Be honest. Am I Funky, Sexy or Cool?

You can decide for yourself at the end of this post, but before you do I will tell you where the title of this post refers to. I had the pleasure of talking to Russel Craig, VP director of Brand and Marketing of funkysexycool.com

FunkySexyCool is a mobile social dating service aimed at young adults (18-35 years). It started a few years ago in Australia and has expanded to a number of different countries, including Germany, Switzerland, South Africa, Austria and in 2007 the USA. During this expansion approximately 200K users signed up and the development team decided to spent time on ensuring the architecture would be able to scale along with the growing community.

FunkySexyCool aims at a very specific niche in social networking. They call it social dating. There are many on-line dating sites, but the target audience of FunkySexyCool finds these dating sites too serious and too expensive. FunkySexyCool has social networking elements it but the service differs from giants like Facebook and MySpace in two important ways:

1. The service is entirely centered around flirting and dating
2. The service is a mobile social network instead of a web-based social networking

What does the service offer?

Right now the service lets a user upload pictures of himself and lets any user rate these pictures with Funky, Sexy or Cool. You might wonder, is that it? Well, it turns out that rating and be rated helps the users socialize and get to know each other. It lowers the boundary to get into contact. For example, as soon as you upload a profile picture, other users will rate it. If someone finds you Sexy, and you rate this person as Sexy too, then it lowers the threshold to get into contact and message each other.

For this reason FunkySexyCool has chosen the path of becoming a mobile social dating service. Flirting and dating isn’t something people will do in the open. Being able to use the service on your mobile, which is a personal device, helps the user to flirt and date@@ without friends, family or colleagues seeing you.

It is a difficult business to get into. Not because of the service or its proposition, but because technology and data plans often get in the way. FunkySexyCool works on most WAP browsers. They have taken a lot of time ensuring the mobile web experience works on most mobile devices. Right now they support 10 different languages and nearly every type of web enabled mobile phone.

Business mode and competition

I asked Russel about possible competition. He says that there are a few successful mobile dating services such as flirtomatic.com and crushorflush.com. I haven’t tried these services out, but they seem to be more web enabled with SMS features. FunkySexyCool has a pure focus on mobile. Facebook, MySpace aren’t really competition for FunkySexyCool right now. While these giant social networks do have a lot of the target audience as users, the services aren’t specifically aimed at flirting and dating. |Russel believes that in the coming years niche social networks, aimed at one specific feature will become more important. They want to become a major mobile flirting and dating service.

FunkySexyCool will experiment with both advertisement, subscriptions and the Freemium business model. Already there are (one off) payed services, such as the ability to rank a large group of people at once, be noticed by others, obtain a super status etc. Advertisement is more tricky. Russel doesn’t want to stop at just serving ads, as he believes that this won’t work well on any social network. But the mobile component does give them a possible edge when it comes to advertisement. Russel and his team are already thinking about new ways to use advertisement in such a way that it will provide the user with value. He gives the example of a user who has tagged his picture/profile with a specific brand of Jeans. Using localization this person could be served a discount ad for this brand of Jeans when he is near a store that sells them.

My opinion

I think that FunkySexyCool is a pretty smart concept. Bringing flirting and dating into the personal mobile space is a good approach. By focusing on the mobile experience, instead of trying to be a web service, they are already positioning themselves as a mobile service. And the mobile space is the arena where next generation on-line services will fight out the battle for world domination.

The challenges for this service will be both technology and to get people to find and use this service, as they do not have a strong web presence yet. Technology wise, they will need to keep investing in mobile technology as more handsets and platforms appear. Making the service work seamlessly from each country provides its own technological challenges. Billing is also an important issue to solve. Right now users can pay via premium SMS services (common in Europe), and in the case of Germany, FunkySexyCool has an agreement with Vodafone, ensuring the costs for the user are billed through his mobile phone subscription.

Finding and convincing users to use the service is another challenge. It is difficult to set up agreements with Mobile Operators for distribution purposes. At the same time, the incredible user pools of both MySpace and Facebook will provide FunkySexyCool endless possibilities to attract these users to their service. Instead of being competitors, these giant Social Networks might just prove to be excellent distribution platforms.

So, be honest, what do you think? Am I Funky, Sexy or Cool

5 ways Facebook can leverage their platform and start justifying a $15 Bln valuation

Paul Buchheit wrote an interesting post a few days ago called “Facebook knows who you are, and that is worth more than you think”. As an ex-Google employee and now one of the founders of FriendFeed, he knows what he is talking about.

It’s very fashionable to declare that Facebook is an over-hyped fad and will never make any real money, certainly not enough to justify it’s insane $15 billion dollar valuation. At first glance, it’s easy to understand why some people might think it’s a toy — most of the activity there seems to involve biting, poking, and joining groups with funny names.

However, I think that assessment misses out on something very interesting: Facebook is capturing everyone’s identity and relationships. Of course there’s some noise caused by random friending, but by examining the larger graph as well as other details such as location, affiliations, interactions, and of course explicitly entered relationship details (”how do you know Paul?”), they can get a pretty good idea of which people are actual friends and acquaintances.

He goes on and writes that people that rant about Facebook and its business model aren’t using enough imagination.

Perhaps a people directory doesn’t seem terribly valuable, but if you can’t imagine how to make money from knowing everyone’s identity and trust networks, then you aren’t being very imaginative.

I believe that this last sentence is important. It not only discusses opportunity, but it also shows how incredibly vulnerable such a business model is (will get to that in a second).

Facebook stores one of the largest social graphs in the world. With their incredible user base, and their viral methods to gain more insight in users and their relationships they are building an unprecedented people’s directory. Facebook asks users that add friends about their relationships, it has viral applications that only work if you “infect” your friends with it too, and it seems to be moving in the direction of interaction, providing its users with chat functionality. Every action of every user on the Facebook platform is stored, analyzed and added tot the social graph they are building.

The database must be immense by now and growing every minute. From the perspective of Facebook this database with identities and relationships forms the value that is to be leveraged. The Facebook business model depends entirely on that leverage.

The information stored in the Facebook databases must be a marketeers wet dream. Instead of working with “old-fashioned” demographic information to reach customers, Facebook provides the marketeer with a platform that allows almost any kind of dissection of user groups into specific customer types. Talk about possibilities to target customers (what a terrible phrase that is). Marketeers are idiots of course (no I didn’t mean you ), so they won’t really be able to leverage the possible value.

There are a gazillion ways to use the information and create value from the Facebook database. Targeted advertisement, brand campaigns, specific customer interactions, targeting specific customer types, “social” search, “friend referrals” (Beacon was a very poorly implementation of this), etc. etc. But having all of this data does come at a cost. Facebook has created a perfect conceiled advertisement trap, but it’s a trap they had better not fall into themselves. The trap is formed because Facebook has chosen to make the social graph the most important aspect of their business model. Instead of directly leveraging customer value, they are leveraging network value.

The problem with this choice is trust of course. You have to be extremely careful that you aren’t leveraging too much of the data you collect for commercial purposes. The users, often unaware of the data collection and purpose of it, will not see the added value in that. They will most likely lose trust in the service that hosts their user profile and friend network if it turns out to collect data for commercial purposes. Facebook already has to deal with this problem with the increased friend spamming that is taking place, for example with 3rd party developed applications trying to collect their own social graph data.

A great example of a friend spamming application I received. I have to forward it to other friends to see its content (didn’t do it BTW).

So what can Facebook do to leverage their social graph data? How can they turn Facebook not only into a success in terms of nr of users and traffic, but also in terms of revenues? Here are my 5 tips how to make Facebook more valuable to its users and more profitable at the same time:

1. Focus on user value first, then leverage the data, no the other way around. It means getting rid of advertisement in user interactions on the Facebook platform. It doesn’t add value to the interaction and it often hurts the trust relationship Facebook has with its users. Alan Stern writes about the poor quality of the ads in Facebook. Its sits in the way of interaction. It also means getting rid of the 3rd party applications that have the purpose of collecting user data. Especially stop the friend spamming apps.
2. Focus on interaction. Social networking isn’t about user profiles or social graph data, it’s about interaction. Stimulate interaction, provide services that allow users to interact in ways they couldn’t before. That’s user value. And advertisers have no purpose or any value in interactions between friends. They aren’t part of the conversation, they are trespassing.
3. Think mobile. What is the single most successful business model that is entirely based upon interaction and user value? It’s mobile of course. People love to interact. They use their mobile many times a day to call and send SMSes to each other. And they are obviously willing to pay a lot of money for it. I can’t understand that a service with such web presence isn’t capable of mobilizing its users. The applications are there, but they aren’t being used. Facebook lacks focus on mobile, a possible revenue generator.
4. Open up the walled garden. Even though a lot of users aren’t aware of it, there are bound to arrive new competitors that provide valuable social interaction services without locking the customer in. Human nature will always find a way out. We don’t like to be trapped. Opening up has two important upsides. It forces you to think in terms of user value, because now you have to deliver a better service than any competitor. And it makes you have to trust your customer, and not ruin that trust by doing something evil. Opening up is also needed to be successful at point 5.
5. Leverage the social graph data outside of the Facebook platform. The future of Social Advertisement lies outside of the network. There is no value in trying to become commercial within Facebook. Facebook should be about interaction, remember. But outside of the Facebook platform these users will perform actions where the social graph data becomes handy. Think about it for a moment. The real value comes only within the context of a user searching or buying something on-line. That is where the data becomes valuable. Why? Because it helps the marketeer to provide me with advertisement that, in itself, has value within my context. I don’t want advertisement in my social interactions. But I do want them when I’m searching or buying stuff. It’s a knife cutting both ways. The user gets value, and Facebook can maintain it’s trust relationship with its user base. I’m not so sure automatic friends recommendations will work the way everyone hopes it will. if I need a recommendation from a friend, I’ll ask. No automation needed there, unless I can find it at the place I’m buying (e.g. finding a bookreview at Amazon written by someone I know). The newsfeed and beacon implementations of it do not even get close to real life recommendations. We need conversations, not Orwellian messages telling us about the shopping behavior of a friend.

I agree with Paul Buchheit that with imagination there is a lot of value to be gained from knowing the identity and relationships of people. But I also believe that leveraging that value is pretty difficult and requires a constant balancing act. Facebook has the users the traffic, the data. But it remains to be seen if they will be able to convert that into enough revenues to justify a $ 15 bln valuation.

I’m sure there are many other ways possible too. Let me know what you think.

Free (ad-based) Social Networks versus payed Social Networks

Rolf Skyberg posted his prediction that users will eventually pay to network, as free social networks tend to provide “value”a user is not really looking for.

I have been thinking a lot about that since I started writing on my blog. I agree with Rolf, simply because I feel that “free”never comes for free. There is always a catch. In this case, the service provider who has to monetize the network the users build up (that’s really weird isn’t it?). And this catch has way too many unwanted effects for me that need fixing. For example, I can’t even export my friends and re-use them in other networks. Or, have you ever tried burning a CD with the best content you have ever received in your network of choice?

But the problem always lies in the transition of going from “free”services to payed services. How do we do that. What transition will work? That is the real question. Because of the fact that a user cannot export his self build Facebook network of friends, he will be reluctant to start using a (probably much better) payed service. He would have to rebuild the network, and how would he be sure that his friends would join him on this payed service?

I currently see 3 ways of creating this transition:

1. The transition starts from mobile. Why? because there, we are already used to paying for services. Ad supported mobile phones will never work, but I think that social networks that originate from the mobile, instead of the web will emerge
2. The transition starts from e-mail (Rolf also suggests we might bundle a payed networking service with e-mail). I like it. Why, well for starters E-mail isn’t free! You pay for it, as soon as you subscribe to an Internet access service. But more important, e-mail does provide the import and export of contacts and provides support for the basic need of interaction. All we need now is to upgrade the concept of e-mail to a sharing/interacting/social networking tool instead of a spamming or “I still have 1000 unread messages left” tool.
3. No transition, but user controlled ads. Well, this is a weird suggestion, but what if we could have free services, no walled gardens, ads to monetize it (well, someone has to pay for the services and bandwidth right), BUT the user decides what ads show, when  and how (heck, there are probably users enough that would be willing to create ads for the advertiser if you ask them nicely). Most people think were too lazy to do this, but if I could have very simple ways of tuning ads to my preferences at any point (turn them off for a while  would also be an option) I might just do that. Saves me a lot of time looking for stuff when I really need it.

Interesting discussion. I’m going to put my money on 1 and 2 for now, but who knows where this will go. I am curious if there are already payed services that are successful? Anyone have an idea how to make the transition without asking the user to put too much effort into converting his friends into a payed service?

Facebook will be no match for Google

After the first Twitter and blog post of Robert Scoble about Google buying Jaiku the twitter space is full of Jaiku. Its everywhere. Lots of discussion on what this means for Twitter. Robert states in a second post that the deal isn’t about Jaiku versus Twitter, but more about Google versus Facebook.

While I don’t have the excellent sources Robert has, I think he is right about this. Google understands social networks much better than Facebook does. Lets see how the jigsaw puzzle pieces might fit together to describe the Google strategy with respect to Facebook.

1. First of all Orkut is (or will be) more open than Facebook is. For example, Orkut will allow application developers to let their services run on their own servers instead of on Orkut servers. Facebook doesn’t allow that. It is much more a walled garden than Orkut is. Why?Because Facebook needs the Facebook network to be valuable, while Google needs to be the connector across the entire Internet. Orkut is just another asset in that strategy.
2. Secondly, Google doens’t have to build a social networks as its primary strategy. Unlike Facebook Orkut is simply another means to an end. Google is the connectivity on the web, and Orkut only is one aspect of that strategy. Think Gmail, think Google earth, thin iGoogle. All major Internet platforms than can easily be integrated into one compelling service for the user.
3. Google is ready to launch its Google Phone. As said in several posts the strategy here is not to attack the iPhone, it is to attack Microsoft as a mobile platform.
4. Google is building up strength in Asia, the continent where (payed) mobile services are adopted quicker than anywhere else in the world!
5. Jaiku provides Orkut users with mobile presence information, which will add value to the connectedness in the social network. Let’s not forget that the mobile phone is the most dominant device worldwide (think communities dominate brand by Toni Ahonen)
6. Jailu does rss feed aggregation well, providing Google yet another advantage. It controls the world of Rss feeds with Google reader, Feedburner, and now on the mobile platform Jaiku
7.  I saw a post earlier on Engadget suggesting that Google is also working on a Google PC, which supports again their strategy of becoming the main platform on the Internet and Mobile.

While Facebook is building walls around their service, trying to increase the value of their network (instead of value for its users), Google is becoming the major operating system om the Internet (Search, Social Networks, mail, RSS) and Mobile (Google Phone, Jaiku). Given this strategy I would put my cards on Google, not Facebook. No way they will be able to match that. The big question now becomes whether or not Google will be able to integrate all these services and still remain open as a platform thus providing more value to its users.

Toni Ahonen:Mobile the 7th Mass Media

Marketingfacts pointed me to a video + presentation of Tomi Ahonen in Amsterdam, called “Mobile the 7th Mass Media”.

In his presentation he talks about Mobile being the next Mass Medium and provides many examples of successful mobile stories, most of them in Japan and Korea.

He start with stating the 8 needs Mobile fulfils:

Communication, Consume, Charging (Money), Commercials (Advertising), Create, Community (Social Networking), Cool (Fashion), and (Remote) Control.

He then proceeds in showing how the Mobile phone is the next (7th) Mass Medium with 6 characteristics that are preferable over the six other Mass Media (Print, Mass Media recording, Mass Media cinema, Mass Media Radio, Mass Media TV, Mass Media Internet). It is Personal, Always On, with Build in Payment system, is always available during a creative impulse, and provides the most accurate audience info.

While he is an authority on the subject, and he brings his presentation well and with many live examples in the market, I cannot help but feel that he is sometimes a bit too fast in projecting the success of some of those market examples to the rest of the world. There are also (technical, UI, service) hurdles still to be taken, but he dismisses them for now as “don’t focus on the limitations”. Instead, concentrate on the possibilities. In itself a wise saying, but I would add that the limitations should still be solved in the end.

Most of his market examples are taken from the Japanese and Korean market. There are two concerns there for me.

1. These markets are years ahead in terms of technology, mass adoption and maturity (actually, he often uses Finland as example as well, and that market is also ahead of the rest of Europe as the homeland of Nokia)
2. The cultural differences between Asian and for example European countries are very large. It is therefore difficult to draw conclusions on market results in Asia and project these directly to the European or American market. I’m sure Toni understands this, but it is not covered in too much depth in his presentations.

Don’t get me wrong, I am a strong believer of mobile community development and the value they can have for both the user, the community, the service creator and the advertiser/brand owner. I think that mobile phones are by far the best mass media devices, and even better, they have payment systems in place and users that are already used to paying for services and content (major barrier on the Internet). And yes, there are also European successes, but there are less (in numbers and volume).

Making mobile services successful isn’t a fairy tail with a happy end in all cases. There are may startups trying and failing. We need more time to experiment, improve and enrich the technology, but even more important the overall experience before it will truly become a mass adopted success worldwide.

I believe the mobile phone is becoming our remote control to life, but if this extension of our personality and life is pressured by too much unwanted ads or commercial activity we might see that the momentum that is being created now will be slowed down instead of moving faster.

And I feel there are still a few threads out there that might slow down the fascinating growth at the moment:

1. Premium SMS services work really well right now, but would the same apply for data services later? And with more successful services on the way there is always the danger of price erosion. If I only pay for the Carrier fee to send a Twitter to the rest of the world, I will probably not like it much if I have to keep paying for premium SMS services when interacting with a brand. Arguably, Twitter is probably more something for middle aged men and woman now, but similar services will be discovered and used by teenagers.
2. Don’t forget the power of the Mobile Phone carriers that still make loads of money on traffic and data bundles. They still control perhaps the most important aspect of the value chain (access). Unless they are willing to drop prices here, mobile Internet (unlike mobile messaging) will still have to overcome the barrier of high subscriptions fees. Same thing goes for the Phone manufacturers. We need open standards, open platforms, payment systems across carriers and phone types, and not walled gardens. If these walls can be broken down, I am convinced that innovation will lead to a much better user experience which will in turn speed up adoption.
3. The influence Internet will have on Mobile users. On the Internet everything is free. The user experience is becoming richer and richer. Internet services will extend to mobile services and there lies a danger in the value model. Unlike going from Mobile to the Internet, it won’t be easy for Internet service creators to extend a free service to a payed mobile service, especially since many are already making mobile access to the Internet service free.

Having said all this, I am still inspired by the examples of Toni and would definitely enter this exciting market and start experimenting with mobile services. The endless possibilities, the always on, the presence information, the easiness to quickly send messages to the world, the always hungering for message by its user (how often do you check your mobile for new messages?), what better test ground could you have for new services!

Mobile Internet will become the next hit (but not yet)

I have been wondering why the promise of Mobile Internet has not been fulfilled yet, while at the same time new startups are popping up to get into this (very lucrative) market. Don’t get me wrong, the number of mobile Internet users is growing steadily, but I am more looking at it from a mass adoption point of view. There are loads of people trying it out, but far less use it on a regular basis in their (mobile) lives. There has already been published a lot about this topic. Michael Arrington just wrote a nice article on mobile social networking on TechCrunch. I think there are several major inhibitors for a massive breakthrough:

1. There aren’t that many really useful services that really enforce mobile Internet into the lives of mobile users. Yes there are many “cool” services around, but let’s face it. Most of these services are used by techies (nothing wrong with that btw), or obtain a lot of media attention because of the technologies used. I don’t think there are many mobile Internet services that appeal to the mass yet. Yeah, location based services are cool, but I am not so sure if it is the user that finds it useful , or the startup that provides the service. It seems to wear off after the initial excitement. And I can’t help to notice that children in the age of my oldest daughter (yes, they all have a mobile phone) have an intuitive grasp where their friends hang out. SMS is much more functional to them for now, but who knows. Physical dating still rules over virtual dating.
2. Mobile devices don’t deliver technically yet what is needed. I use a Nokia N95. I am perfectly happy with it, but if I ask my wife or any of my friends to go to the Internet with it, they probably won’t accomplish it without at least some help. Come to think of it, this is as much a UI issue. I do think that the Apple iPhone is a real step forward here.
3. The mobile Internet interface is not nearly as flexible, intuitive and usable as the Internet browser and a mouse is on a PC. There is the problem of small screens that cannot display enough content and provide the same user experience that a user is already accustomed to using a PC screen (19 inch or higher nowadays). Inputting information remains a hassle unless you have a keyboard. The downloading or uploading of content is still slow and difficult to do, although I can’t complain too much about speed when near a Wifi or HSDPA signal
4. The cost is high for a large adoption in the market. You need high end (expensive) handsets like the Nokia N95 or Apple iPhone and transferring data is still pretty expensive. See this nice article earlier this year by Guy Anker on the subject.
5. And last but not least. I think there might be a psychological barrier for users to download all kinds of new applications onto their mobile phone. It is the most personal device for any user and they won’t put any software on it unless the source is trusted by the user

Users really need a compelling reason to start integrating mobile Internet usage into their regular patterns. Unless the industry starts addressing all the issues above it Will still be a long and slow growth path.

My personal opinion is that the real mass adaptation will start from the Internet, not on the mobile phone. Start with adding simple mobile services to the most successful Internet services. Help the user with the first steps onto the mobile Internet by services like up/downloading of messages/pictures to the Internet and phone and forwarding them to their friends. I can’t wait to get my hands on simple mobile sharing services to enrich the SMS experience with audio, video and pictures. Then, gradually increase the functionalities to contain browsing, search, location based services and social networking capabilities.

What do you think? Am I being too pessimistic here? Have some of these barriers been resolved already, have I missed any? Are there examples where mass adoption is already taking place (outside of Japan!)?