Caleb Elston

This is a question that has been swirling around my head for the past few months. Ever since I played with Android a year ago I've always been perplexed as to who Google envisions is Android's customer. The tricky part about this question is Google has many "customers" of Android and that worries me. 

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If Twitter was hard to explain to regular people Foursquare is a true enigma. While the digerati find it super cool to know the exact location of any friend, at any moment in time, there is a much larger swath of people who find the concept extremely creepy, and claim they wouldn't be caught dead sharing that kind of "private" information. Even after you can get people over the privacy concerns, their next question is "Why do it at all?". Foursquare and competitors like Brightkite (more of their own social network) and Gowalla (more game, than pure utility) are currently fighting the eternal social app dilemma; they become valuable only when your friends are also using it. Their isolated value is quite low. Facebook can solve the privacy concerns as well as provide instant availability of your friends, the chicken to Foursquare's egg.

People trust Facebook and they operate with the view that only their real friends can see their information. Facebook, better than most recent consumer web companies, have assuaged peoples fears of sharing highly personal and private information. Facebook can solve the privacy concerns which otherwise greatly retard mass consumer adoption of a service like Foursquare. Facebook also solves the "friends" problem, they have the best and most up to date picture of people's friends and their relationships than any web service. This connectedness is essential for Foursquare to provide value to regular users. Foursquare has implemented features such as 'Mayors' and 'Badges' to boost their "solo" value, but I would not use Foursquare if I were not able to get a core group of my friends to join. Facebook acquiring Foursquare instantly solves this problem. My friends would be there.

Foursquare gets a lot of value from being plugged into Facebook, but what does Facebook get? Simply stated, Facebook wants people to share more of their lives on the web. Facebook started their march towards this goal with basic information such as age, sex, phone number, high school, college, and other personally identifying information. Once users were comfortable with this, they moved on to photos, providing more value then ever before to sharing your photos online... seeing who was actually in the photos. Then came video sharing, and most recently a big push for status'. User's physical location and they places they frequent would be a logical next step of new information to share. Sharing where I am, seeing where my friends are and have been, and being able to comment on these check-in's  advances Facebook's goal of helping people share more.

Facebook also has a fantastically large mobile user base which is growing faster than their web presence. From Facebook's published stats, "There are more than 65 million active users currently accessing Facebook through their mobile devices." Foursquare would add immense value to Facebook's mobile offerings. If users became accustomed to checking-in everywhere they go, this simple activity would lead to more overall usage. After I check-in I might take a look at my Newsfeed and notice a friend uploaded some new photos from their latest night out, all the while I am seeing more highly targeted ads. This may be one of the most compelling reasons for acquiring Foursquare. Giving people more reason to engage is important to Facebook and Foursquare provides a clever Trojan horse for more usage. This stat provides credence to this claim, "People that use Facebook on their mobile devices are almost 50% more active on Facebook than non-mobile users." In Facebook's world, more usage leads to more revenue.

Facebook could certainly build this technology and product, so why buy Foursquare? Because it is more cost effective for them to acquire than build at this point. They are on a hiring tear and getting talented and motivated developers through a lightweight acquisition is a swift way to access the best and brightest. The recent acquisition of Friendfeed demonstrates Facebook isn't afraid of this sort of thing, because the best and brightest are often building their own company or working at a hot new start-up.

Foursquare has recently raised another round of funding and is growing quite rapidly, so they may not be interested, but that doesn't mean Facebook wouldn't be a prime suitor. The two companies are well matched; Foursquare has locked onto an interesting social experience around shared place, which would be a logical next extension for Facebook in getting people to share more and be more connected.

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Are Algorithms the Magic Bullet.mp3 (3096 KB)

(I am trying something new, I have recorded an MP3 version of this post. I hope you find it useful as another way to stay connected. You can even subscribe as an iTunes podcast here. Let me know if you like this idea.)

Algorithms are in the news a great deal recently. The Netflix prize has finally been seized, Microsoft and Yahoo are joining forces to hone their ad targeting and search algorithms, hoping against all hopes to out Google Google, not to mention the countless social news filtering services cropping up to help us all cope with information overload. All this attention on algorithms begs the question, how important are algorithms to the success of these companies? Is a killer algorithm the magic bullet? I think not. Chris Dixon has a fantastic post about the topic which can be found here. Chris posits it's about the data, not the algorithm. I agree, but would take it a step further, it is about unique insight.

The mainstream press loves talking about algorithms because they sound "technological" and complicated; futuristic in some way. Many companies believe algorithms are the magic bullet, they aren't...insight is. Algorithms are simply one way of executing on insight, a way that is particularly well suited to large data sets, no doubt. The fact remains, you still have to ask the right questions of the right data. If you are trying to beat Google or Netflix, both algorithmic bastions in their own right, then the pursuit of a slightly better algorithm is foolhardy. There are very few instances in business when doing the exact same thing as a competitor, only 5% better, is a winning long term strategy, yet many companies seem to operate as if it were, putting their faith in besting a competitor's algorithm with their slightly better version. It doesn't make sense.

Google, Netflix, and Amazon are all known for their algorithmic excellence and as a result are often portrayed as owing their success to their unbelievably complicated and deep understanding of how to write them. Hogwash! If you look back, you realize their initial algorithms were rough and incomplete. But they all sought to illuminate a killer insight: links as authority, collective ratings as an indicator of movie preference, and browsing/purchase behavior as fuel for targeted cross promotion. The algorithm facilitated their insight. It was only after their insight was validated did these companies commit massive resources to advancing them.

What's so fascinating to me is that the raw data that makes Google Google already existed in plain sight, it wasn't held under lock and key, nor was it immensely difficult to query. It was the human leap of logic, the synthesis of one world (academic citations) to the web world (links as authority) that cried out for the creation of PageRank.

When some company eventually usurps Google it won't  be because they do PageRank better, or because they can crawl the web a bit faster or deeper. No, this company will have discovered a new bridge into surfacing information, some new insight into the way it can be discovered, filtered, stored and made more useful.

Companies need to stop focusing on building better algorithms and instead focus on coming up with unique insights.

Subscribe to the Podcast of these Essays (iTunes)

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As I search for a new apartment in a new city I am constantly frustrated by the state of the tools available to find a great place.

Craigslist has too many dupes and people don't take enough photos, there isn't a comprehensive place for data about neighborhoods, and tools to learn about places to eat, drink, and relax assume you already know where you live.

Why isn't there a Kayak.com for discovering apartments?

Kayak makes it so easy for me to plan trips that I take for granted how annoying it used to be; constantly flipping between sites making sure I was getting a good deal not to mention the nightmares of trying to build a complex itenerary. Kayak made my traveling life so much easier. They realized the data was out there, but it needed to be packaged up and presented in a human way. They understood how people actually plan trips and built their service around making it way better.

Back to the problem.

Moving to a new city and needing a place, I don't really know where I should live, which neighborhoods would make me happiest, or what fair prices really are for that area. And it isn't just the neighborhood, but a combination of the neighborhood and the particular apartment, so you have to optimize for both simultaneously. Great neighborhood + crappy apartment = FAIL. Great apartment + crappy neighborhood = FAIL. You want both, and there should be a much easier way to find the perfect (or near perfect) pairing.

There are sites that try to solve these individual problems: Walkscore.com is cool, and Padmapper.com is nice too, but it is still a ton of work to whittle all of the options down. Even so, I have yet to find a site that ties it all together in a cohesive and pleasing way. I want this service, I would even pay for this service. Please someone build this service.

I would love to hear your war stories on finding a place or ideas on how you would envision such a service working.

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I have some big news to share, I am moving to San Francisco to join the amazingly talented Justin.tv team.

The past few weeks have been a whirlwind from beginning conversations with the guys at Justin.tv, to meeting the team and asking tons of questions, to working out all the details to make it a reality.

I will be VP of Products and will be responsible for making the Justin.tv experience the very best it can be. I was blown away by the passion and commitment the team all share for making a kick ass product combined with their drive to get stuff done. The site is massive and operates at a scale few companies ever reach, all with a small focused team. These guys understand leverage. I am honored to be joining them.

Not only is the opportunity to work on Justin.tv amazing, the location couldn't more perfect. I have been yearning to get out to the Bay area for a while now, so being right in the heart of San Francisco is going to be sweet. Every time I have visited the city I always imagined what it would be to actually live there, now I won't have to wonder. I can't wait to explore and discover!

I will certainly miss my friends and the exciting challenges at Scrapblog here in Miami, but I know they will continue to innovate and build the best creative expression experience on the web.

The opportunity to influence the way people communicate and share their lives and interests with friends, loved ones, and the world through live streaming video is immense, and I can't wait to help shape that experience for millions and millions of people around the world.

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Starbucks gets it. They are a company that knows their customer and knows emotions. They don't just sell coffee they sell a coffee experience. That experience used to be unique just a few years back, but has become common due to their hyper growth, but lest we forget they performed one of the greatest feats in business, transforming a commodity, coffee, into a premium good.

Now Starbucks, looking for more ways to grow, has branched into the super premium ice cream world. Without getting into whether I think this is a good idea or not for Starbucks in the long term, I can't help but be impressed by the way in which they promoted the launch.

They built a Facebook app that is the best indirect advertising I have ever seen on a social network. The app's sole purpose was to run a promotion where every hour 800 pints of the new ice cream were given away, totaling 20,000 pints a day, and 260,000 pints over the nearly 2 week campaign. Facebook users would visit the app every hour to see if they were quick enough to nab a pint from that hour's allotment. They were then given the option to have the free voucher mailed to a friend or themselves. (The campaign has ended but you can find the app here http://apps.facebook.com/starbucksicecream)

This is great on so many levels.

Starbucks is providing real value to people. They didn't create a game where you throw ice cream at your friends, or give your friend a virtual pint of ice cream, they gave away the real product; for free, no strings attached. They could have given a lame discount and offered the promotion to more people, but Starbucks understands how powerful really free is, how it taps into deep human emotions.

The "free sample" is one of the oldest marketing techniques in existence and has been a cornerstone of new product launches for more than a half century. This elemental technique has endured because it benefits both consumers and marketer.  Consumers get something risk free and the marketer, rather than spend gobs of money on convincing consumers to buy something they don't yet want, gets to short circuit the normal buying cycle and get their product directly in the hands of people.

The problem with the free sample technique is how to efficiently get in front of the customer so one can actually give the product away. Companies would hire people to stand in busy places and give away the product, but this doesn't scale and the passers by may or may not be the target customers. Another approach was to buy advertising to promote the give away. Companies often spent millions promoting a campaign giving away only thousands of dollars worth of product. Both of these approaches are flawed, and limit the potential of the "free sample" technique. Facebook fundamentally changes the dynamics for the "free sample" and makes it remarkably efficient.

The Starbucks app consisted of a landing page, a way to "check" for an available coupon, and a way to give your mailing info for the free sample coupon. This app was not complicated, it didn't have to be, and it shouldn't have been. It could have been built for thousands of dollars. Starbucks used traditional PR techniques to alert people to the promotion, but once the ball was rolling it didn't stop, because of the integration with News Feed people discovered the promotion and were clamoring for their chance to get a free pint of the new ice cream. Starbucks gained over 260,000 customer's information and permission from many to communicate about future offers and new products.

Starbucks did something very powerful by combining an age old marketing technique with a fresh implementation. Giving away the product makes consumers happy, and Facebook allowed Starbucks to do just that at a scale and rock bottom marginal cost inconceivable just a few years ago. I hope more marketers wise up to the power of social services like Facebook. They are not just another place to put up a billboard, but a way to change the dynamics of reaching customers and spreading compelling information, in Starbucks' case, a free pint of tasty ice cream.

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Louis Gray recently posted about the future of Apple's OS efforts in his piece, Will The Mac OS X Dial Go All The Way to Eleven?. He points out how little attention has been given to answering the question of "What's Next?" for Apple in particular and OS's more broadly. Louis accurately points out that Apple's recent OS upgrades focused on polish, adding a few consumer facing features, and UI tweaks. They have not been challenging the core assumptions of interacting with your computer in the age of the internet and true web applications. This got me thinking about what will be next. What should a modern OS do for people?

There is so much hyperbole around "the Cloud" these days you could nearly choke yourself, but that doesn't mean it is all unwarranted. People are getting too juiced up, yet there is a change happening. More and more of my information is being stored by the likes of Google, Facebook, Flickr, Twitter, and the rest of the current web darlings. Also undeniable is the fact that more and more apps, once relegated to live a solitary desktop only life, are finding their way to the web due to advances in web technologies such as Flex, Javascript, and the nascent HTML 5 combined with the steady increase in computing power available in an on-demand model.

The OS's of today have little to no knowledge that this shift is occurring. Their only real connection to all of this is through the browser. As we spend more and more time in the browser the question arises, "Do I need anything other than a browser?" Google's Chrome OS certainly (from what little we know) is a direct response to that question, but I think there is more to it than that.

We use the browser so much more now because many of the apps we want to use are better when connected to our friends, our other data, and accessible anywhere in the world. The browser has been the client app that has bore the burden, but that is due to a deficiency in the core OS, not other apps. The point of the OS is to abstract the hardware of a particular machine and make it easier for developers to spend time building specific value, rather than coming up with ways to get pixels displayed on screen or recognize mouse clicks. The OS of the future needs to abstract away the complexity of distant storage and distant compute resources. 

What we really want is the OS to not only abstract the local hardware, the machine sitting on your desk, but the hardware of distant datacenters. Allowing application developers to seamlessly and effortlessly deal with storage and compute without having to make a distinction between local and distant. There is no reason the OS can't do this.

It is already being done, not for consumer OS's, but by companies like Google and Facebook. They have created software to abstract their enormous number of servers, freeing their own developers from worrying about the hardware apps like Gmail or Newsfeed are deployed too. I realize it is not as simple as I make it out to be for developers at these companies, but they are no doubt benefiting from a platform their respective company is building to help reduce the effort required.

These companies are trying their hardest to make their massive cluster of servers look like a single computer to their app developers. This same model should be adopted by Apple, Microsoft, and others for the consumer OS. How can you treat my single machine as a part of a larger cluster gaining the benefits of the Cloud, while still maintaining the advantages of local resources, mainly the fact that latency is orders of magnitude less on my own machine compared to communicating with servers around the world.

The OS of the future is not about providing the solutions to consumer's problems, that is the responsibility of app developers. The OS needs to provide the hooks for app developers to build compelling experiences. Even though the current OS's we use everyday are severely handicapped in their web awareness, we still have apps that work better on the desktop then in the cloud. Imagine when these apps can have the best of both worlds.

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So I now have a blog. I knew the day would eventually come, I have simply always told myself I am too busy to blog. I finally decided that excuse was lame, there is always time in the day, you just have to make room and prioritize.

There are lots of little ideas floating around in my head that I love talking to friends about, but never really get to flesh out or share with more people and get their opinons or thoughts on the matter. I am not going to post the same regurgitated news you can find in other places. I am not going to be breaking news here. There are many more talented people than I at that. I hope to combine my deep passion for technology and business strategy  to provide a unique assesment of trends or ideas that I can't get out of my head for some reason.

This is not a lowest common demoniator blog. I won't be posting about gossip or trying to piss people off. It also won't be about my lunch. It will be about ideas.

Here we go!

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