Personal Data Mining coming at last? Check out Strings

I'm a data geek and love the idea of mining my personal data for patterns. A while back I got excited about where EMC might go with Decho (their acquisition of personal cloud data storage provider Mozy), but after a rebranding push and some teaser-y PR, they've reverted to the Mozy brand and plain vanilla storage offering. And while I like the idea of Blippy, I'm skeptical that default public is the right way to go for most people, at least right now.

The latest contender in the fight is Strings, a new service that launched to day (hat tip to GigaOm for poining me their way). It looks like today's publicity push has taken their site down, but Liz Gannes' writeup is tantalizingly close to the idea I posted about back in 2007:

"A service called Strings, which launched today, is trying to find and collect all the different ways you can track yourself online — your purchases on Amazon, Zappos and other e-commerce sites; your watching on YouTube, Hulu and Netflix; your listening on iTunes; your check-ins on Foursquare. The service is not about socializing and sharing that information, like the Twitter-for-credit-cards Blippy, but about privately harnessing it. It aggregates all that different preference data to build a better picture of things and places you like."

I'll definitely be taking Strings for a spin (assuming they can solve their scaling issues) and will post more thoughts once I've had a chance to dig in.

Charlie Munger nails it again: The U.S. Economy is F***ed

I'm a huge fan of Charlie Munger, Warren Buffet's lifetime business partner. I've written previously about his distillation of behavioral psychology principles for business, but in today's Slate piece he covers a much bigger topic: where the U.S. economy went wrong and how unlikely it is (given the dominant influence of monied interests on politics) that's it's going to get right again without sweeping change.

My favorite bit: equating the current defense of the financial industry with the past defense of the tobacco industry - both cause cancer, one of the body and the other of the body politic:

"Of course, the most effective political opposition to change came from the gambling casinos themselves. This was not surprising, as at least one casino was located in each legislative district. The casinos resented being compared with cancer when they saw themselves as part of a long-established industry that provided harmless pleasure while improving the thinking skills of its customers."

Read it and weep, then send a copy to your congressmen and senators, get involved and work for change at whatever level you can. We can do this, but it's going to get ugly before it gets better...

Announcing our latest Founder's Co-op Investment: Urban Airship

I'm excited to announce that Founder's Co-op just completed an investment in Urban Airship, a new mobile infrastructure company that's making it radically easier for smartphone developers to implement core features like push messaging and in-app transactions. The deal is is a first for us in several ways: it's our first significant investment outside Seattle (the company is located just down the road in Portland); it's our first co-investment with True Ventures (a firm we've admired from a distance but never worked with closely before); and it's the first time an existing Founder's Co-op portfolio company was the source of a new investment (the AppStoreHQ team met Scott Kveton - Urban Airship's CEO - at a mobile industry conference last summer and had done business with the company repeatedly before the topic of investment ever came up).

But if aspects of this investment are new for us, the core elements of the deal will be familiar to anyone who knows what we look for in the companies we back. Scott and his team had a great insight about how the mobile messaging world was changing and bootstrapped their a way into a market leadership position based on nothing but smarts, hustle and relentless customer focus. They hadn't taken any outside funding and were closing in on cashflow breakeven when we started talking, just seven months after they started the company. They were explicitly not looking for a big venture round, but knew they needed to run faster to stay ahead of the pack and wanted to raise just enough money to make that happen.

Not only do Scott and his team have great instincts as entrepreneurs, they're also working on an incredible opportunity. When Apple released the 3.0 SDK to iPhone developers last summer they introduced two significant new capabilities to the platform: push messaging and in-app transactions. These opened up entirely new paths for developers to drive user engagement and radically increase the value of each install, but both required major engineering overhead to implement effectively. By offering these capabilities to iPhone developers as a turnkey platform, Urban Airship quickly became a critical infrastructure layer in the iPhone developer ecosystem: since launch more than 1,500 developers have used Urban Airship to deliver more than 100 million push messages to over 10 million unique handsets. A similar opportunity exists in the Android ecosystem, and the company also has some unannounced tricks up its product development sleeve that will open up the opportunity even further.

Urban Airship's deep roots in the Portland startup community only added to our excitement about this deal. Their CEO, Scott Kveton, is also a founding member of PIE (Portland Innovation Experiment), a co-operative work and event space hosted and sponsored by Weiden + Kennedy, the Portland-based ad agency known for their provocative work with Nike, Coca-Cola and other global brands. Urban Airship's co-founders are all passionate contributors to and advocates for the Portland startup ecosystem, and the level of creative energy and excitement in the community have made it obvious to us that this won't be the last deal we do in Portland.

So congratulations to Scott and the entire Urban Airship team on this milestone. If you're an iPhone developer and haven't yet kicked the tires on the Urban Airship API I'd strongly encourage you to take it for a spin. And if you're a branded iPhone publisher who views your mobile apps as strategic to your customer engagement strategy, ask your developers to get up to speed on Urban Airship now - there's some stuff on the way that you're going to want to jump on when it hits.

Social gaming, incentives and the 'FatWallet locusts'

As regular readers know I'm fascinated with behavioral psychology - especially as manifested in software development and user experience design (related posts here, here and here). The most successful web + mobile applications (from biggies like Facebook + Twitter to up-and-comers like Foursquare) are masters at exploiting behavioral triggers and game mechanics to drive customer adoption and use.

Incentives - whether real (cash + gift certificates) or virtual (badges + points) - are often a key ingredient in social gaming systems. Applied correctly, they can be a powerful accelerant to a well-designed game structure. But whenever we get into the topic with one of our Founder's Co-op portfolio companies (which is often), I feel compelled to share our experience at Judy's Book, to remind them that poorly-designed game incentives are often worse than none at all...

Andy and I started Judy's Book together back in 2004. We were convinced that local search was going to be a big deal, and "Social Search" (a term we actually trademarked) was the way consumers were going to prefer to filter their results. At launch, all we had was a set of business listings and some basic user mechanics that allowed anyone to share their opinions about their favorite (or least favorite) local vendors. We had raised some venture money and were impatient to show growth in our user and review counts. So we came up with an audacious promotion: write 50 decent reviews of local businesses and we'd give you an iPod Shuffle ($99 retail at the time). The New York Times got wind of it, giving us our first national press hit, and our user signups and review counts went through the roof!

At first we were ecstatic. But when we started reviewing these new accounts and their reviews we quickly found that a significant percentage of them were clearly junk: thinly disguised copy-paste jobs, improbably broad geographic spreads for single reviewers, etc. When we dug deeper to see where these new users were coming from, we noticed a high volume of referrals from a few bargain-hunter forums: FatWallet and SlickDeals in particular.

By accident, we had turned over a rock we didn't even know existed: bargain-hunter forums are the clearinghouse for tens of thousands of people (mostly women, and mostly in rural and suburban locations) who watch vigilantly for freebies of any kind and pounce en masse when a juicy new offer hits the wires. They value their time at close to zero (so they'll do a significant amount of work to claim a free offer), and are driven primarily by the market value of the incentive offered (many of them resell their prizes immediately on eBay).

Knowing that this population is still out there and eager as ever to game your promotion, here are a few rules of thumb I'd suggest if you want incentives to be a part of your social game (they seem obvious in retrospect, but that's how experience works):

• Reward engaged users, not new signups - find your most passionate and engaged users - the ones who love your value prop for what it is - and send *them* thank you gifts, not the folks who just showed up for the goodies.

• Practice intermittent reinforcement - avoid clearly-defined "do this, get that" programs in favor of unpredictable and variable ones (Foursquare's funny and many-faceted badging system - even the controversial "Douchebag" badge - is a great example of this).

• Make rewards as unique and personalized as possible - offering a mass-market product like an iPod Shuffle is an invitation to abuse; offering a one-time coupon at a local business that you know the customer visits often is worthless to most people, but very much appreciated by the customer you're trying to reward.

• Don't promote your rewards program - let your delighted users do it for you. It will be more authentic coming from them, they'll tell the right people, and word is less likely to spread to folks who will come for the wrong reasons.

So don't be stupid like we were - if you want to sprinkle incentives on your social game mechanics, make sure you spend your money on the customers who care about you.

From service to platform: Nearlyweds! opens up to help indie wedding designers sell online

Last September we announced our investment in Nearlyweds!, a two-year-old provider of beautifully-designed wedding websites. At the time, we hinted that they were working on some "secret sauce" that would bring some exciting new ideas to the wedding services ecosystem (a $71 billion marketplace, per this snazzy infographic from BridePop).

The Nearlyweds team still has some excellent tricks still up their sleeve for later this year, but they just released some changes that will give you a sense for where they're headed. As CEO John Scrofano describes on his blog, this week's release transforms the company from a service provider (allowing brides to choose among a carefully curated set of designs to publish a custom 'wed-site') into a platform (empowering *any* graphic designer *anywhere* to upload their invitation designs and offer matching wedding websites to their customers). As John writes:

"Stationery designers all over the country (or world) can now reach customers earlier in the planning process than they would have access to otherwise (because brides buy wedding websites early on, whereas stationery is later in the planning process).  They can also provide existing customers with a matching wedding website.  Plus designers receive commissions on each one of their sites in use by a paying customer.

"Wed-site Customers will have access to an incredible selection of design – everything from modern, to traditional, to sub-cultures like steampunk, geek, goth, and rockabilly."

When we made the investment, we referred to this planned change as the 'Etsy Model', out of admiration for the wildly successful and much-loved handcrafted goods site Etsy.com. Like Etsy, Nearlyweds! now hosts an online marketplace that celebrates and enables passionate craftspeople to showcase - and earn a living from - their creative expression. Brides can now collaborate with any designer they choose (and there are thousands of independent wedding invitation designers around the country) to create invitations that represent their unique vision for their wedding day, and then marry (sorry, couldn't help myself) that design with the best that modern social software has to offer.

I'm incredibly excited about this change, not just because it gives Nearlyweds a huge lead on any other social software player in the wedding industry, but also because it reflects a philosophy of success that applies to nearly all of our investments at Founder's Co-op: once you've built a software platform that creates value for you, find a way to share that value with other businesses in your ecosystem. And if you're making money from that platform (and you should be), make sure your partners are getting a piece of that economic value as well.

So thank you, Etsy, for the inspiring example, and congratulations Nearlyweds on making the switch from provider to platform. And stay tuned! There's more goodness on the way from these guys...