Before going further, I’ll summarize why I think building a professional networking product or jobs product on top of Facebook is a big opportunity:

*Jobs, as a category, monetize really well – people are willing to pay to get to the right candidates
*Jobs, as a category, has supported multiple winners on the Internet (HotJobs, Indeed, SimplyHired, CareerBuilder, etc)
*LinkedIn is already a large, interesting, pre-IPO company with a clear value proposition
*Facebook is a daily use application for hundreds of millions of users; LinkedIn is not (although they’re trying to become more daily use with Twitter integration, questions, events, and other features)
*Many of the younger, up-and-comer folks spend more time on Facebook than they do on LinkedIn
*Competing with LinkedIn on the open Internet would be really hard; being on Facebook helps you address the customer acquisition problem.
*There is a growing segment of people want to use Facebook for professional purposes and FB as it stands today simply lacks the necessary functionality to do so.

Despite all of those good reasons to pursue jobs or professional networking on top of Facebook, I think there are some hard problems to solve. Having thought about this for awhile and ultimately decided not to pursue it, I’ll rank my concerns in order of decreasing importance – I think the “Facebook could do it” argument is the least compelling of all. Hat tip to my friend David King (@deekay) for helping me think through that last part earlier today.

Problem #1: Customer Acquisition – Cost and Difficulty
Once upon a time, it was fairly cheap and easy to acquire users on Facebook. There were tons of viral channels (requests, notifications, forced invitations, other forms of unsundry sneakiness, etc) – that era has passed. I would not say that virality on Facebook is dead, but it is much harder to have a fast-growing application that is not supported by advertising spend today than it was 6-12 months ago. And the applications that have seen rapid growth in the current environment tend to be entertainment and games applications. There are lots of people on Facebook who are looking to kill time and are willing to try new, fun things that their friends send their way or that they discover via the newsfeed, an ad, or some other mechanism.

Perhaps I should be a bit more granular and specific to jobs here. Let’s assume that the people who would be the targets of a professional social networking application do not “live” on Facebook (they don’t have it open all day long and are not constantly checking it). Ideally, you would not want to rely on those individuals changing their behavior and becoming more active Facebook users for your business to succeed. What’s the clever hack? You want to be able to communicate with them through other channels (email, in particular) where you can catch them when you have something to tell them. Meet them where they are, which is the email inbox. Given how buried most of the on-platform discovery options are (no more notifications, requests are buired), trying to rely on those mechanisms is unlikely to work. You can do wall posts and what not, but I don’t view that as a long term sustainable strategy.

So, in a world in which customer acquisition is difficult to achieve for free or at low cost, what’s the answer? Well, you can obviously spend money on advertising to acquire installs. So long as you know or believe that the cost of customer acquisition can be funded profitably by future revenue (or CPA < LTV), it could all work out. For example, if you are distributing jobs with $10,000 referral bonuses, you can build a sane business model along the following lines:

* Focus on jobs with referral bonuses greater than a few thousand dollars
* Split the referral bonus between the candidate and/or referring party and keep some margin for yourself
* Invest the margin you capture in customer acquisition to grow the network

For a job with a $5,000 referral bonus (not uncommon in tech), a service that kept 20% of the bonus would have $1,000 to contribute to customer acquisition and customer overhead. If the math works out, the only real risk you have is making sure you have enough money to invest in growing the network before you start to reap the benefits of the captured referrals.

Problem #2: Usage Model – It’s Not Games
By far, the most successful category for Facebook applications has to be games. Just look at the revenue numbers that companies such as Zynga (disclosure – I used to work at a company that Zynga acquired), Playdom, Playfish, Kabam, and others are able to generate. One of the nice things about games companies is that they are the perfect application for people who have lots of time to spend on Facebook. For games, the challenge is not getting people to engage – the challenge is getting your engaged users to monetize.

Let’s think about the kind of people who you’d want for a professional networking application focused on white collar jobs. You want people with strong educational backgrounds, with good past employment, and other indicia of employability. Those might not be people who are spending all day long on Facebook. A lot of busy people I know don’t “live” on Facebook the way many power gamers do. They check in periodically to see what’s up, respond to friend requests, check the occassional baby photo, and they’re gone.

How do you build an application usage model that engages them? Can you do it with a Facebook-only experience? I don’t know. But I do know that there are a lot of busy professional people who are not actively engaged with Facebook – making this service work for them is going to be a challenge.

There are actually two things to consider here. For those who are actively considering new jobs, they will usually go where the jobs are. If there’s a good job board or service on Facebook, they’ll use. But that only applies to active candidates. One of the magical things about a good professional network is that it helps route jobs THROUGH passive candidates (people who are not looking or are otherwise happy in their job(s)) to those who are open to new opportunities. For a service to really work, you need to have a way to engage these passive candidates as participants. Solving that latter problem is a big deal – it would make a service super useful as I’d estimate that there are 7-8 passive folks for every active job seeker.

Problem #3: Is This Core to Facebook?
I can’t answer this one. I don’t work at Facebook and never have. But I think of Facebook as being interested in two big ideas. One big idea is having the world’s best, most complete social graph of all facets of your life (personal and professional). The second is building the world’s largest personalized, contextual advertising business powered by a vast collection of data about you, your preferences, and your friends. On the one hand, having a third party build a professional networking layer on top of the existing social graph threatens the integrity of Facebook’s stranglehold on the social graph. But is that more important than making Places and Pages successful? More important than establishing Credits as a default payment mechanism on their platform? What about distributing Facebook Connect as the default ID / login system across the web? In short, Facebook can’t do everything. No company can. They have to pick the areas where they want to concentrate their firepower. Is jobs an professional networking in the sweet spot? I simply don’t know.

Hope you enjoyed the post. Feel free to leave comments below.

If you’re short on time, the summary answer is that I the iPad cannot be a 100% laptop replacement for me during the workday. That being said, I did identify quite a few use cases or types of days where it was perfectly fine to go iPad only and leave the Macbook at home.

To give the iPad vs laptop comparison a fair shake, I thought it was only fair to compare an iPad without an extended / additional keyboard to a laptop. While having an external keyboard would have closed the gap between using an iPad and a laptop, the real goal was to see if I could get by with the iPad as is – if I’m going to carry the iPad plus a dock or keyboard, I might as well just carry a laptop. I should also say that I have been using an iPhone for about two years and am very comfortable with the iPhone operating system and user experience.

Broadly speaking, most of the workdays I have fall into one of three main buckets (or a combination of them):

* Heavy Meeting Days – These are days where I have 6-8 meetings during the day, with maybe 30-60 minutes in between each meeting.

* Heavy Transit Days – These are days where I might not have a lot of meetings, but I do have to make a major transit move or two, going from Mountain View to San Francisco, Berkeley, or somewhere else more than 30 minutes from home. The time spent commuting is a pretty meaty chunk of the day, at least 2 hours or more.

* Desk Days – These are days where I’m mostly sitting at a desk of some sort. It can be a coffee shop, hotel lobby, or some other reasonably comfortable place where I can work for blocks of 1-2 hours at least once per day.

The biggest thing I realized from going iPad only is that it’s a total waste of time to lug around the Macbook on days where I am doing a ton of commuting or have a lot of meetings. By and large, I was able to keep up with email, Facebook, the news, and deal with Google Docs and light spreadsheets / presentations on the iPad alone. When I was going iPad only, I basically just deferred any long emails until I got home (which was generally okay) and deferred playing Flash-based Facebook games until I had a Flash-capable device. Overall, I found that I was happy to use the iPad for about an hour straight to do work before I started wanting to have a full keyboard and larger form factor.

Oddly enough, I did not miss having a full keyboard. Unlike the iPhone or my Droid, where I am pretty fast holding the device with one hand and typing with both hands, the iPad does not allow for easy one-hand typing – it’s too heavy and too awkward. The simple workaround for me was to simply defer typing intensive tasks until I had a full keyboard.

There was one very unexpected surprise. The iPad is a much more capable all-day computer than my Macbook. I generally can’t get more than 2-3 hours of useful stuff done on my Macbook on a single charge. On the flipside, my iPad is able to last an entire day on a single charge with nearly constant use.

So, overall, I was pleasantly surprised with using the iPad as a laptop replacement. At least 2-3 days per week I have a combination of commute and meetings that basically make the laptop useless. When I’m on the go, I rarely get the opportunity to sit down, plug in, and get enough work done to justify lugging around the laptop. I’m happy to have found a new device to lighten the bag for days where I’m on the go.

As always, leave a comment if you like.

Changing the way people spend money and pay for things is hard. I’d argue that most people aren’t looking for new ways to pay unless the new payment method either a) enable a class of people who weren’t able to pay before to transact or b) it’s way less friction than competing alternatives. Otherwise, why not just use your current method of payment? I can think of a few payment innovations that succeeded (or are in the early stages of succeeding) and my guess as to why they’ve gotten traction:

• Bill Me Later – Allowed merchants to offer promotional financing and same-as-cash offers to e-commerce customers
• PayPal – Enabled relatively frictionless person-to-person transactions for auctions and other use cases
• Zong / Boku – Simple, fast, easy mobile payments using an existing billing system (the mobile phone)
• PlaySpan / Blackhawk / InComm / GMG – Pre-paid cards enabling teens and other people to pay for digital content (iTunes, free-to-play web games, etc)

I also worked on a payment product, Google Checkout, that is a good product but has not taken off. The reasons for that probably belong in another blog post. Suffice it to say that launching a new payment product, even with the imprimatur of a very strong brand like a Google or Faceboo, does not guarantee broad commercial adoption.

I’ve been reading about how the “Pay with Facebook” option that’s being rolled out to developers might actually be made available to 3rd parties in the same way that Facebook Connect is being rolled out. I’m still not getting the rationale for why off-Facebook payments are a big deal. I do think payment on Facebook could be really interesting because they have the ability to make buying things on Facebook just as simple as Amazon 1-click by storing credentials and integrating payments deeply into trusted applications. Now for my concerns…

Fraud has many faces – having a social graph (might) only address a few - Taking payments is a risky business. You’re always going to experience fraud, whether it’s friendly fraud or truly nefarious activity. Given that you can set up a fake Facebook profile, I’m not entirely convinced that the “verified” nature of Facebook identity is sufficient to reduce nefarious or friendly fraud. I need to be convinced of this argument before I’m willing to buy that merchants would view a “Paid with Facebook” transaction as being more trustworthy than a standard credit card transaction.

Merchants tend to be interested in offering payment options that convert well. Will enough Facebook users payment-enable their accounts to reach critical mass? How is Facebook going to get people to payment-enable their accounts? Sure, those who have purchased virtual goods or credits have a credit card on file with Facebook. But what about the other large percentage of users who don’t have a card or payment source on file? What will Facebook do to induce those users to register and how much will these inducements cost?

Beacon had some things right – the primary benefit of off-Facebook payments is likely to be a tight integration with the newsfeed or social graph – Say what you will about Beacon, the idea of publishing actual purchase or transaction data into a user’s social graph is a really powerful signal and a benefit that no other payment option can currently offer. For some categories that are inherently social (movie tickets, concert tickets, general entertainment and lifestyle purchases, life milestones, etc), the ability to broadcast a transaction could drive additional downstream revenue from people who see that activity and choose to transact. Is this a sufficiently powerful incentive for merchants to adopt off-Facebook payments? Depends on the complexity of integration, rate of adoption by consumers, and the number of downstream transactions they’d need to see to get a reasonable payback on the engineering effort.

My guess is that those e-commerce sites that have a positive experience with Facebook Connect will be first in line to trial a payments offer as a ride along.

What am I missing? Help me figure this out by leaving a comment.

-Put 700 business cards in a large plastic bag
-Put said plastic bag in a FedEx or USPS envelope and mail it off to them
-Pay $181.20 for the privilege of having my business cards digitized and make available for easy import into many systems. That broke down to about 25 cents per card scanned.
-Wait a few days until you get an email telling you the digitized file with your cards is available

CloudContacts was a fair deal – not cheap, but a good value
I could have bought a new card scanner for about $200. Instead, I chose to use CloudContacts. I’ve used card scanners in the past and I found that about 80% of the cards I scanned came in 100% correct. For data purity reasons, I often had to manually review all of the cards I scanned. I’m not sure whether paying $0.25 per card was the right price, but it struck me as relatively fair and conformed to my own Kinko’s principle (the Charles Hudson Kinko’s principle states that I’m willing to pay a premium for stuff I don’t want to own but do want to use from time to time; I expect to pay a premium for scanning, printing, faxing, etc but don’t expect to get gouged).

The results CloudContacts produced were MUCH better than what I was able to create by manually scanning cards by hand. I’ve been flipping through the results I got back from CloudContacts and so far I have yet to find a meaningful data error in the 700 cards they sent my way. They also gave me a wide variety of file formats to choose as well – I opted for Highrise and the import was flawless.

Good customer service along the way – As an aside, I had a bunch of questions during the process and Allen from CloudContacts provided timely updates and answers to my questions. I found it very reassuring.

I am pretty pleased with my first experience with CloudContacts. It strikes me as a good business that charges a fair price for a good product.

-PayPal – Had a pretty good business on eBay’s platform before eBay bought them. They continue to grow.
-Skype – Had a good business (by volume) as an independent company; continuing to grow rapidly as part of eBay
-YouTube – Didn’t have much of a business model when acquired, but gaining momentum
-BillMeLater – Had a working business model prior to the credit meltdown; no idea how it’s performing now
-MySpace – Having a $900 million ad revenue guarantee never hurts; this was going to be a media / ad business all along

What do you think? Any examples of big companies helping small companies figure out the business model (in a big way) post-acquisition? I’m not counting businesses that already kind of work but lack scale (ad networks that need access to more publishers and advertisers to scale up, functional technology that needs a key distribution deal to work etc). It’s late so I’m looking forward to some help in figuring this one out.

For large brands, Fan Pages on Facebook might make sense if they become more profile-like. To me, most large brands aren’t terribly personal. Take Nike for example. Who do you think of when you think of Nike? Tiger Woods? Michael Jordan? Derek Jeter? I think of all of them because the Nike brand is not about any one individual – it’s a brand in the more traditional sense (it’s about a lifestyle, a state of mind, etc). I find the current Pages product to be kind of dull and not super-interesting; I’m not really sure what I, as the user, am supposed to get out of it. And I seldom, if ever, hear from the people and organizations behind the pages of which I have become a fan. What’s the use case and why isn’t it working today (for me, at least)? I’m willing to give Pages another shot if the new rev is more engaging for me as a user and the entities behind them take more advantage of the opportunity to reach out to me in interesting ways.

For small business, Internet celebrities, self-promoters, or other people where there is a nearly inextricable linkage between the individual and the brand (or, better said the individual is the brand), I have a hard time seeing how Facebook pages can unseat Twitter in the short term. If the person is the brand, why split the brand between a personal page and a fan page? If you’re Scoble, Shaq, or anyone else who has a large cult-of-personality type of following, why would you want to fork your audience between the “you” that is your Facebook profile and the “you” that is your Facebook fan page? It seems more logical to centralize everything around the “you” that is your one profile. And Twitter does that better today, largely because they’re not (yet) making any distinction between a person, company, organization, cause, etc – any entity can have an account and use it as he or she likes.

There are a lot more Internet celebrities, self-promoters, small businesses, real estate agents (yes we still have them), self-professed experts, and individuals trying to be heard on the Internet than there are Fortune 1000 companies out there. I’m not sure which, if either, is the meatier target to pursue and what a useful product would like like to either constituency.

Vark is very useful for a very wide variety of questions – I’ve asked the service about everything from ad server configuration questions to gym recommendations to restaurant recommendations while traveling. Instead of having to figure out what vertical recommendation aggregator to use for every question I might have, Vark is working well as my go-to first step when asking questions. For things like restaurants, you can go to more established sites like Yelp if you choose. But for general purpose queries, it has been good for me.

Time is money and Vark is fast – One of the things I really like about Vark is that I get resolution quickly. If Vark has an answer for me, I get the answer in under 10 minutes in most cases. When the service doesn’t have a lead for me, it also lets me know that. I’m surprised that nobody else has linked up instant messaging /email and search in a simple yet powerful way – being able to enter natural word queries that are answered by humans in near real-time is a pretty powerful value proposition.

Vark is actually facilitating a market between questions and answers – The other thing I like about Vark is that I can see a clear path to a business here. Because all of my questions are routed through Vark, they are essentially creating and facilitating this Q&A marketplace. What does this mean for Vark? Well, if the network of questions and answers gets big enough, they could find themselves in a great position to deliver relevant ads / paid recommendations. For example, imagine 100 people all ask the service about the best gym / restaurant / service provider in a metro area. At some point Vark would be able to do two things that I think are clever. First, with a store of canned answers, you no longer need to have humans online and plugged into the system to answer the most common questions – they could just say “Most Varkers think service XYZ is the best based on past queries.” This should give them some benefits to scale as the database of questions and answers gets larger. Second, it seems very logical to me that you could have an AdWords like system that would match natural language user queries with ads or offers. For example, if you asked about plumbers, Vark could both return answers, connect you with a user, and provide a discount / coupon / offer from a competitive advertiser. There are certainly some categories where timeliness is key – if you need a plumber, locksmith, dentist, etc and you need one now, a referral might be both welcomed and useful.

I can’t help but think that this is a direction that Twitter could have and maybe still could go. The Twittersphere certainly has more users than Vark and the whole ask a question on Twitter and get an @reply from someone else is well established. But right now Twitter is not an intermediary – they are not central to that Q&A activity and hence I think it would be hard for them to build a business around connecting people with questions and people with answers. But I don’t think it’s too late for Twitter to go down this road. If there was an “ask the Twittersphere” service that leveraged the data about people’s tweets and could intelligently determine who could best answer a question, that would be the first building block. Then they would need to layer in some kind of contextual ad service.

To use a crude analogy, Vark is like a human powered yellow pages directory and Twitter is like the telephone. Directories get paid by organizing information and selling priority placement to advertisers. A telephone is a utility that connects people but doesn’t participate in the economic transactions it enables.

With so many social media companies rushing to discover and implement a business model that will work for their service and community, I think the discussion of free sometimes gets convoluted. I think there are some really important distinctions between a model that incorporates a perpetually free version with a premium upgrade and a model where there is one (or few) offerings that users can fully enjoy for some period of time before having to make the pay vs not pay decision.

I want to make the case for more companies tinkering around with the “free trial” approach as opposed to the model focused on a neutered version of the paid product being offered for free with the hope of eventual upgrades.

I can think of two sensible ways to offer a free web product whose ultimate aim is not to be ad-supported:

1. Perpetually Free with a Paid Upgrade Option – Under this model, you build a product that has a perpetually free version that is a degraded version of the paid product. The onus is on the company to properly delineate the free and paid offering such that the basic offering is sufficiently useful to the free audience and the premium offering is sufficiently valuable to those who choose to pay.

2. Free Trial with Pay or Quit Option – Under this model, you build a product where the user can consume the full version of the product but only for a limited period of time. At the end of the trial, the consumer must decide whether or not he/she likes the service enough to continue paying for it.

For now we will ignore a more nuanced approach that blends both of the generic strategies above.

There are a lot of social media people today who are trying to figure out a freemium model for their product or service. We’re already seeing models that combine a perpetually free offering with a paid upgrade option work pretty well in the free-to-play gaming space (you can see my earlier post on virtual goods in the United States as a reference). As a basic rule, I think freemium can work really well for products in which the free and paying users can peacefully coexist or where having more people engaged using the service actually makes it more useful for paying and free users. It’s still worth noting that the “free trial” approach in gaming still generates a lot of money (see World of Warcraft or any other successful subscription MMO).

There are a few things about the perpetually free with a paid upgrade approach that I think are worth considering before heading down this path:

It is very difficult to properly segment users and features such that you provide enough value to both paid and free audiences. For example, an email service that provided a 10 MB of storage for free and 1 GB for the paid version would have a hard time surviving – the basic offering isn’t sufficiently compelling to get people in the door. Conversely, a service that offered 2 GB for free and 10 GB for the premium service might be giving away too much value in the free product to expect a large audience of people to upgrade. And that’s just one product dimension. Adding more dimensions just makes it that much more difficult to figure out the features for which users would be willing to pay.

Going with a free trial can be much simpler. You offer one product that users can fully consume for some period of time before they have to decide whether or not they want to pay for the product. It’s more important to figure out how much time a user needs to experience your product before he / she is ready to make a purchase decision rather than which features should be exposed to paying users vs free users.

Offering a perpetually-free product is a framing event for your customers. Offering a product free with no prospect of a paid offering can be a sticky decision. Customers begin to think of your offering as free and attempts to introduce paid offerings can rile the community. It doesn’t match with what customers thought they were getting into when they signed up for the service.

Introducing any kind of monetization can generate backlash within a community. But the longer the ethos of free is allowed to become an expectation within your customers, the more difficult that conversation can be. I think it’s a much easier conversation to have with customers when you’re explicit up front with the fact that at some point they will have to make a decision as to whether or not the product is sufficiently valuable to warrant payment.

Price is a signal and there is value in sorting between customers who you can afford to keep and those who you cannot.For customers for whom your service is not sufficiently compelling at the price point you’ve offered, you have an opportunity to tweak the offering. If people aren’t biting at the price you’re charging, that’s a meaningful market signal. And that’s information that’s better learned sooner rather than later.

Under the free trial model, it seems to me that testing alternative hypotheses is easier. You have the features you have and all users get to use them. You can increase the length of the trial, decrease the price, or do both. But what you don’t have to do is to go back through your segmentation of features and figure out if you sorted properly.

At the end of the day, I think it’s good to figure out whether the business model you have in mind works. The sooner you find it out, the smaller the stakes and the more time you have to fix it.

i’m not sure people are ready to hand over financial creds to web 2.0 startups. that being said, plenty of cool work being done in money 2.0

When I first started working in venture capital after college, one of the first anecdotes I heard was the “vitamins vs. aspirin” theory of investing. In short, the basic idea is a notion of relative need – people with headaches will seek out aspirin while we all know we ought to take our vitamins and often don’t. The theory holds that the best businesses (traditionally) are more like aspirin (solving an acute need) than vitamins (good for you but not critical).

Unlike esoteric and philosophical arguments about data portability, privacy, and API integration, people have a strong and material interest in making sure that their money is safe and secure – it’s one of the few areas of web 2.0 where what’s at stake is real, concrete, and quantifiable.

I’m very interested in all of the cool start-ups I’ve seen in the personal finance space which I unimaginatively lump together as Money 2.0. Good examples include Mint, Cake Financial, Wesabe, BillShrink, and Covestor. I try to avoid writing about products I haven’t actually used that much but I’m going to do it in this case.

Given that Microsoft Money and Quicken are both getting a bit long in the tooth, it seems like now is a good time to be launching innovative personal finance products. Some thoughts about the whole Money 2.0 space below.

To succeed, I have to believe that these tools are going after people who are non-users of the desktop alternatives. Microsoft Money and Quicken both have large installed user bases and relatively flat growth in net new users. Chances are if you’re interested in a desktop personal finance solution, you’ve already got one. Given the marketing budgets and installed base those products have, I can only imagine that these money 2.0 startups are going after folks who aren’t using these desktop products. Whether or not they’ll succeed in converting these non-users to become active users of a web-based solution depends (I think) largely on the root cause of their non-use. Is it product complexity? Cost? Or is it simply that people know they should be more responsible about their money and just choose not to take action?

Are people ready to trust their financial information to new startups? I think this is going to be a really interesting situation to see play out. There are obviously early adopters in any market and people nowadays seem much more comfortable putting their personal information online in social networks and community sites. I have always thought that money is different than other types of personal information because the consequences associated with disclosure and misuse are so much higher. This will be a good test for how far the market has come in terms of people putting their financial information online.

One thing worth noting is that one of the historical advantages of desktop products is that the information on your computer feels “safe” as it’s under your control – as long as your computer is properly secured nobody can get to it (in theory, at least). Will people be as trusting in the cloud with services offered from new companies? I think there are more people willing to hand over their financial information to companies (start-up or not) who can help them better manage their money than either I or any other pundit today expect. I’m curious to see how large that audience is today, which is really what matters for all of the new entrants.

Is this going to be like Paypal or online bill payment? In terms of historical analogies, I wonder if this will play out more like Paypal or online bill payment. In the former case, Paypal was able to succeed in pioneering a brand new service that existing banks and financial institutions could have provided and in fact did try to provide. In the end, Paypal won for reasons that are too myriad to list here. However, online bill payment has been a different story. Based on data that I’ve seen, the vast majority of users who pay bills online pay them directly through their chosen bank or financial services provider. At this point, I’d be willing to say that it if there is a market for web-based personal finance solutions, start-ups are likely to win here. If any of these companies can build a large enough user base, I think they will be very difficult to knock off, even by a well-funded incumbent.

Right now to me, this market feels more like vitamins than aspirin, but that could change as people start saving money, getting their financial houses in order, and talking about the benefits of these products.

If you’re a user of any of the products mentioned in this post or have thoughts, feel free to leave them below.

What does it mean to “shop socially”?

To me, social shopping is about leveraging the collective wisdom of others, be they friends or others, to make better purchase decisions.

I think it’s just that simple. It’s not just about what my friends do and not just about what everyone on Amazon does either. There are very strong use cases for each instance. Part of why I’ve struggled with this whole concept is that I haven’t seen a good breakdown of what people really mean by “social shopping” – so I’m going to break it down in a way that make sense to me.

First I think there are 3 different types of people whose input I value as a shopper. The three broad classes can be found below:

• Friends – People I actually know or to whom I have some connection.
• Smart Strangers – People who are not my friends, but are likely to have some particular expertise on a particular topic. Think about a power reviewer on Yelp – someone who knows a lot about your local environment but is not exactly a friend of yours. You’re relying on their expertise as an individual, not the weight of collective opinion.
• The “Collective” wisdom of others – What did other people, facing the same decision as you, actually choose to do? The best example of this is Amazon’s feature that tells you what other folks who looked at the same product actually chose to buy.

Now that we have the classes of people out of the way, what else do you need besides people to make social shopping work? I think there are two other key pieces you need:

• A Broad and Deep Collection of Ratings and Reviews – You need to make sure that you have good breadth of reviews and that each object reviewed has some depth behind it to reduce the effect of noise.
• Aggregation of Actual Purchase Behavior – At the end of the day, you want to be able to combine reviews and actual purchase behavior. This is not just so that you can do the Amazon-like piece around telling people what the collective did when presented with the same choice. You also want to be able to connect reviewers with actual purchase behavior. In many cases, you get this “for free” – if I only review restaurants that I’ve actually visited or cameras that I actually own, this is moot. However, it reduces (but does not eliminate) the possibility of gaming by posting fake reviews on products you don’t actually own.

With all of that background in place, why don’t we have more social shopping applications? It’s my theory that when most people hear “social shopping” they think of the use case where people only want to know what their friends purchased or use their friends as a key source of input when making decisions. This is only one of the few use cases imaginable, but it’s really interesting.

If this is the use case that seems to have captivated people (I’d argue that Beacon was a clumsy attempt at enabling social shopping), why isn’t it working. I think the missing piece in the puzzle is the ability to identify experts among your friends and contacts.

Expertise Identification- Of all of the things that I think are holding back social shopping for the “friend” use case, I think expertise identification is one of the biggest ones. What is expertise identification? Simply put, it’s the ability to determine who in your social network is an “expert” on a given topic. This is where I actually think the real opportunity lies and where a properly-implemented system like Beacon or some other system that silently keeps track of what your friends are buying / reviewing on the web might be made useful. I have no interest in knowing about each and every purchase made by my friends and associates on Facebook, MySpace, LinkedIn, or any other social networking site. Right now, it seems like there are two major ways that I see people figure out who in their social network might be able to answer a question for them:

• Post a blast announcement to your friends (update your IM status, Facebook status, send an email, etc)
• Rely on coarse “clues” to guess who might know something about the product (your own memory, clues from information in their profiles, etc.)

To be fair, a friend of mine was working on a concept called friendput in this space that relied on very explicit input and contribution by users to build up expertise. I think the only way you’re going to be able to actually surface experts within a network (most likely) is through passive profiling of what people buy, read, and write. Relying on active user contribution might work, but I’m not sure why I’d want to tag myself as an expert or identify myself as an expert manually. You get into all of the complicated questions of how to map across individual tag taxonomies and what not. Also, “expertise” is a relative term – I might not consider myself an expert in some subject where my friends might think I know quite a bit. Relying on self-identification is both prone to gaming and time consuming for the user.

The reason (I think) we haven’t seen systems like this emerge yet is largely privacy driven. It’s one thing to look at questionable material on the web. Actually buying questionable products is a much stronger signal of one’s intents and interests. I don’t know that most people today would want to have their purchase histories a) indexed by a 3rd party service or b) aggregated across their activities and identities on the web and c) made visible to their social networks. The ability to exclude certain purchases or websites would be an obvious must-have feature. But I can imagine a number of folks who’d rather not use a system than have to invest a lot of energy in manually managing the information in the system.

If someone can find a way to get this right, I do think it’s a big idea. And thanks for reading if you made it this far – feel free to share your thoughts in the comments section.