I had a good discussion today with a friend of mine who was one of the founders of Mobissimo (travel search) about the difference between shopping and buying.

Much of the Internet is optimized for buying: if you know what it is you are looking for, everything from Google to comparison shopping engines will help you find it quickly and at a reasonable price. Search is a great metaphor for this. Tell me what you are looking for. Here is where you can find it.

Shopping is about the “if” part above. It is about product discovery. Discovery is a big deal because it happens before an intent to buy is formed. How a purchasing decision is framed during the discovery process may determine which product ends up being selected. Great sales people everywhere know that cold.

OK, everyone wants an iPod (search works great for that) but does everyone want a Bob jogging stroller? What if they are just looking for a jogging stroller but don’t know what kind they want to buy? The Google query results are just not that helpful to me. JoggingStroller.com is a great site but how do I know they cover enough of the universe of jogging strollers? How do I know I’m not missing that One Great Jogging Stroller? I can open a few more sites but they are all geared towards buying and not towards shopping.

So I go to the thefind.com and search for jogging stroller. I get 12,189 results from 540 stores. I’m not sure about you but to me that answer is both annoying and depressing. Annoying because I bet there aren’t 12,189 types of jogging strollers out there. It shows that thefind.com has good crawling tech and pretty poor equivalence matching algorithms. Depressing because those kinds of numbers just make me feel like I’ll never be sure I picked the right one. (That has to do with the paradox of choice.)

Determined, I go to become.com. The same query delivers 687 products. That’s better. I like products. I’m looking for products. I wasn’t looking for “results”, which is what I got on thefind. Beyond that, become.com doesn’t offer any meaningful help in finding the right jogging stroller. Also, as Siva from thefind points out in the comments to this post, there is a qualitative difference in the result sets between thefind and become.com, though I wonder whether the average consumer will know and understand that difference.

Jonah posted in the comments section that trying this out on shopwiki produced 387 results, all legitimate products. Per Siva’s comment above, I’m not sure about shopwiki’s business model so I can’t say whether this result is good or bad. The user experience on the site doesn’t help much with shopping, though.

These sites miss something that any good salesperson knows about. The right match between a buyer and a product is as much about the buyer as it is about the product. Ever tried to buy a digital camera at Best Buy? The good salespeople are curious about your life and how you want to use the camera. They are not just building a relationship (though that’s important also). They are restricting the product set that makes sense for you in order to simplify the comparison shopping process. They want to know enough about you in order to present 2-3 reasonable models for you to choose from. The bad salespeople give you an earful about the specs of all top-selling models.

Which sites out there do a good job of discovery, i.e., helping people figure out what to buy as opposed to helping people buy what they know they want to buy?

One of the observations is that saving time & effort by eliminating the need to choose is a powerful way to simplify an experience (third law). For example, I’ve switched to using an iPod Shuffle on flights because it offers the shortest path to music in my ears. I’m saving the time looking through thousands of albums and dozens of playlists. I’m also saving the potential frustration of picking which few dozen out of 40,000+ songs I’ll listen on the six hour flight.

In the physical world, consumption choices have steadily increased. In the digital world, they have skyrocketed. Despite search engines and a plethora of vertical portals, is has become increasingly more time-consuming to find exactly what we are looking for. Hence is it no surprise that businesses are spending increasingly on technology and marketing to convince us that we don’t need to think about choices. From personal shopping to online product recommendations to “automatic” content generation for our social network profile to auto-generated entertainment channels, we are letting software decide what we like.

On the flip side, eliminating the need to choose can get dangerously close to eliminating the need to think. The pleasure of simplicity can lead to a reduction in critical thinking (we complain about the masses being led by the media) then grow into apathy (few people are excited about voting in dictatorships) and in extreme cases can be downright dehumanizing as proven time and time again by atrocities committed by people who later claim they didn’t have a choice.

I’m certainly not suggesting that Amazon’s recommendation engine will dehumanize Internet shoppers. The trick is in the balancing of choice (complexity) with lack of choice (simplicity). This, not surprisingly, is another law in Maeda’s book.

Who does the balancing when it comes to online consumption? I see a somewhat unsettling shift where consumers increasingly cede this right to recommendation software whose ultimate goal is to optimize the P&L of online businesses. On average a business profits when its customers are happy but at the margin ad targeting systems, recommendation engines and services such as Loomia and Aggregate Knowledge (both of which I know well and respect much) are focused on the short-term P&L goals of their customers and not on your personal satisfaction because you are not their customer.

Which brings an interesting question: is there an opportunity for a personalization/recommendation service whose true customer (not user!) is the consumer? I believe so and have started talking with entrepreneurs about this.

• Richer user experiences (e-commerce becomes engaging)
• Accelerating disaggregation (e-commerce happens everywhere)
• Social commerce (e-commerce leverages emotional/social forces)

It has also been the one people have been most skeptical about… For a venerable media company such as Hearst to go after Kaboodle IMO is an opening shot for the race to begin in earnest. I thought that event required smart commentary. I don’t live in the trenches so I’m not well-suited to provide it. Some of my companies, for example, Allurent, are doing innovative work in the social commerce space but it’s all in stealth right now. So I asked my friend Gordon Gould, CEO of ThisNext whether he’d do a guest post. He agreed and so you are in for a treat as he is on the bleeding edge. Caveat lector: Gordon is an entrepreneur so this is not an unbiased post.

The two key take-always for me are (a) the importance of serendipity in product discovery (more on my take here and here) and (b) the duality of social merchandising (as media in addition to e-commerce).

Sim invited me to guest blog about Hearst’s recent acquisition of Kaboodle for an estimated $40 million. So who am I and why did Sim ask me to post? Well, I am guessing that since I am the CEO of ThisNext, the leader in social shopping, Sim thought I might have some moderately useful or interesting things to say which only you, dear reader, can judge for yourself. (Shameless self promotion: check out our global shopping activity map which Wired said was the “most fun kind of global window shopping you can engage in without a personal jet and an entourage.”)

In any event, before I get into the details of my POV on the Hearst deal, let’s set the stage and define a few terms first.

Social shopping refers to a class of sites and services that aim to capture and structure word-of-mouth around product recommendations and reviews. Other companies in the space besides ThisNext include Kaboodle, Stylehive, Crowdstorm, Wists, and a handful of smaller players. Many of these social shopping sites are heavily fashion focused and apparently plan to make money on CPA/affiliate and CPC deals and some are selling directly as etailers. The larger players are also working on partnerships and/or display ad deals.

The social dynamic that ThisNext et al leverage is people’s propensity to recommend products to, and take product advice from, friends. Social product recommendations benefit shoppers in two ways:

1. Social recommendations help people discover great products they may never have known about.
   • Offline, discovery represents about 70% of retail shopping decisions where consumers don’t know what they are going to buy until they encounter it in the store.
   • Current ecommerce models are search-driven and do not facilitate much happy serendipity the way a great “experience store” or advice from a friend can and thus leave a LOT of potential sales on the table.
2. Social recommendations validate and enable lifestyle and emotionally-driven shopping which is how most products are bought in the real world.
   • I know the idea of emotional- or lifestyle-driven shopping is not a sentiment many middle-aged, master-of-the-universe type men think they can relate to, but I ask them to consider really what drove them to purchase that sports car, expensive watch, or ultra-fancy/teched-out roadbike component. Most certainly, they rarely, if ever, “need” to drive at 150mph, to broadcast emergency distress beacons while adrift at sea post-plane crash, or reduce the aerodynamic drag on their bikes by buying $1500 carbon fiber wheels. More likely, the “need” arose because of a social, emotional, or tribal need to fit in with or dominate a desirable group or lifestyle.
   • SEM and traditional ecommerce do a lousy job of communicating high-impact emotional, social, or lifestyle product marketing & merchandising messages because they offer a dry, boring, task-oriented, and solitary experiences. Most brands rely on emotional punch to make their case.

Social shopping (which really should be called social merchandising) ties both of these behaviors together into a neat, mutually reinforcing cycle where people discover great stuff and in turn recommend it to friends in exchange for the social capital earned by being a maven and for doing your friends the favor of bringing them into the know. By unlocking this virtuous circle, social shopping/merchandising is poised to help bring the missing 70% of shopping behaviors online and facilitate further migration of erstwhile TV brand marketing budgets online into social media.

So why should you care?

Consider for a minute how gargantuan the social shopping/merchandising market opportunity is: the current US retail market (excluding home and automotive) is around $4+ TRILLION/year and is supported by $150+ billion in advertising, the bulk of which still goes to TV for immersive, emotionally impactful ads. Capturing the proverbial 1% of that total market would represent over $40 billion/year in transactions which is huge!

So, clearly, whomever figures out how to get paid to unlock socially-driven product discovery and merchandising is going to make an astounding amount of money and have a huge impact on net culture.

Which brings me back to the Hearst/Kaboodle deal.

Let me first say congrats to Team Kaboodle, you were a worthy competitor and I hope you all made some good money. And thank you, thank you, thank you for validating the space by selling to a brand-marketer-savvy old media giant.
That said, I don’t think this was a great deal for Kaboodle and probably was a great deal for Hearst. I have no idea why Kaboodle sold early and left so much on the table. Maybe internal politics, maybe they did not see the big picture, maybe they were tired and wanted out. Who knows. Kaboodle’s sale for 1/1000th of 1% of the addressable market will, I think, come to look like an inverse/road-not-taken version of Google’s early decision not to sell to Excite, instead choosing to go it alone to obvious success. Hearst, on the other hand, now has a toolset that they might be able to turn into a cash cow, their culture permitting (though gridlock and stasis would not surprise me).

Whatever the case, Kaboodle is now a captive feature-set for Hearst. In the press release about the deal, Hearst talks about Kaboodle becoming the “MySpace” of social shopping, presumably by leveraging off of the distribution provided by other Hearst properties. I am guessing the heavy breathing strategy sessions preceding the deal probably focused a lot on Cosmo, Lifetime, and O Magazine.

I am way skeptical of Kaboodle being able to grow into a large, stand-alone “MySpace”-sized brand while inside Hearst. Even the biggest, most innovative companies on the net (i.e. Google, Yahoo, ebay, Amazon) cannot effectively build substantial properties that range far from their core. Hearst is not known for being anywhere near as innovative or flexible as say Google so I think it is highly unlikely that they will be the exception to the general rule that innovation happens best outside of large companies. And having worked with old-school magazine editors, I wish Kaboodle luck in persuading them that the readers are as smart as they are and hope for Manish et al that their deal is not heavily earn-out dependent. Culture wars are not only for red/blue states….

More broadly, this deal points to the potential market for social shopping/merchandising as a form of social media, not commerce per se. I say this because I believe a media-oriented approach provides the flexibility to pursue a community-driven model that can build engagement while capturing value from brand marketing budgets and does not immediately force people into a sales funnel. Sure, commerce lead gen is going to be a HUGE part of the biz, but I say leave the commerce plumbing to others and focus on capturing hearts/minds/attention which is where the long-term value is.

My own view and the strategy we are pursuing at ThisNext centers on the belief that we are pioneering a new category of media called social merchandising. That means providing a branded product recommendation layer to the social web. Nobody has done this before and we are executing and intend to dominate this area. Our vision benefits shoppers by helping them spend their hard-earned cash on products they will love, benefits mavens by amplifying their voices to an appreciative audience, and benefits marketers & retailers by helping their customers discover them. Winning means being as big as ebay. That’s the size of this opportunity.

The viral loop of people inviting each other to most social networks revolves around a user posting a widget to their page and having friends see their page.

The viral loops for Facebook (there are multiple) revolve around the news feed, the mini-feed and the invite request. Not around people coming to your page and interacting with it.

The interview is worth reading less so because of the specific insight about viral distribution on Facebook and more so because of the process RockYou used to figure out how to do viral distribution on Facebook. Some of the tools included:

• Deeply understanding the demographic
• Interviews to determine specific viral flows in a given platform
• Not just porting products from one social network to another but (re-)inventing products based on the specific viral flows
• Collecting lots of data and adding feedback loops, e.g., note their comments on the strength + intensity of viral channels across sites and over time.

RockYou may have its monetization challenges but they sure have mastered the process of figuring out how to do great viral distribution. With that type of engine inside the company, good things will come out in the end.

With the rise of social infrastructure (something I’ve written about before), people who have the right combination of creative and analytical skills to take advantage of many viral distribution channels to push a new offering would become as sought after as the great analytical Web marketers of today. Facebook is just one example of a social networking platform. My friend Jeremy Liew has a good aggregate post on the topic.

The same applies to great product people who understand what it means to build on top of social infrastructure. There are already calls out to them from folks like Jeff Nolan.

Last but not least, this all ties into e-commerce 2.0 (which is slowly but surely taking off) because of its key trends is going to be the prevalence of social commerce.

No, widgets are not new. They’ve been around for a very long time in multiple technology implementations. Some prior examples are in Brad Feld’s post. As for Web-based implementations, in 2001, I was on an OASIS technical committee for Web Service Interactive Applications (WSIA), which more or less was trying to build standard (unnecessarily complicated ones) about how widgets powered by Web services could interoperate on the browser page. That work eventually led to Web Services for Remote Portlets (WSRP). And what about Kevin Werbach’s 1999 Release 1.0 issue on syndication?

In their current form, widgets are the next step in the trend towards disaggregation of content at the production end and aggregation of content by the consumer. This is why they are here to stay. They will also go mobile, partly because the form factor is a fit for small screens. Most in the mobile space, from Nokia (Widsets) to Opera (Opera Widgets) are exploring the concept. There is even a W3C TR for Widgets 1.0. (I’m surprised they didn’t start with Widgets 2.0, just to stay on part with the rest of the 2.0 vintage nomenclature.) On top of this Vista, Mac OS, Google and Yahoo have their own version of widgets. Widgetbox’s directory has about 7,000 widgets. And, yes, there is volume. RockYou is pushing 100M/day.

So, in all of this, where is the money? David Cohen thinks there is money to the made. Brad Feld is skeptical. Jeremy Liew is pondering how RockYou will make money despite its volume. Fred Wilson relates widgets to feeds. Mypartner, Mike Hirshland, pushes the debate forward.

Let’s first consider some of the models for monetizing widgets:

• Several widgets can be packaged with an ad unit next to them.
• Widgets can embed advertising in their content.
• They can show promotional campaigns, competitions or other pay-for-placement content.
• Widgets can tie into affiliate networks, e.g., buy this product on Amazon.
• They can collect valuable data, e.g., MyBlogLog.

To analyze how monetization might work we have to look at the content value chain. There are widget builders. There are the page owners (think bloggers and folks who own a profile on a soc networking site). There are the publishers (site owners). There may or may not be a widget distribution/syndication network in the middle.

Widgets are content and widgets builders can extract value based on whether that content is unique, valuable and relevant. Nothing new here but the form factor. Content owners can let widgets spread in order to drive traffic back to their sites or they can decide to monetize valuable content. What’s new with widgets is the need/opportunity to syndicate at the level of the Net as opposed to through a small set of pre-negotiated relationships. This poses some distribution and measurement challenges.

For site owners, widgets offer a way to create new inventory. They also offer some very interesting targeting opportunities. Widgets let you take several bites at the same page. Managing this and targeting for maximum impact are not trivial. Certainly, most site owners won’t let others make a ton of money off of their real-estate without wanting a cut.

For most page owners, widgets are bling. Direct monetization doesn’t make sense. The average casual blogger gets 150-250 hits/month. The average “pro” blogger gets 800-1000 hits/month. The average social network profile gets less than 100 hits/month. There is no meaningful eCPM that makes direct monetization relevant for the average page owner. That’s a BIG problem for monetizing widgets–how do you make the long tail of users put monetizable widgets on their pages? Some solutions are to (a) focus on content relevant for the page owner and (b) indirect monetization, e.g., lotteries, etc.

The opportunity for widget distribution/syndication/management platforms is to help address the abovementioned problems that arise when you try to match N widget builders with M site owners and their Q millions of users, namely:

• Discovery of widgets (content) that is relevant for people with specific interests. This is not trivial as it involves not just search but also recommendation. How else can you help widget developers “move” new widgets onto pages? As the number of widgets on the Net grows, the value of these services will increase.
• Easy distribution of the widgets, from putting them on pages to enabling actions (say, working around MySpace’s Flash linking restrictions) to making sure that content is served fast. As widgets become commonplace and some standards (formal or de facto) emerge, the value-add here will decrease.
• Measurement, measurement, measurement. And analytics, which are not easy to do in a broad syndication environment. There is a lot of value in this for two reasons. First, from the standpoint of traffic rating agencies, widgets count as page views. That won’t last. Eventually, someone will realize that serving 4 square inches of content is not the same as serving 100 square inches. Second, widgets will penetrate real estate that’s not monetizable. For example, I don’t want to make money from my blog but I may put some widgets on it. From a behavioral targeting standpoint, widget distribution networks may get better data than even some of the very large ad networks.
• Monetization enablement + audit. No rocket science here but someone needs to make money move through the content value chain.
• Widget marketing services, from SEO to SEM to viral distribution enablement. A widget syndication network may have the best data to optimize these. Some type of fee or pay-for-placement structure has to be put in place amongst widget developers to address prioritization conflicts.

This is a classic aggregator/middleman play. The main reason why these types of businesses succeed is that there are economies of scale in aggregation. The two patterns of failure involve top line collapse due to big producers cutting direct distribution deals with publishers and margin collapse due to (a) the commoditization of the aggregator value or (b) the bargaining power of large producers and publishers. There are many examples of these aggregator plays succeeding (ad networks are a prime example) and many more examples of them failing.

Who knows how this will play out with widget management systems? Ideas/opinions welcome.

The Paradox of Choice re-introduced an old idea that more variety is not necessarily better. Sorting through choices takes effort. Further, since a “perfect” choice may not exist, even the knowledge of alternatives which are better in some respect can make us less happy with our ultimate choice. (There are lots of examples of this in published work. Rory’s blog links to a fascinating piece of research which suggests that one of the key reasons why people like to shop the organic sections of supermarkets is that they are presented with less choice.) This type of reasoning flies in the face of traditional neoclassical economics, which considers humans to be rational utility-maximizing creatures. More choice is always Pareto optimal, i.e., no worse than less choice. Psychology experiments suggest that’s clearly not the case. (One of the reasons why I abandoned economics was that I didn’t see many Homo economicus walking the world. It’s more interesting to think about how people actually behave than about how they should behave.)

Well, if we are not running triple stochastic integrals in our heads to optimize decisions based on all available information, how do we make choices? Without getting into details, the basic idea is that we use heuristics. That finding is supported by both theory and experiments from Herbert Simon’s work on satisficing (a combo of satisfying and optimizing) which spanned cognitive science and AI to evolutionary psychology to behavioral economics. The basic theme of heuristics is that they are quick and dirty (computationally efficient from a wetware standpoint), use local information as opposed to all available information and are much influenced by emotions.

Side note: for anyone interested in these ideas, especially in the context of how humans fail to accurately estimate probability and risk, I highly recommend Fooled by Randomness. I had missed that book despite my interest in the area and have to thank Gourdon Gould of ThisNext for bringing it to my attention. It’s a must read for anyone spending time in the financial markets, for economists and for entrepreneurs.

We live in a world where content choices are increasing at an increasing rate, from more cable/satellite channels to user-generated content to everyone dumping their content vaults on the Net. What hasn’t changed is the 24hr day (though I hear Fox execs are offering a lot of money for ideas on how to eliminate that constraint. ). Are we better off? Sure, but… There are at least three reasons why more does not always equal better for individuals:

• The ratio of signal to noise has gone up. I have no good data to support this other than the logical argument that signal (meaningful data) changes relatively slowly as it is tied to things of importance and lasting value. I just can’t imagine there being enough new “signal” to justify, say, the rapid rise in the blogosphere content. When someone who’s not an expert on a subject (for example, me on most of the matter covered in this post) writes, the resulting text tells more about the writer than about the subject. Now, noise to some is signal to others, which is absolutely true, but that just brings the point that…
• Search and discovery costs have gone up. Again, I don’t have any good data on this, but my personal experience is that I spend more time searching for the right thing because I assume it exists and I’m less likely to accept the top choice my search engine gives me. Past data I’ve seen (I can’t find good links to it to share here) suggested that the average person puts 2-3 words in a search query + clicks the top 3-5 links in order until she satisfices her search request. More recently, I’ve heard from search engine startups and the likes of Google and Yahoo that average search term length is going up. That’s used to suggest that search engine users are becoming more productive. In addition, they may be getting more frustrated with the poor quality of the search results from simple queries and have to work harder to find what they are looking for.
• Information asymmetry has increased. In the past, there was not only less information available but, also, much of the same information was available to most people. (Think of the days of radio.) People from businessmen to your next door neighbor could make stronger assumptions about what other people knew about. Nowadays, I’m constantly caught having discussions with businesspeople and friends from the standpoint of significant information asymmetry. It takes time and effort to get closer to parity so that joint decisions can be made, e.g., which tech conferences should Polaris sponsor this year.

So, what’s the solution? There are four axes to consider:

• Go someplace where this is not a problem. What I’m describing is primarily a developed economy problem. People in Cuba aren’t troubled by too much choice. (I grew up in Communism so I know what I’m talking about.)
• Increase the available time to consume content. The supply of disposable time to consume content is bounded by the 24hr day but has been growing steadily over the past decade. TiVo and DVRs in general have allowed people to watch TV at odd hours. Despite the best efforts of some larger corporations, the Net has brought entertainment to the workforce. Mobile phones increasingly fill spare minutes with entertainment. And, yes, we have product placements in TV shows and virtual worlds as well as ads in elevators (a true startup innovation) and bathroom stalls. Unfortunately, we are getting to the point of strongly diminishing returns. It is very difficult to come up with another disposable hour of time in our busy lives. Therefore, much of content consumption will be replacement-based, which leads to…
• Make content more attractive to the audience. The Net’s “infinite number of channels” and low bandwidth costs (broadband penetration is what enabled MySpace and YouTube) have presented distribution options for both niche and user-generated content. Technology is also becoming much better at putting content in context. (An interesting point that came up at the Ogilvy dinner is that everyone is chasing mobile entertainment while they should be chasing content in context. Rory cited some research on the subject indicating overwhelming user preference for the latter.) Still, the more fragmented the content ecosystem, we have to…
• Make discovery significantly easier. This is probably the most exciting area and one where I’m focusing some of my time as an investor. Because content consumption often begins with discovery, the impact of better discovery tools is significant. Google’s market cap is built not on the fact that they sell advertising but on the fact that for many people discovery begins with their search engine. In short, to make money from the paradox of choice you have to make the large choice set seem small and relevant and that’s what discovery is all about.

So far, I’ve focused primarily on content but the same arguments apply to products. Especially in developed countries, it’s becoming harder and harder to find reasons why a new product should be purchased (the full kitchen/wardrobe/house problem is the real-world equivalent to the 24hr constraint). Manufacturers are developing systems for mass customization of products. For example, at 3GSM I saw a startup, which specialized in producing phones for niche audiences. They had a roadmap of dozens of designs, all on a common platform. And product discovery is perhaps an even more relevant problem than content discovery since products are often much more complex to evaluate.

More on the opportunities in discovery in my next post.

Ecommerce 2.0 arrives. Google’s search revenues continue to grow at 70-80% growth rates. Yet the public ecommerce companies‘ revenues are growing at “only” 25-30% at best. But almost every Google click is going to an online transaction somewhere – people still aren’t using search advertising for branding purposes. So what is filling the gap? Some of it is the multichannel retailers coming on strong, Walmart, OfficeMax, etc. But a lot of it is from the next generation of ecommerce companies, still private but doing revenues in the $10s and sometimes $100s of millions that have quietly been growing at 50-100% per year through the last few dark years. Companies like Zappos, Art.com, Mercantila, Netshops, CSN Stores, Backcountry, Bodybuilding.com, Toolking, US Auto Parts and dozens more have grown up, mostly away from Silicon Valley, and many without the need for venture capital. Those that have taken investments have often been at scale and profitable when they do. Watch this space as the next generation of ecommerce sites ride people’s growing willingness to buy online, use search to acquire new customers and focus on verticals rather than trying to be an all encompassing department store.

Source: Lightspeed Venture Partners Blog

On the social networking panel at the MIT VC Conference today I talked a fair bit about social commerce and why I think it’s a trend worth watching. The concept resonated with panelists and the audience so I had no choice but to get back to Wikipedia and finish the job. Here is the social commerce page. Please, add more content/links.

Update: Well, despite the fact that to my knowledge at least 5-6 people contributed to the page and the content was starting to look pretty good, we weren’t able to defeat the Wikipedia bots–they auto-deleted the page, probably due to lack of references. Hard to have references to a new concept… It didn’t help that during that period I had to do a lot of travel and so had limited time to contribute. How about this–put some content in comments to this post and then I’ll try again early next year.

Social commerce is not new. Tupperware parties and other multi-level marketing schemes are all examples of social commerce but so are emerging models of selling & recommendation through social networks.

A couple of weeks ago I had lunch in NYC with an ex-IAC exec who knows more about online businesses and e-commerce than I can ever hope to learn. We were talking about areas that we find interesting and somehow social commerce came up. The discussion that followed was fast and enlightening. I guess we ended up agreeing on two things: (a) the concept of social commerce is sound and eventually, it will be a meaningful part of e-commerce and (b) many of the initial attempts at social commerce will be terrible failures.

Still, I believe in the ability of markets to evolve solutions to problems. From an investment standpoint, this means that I’m looking for highly iterative (hypothesize-test-adjust) capital-efficient businesses to try out specific social commerce ideas and platforms that can enable others to experiment. Both Allurent and 8th Ring have a role to play in the latter category.

I have written more on this in my E-Commerce 2.0 post/article as one of the three big trends to watch. (The other two are rich user experiences and disaggregation.)

Sony and former Philips chip unit NXP Semiconductors have announced they will create a joint venture to create a secure chip that enables short-range wireless interaction between handhelds, PCs and other consumer electronic devices.

The problem with mobile payments has not been one of core technology. There have been a number of successful pilots in Asia and Europe. The article has some good links but you can also look at the Octopus card and the Oyster card. The core wireless and security technologies have been available for nearly a decade. The main issue has been compatibility (and the associated increase in cost if a device were to support multiple solutions). That’s why the Sony-NXP collaboration is important–together the companies will have critical mass to push a common solution to market. ETA 3+yrs?

Apparently, the site cost next to nothing to build, another example of how easy it is to hang your shingle on the Web 2.0. The concept is not innovative but very effective when globed onto the eBay community. It’s a way to tap into the emotions of sellers and drive some gawker traffic, sometimes with unintended consequences. See for yourself Meg Whitman vs. Fruit Helmet Cat.

It is now important for eBay to not interfere with the doings of users.