiVo just seem like cobwebs from its history. If you were to redesign TiVo, you would never design these things in this way.

No built-in WiFi. TiVo requires you to use a wired network, buy a separate wireless adapter or figure out how to set up a wireless bridge. TiVo’s Wireless N adapter costs $90. All but one of Roku’s entire devices (which include wireless N) cost less than that. Apple TV (which also includes N) costs $99. At this point, wireless should be built in.

Setting up remote devices is a pain. Most apps, like the ones for Roku, can automatically discover the device on the wireless network. TiVo requires you to find a Media Access Key buried deep within the TiVo’s menus and enter that to pair a device. What’s worse, this pairing process doesn’t connect with your TiVo account. If you want to program your TiVo while out of the house, there’s a separate account and credentialing process.

Can’t set it to just record HD programming. I generally only want to watch HD content. There’s no way for me to tell TiVo to only record HD versions for content that it suggests. Likewise, when I do a search, I want the SD versions of a program collapsed under the episode listing. Resolution is an attribute of a program, not a separate program.

Some of the menu screens are still in SD. Some of the lesser used screens in the TiVo interface haven’t been updated to HD. Not only does it take away from the overall elegance of the interface, the transition causes the device to pause briefly.

Slow data refreshes and inadequate filtering on content sources. Although TiVo knows about the availability of content across devices, it’s not as easy as it should be to filter through it. I want an indication of what content is included with the subscription that I pay for versus content that would be an additional fee. There should be a dollar sign next to a pay-per-view movie to distinguish it from a free-on-demand movie. Data doesn’t update as fast as it should. For example, many programs are available on hulu the day after the air. TiVo doesn’t show them until two days later.

No DLNA integration. Many of the more recently designed media streamers, Blu-Ray players and gaming systems like Xbox, can automatically find photos, videos and music on your home network through DLNA. That should be built into TiVo. Instead, TiVo offers a really kludgy process to get photos and music on to your TiVo by using a desktop application.

Off-device viewing. It’s possible to transfer your videos for viewing on to your PC or an iPad, but it’s harder than it should be. With TiVo’s Stream add on box (additional $129), you can stream programs to an iPad, iPhone or iPod touch within your home network. Or it can be downloaded for offline viewing, such as on a plane or a train. But it requires that your TiVo be connected to a wired network. Even though it would be technically feasible, TiVo also chose not to allow streaming of the video over the Internet. (Such as what Sling allows with Slingbox.) A TiVo spokeswoman said the current DVR hardware isn’t capable of doing the video processing on its own and thus the Stream is a separate box instead of a software update. I would like to see the entire Stream functionality and streaming over the Internet should be built into the next TiVo DVRs.

Ads. Yes, there are ads on TiVo. I’m not someone who is reflexively averse to ads. It’s just that when there only seem to be two or three of them that repeat constantly, it seems pointless. If TiVo hasn’t worked out a meaningful ad business after more than a decade, it should think about reducing the clutter from its UI.

Monthly fee. I think the $15 a month service fee for TiVo is fair for the service that TiVo provides, but many people consider it expensive. It’s comparable to what Comcast charges for a vastly inferior DVR. (But with Comcast, you don’t have to pay anything upfront for the box.)

Bad guide data. In some cases, the meta data on programs is ancient. TiVo’s data still lists Erin Burnett as the host of CNBC Street Signs. I’ve been a guest on that show many times over the last two years and the hosts have been Amanda Drury and Brian Sullivan all of that time.

It keeps recording Bloomberg West. This seems to be an odd bug. It records all three airings of each episode of Bloomberg West. As much as I love Emily Chang and Cory Johnson, that’s a little much. The guide data correctly show that only the 3 p.m. episode is new, but the TiVo records all three even though I have it set to record new episodes only. TiVo blames its guide data provider for it, but as far as I can tell, the guide data is correct.

The Ugly

CableCard. Unfortunately, the biggest issue with TiVo is out of its hands. In order for TiVo to record encrypted programming, it requires a CableCard from your cable company. CableCard is a standard that was forced on cable companies by the FCC and they really do their best not to be helpful to consumers who want it. It took me more than a month to get my CableCard configured correctly.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

The Barry Diller-backed company, which is already operational in New York City, announced yesterday that it had raised an additional $38 million to expand its Internet-based TV service to 22 more cities.

Unlike Hulu, Amazon, and most cable and satellite operators, Aereo doesn’t pay programmers. Instead, it relies on two rulings by U.S. courts. In Sony Corp. of America v. Universal City Studios, Inc., the Supreme Court ruled that recording an entire program for later viewing was fair use and not copyright infringement. Commonly known as the Betamax case, that legitimized VCRs. More recently, in refusing to hear Cable News Network, Inc., et al. v. CSC Holdings, Inc, et al., the Supreme Court let stand a lower court ruling that determined that Cablevision’s network-based DVR was legal.

Aereo subscribers have individual antennas in Aereo’s facilities, and they can direct Aereo’s cloud-based DVRs to record the content that they want. No specialized hardware is necessary on the consumer end.

At a time when companies like Netflix, Amazon, and Google have been comfortable extinguishing consumers’ fair use and first-sale rights, Aereo is trying to push the envelope. I’ve argued before that innovation like YouTube would never come from inside a large company. Once companies get to a certain size, they become risk averse as lawyers tell them all the things they shouldn’t do. And business people are willing to concede things that favor consumers in exchange for more favorable terms, such as Netflix agreeing to delay renting new releases of DVDs for weeks, even though under the first-sale doctrine they can rent them on the first day.

Aereo shows the kind of chutzpah that only small innovators can. It is pushing for a broad interpretation of fair use rights, an interpretation that is relevant to the 21st century. It shouldn’t matter if you have a physical device in your home or you pay someone else to host a device in their facilities.

Beyond that, it’s a good product. I had a chance to use it when I was visiting New York City. (They’re being extra careful and not even letting reporters and analysts try it remotely.) Unlike a DVR, there’s no hardware to buy and configure. Unlike Hulu plus, you’re not subject to the whims of programmers that tell Hulu when and for how long a program can be made available. If it aired on live TV in your local market, you can record it and watch it.

This is especially important for things like live over-the-air sports, which are typically impossible to stream legally. The interface is elegant and easy to use. Aereo offers a range of plans, including $1 a day and $8 a month. A comparable level of service from a cable company would cost 3 to 4 times that. At a time when cable and satellite bills are rapidly rising, Aereo provides an inexpensive alternative.

If Aereo were to come to San Francisco, I’d drop my Comcast service in a heartbeat. (Unfortunately, San Francisco isn’t among the 22 cities in Aereo’s announced expansion.)

The cable and satellite companies aren’t entirely to blame for the rapidly rising prices of pay TV. Those price increases are driven in part by rising costs from programmers. Programming costs are driven in large part by the increased conglomeratization of programmers and rights fees to sports leagues. You want Comedy Central and MTV on your cable system? You’re also going to have to pay us for Logo. ESPN in particular and sports programming in general is a substantial tax on every pay TV household, whether they watch sports or not. Of the top 10 most expensive cable networks (measured by viewership), all 10 of them are sports networks, according to SNL Kagan, which researches this stuff.

If Aereo is successful in getting traction, it may force cable and satellite operators to offer other, less costly alternatives.

Although a lot of pundits vastly overestimate the benefits of unbundling channels — just because the cable company pays roughly $4 for ESPN or about 50 cents for CNN doesn’t mean you could buy it individually for that price — the current system has led to too much channel and bundle bloat.

Aereo also offers an outlet for smaller programmers that aren’t part of companies like Disney, Viacom, and TimeWarner to get more distribution. In December, Aereo announced that Bloomberg TV would be added to its lineup.

From a legal standpoint, Aereo isn’t out of the woods yet. It managed to prevent an injunction that would have shut it down. But many programmers will fight hard to either shut it down or force it to pay the kinds of fees that cable and satellite companies pay. Even if it gets past the legal hurdles, acquiring customers for a monthly subscription service that is hard to explain is a real challenge. (Just ask TiVo.)

Whether it will ever be a big commercial success is a huge, open question. I think the odds are very much against it. But I have to root for a company that is pushing to bring the law into the 21st century. And I have my credit card ready for when Aereo does come to San Francisco.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

The paperless office is a promise we’ve heard for decades: We’d have easy access to documents all the time. Our desks wouldn’t be cluttered. And we wouldn’t have to deal with file boxes.

Unfortunately, it hasn’t worked out that way. Although we can increasingly get a lot of things digitally, such as bank and credit card statements, a lot of paper still comes our way. The latest version of Fujitsu’s ScanSnap line, announced today at CES, brings the paperless office a step closer to reality. Although I can’t eliminate getting the paper, I can eliminate storing and organizing it.

Scanning has been around for decades as well, but for the most part it has been cumbersome. Flatbed scanners require you to handle one sheet at a time. Most document scanners are persnickety about how you feed them. What makes Fujitsu’s ScanSnap ix500 different is that it just works.

I’ve been testing the ix500 for the past month. I’ve used it to scan receipts, pictures, Christmas cards, business cards, bank statements, checks, and car repair records. I found it as easy to use as Apple’s iPad mini, TiVo, and Sonos. You can put a stack of up to 50 different sized documents on the scanner (including double-sided pages) and press one button, and everything is converted into a PDF.

The best use is getting your physical documents into the cloud. I save all of my scans into a Google Drive folder. From there, everything is synced to Google and available on all of my devices. I was able to finance my car while on a business trip by pulling up a copy of the title in Google Drive. Even better: Google does optical character recognition on scanned documents, so you can search them just like you search email.

It’s great for places where space is at a premium. I visited the Bloomberg Foundation in early December and many of the desks had Fujitsu’s ScanSnap 1500M. Because there is limited space for filing paper, employees have the scanner. The scanner itself takes much less space than flatbed scanners.

The ix500 is an update to Fujitsu’s ScanSnap 1500 and 1500M. The new version increases scan speed to 25 pages per minute from 20 ppm. It also allows you to scan credit cards. (I’m not sure why you’d want to do that, but it does work.)

But the biggest improvement is the addition of Wi-Fi capability, allowing you to scan directly from the scanner to an iPhone, iPad, or Android device. Load the document feeder, launch the app, press the scan button (on the app or on the scanner), and the document appears on your mobile device. This is a great way to get digital copies of documents as you’re on the way out the door. Once the document appears in the ScanSnap app, you can email it or send it to a cloud service. Although I use it with Google Drive, it can also work with Dropbox, SugarSync, and Evernote.

Setting up the scanner to connect to my network was much simpler than most Wi-Fi setup procedures. My only nit is that the scanner has a physical Wi-Fi on/off switch that comes preset to off. Considering that Wi-Fi is a big selling point of this model, forcing the user to switch it on seems like an unnecessary step.

Although the ScanSnap can work with cloud services, the device itself is not cloud-centric. The implementation is close enough that it’s splitting hairs, but it would be nice if it would directly talk to cloud services. With the current implementation, if you scan it to your mobile phone, the document isn’t automatically on your laptop.

I would also like to see Fujitsu help bridge the physical and digital worlds. For example, if I scan a stack of business cards, I’d like to have that pull up the LinkedIn profiles of those people and let me quickly connect with them. The ScanSnap comes with business card management software, but that kind of software is just a relic of a different time. Most business card scanning software relies on OCR, which is awful when you apply it to the creative fonts and formatting that people use on cards. A partnership with LinkedIn would allow more accurate connection by doing image matching instead of OCR.

The ScanSnap is also a good solution for quickly scanning a stack of photos to get online. Although the quality isn’t as high as individually placing each photo on a flatbed scanner and optimizing them in Photoshop, that’s a task I’ve long put off because it was just too much effort. With ScanSnap, I was able to get all of my pictures online.

At nearly $500, the ScanSnap is not a cheap device. But this is definitely a case of getting what you pay for.

Fujitsu is one of several companies pushing paperless office technology this year as part of a new campaign, as VentureBeat covered last week.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image courtesy of Fujitsu.com]

Over the course of a year, I test dozens of consumer electronics products. A lot of them are junk. This year, I tested a router from Cisco that required a reset every few days.

But there are five products I’ve used this year that not only work as advertised but are genuinely a pleasure to use.

Sonos music system

Sonos sells a range of wireless speakers and accessories that let you easily create a whole-house music system without fishing cables through your walls. You can play your iTunes collection, Spotify, Pandora, Amazon Cloud Player, and many other services throughout your home. And you can synchronize music across multiple rooms, controlling it all from any room with a PC, Mac, or iOS or Anrdoid device. I’ve even taken to leaving outdated smartphones throughout my apartment to serve as Sonos controllers. The speakers are beautiful and sound great. The controls on each speaker are Apple-like minimalist: volume up/down and mute.

The biggest knock I have against Sonos is that it doesn’t natively support Apple’s AirPlay music streaming. (It’s possible to add a kludgy version of AirPlay to Sonos by connecting an AirPort Express to the Sonos line in jack. But that defeats the elegance of both AirPlay and Sonos.) The smaller Sonos speaker, Play : 3, costs $299; the larger Play : 5 is $399. A subwoofer is available for $699 (I haven’t tested that).

Harmony 900 and Harmony Touch remotes

If you have a lot of devices in your home entertainment system, chances are you also have a bowl of remotes. The nicer your system, the harder it is to use. Unless you have a Harmony remote. Logitech’s Harmony remotes let you control all of your infrared devices from one remote. Harmony remotes are based on an activity metaphor. Instead of selecting a specific device like a Blu-ray player or stereo system, you select an activity, such as listening to music or watching TV. (This metaphor is beginning to breakdown as multiple devices can accomplish the same task. My Apple TV, Roku, TiVo, and Blu-ray player can all play movies.) In my home, selecting ‘watch TV’ turns on the TV and the amplifier. It also makes sure that the TiVo input is selected on my amplifier and the TV is set to HDMI 1. My ultimate test is whether people who visit me can figure out how to watch TV; they can.

My favorite feature on the Harmony Touch is the ability to set your favorite TV channels. In the thousand channel cableverse, getting to the few channels you like can be hard. With the Harmony Touch, select your favorite channels during the setup process and you get 1-click buttons on the touch screen for them. (It’s also possible to have this functionality on the Harmony 900 but is much more difficult to set up.)

Unlike cheap universal remote controls, Harmony remotes are extremely customizable to your specific system. Typical universal remotes require you to look through a tiny print list of manufacturer codes and then stare at blinking lights. (Was that a long blink or a short blink?) With the Harmony remotes, you use a Web-based tool to enter the model numbers of the devices you want to control; the software picks the right codes. Configuration is as easy as it can be for a complicated task like this.

The Harmony Touch is the newer of the two remotes. It’s smaller and has a gesture control system. It also does away with the numeric keypad. But the Harmony 900 supports RF control, which allows you to control devices hidden away in a cabinet. The Harmony Touch retails for $250, the 900 for $350.

TiVo

Earlier this year, I named the TiVo the most disruptive product in television. I debated whether to include TiVo in this guide because there are so many ways I can think of to improve the user experience. But that doesn’t change the fact that TiVo is the best way to watch TV today. (And infinitely better than the torture that Comcast inflicts on its customers through its DVRs.)

TiVo does what it always has: It lets you timeshift television and watch it on your own terms. And it does it really well. But it also does so much more. You can watch Amazon Instant Video, Netflix, Hulu Plus. Recent changes also make it possible for you to watch Comcast’s on-demand videos and pay-per-view. (TiVo also lets you access music and photo services such as Pandora and Picasa, but those features are poorly implemented.)  My favorite TiVo feature is the universal search, which allows you to search across your video sources. You can enter the name of a show and quickly see where it’s available across Hulu, Netflix, Amazon, Xfinity video-on-demand, and live TV. Combine universal search with TiVo’s brilliant iPad app, and you can pull up a grid of every episode of that show. Click on a show and a provider, and TiVo takes you to the right place in the service’s menus to start watching.

The biggest knock against TiVo is unfortunately one that it has little control over: For it work with your cable service, you need a CableCARD. It took a month of dealing with Comcast incompetence to get my CableCARD set up correctly. The cheapest TiVo Premiere DVR is $150, and service is $15/month, but the company frequently runs specials.

iPad mini

The iPad mini is the best tablet out there — even better than the newest iPad. (Disclosure: I own Apple stock — and Google stock.) No, it doesn’t have the Retina display, but it’s small size and lightness more than makes up for it. It beats low-end Android tablets like the Kindles and Google Nexus 7 based on the breadth of tablet-optimized applications and its elegant build.

There’s not much more to say about the iPad mini. If you’re looking for a great tablet, buy this one — if you can find one in stock. If not, an IOU for an iPad mini is a much better gift than an inferior tablet. The iPad mini ranges from $329 to $659, depending on the configuration. I recommend at least the 32GB model.

Panasonic DMP-BDT 220 Blu-ray player

Despite all of the talk of video streaming on demand, the state of copyright law and video licensing means much of the most compelling content is only available on plastic discs. This means you probably need a Blu-ray player in your entertainment system.

This player will play your plastic discs but also connect you with online streaming services like Hulu Plus, Netflix, and YouTube with its built-in Wi-Fi networking. It can also play content from SD cards and media servers on your home network. Setup was surprisingly painless. You can control the Blu-ray player through iPhone, iPad, and Android apps. The apps even include a virtual shuttle control that movie fans will appreciate.

The Blu-ray player is the cheapest of the bunch at $99.

These products are pricier than many of their competitors. But they should pay for themselves if you detest frustration as much as I do.

As for assembling that bike you bought your daughter for Christmas? I suggest searching for YouTube videos.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

I would think it goes without saying that you should be on time to a meeting you requested. But my recent experience has been that people who pay me $800 an hour for my advice show up on time and people who pay nothing are often late — many times with no advance notice.

Earlier this week, I had a 6 p.m. meeting. I arrived at 5:54 and sent the other person a message indicating where I was. At 6:10 the person responded that they were walking and 10 minutes away. They were running 20 minutes late and didn’t bother to let me know ahead of time. As luck would have it, my phone died at 6:08 and I left at 6:15.

The best case scenario in this situation is that you have to start a meeting with someone with an apology and you get someone who is in a bad mood because of you. That’s hardly what you want when you’re looking for help or advice. On the other hand, the meeting might not happen and you won’t get a second chance.

Yes, there are valid excuses. But those are and should be rare. Traffic and transit delays are not valid excuses. If you don’t know that there’s traffic on the 101 at 5 p.m., that’s your problem, not mine. If you couldn’t find parking in San Francisco, it’s your fault for not leaving early enough to allow for parking time. You should account for variability given the conditions.

If you’re going to be more than 5 minutes late (for any reason), you need to send a message with an apology and an ETA. And if you’re late, offer to buy drinks or dinner or whatever it was you were doing.

Here are some of the things that I do to try to ensure on-time meetings:

• I often use Glympse to send the person I’m meeting with my location when I begin my trip. That serves as a reminder that the meeting is on and (I hope) exerts some subtle social pressure: “I’m going to be on time, so you should be, too.” It also serves as an alibi in case there’s a truly unforeseeable delay.
• I’ll send a meeting request in Google Calendar so that the person knows I’ve got it in my calendar and can easily add it to his or her own calendar. Some people re-confirm the day of, but if it’s in my calendar, you can expect me to show unless I tell you otherwise.
• I double check the time zone of the meeting request. Unfortunately, the various calendaring systems aren’t as seamless as they should be. This is especially important if you’re dealing with someone who travels a lot.
• If I’m going somewhere that I’m not familiar with and I don’t know the parking or traffic situation, I’ll add in a buffer to allow for variability.
• If it looks like my day is getting away from me and I will have to be more than a few minutes late to a meeting, I give the other person a heads up a few hours in advance and offer to reschedule.

Being late not only hurts your reputation, it can hurt the overall ecosystem. Every person who is late or blows off a meeting reduces my desire to take meetings from others.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image credit: cozyta/Shutterstock]

“We obviously don’t agree with that,” David Cush, the airline’s CEO told me in an interview. “Not only are we not in danger, we’re projecting a profit for the fourth quarter.”

The airline reported an operating profit for the third quarter with an operating margin of 4.3%. The airline also announced that it is scaling back its aircraft options with Airbus. On a cash basis, the airline had less cash at the end of 3Q than at the end of 2Q.

Like startups facing changes in the funding climate because of the broader markets, Virgin America has had to do its own pivot. I spoke with Cush about the latest results and the future of the company.

How Virgin is adapting its business plan is something other startups can learn from. Bay Area travelers may also find some comfort in his view of the prospects for the airline.

Oil

The biggest challenge the company has faced is oil prices. The original growth plan was built when oil was trading at $85 a barrel. Today, it’s trading at $130 a barrel. That’s a factor the airline has little control over. (Like most airlines, Virgin does hedge its fuel exposure, but that only gets you so far.) This affects the routes that all airlines can profitably fly. At today’s oil prices, it’s easier to justify business-oriented routes than leisure routes.

“There are only so many JFKs and only so many DFWs in the world,” Cush said, referring to popular business traveler airports in New York and Dallas. The additional aircraft Virgin had on order would have been used on lower yield routes favored by leisure travelers. “That’s what would have been left over.”

Rapid growth

The airline has grown rapidly in the last two years, increasing its capacity 73%, measured by available seat miles, while the industry grew at 0.4%. That rapid growth has dragged down margins because it takes time for a market to mature. Cush said that in its established markets, Virgin had operating margin of 8%, but the overall margin was 4.3%. As those new markets mature, he expects margins on those markets to reach those of the established markets.

Schedule cutbacks

Virgin has reduced its flight schedule for the first quarter of 2013. Cush said this is in line with a decrease in seasonal demand. In shuffling its schedule, Virgin tried to optimize for times business travelers favor. “There will be fewer total flights, but better timed flights in first quarter,” Cush said. Next to oil prices, capacity gluts have been the bane of the airline industry. Flights return to a fuller schedule in April.

New routes

Despite oil prices and growing pains, Cush is on the lookout for new markets that appeal to business travelers. Newark is one of those. “Absolutely, we remain interested,” Cush said.

In August, Virgin launched service to Washington National Airport. “The election has a pretty disruptive impact on flying overall and particularly flying into Washington,” Cush said. With the uncertainty about who was staying and who was going, travel was cut back. “That’s behind us and demand is very good. We expect that, after a little bit of time, it will be one of the best markets in our system.”

Virgin also has “every intention” of bringing its service to Hawaii, Cush said. Hawaii is such a popular destination among San Francisco area residents that I call Maui the Outer Outer Sunset.

But the delays in its aircraft orders will push that back a couple of years. The aircraft scheduled for delivery in 2015 and 2016 would enable that service. In the meantime, Virgin recently launched a partnership with Hawaiian Airlines that allows frequent fliers to redeem Virgin points for travel to Hawaii, Tahiti, Asia, and other destinations on Hawaiian’s network. The partnership was in the works before the delay in Virgin’s service. “It makes it more important now that we’ve deferred [Hawaii service] for a while,” Cush said. The point-based redemption rates are actually quite attractive, though nowhere near as attractive as the (since closed) loophole in Icelandair’s program that allowed me to fly first class to Maui on Alaska Airlines for about $350.

Elite levels and customer loyalty

Earlier this year, Virgin launched elite tiers of its frequent flier program to entice business travelers to be more loyal to the airline. Among the benefits are bonus miles, priority security screening, preferred seating and priority boarding. “They are working out great,” Cush said. Virgin measures the success of its elite programs based on the degree to which elite fliers use the benefits they are entitled to and how much they spend. Spend is based on both the amount they pay the airline for tickets and how much those customers spend on the airline’s co-branded credit cards.

Elite members are using the new benefits “quite a bit” and “there has been a significant increase in spending since we put the program out there,” Cush said.

The airline is now matching elite status from American and United, its two largest competitors. Cush said the limitation was to keep the administrative process as simple as possible. Besides, I don’t think Virgin’s route network is very attractive to the bulk of Delta fliers; Virgin doesn’t fly to the key Delta hubs of Atlanta, Detroit and Minneapolis.

Security

TSA hassles are the bane of business travelers who fly often enough to know what a joke our current “security” model is. The TSA has been moving toward a risk-based model that would allow frequent travelers to bypass many elements of the screening process. With recent changes to the TSA’s rules, Virgin is now eligible to participate in the TSA’s Pre Check program. Cush said the airline is working to modify its systems to enable its fliers to participate and hopes to have it available shortly after the holidays.

Mobile

For an airline based in Silicon Valley that is known for in-flight Wi-Fi fleetwide, power at every seat, modern airplane cabins, and its great Linux-based entertainment system,Virgin’s lack of mobile apps sticks out like a minority on “Startups: Silicon Valley.” I told Cush that they were far behind their competitors. Heck, even Amtrak has a mobile app.

“Yes we are, and we recognize that,” Cush said. The airline launched a mobile version of its Web site about a month ago. He guesses that iPhone and Android apps will launch in 2013.

Although I will make bold predictions about the future of Internet companies, I stay away from making long-term predictions about airlines. The biggest factor that affects an airline’s existence is oil prices. And airline CEOs have as much control over that as their pilots have over the weather.

But if I use up my Virgin miles in the next year, it’s going to be because I really want to go to Tahiti, not because I’m worried they’ll become worthless.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image credit: chalabala/Shutterstock]

There’s a good chance that most personal auto insurance won’t cover you when you’re driving your car for hire.

“Any peer-to-peer car sharing service is doing a disservice to its customers by not disclosing to them that they are putting their personal insurance and perhaps their own assets at risk,” said Loretta Worters, vice president of the Insurance Information Institute, a group that represents insurance companies. “These companies should let their customers know that if their vehicle is being used as a commercial venture, it should be insured with a commercial policy.”

Liability insurance covers damage that you cause. If a Lyft or SideCar driver were to hit a pedestrian or injure a passenger, the insurance carrier might deny any resulting claims, and the driver would be on the hook for the costs.

While both companies assure riders on their Web sites that they verify a driver’s insurance, they don’t acknowledge the possibility that the insurance might not pay out.

“Any peer-to-peer car sharing is, in the insurance company’s perspective, a commercial venture, so most likely [the driver] or the injured party would not be covered,” Worters said.

Lyft provides “excess” liability insurance. That means if the damage exceeds your policy limits or your insurance company refuses to pay out, Lyft’s insurance would kick in. Still, it would mean reporting the claim to your insurance company.

I asked Worters if an insurance company could drop your coverage if it found out that you were driving for a ride sharing service.

“Yes, the insurer has every right to drop you if they find you are committing fraud,” Worters said.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Image credit: Sapsiwai/Shutterstock]

Although we like to be optimistic and think nothing bad will happen, it’s best to prepare for disaster. You should be able to anticipate likely scenarios of things that might go wrong.

Imagine you’re running a startup that allows people to rent out their homes or spare rooms to others. Once you reach a certain level of success, every one of these things will happen:

• Someone will get evicted because renting out their spare room violated their lease agreement.
• Someone will get sued after a guest trips and falls in their room. Because they were renting out their place for money, their insurance company will deny the claim.
• A guest will be raped by their host.
• Some pervert will install a camera in the shower and post pictures of a guest online.

These things aren’t unforeseeable. (I just foresaw them.) This isn’t fearmongering or anything unique to startups. Sadly, such things happen in our society when you reach a certain scale. Even Starbucks was sued after a man’s five-year-old daughter allegedly found a camera hidden in a bathroom.

But Starbucks has three key advantages that most startups don’t: It’s well versed in public relations, it has a strong brand, and it isn’t subject to media fears of the Internet bogeyman.

Too often, startup execs make rash statements after a disaster. Most executives at big companies have been trained on how to speak with the media. Given the strength of the Starbucks brand, few people would think Starbucks would endorse putting cameras in bathrooms. But as a startup, post-disaster may be the first time most people hear of your brand.

The mainstream media still have a fear of the Internet, despite it’s having been a key part of our lives for more than a decade now. Anything bad that happens on the Internet instantly gets more attention. Credit card fraud happens all of the time — we give our credit cards to waiters who walk away with them — but an equivalent amount of fraud online will get much more attention.

You can’t do anything about the Internet bogeyman. But you can avoid some of the most common mistakes I see startups make:

• Not having a single person (preferably the CEO) responsible for making all comments. Yes, we’re all flat organizations and we believe in equality. But now is not the time to have random staffers tweeting their thoughts.
• Blaming the victim. It’s possible that the victim really played a role in what happened. But blaming the victim in the immediate aftermath, before an investigation has taken place, is a bad idea.
• Trying to intimidate the complainant. Don’t ask people to remove blog posts or photos they’ve posted. Once something is out there, it’s out there. Asking someone to take down a blog post will likely lead to more attention to it.
• Explaining economic theory or contractual relationships. Our hypothetical room rental startup might have legalese to protect it as purely a marketplace if the case ever goes to trial and the judge buys the argument. But this argument is guaranteed to be a loser in the court of public opinion.
• Not engaging a crisis PR firm as soon as they know things are bad. Crisis PR is very different from the typical “please, please write about us” PR. My view is that VCs should have warm relationships with such firms and be able to call up in a hurry on behalf of their portfolio companies. If your VCs can’t help, maybe your attorney or regular PR firm knows someone.

The most important thing you can do is plan in advance. By identifying likely scenarios, you can figure out what to do when something happens.

Identifying likely scenarios also gives you the opportunity to figure out ways to make sure they won’t happen or at least take steps to mitigate the risk. Our room rental startup, for example, could find an insurance company that will cover liability claims from guests. Because this is a low-frequency event, it’s a risk that should be insurable at low rates.

That could be a much better approach than dealing with the aftermath of a PR disaster.

[Top image credit: Dirk Ercken/Shutterstock]

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

With the new updates, cardholders can get location-based offers based on their preferences. AmEx already allows cardholders to load offers on to their credit cards in partnership with Facebook, Twitter, and Foursquare. Now, they can be alerted when they are within 2 miles of one of those businesses.

More interesting to me is that offers can be triggered based on swipe activity. I’ve long said that AmEx is the king of checkins, because the user doesn’t have to take an explicit action just to check in. AmEx is now using that data to generate offers. If you swipe your card at Pottery Barn around dinner time, you might get an offer for a California Pizza Kitchen nearby.

AmEx is also allowing cardholders to redeem points from its Membership Rewards loyalty program for electronic gift cards that can be used instantly at the Gap, Banana Republic, Old Nay, Pottery Barn, and Williams-Sonoma. More retail partners are available. Although I think it’s really clever and shows how broadly AmEx is thinking, redeeming Membership Rewards points for gift cards isn’t usually the best value. (For the record, the best return on spend is to use AmEx’s Starwood Preferred Guest credit cards and eschew Membership Rewards altogether.) The digital cards also solve a problem I frequently have — leaving the pieces of plastic at home. This feature is also available on Android.

That feature might come in handy around the holidays. According to an AmEx survey, 32% of consumers plan to use a smartphone during their holiday shopping, a big increase from 8% in 2011.

It’s a rare feature I won’t be rushing out to test. I’ll be saving my points for travel.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

But both companies have adapted well to the Internet age. Most of these changes have been business-to-business and focused on things like logistics and warehousing. Just-in-time manufacturing is reliant on timely shipping from major carriers. About the only time most consumers notice the sophistication of shipping operations is when they track their iGadgets going from China to Anchorage to UPS’s WorldPort hub in Louisville, Kentucky. There, the package sits until just before the magic date anointed by Apple for release.

UPS My Choice, which launched last year and will likely become more visible this holiday season, is an example of innovation that consumers can see. The service lets consumers track and manage their incoming packages, regardless of who is shipping them. I’ve redirected packages from the beach in Cabo San Lucas.

My Choice finally allows UPS to develop tighter relationships with its customers. On signing up, customers register their name, address, and email address. When a package is due to be delivered, UPS sends an email indicating that the package is due for delivery. In some areas, UPS will provide an estimated delivery time. (I have never seen this in San Francisco.) If you’re not going to be home, you can electronically authorize delivery or request that it be held at the UPS depot.

The service has a free tier and a $40-per-year option. (UPS provided me a free trial of the subscription option.) The paid tier allows you to see a calendar of expected deliveries, leave instructions for the driver (such as a security code for the door), request that it be delivered to a neighbor, or have it left at one of thousands of UPS Stores. (The last two options are also available a la carte for $5 per use.)

I’ve found delivery to a UPS Store to be the most convenient option. When I see that a package is arriving, I log in and redirect to the store that’s a block and a half from my house. It’s not as convenient as the new Amazon Locker, but it is a nice option to have for packages from other shippers. Although most packages I’ve received could be redirected, a camera I ordered from Sears and a Chromebook I ordered from TigerDirect didn’t have the option to change delivery.

Not only does My Choice make things easier for me, it reduces costs for UPS and is better for the environment because trucks don’t keep coming back to my house constantly. That’s a win all the way around.

There are a few additions I’d like to see for the packages that are too large for me to carry from the UPS Store.  I’d like to be able to say that I won’t be at home all day, so don’t bother making a delivery attempt. I’d also like to get a text message an hour or two before the driver is due at my door. (UPS allows you to select a 2-hour confirmed delivery window, but that’s an extra $5 per use and only available to paid subscribers.) I’d also like to see the calendar set up as a feed that I can import into Google Calendar and iCloud, instead of a separate destination.

Electronic data is a key enabler of My Choice. Because package data (such as shipping address) is sent electronically to UPS separately from the physical package, that data can be crunched to deliver alerts and change the physical routing of the package.

My Choice is an interesting example of value-based pricing. Some of the premium features, such as providing a gate security code or a calendar of scheduled deliveries, have little actual cost to UPS. But there’s also a high degree of value to consumers.

One downside to My Choice: It can ruin surprises. A friend sent me a bottle of wine and I first found out about it from UPS’s email alert.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image c/o UPS.com]

Online retail has a last-mile problem for many city dwellers: They’re often not home when the UPS or FedEx driver chooses to show up.

In suburban or rural areas, where risk of theft is low, drivers usually leave the package without a signature. But in a place like downtown San Francisco or New York, they put the package back on the truck and try two more times. If after three attempts the package hasn’t been delivered, it’s sent back to the sender.

Amazon is solving the problem with Amazon locker, automated lockers installed in dense urban areas. These recently went up in downtown San Francisco. I’ve also seen them promoted in Mountain View, Calif. and Northern Virginia. These serve to improve the Amazon experience, reduce environmental emissions, and save shipping costs. It makes shopping online more convenient when you don’t have to worry about waiting at home for deliveries. That presents yet another threat to retailers like Best Buy, Sears, JCPenney, and Barnes & Noble. (Disclosure: I’m short Best Buy.)

Instead of shipping your package to your home, you select a nearby locker location during the checkout process. (The closest locker to me is less than two blocks away.) I’ve seen lockers at 7-Eleven and Staples stores. They’re also at many Radio Shack stores in San Francisco. When the package is delivered to the locker, you get a confirmation email with an unlock code. Walk up to the locker, enter the code, and the right door pops open. See the video below for the process in action.

For the company that invented one-click ordering, the experience is surprisingly kludgy. The touch screen isn’t very responsive. (In the video, you can see where letters register incorrectly or don’t register at all.) In the typical case, I should just be able to insert my credit card and have the right locker open. Or push a button on my phone, with the Amazon app open. The code is necessary only for gifts, where the recipient wouldn’t have my credit card.

But despite my nitpicking of the user experience, this solves a real pain point for online commerce.

Because Amazon designed the process from scratch, it was able to optimize it for speed and self-service. It’s much more convenient than the in-store pick up processes I’ve experienced at Best Buy, Sears and REI. At Best Buy and REI, the customer service staff does double duty for pickup. Best Buy requires that you stand in line to wait for a clerk, the clerk then has to retrieve your package, and then you have to provide ID and sign. I’ve had Best Buy in-store pickups take longer than 15 minutes. If I weren’t recording my Amazon locker experience, I could easily do it under a minute.

Best Buy and Sears have the key advantage that they can offer same-day pickup; the best Amazon can do in most markets is overnight. Although there has been a lot of hype around same-day delivery, I’m so far unconvinced of the need. For most things I buy, the two-day delivery that Amazon offers for free with Prime memberships is fast enough.

Amazon locker has environmental advantages over traditional online shipping: Instead of driving around to numerous residences, shipping companies can drop off a number of packages in one location. They also don’t have to make multiple trips because someone isn’t home. Because of these complexities, shipping companies generally charge higher rates for residential deliveries than for commercial ones. Amazon locker has the potential to save Amazon money on fulfillment costs.

The selection of retailers willing to partner with Amazon is interesting. 7-Eleven really isn’t competitive with Amazon. (I don’t think Amazon sells hot dogs that have been sitting on rollers for hours.) Radio Shack and Staples are more competitive but seem to have made the calculation that even though they compete in many categories, whatever rent Amazon pays them and the increased foot traffic from Amazon customers picking up packages could drive incremental sales. Maybe if I bought a new camera, I might pick up a memory card at RadioShack.

Or it could turn into extreme showrooming. I’ll scan the memory card at RadioShack with the Amazon app, have it shipped to the store and return to RadioShack the next day to pick that up.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

That sounds a lot like the story of Groupon. After missing earnings yesterday, the company is down close to 25% today. It’s trading roughly 85% below its offering price of $20 one year ago. (Disclosure: I’m short Groupon.)

But the story I’m talking about today is that of Varsity Books, a high flier in the first dot-com boom. It went public shortly before the bubble burst and crashed along with the rest of the Internet sector. I had a chance to talk with co-founder Eric Kuhn earlier this year.

Varsity Books sold textbooks to college students, presenting one of the first challenges to college bookstores.

“We heavily discounted, we subsidized shipping or had free shipping, and we spent a ton of money marketing on college campuses and national marketing — MTV, radio stations — to convince college students to buy from us,” Kuhn said. The company was spending more on customer acquisition than it was generating in profit from each customer.

“We grew quickly under that original business model, which was to raise money, use it to market, use it to get market share, and then raise more money,” Kuhn said. “In a little less than two years, we went from an idea to a public company.”

The company went public about a week after Pets.com.

“Up until that point, we had built and run a business with several hundred employees geared specifically to just capture market share,” Kuhn said.

“Relatively soon after the IPO, I made a gutsy call and went to the board of directors and said, ‘Hey, we need to profoundly change our business model. I think there’s a good chance that we’re not going to be able to raise additional money, and we need to figure out how we’re going to cut our burn rate dramatically and identify a business that’s going to allow us to get profitable years before we originally anticipated even if it means profoundly changing the business model and growth trajectory,’” Kuhn said.

“Usually after you go public, it’s sort of this celebratory type feeling,” Kuhn said. “At the same time, it was jaded by the realization that things weren’t right. It was something where we would likely need to make some significant changes. In our case, it was pretty much dismantling and rebuilding an entirely new business, which for us literally saved the company.”

Being a public company was a challenge. “When we were a private company, we very much wanted to be a public company,” Kuhn said. “After we went public, we very much wanted to be a private company again.”

Kuhn said he tried to ignore many of the pressures of being a public company and didn’t make business decisions differently specifically because Varsity Books was a public company.

“I think a lot of public company CEOs face that additional pressure, making quarters, making numbers,” Kuhn said. “You don’t have any of that when you’re private.”

Varsity Books was de-listed from the NASDAQ. After Wall Street gave up on the company, Kuhn managed to reposition Varsity Books into a different business.

Instead of selling books directly to students, which involved high customer acquisition costs, Kuhn pivoted the company to partnering with private high schools to sell books to their students in exchange for a revenue share. (Partnering with colleges was out of the question, because they were already in the business.)

“You could instantly see the profitability behind the model,” Kuhn said. The company didn’t have to discount, and it saved dramatically on marketing expenses. It also allowed the company to drop headcount from around 250 to around 14.

“We had a football team, but we were now playing water polo,” Kuhn said. “We had to radically change who we needed, what we needed.”

“We were able to get profitable pretty quickly and grow profitably and get re-listed on the NASDAQ a couple of years after that,” Kuhn said.

Varsity Books was eventually sold to Follett, which is best known for running bookstores on college campuses.

So what’s Kuhn doing now?

He’s running a high-end deals site. And it’s a deals site that I like.

FoundersCard is a membership program targeted at Internet entrepreneurs. For an annual membership fee, FoundersCard provides discounts on a wide range of services. (Disclosure: FoundersCard provided me an evaluation membership.) I’ve found that the best benefits revolve around travel. I was in Boston earlier this year and used my FoundersCard to get one of the last rooms at the W Boston hotel, at a time when the city was nearly sold out and a few mediocre hotels with availability were going for around $500 a night. I paid $289 with FoundersCard’s negotiated rate.

I’ve said throughout my deals coverage that the key is to strike the right balance of value among consumers, merchants, and the company. Unlike most travel booking partners, FoundersCard doesn’t charge hotels a commission. That makes it easier to negotiate things like low last room availability for consumers. Founders has some of the best LRA rates I’ve seen for hotels like the W and St. Regis in San Francisco.

Because the site is targeted at a higher value consumer, hotels don’t have to worry about bottom feeders who come in seeking a cheap room, don’t spend any money on food and beverages, and detract from the experience of their other guests.

“We essentially are delivering to our partners a customer that has the potential for being a lifetime customer,” Kuhn said. “In our case, they are usually founders or CEOs, people that travel a lot, people that are looking for great value but great hotels.”

Kuhn cites a couple of important differences between the Varsity Books experience and Founder’sCard: Technology costs have plummeted, and social media like Facebook and Twitter have made spreading the word easier.

“If you have the right tools and products in place, you can essentially acquire customers with no cost, as long as it  is a very high quality product that people feel strongly about, connect to, and are willing to spread the word about,” Kuhn said.

Kuhn also focused on building a high margin product with a recurring revenue stream.

FoundersCard has 8,000 members and is profitable. Kuhn said the company achieved profitability within the first year.

“We’re not all about growth at all costs; we’re not about quantity at all costs,” Kuhn said. “For us, it’s very much a high-quality member base, a high quality partnership program with our benefit partners. We very much take time to shape ongoing partnerships that aren’t going to burn out.”

I told Kuhn that I loved the concept and thought he had a sustainable business model. But, I said, there’s no way that FoundersCard could ever go public.

“If you said that to me 12 years ago or 15 years ago, on the first company, I would have fought you on that, and I would have thought what you said is just an insult,” Kuhn said. “When you say it right now, I say, ‘So what?’ I say, ‘We have absolutely no desire to go public.’ I don’t look at that as any kind of badge of honor. Going public is a financing strategy. It’s not an endgame to anything.”

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Top image credit: Richard Lyons/Shutterstock]

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

I had a magical mobile payments experience today. I walked into La Boulange in San Francisco, bypassed the line, picked up my croque monsieur and started eating. I didn’t pull out plastic, or scan a QR code, or say my name. I had ordered from my iPad mini with La Boulange’s app.

This is another case where mobile payments solves a real problem, like paying for parking meters. Swiping a credit card is not hard, but waiting in line can be painful. I estimate that I saved at least 10 minutes during the lunch rush.

La Boulange is a chain of San Francisco bakeries that Starbucks recently acquired. The coffee giant plans to take the La Boulange concept national.

“The big news on the coffee front is that Square launched with Starbucks today, so now you can stand in line, order the old fashioned way, and pay with the Square Wallet app instead of paying with the Starbucks app or cash or credit card,” said Noah Glass, founder and CEO of OLO, the company that made La Boulange’s app. “And while there will certainly be a lot of press about that, Starbucks’ beloved La Boulange brand already lets you order ahead and pay ahead from the La Boulange app and skip the line entirely with OLO.”

New York-based OLO has raised $8.25 million from Founder Collective, RRE Ventures, and Core Capital, Glass said.

The app itself needs some significant UI help, but once I got through the process, the order was ready by the time I walked from my apartment to the restaurant.

Other companies offer online ordering for restaurants: GoPago, GrubHub, Seamless, and Eat24Hours. What makes OLO different is that it integrates with commonly used restaurant point-of-sale systems like Aloha, Radiant, and MICROS. (Disclosure: I own stock in MICROS.) The company also helped write an open standard for self-serve ordering with the National Retail Federation. Restaurants don’t have to set up a separate workflow for orders that come in through a mobile app. OLO also charges a flat monthly fee instead of a per-transaction fee. That’s more appealing when a business has high frequency; restaurants don’t want to pay 5% to 30% on every order just to offer the convenience of mobile ordering to their customers.

OLO also develops the apps under the restaurant’s brand. This is both good and bad. Although brands want to have an app, consumers don’t want to load up dozens of apps to deal with each place they might visit. This only really works for high frequency brands like Starbucks and Chipotle. (La Boulange would also fit this requirement.) In addition to La Boulange, OLO provides mobile ordering services for Five Guys.

Although OLO works well today, any mobile ordering or payments solution faces a challenge: often, the gating factor is not the speed of ordering or payments, but the speed of preparing your order. If you’ve ever been to an In-N-Out Burger during the lunch rush, you’ve experienced this. Their super-simple menu means that the ordering line moves very quickly. But then you end up waiting while they shout out 30 numbers before yours.

Mobile ordering has the potential to help smooth demand, resulting in shorter lines for everyone. When I initially tried to order, I requested a 12:15 pickup. I was told that the earliest my order could be ready was 12:26. I shifted my order to 12:30 and got another 15 minutes’ worth of work in.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.

[Photo credit: Rocky Agrawal]

I already have five tablets in my single-person household, including all three previous generations of iPads and a Google Nexus 7. I thought the mini would fill a small niche in my tablet needs, such as controlling my TiVo or Sonos system. So I bought the low-end 16GB Wi-Fi only iPad mini. I was wrong.

I like it so much that I’m going to return it and get a 32GB 4G iPad mini. I expect it will become my primary tablet. I’ve had various tablets since the Newton MessagePad 110. I’ve spent a lot of time with iPads, the Nexus 7, and Kindle Fire. iPad mini is easily the best tablet ever. (I haven’t tried out the Surface, so I don’t have that as a basis of comparison.)

My love for the mini over the other iPads comes down to one thing: size. It’s perfectly sized for every room in the house. It’s perfectly sized for travel, where every ounce counts. My most frequent use is while I’m watching TV. I use it to control my TV, play Pandora on my house’s speaker system, check email, tweet, and update Facebook. It’s much lighter than the iPad 3 I used to use for these tasks.

I do miss the iPad 3′s Retina display. Yes, the display is a step down, and I definitely notice it. But when I have the iPad 3 in my hand, I now notice how heavy it is more than I notice the crispness of the display.

Why all the love for iPad over Nexus 7 and Kindle Fire? These devices have better displays in a similar form factor. That answer comes down to apps. Apple has more than 275,000 tablet-optimized apps. Nexus 7 and Kindle Fire don’t come close.

A higher resolution screen isn’t all that important if the apps aren’t there to take advantage of it. Apple could have included a screen resolution closer to the Nexus 7 and Kindle Fire in the iPad mini, but then developers would have had to update their apps to take advantage of that incremental improvement. That wouldn’t make sense.

A secondary reason is that the build quality on the iPad mini is fantastic. Although the Nexus 7 is a terrific tablet for the price, it’s not an iPad mini in fit and finish.

At the same time, I’m not sure that Apple’s dominance of the tablet market will last. There is a big price difference between the cheapest iPad mini ($329) and the closest comparable Nexus and Kindle devices ($199).

The thing that has held back the Android app market is that most of the tablets on the market were terrible (cheap Chinese OEMs) or expensive (“not iPads” from the likes of Samsung), so no one bought them. Amazon and Google’s products are solid contenders, and as the companies push them heavily, we will see enough of a solid core of tablet-optimized Android apps. The fragmentation between the Amazon and Google app stores is a barrier, but I expect there will be enough customers for a meaningful market for app developers.

Because Amazon and Google are essentially selling the devices at cost, I don’t expect them to spend a lot of money to match Apple’s build quality. But for many people, a 65% cost difference will be enough to put up with some cheap plastics.

The danger for Apple is that Android becomes the platform where the bulk of tablet users are and developers start taking an Android-first approach.

Until then, I’ll be enjoying the best tablet ever.

Disclosure: I own stock in Apple, Google, and Microsoft.

[Top image credit:  pcruciatti/Shutterstock]

I discovered through my Twitter friend Nicholas Augusta (who lives in Hawaii) a number of Twitter accounts for local emergency management agencies to follow. If it hadn’t been for his initial seeding, I would have had to actively seek out those accounts.

As the Internet becomes a bigger part of our everyday lives, companies with a lot of reach have a responsibility to do more to keep people informed during emergencies. Television and radio have the Emergency Alert System (successor to the Emergency Broadcast System.) Although the tsunami turned out to be a non-event, it annoyed me that in 2012 I found out about the tsunami by running into a security guard on the beach rather than the 2-way, location aware communications device in my pocket. When I looked deeper at the Google alert, my options for modifying the alert were to make it a lower priority or turn it off altogether. There was no way to make alerts about possible life-threatening emergencies more important than sports scores.

The technology exists to provide real-time data to people who need it the most. Here are some thoughts on what various companies could do, based on their specific assets:

Apple. Real-time alerts on all iOS devices when there is an emergency. Emergency road closures and evacuation instructions in iOS maps. Space to charge gadgets at Apple stores that are open. (If that sounds ridiculous, consider that Chase opened its branches in Manhattan to let people charge up.)

Google. Android devices should have a modal dialog that alerts users to the emergency. The Google bar across most properties should contain an alert notification. (Something distinctive and obvious, not like the Google Plus notifications I’ve trained myself to ignore.) Google could also update maps and routing based on road closure information from civil authorities. One of the common complaints I heard during Sandy from New York Mayor Mike Bloomberg and Newark Mayor Cory Booker was that people were misusing 911. The Android dialer could be used to educate people on what is 911 worthy as well as provide the non-emergency number. (Bloomberg has it relatively easy because his non-emergency number is 311. Booker’s is the much harder to remember 973 733 4311.)

Google could use its extensive mapping resources to help rescuers and first responders find people in emergency zones. Maybe even send YouTube videos like Chris Christie’s “get the hell off the beach” to people known to be in evacuation areas.

Facebook. Like the Google bar, the Facebook bar could contain emergency notifications. I would modify news feed to highlight content from the affected areas so I can automatically see how my friends there are doing. Regular Facebook users in the affected areas could be highlighted if they don’t check in, serving as a prompt to check on them. Facebook popped up an Election Day alert at the top of my feed today, asking me if I voted and offering a polling place locator. Affected individuals could be offered resources such as emergency shelters. Like the “I’m a Voter” button, there could be an “I’m OK” button to quickly let your friends know. I saw a number of my friends posting that they had a spare room to lodge those who were homeless or that they had power and friends could come over to charge up or watch a movie. Those updates could be offered as free promoted updates.

Twitter. Twitter offered emergency agencies free promoted tweets during Hurricane Sandy. During extreme events, I consider it appropriate for Twitter to automatically follow certain accounts, as long as it can be done on a geo-targeted basis. The latest (or a designated) tweet from emergency agencies could be pinned to the top of my timeline instead of flowing through the usual river. Likewise, if I were to go to Cory Booker’s Twitter page, I’d see his most important message at the top, not necessarily his latest heroic effort to play Superman for a constituent.

Amazon. For storms like hurricanes that have a fair amount of notice, common emergency supplies could be positioned at distribution centers just outside of the anticipated storm zones. Shoppers could be given the option to purchase emergency supplies for people who are affected or add a Red Cross donation to their cart. A group in New York is using an Amazon wedding registry to help others buy needed disaster supplies.

One of the more impressive efforts I saw with Hurricane Sandy was Chase updating its branch locator with hours. Branches that were still closed due to the storm were labeled closed. Branches that were open had their modified hours displayed. That kind of near real-time data can be valuable in emergencies.

Disaster relief isn’t limited to just the big companies or the big ideas. There are a lot of little things that can be done, if you are creative and take the time to think about it. After 9/11, Verizon offered people who had voicemails left for them by someone who perished in the attacks the option to receive a copy of the recording.

Here are a couple of other things I thought companies could have done, but didn’t:

Foursquare. Use check-in data to publish lists of businesses in the affected areas that are open. Not just in the app (these would have shown up as trending), but automatically generate a list as a public service. Often it’s hard for people to figure out what’s open when there are systemic outages. This helps consumers find essential services and also helps businesses get back on their feet by bringing customers in the door. American Express could actually do this much better, with its larger data set. (But it would include only American Express merchants and would leave out any merchants who were without credit card services and handling transactions manually.)

Uber. Uber got some negative attention for raising its rates during Sandy to attract drivers to the Uber platform. (See my thoughts on that move.) But the company could have offered free rides for people who were volunteering to help the city get back on its feet.

It’s important to think about these things before an emergency. Chances are, there’s an opportunity for your business to do good to help keep people safe or help them get back on their feet.

People are often looking for help and resources during times like this. It’s an opportunity to put your company out there in the best possible light. More importantly, we can use technology to do good.

[Top image credit: Anton Oparin/Shutterstock]

I was at a bookstore on Saturday and found a book that I thought my nine-year-old niece would like. I scanned the book, found it on Amazon, and it should arrive at her home in Virginia today.

As it turns out, I paid substantially less on Amazon than I would have in store. But I would have been willing to pay the same price just for the convenience.

Best Buy’s new CEO Hubert Joly doesn’t consider showrooming a threat. “I believe showrooming is one of the greatest falsehoods about our company,” Joly told the Minneapolis Star Tribune shortly after taking the job. “If there was a lot of showrooming, I don’t think we would have $50 billion in revenue. We must have at least a few people buying in our stores.” (Disclosure: I’m short Best Buy.)

Retailers like Best Buy and Target have responded to the Amazon threat this year by offering price matching. If you find an item and see a lower price at Amazon (or other select retailers), they will match the price. But that may not be enough to match the convenience.

For those with friends and family in faraway places, gift giving has had its challenges. Once you find the gift, you have to wrap it. If you’re visiting friends and family for the holidays, you have to haul your stuff with you. Most airlines now charge fees for checking luggage. The TSA insists that it can open anything, so it’s best not to wrap anything until you get to your destination.

If you’re shipping gifts, it involves finding the right packing materials, putting everything together, and then waiting in line at the post office. Then you have to pay for shipping. (Individual rates for shipping aren’t cheap; Amazon gets much better prices from companies like UPS and FedEx.)

Contrast that with my showrooming experience at the bookstore: I scanned the item, selected Sasha’s name as the destination, and I was done. With my Amazon Prime membership, shipping is free and fast.

Because Amazon has made this so easy, I now have most of my frequent gift recipients stored in my account. Scan, click, send. That book will be waiting when I arrive for Thanksgiving, and I won’t have to cram another thing in my suitcase.

As easy as Amazon has made it, there are still opportunities for improvement:

• The user interface flow isn’t optimized. I have a lot of addresses stored in my account, and it takes too much scrolling to get to the right one. Addresses I haven’t used in ages should fall lower in the list. Ideally, Amazon’s magic algorithms would figure out based on the item I’m ordering whom to put at the top of the list.
• Amazon should store preferences based on recipient. Right now, it’s done on a per order basis. Each time I want to send a gift, I have to select whether I want it wrapped and if I want the price on the packing slip. I should be able to say anytime I send something to Sasha, follow these rules.
• Amazon should let me send gifts to people I don’t have physical addresses for. I should be able to enter an email address. When that order is processed, the recipient gets an email saying “Rocky wants to send you a gift” and she can enter a shipping address. Existing Amazon customers can just 1-click to approve the delivery.
• I want the ability to delay deliveries closer to the reason for the gift. If I’m sending a Diwali gift, I would prefer that Amazon deliver it closer to Diwali than to send it right away. This could save Amazon money in shipping costs.

In 2012, I’ve placed 90 orders with Amazon. (Excluding digital orders.) That’s about two orders a week. I should meet or beat that pace for the rest of the year.

[Top image credit: Rafal Olkis/Shutterstock]

To celebrate, the stock market sent the company to another all-time low on Friday. Groupon, best known for connecting consumers with 50%-off local deals, has hardly been a good deal for investors. If you invested in the company at its 52 week high, you’ve lost 88% of your money. If you got in on the first day close, you’re down 85%. If you got in at the IPO offer price of $20, you’re down 81%. The company is down 58% from the $6 billion that Google supposedly offered for it. Any of the institutional investors who bought Groupon in its last private round and held are down more than 50% of their investment — the stock was at an adjusted $7.90 then and closed Friday at $3.83. (Disclosure: I’m short Groupon.)

Over the last year, the fundamental economics of the business have settled in after the hype died down. We’ve seen deals get less interesting for consumers for months now. Deals that were once truly 50% off come loaded with restrictions that make them hard to use. The “free money” deals for things like restaurants that people care about are fewer and further between.

I’ve significantly shifted my energy away from covering the company. I suppose that’s good news and bad news for the company: On the up side, they no longer have someone picking apart their every move. On the down side, that makes me one more person who doesn’t care much about their company anymore.

But I thought it might be helpful to look at some possibilities for what lies ahead in the deals landscape.

Firing the editorial team. At the time of Groupon’s IPO, the company employed more than 1,000 people in its editorial staff. Groupon’s hiring spree has been a safety valve for otherwise unemployable journalism, music, and theater grads from Chicago-area schools, but it’s an idiotic strategy. Most of this team adds zero value to the company. They write descriptions of businesses they’ve never visited. According to several Groupon salespeople I’ve talked to, they can cause tension because business owners are often befuddled by how their businesses are described. The editorial team apparently wasn’t able to stop Groupon from tackily promoting a deal for dining in the dark in New York right after hurricane Sandy, as Bloomberg’s Ryan Sutton found. By my estimates, Groupon would add between $8 million and $10 million to its bottom line each quarter just by eliminating the editorial team. (Some sources inside Groupon say CEO Andrew Mason, himself a music major, is highly protective of the team.)

Accounting. After market close on Friday, Groupon revealed that the SEC has been continuing to ask questions about Groupon’s accounting. I’ve been harping on the company’s accounting sketchiness since the day the company filed its original S-1. I believe the company still has significant accounting issues that haven’t been thoroughly probed. If the past is any guide, Groupon will continue to try to invent new accounting for each new product it launches.

Troubles at LivingSocial. As troubled as Groupon has been, its top competitor, LivingSocial has had it worse. Based on public filings by Amazon (which owns roughly a 30% stake in LivingSocial), we can see that LivingSocial has lost more than $750 million in the last nine months. Much of this has been due to being forced to write down valuations of companies it acquired. But I estimate that LivingSocial had cash losses of about $100 million during those nine months. The company continues to do nonsensical deals like giving away Starbucks gift cards for less than it pays for them. The only positive sign I’ve seen is that, according to an email LivingSocial’s CEO sent to employees, the company took in more cash than went out in September. I wouldn’t be surprised if LivingSocial is gone or acquired by this time next year.

Year-over-year declines start. In the second quarter, Groupon had a sequential decline in its gross billings. (The amount that consumers spend on Groupons.) Executives have said this is nothing to worry about. Look at our year-over-year growth! I expect that we’ll soon see year-over-year declines in the business. If you back out Groupon’s Goods business from the gross billings, this is virtually guaranteed. I think that’s a fair calculation to make because it’s a fundamentally different business with lower margins than the daily deals business. Groupon’s year-over-year comparisons are also helped by the fact that it runs many more deals simultaneously and keeps deals open for much longer than a day. That’s not bad from a business standpoint — it’s the right thing to do to amortize the cost of sales. But it hides exactly how quickly the core deals business has deteriorated.

Acquisition. I am frequently asked whether Groupon will be acquired. I don’t see a logical acquirer, at least not among the Internet companies I follow. Google was interested back when Groupon was white hot. Now that it has effectively proven that its model doesn’t work, I don’t see what value Google would get from Groupon. Any potential acquirer is essentially buying four things: a large database of consumers to spam, a giant sales organization, a merchant base, and a brand. Companies with the money to acquire Groupon like Google and Amazon already have large consumer bases. The sales organization has a lot of bodies that do very different things than most tech companies are used to. (Google is already suffering quite a bit of indigestion from swallowing Motorola Mobility; I doubt it’s ready for another major headcount acquisition.) Groupon’s merchant base is too concentrated in certain verticals. (Often things that involve lasers — think hair removal and lasik.) The brand has seen much better days. Both Facebook and Google have the assets to build the right experience that delivers results for small businesses cost effectively; acquiring Groupon would send them in the wrong direction.

The biggest red flag for me remains the management team, which has not acknowledged how bad things are at the company. Every time I hear them talk, they are using the same lines from the company’s original roadshow last year. It’s a multitrillion dollar opportunity! Trust us!

Maybe they don’t realize it. Or maybe they do and they’re just afraid of spooking Wall Street by announcing bold changes.

If that’s the case, I have one piece of advice for Groupon: Don’t worry, Wall Street has already left you for dead.

[Top image credit: Aletia/Shutterstock]

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Yesterday, I wrote about why analysts are wrong when they consider mobile a threat to Facebook and Google. It’s actually a great opportunity that allows the companies to expand their dominance in Web advertising onto an increasingly important platform.

But mobile also opens up a few more doors for both companies.

Out of home

Businesses in the U.S. spend between $6 billion and $7 billion annually on what’s called out-of-home advertising. This includes things like billboards, transit, airports, and street benches. Some of this is brand advertising and some is direct-response advertising. Although people will have their own definitions of what falls into which bucket, let’s consider the roadside billboard. As you’re driving along the interstate you’ll see ads for restaurants, gas stations, and nearby attractions. Right now, much of the decision to run these ads is driven by size and placement. Billboards compete on being bigger and more obnoxious. Signs are sometimes mounted hundreds of feet in the air so they can be seen from far away. But this advertising can’t take into account a customer’s preference.

Mobile can. With mobile, your phone knows where you are and the direction you’re headed. It knows (or will know) what kind of food you like to eat. Mobile can create a better advertising experience that compares your interests with the capabilities of nearby advertisers and presents you with the best option.

Mobile can also give you a much richer experience than typical out-of-home advertising. If you’re out and you’re thinking about a movie, you can watch the trailer on your phone. I haven’t seen a billboard that does that.

Local 

As Facebook COO Sheryl Sandberg said on the company’s earnings call, local advertising has been the Holy Grail for online advertising. In the offline world, it’s been dominated by newspapers, Yellow Pages, direct mail, and radio. To date, there has been little that’s made a meaningful impact in local advertising online. Players have fallen into two general buckets:

• Plunder and pillage. These are companies like Groupon and Yelp that extract extraordinary rents while delivering little value in return. No local business should ever advertise on Yelp given its current astronomical pricing. For most local businesses, Groupon is also a terrible idea. (But there are some cases where I recommend Groupon.) Part of the reason these companies have to charge so much is that their cost of sales is so high. In Groupon’s case, it has thousands of people calling up small businesses. That’s expensive. The other reason is that because they are standalone public companies, they can’t afford to build the right product for the long term. They have to show revenue now.
• Data-driven, self-serve startups. I see lots of startups tackling the small business market, and many of them make the pitch that they’ll build great self-serve tools and businesses will flock to adopt them. They won’t. Most small business owners don’t have the time to try out every new fad under the sun. Too many startups treat small businesses like they’re big brand marketers with teams that study analytics every day. Most don’t care about reports on the demographics of their business — they’re too busy making cupcakes or snaking drains. Part of the reason for the relative success of Groupon and Yelp is that businesses haven’t been doing ROI analysis! Even if those problems were solved, you’re left with the problem that you need enormous scale in order to support a business. If you’re only charging $30-$40 a month, you need to have a lot of businesses paying you!

That’s where Facebook and Google come in. They don’t have to plunder and pillage small businesses because they have other successful revenue streams. They can afford to design the right experience that works for consumers, businesses, and the company in the long term. They also have massive scale when it comes to consumers and merchants. With Android, Google often knows where the consumer is. The same is true for Facebook, which reaches 600 million people on mobile devices.

One of the problems with local advertising online is that it hasn’t been local enough. Advertising at a DMA (designated market area) level is meaningless for most restaurants and dry cleaners. They need to reach far smaller audiences.

Google and Facebook each has their own strengths. Google has hundreds of millions of Android handsets with consumers who are looking for goods and services. Facebook knows your social graph. Personal recommendations are still incredibly powerful. Facebook also has businesses signed up. According to Sandberg, 12.8 million local businesses have Facebook pages. Create a simple enough ad product and that can turn into a lot of revenue.

Google has largely taken the wrong approach so far with local advertising. It’s tried to reach small businesses by taking the AdWords product that was created for big direct response and brand advertisers and simplifying it for small businesses. The better approach is to figure out the needs of small businesses and build the product for them. (Hint: Small businesses typically are closer in their buying behavior to consumer than they are to big businesses.)

They’re both in a position to help educate local businesses about the right ways to use mobile advertising to reach their customers. To date, a lot of the pitches to local business have been about price. Lower your price for us and we’ll get more people to walk in the door! Smarter businesses focus on value. I’d like to see Google and Facebook use mobile to drive higher quality customers through the door, not just more customers.

Imagine that you run a Tigers bar in San Francisco. Facebook could offer you the ability to reach people who have “liked” the Detroit Tigers and live within a few miles. (I did that search on Facebook and came up with 1,520 people who live in San Francisco and are Tigers fans.) Those customers are much more likely to return than someone who came in from 20 miles away just to get 50% off. Even better, Facebook could use your status updates to help you figure out which customers to target. You just posted about an author event with James Freeman of Blue Bottle coffee? Here are 5,600 Blue Bottle fans in San Francisco. Just click here to buy an ad and promote it to them.

Part of any transition is going to involve some ad dollars simply going away. When Craig Newmark started his classifieds business Craigslist, it didn’t get all of the revenue that newspapers used to make selling overpriced listings in tiny print. A lot of that ad spend just disappeared.

Some out-of-home and local dollars will get Newmarked. If I’m a fan of Friendly’s and I’m driving down the interstate, and your local search tool shows me where the nearest Friendly’s is, you might not get paid for that search.

But that’s OK — there are still billions more dollars that Facebook and Google are in a great position to tap into with the right mobile products.

Disclosure: I own Google stock. I’m temporarily short Facebook. I’m short Groupon and Yelp. I’m a Giants fan despite the fact that I grew up in Michigan. I used the Tigers purely as example to show the kind of reach Facebook has. Go Giants!

[Top image credit: Greg Ward NZ/Shutterstock]