Big Hand Small Map

New blog

Hi all,

I now blog over at blog.hubdub.com. See you there!

Nigel

Netscape goes into retirement

Techcrunch broke the story that the social news aggregation experiment at Netscape is no more. Well it is going to move *somewhere* (potentially www.wow.com).

The question remains: Why didn't it work? I can think of three potential reasons; (1) Social news aggregation only really works for early adopter crowds, (2) AOL didn't design the product very well or (3) they didn't execute very well.

Reviewing the site and the competition would suggest that (2) and (3) are definitely the case (but there was a lot of improvement) and the jury is still out on (1).

In terms of product, Netscape has quite a nice clean layout however I think they are over-using the white space. Above the fold is only 3.5 stories whereas on Digg I get 6 (on Reddit I get 18 but I think they have gone way too far the other way!). Having the Vote/Sink buttons on the left makes sense (I've always wondered if Digg thought about changing that but didn't want to give Netscape any ammo). However not linking from the title through to the original story is a real usability goof. Plus it feels deliberate to increase page views which is only pisses users off. Also after using Digg a lot, Netscape doesn't feel nearly as slick, like they copied the functionality but not the style.

However, I think execution was an even bigger killer for them. Social news aggregation sites are based on building up a community. That takes time and it takes a brand that people relate to and trust. Netscape from the off struggled with that. First they copied a much loved concept at Digg (in some parts reviled but generally regarded as an innovator) and copied it without adding anything significant or innovative to it. Then they offered to pay top submitters, which struck me as confirmation that they hadn't a clue how to build a community. Even McKinsey (gulp) understands that the vast majority of users that submitt content don't do it for cash (report here).

The jury is still out on whether social news aggregation can go mainstream (or even if Digg can go mainstream). My one to watch is Newsvine although it is still fairly small. There is still a clear demand for news aggregation and commenting. My bet is we will see some interesting innovation in this sector in the next 12 months (and lots more Digg clones!)

Calling the top on Facebook

Facebook feels like it has gone from 'site you had heard was like MySpace but big with US college students' to 'site that is going to take over the world' in the space of what feels like about 5 months. Compete (here) shows that its US user base has grown by 124% compared with MySpace's more leisurely 24% growth since last July. In the UK growth has been much faster with it moving from zero to everyone you know now on it. On top of that valuations of $6 billion are being talked about and Facebook is now being talked off as the next big platform (even if that has strange echos of Netscape for some).

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Here's my take: This is the top. Facebook has grown massively as the late 20s and 30s age group suddenly 'got' social networking. In mass the early majority has now put up their basic profile and uploaded a picture. They have linked to their friends, poked and written on someones wall. Over the following few months I have had a steady stream of friend requests which they have accepted in a social form of stamp collecting. Some of my friends have produced a huge amount of content, updated their profile, added photos, send out applications that serve no purpose etc. Now however the number of friend requests has reduced to a tricle. I've also noticed that people aren't just as active as they were before. We're glad our stuff is up their but we just don't visit it as often as we did before.

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This all feels very ominiously like FriendsReunited which in 2000 became a media sensation, everyone joined up, updated their details about where they where now. Emailed a few old lost friends. Checked for updates for a while and then gradually got back to their old lives. MySpace feels slightly different in that its younger demographic has more time to produce content and adopt a new way of communicating (noting the decline in use of email by teenagers). For someone who works in an office with Outlook open all day, is Facebook really better than email for dropping a note to your friends?

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Which brings us to Facebook as a platform. Apart from iLike, Facebook apps have been roundly condemned as pretty pointless (zombie chomp anyone?). However there has been an implicit assumption that they will get better. Will they? What is the consumer crying out for here? Or are there just lots of consumer app companies desperate to get in front of Facebook's millions of users? Interestingly, as the number of friend requests from Facebook has slowed down, the number of requests from LinkedIn has stayed fairly steady. LinkedIn fits a genuine user need (having moved companies 5 times in 8 years its great to have all my contacts in one place and I've found it really useful a number of times).

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My prediction: Facebook will continue to inflate as it moves from early majority to late majority but the core will hollow out. The new apps won't be that much more compelling than the current ones. $6 billion will be the high point of valuation.

Big Hand Small Map - Vintage Example

Sorry for the lack of update to the blog recently. I've been off on holiday for two weeks (bad time to start a blog I hear you say. Anywhere is a cool snippet before I get back into a more regular posting cycle.

I spotted today an example of a vintage 'big hand small map' instance. It is on the Information Aesthetics blog here. You can also get a bigger version of it on Flickr.

Off course I am sure the military had much more detailed plans on how they were going to invade Iraq. What they were going to do when they got there, well that might be a different story...

Person-to-person freeform betting

Some time ago on Midas Oracle there was reference to flutter.com as one of the first sites that allowed users to create their own markets. I was lucky enough to be a product manager with flutter from mid-2000 through to early 2002 so I know the story very well. Flutter merged with Betfair in early 2002, when it was a fraction of the size it is today.

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The flutter story itself is well documented (for example here) so I won’t repeat it, apart from to note that it was one great rollercoaster ride. What I did want to write about was functionality of letting users create their own markets or as we called it freeform betting. The original flutter concept was that we would create a mass market platform that would allow users to bet with anyone on anything. Note flutter wasn’t an exchange, each bet had one and only one counter party. The primary focus was on the social element of betting with other people not on value or the trading experience you might get on an exchange such as Betfair. When we initially launched the site we started by letting users only bet on markets we had created with a focus on sport and entertainment (we coincided with the first Big Brother which was a big betting market in the UK).

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However the plan was always to quickly roll out functionality that would let users create their own bets. We soft launched that functionality as a tool for customer acquisition whereby visitors who arrived at the home page where offered the opportunity to create a bet and then email it to a friend. We would pony up £5 (about $10) for each side. When the event closed we would then email the two participants who would agree who won the bet (with an escalation process if they didn’t agree). Sounds great, but in practise even though it was free money it just didn’t take off the way we expected. Why not?

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In 1999 the UK government commissioned a report into the prevalence of gambling in the UK population (you can read it here). One of their findings was that only 11% of the UK population had a bet with a friend in the past year and only 4% had a bet with a friend in the past week. These 4% were our target audience; this wasn’t a mass market audience. To make it even worse, in 2000 broadband penetration was paltry and even when people where on-line they were still not comfortable putting in their credit cards. So when you multiply the 4% by the percentage of people online times the percentage of online users ready to get their credit card out you end up with a very small user base.

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But what if we had stuck with it (clinging on during the downturn), what sort of market could you achieve today with much more internet savvy audience and higher broadband penetration? Well the UK has a over 18 population of about 50 million; 4% of which is about 2 million punters who bet with friends every week. The report also tells us that the average number of bets per week was 1.4 and we can infer an average bet size of about £10. Therefore we have 2.8 million bets per week, £28 million in weekly turnover and an annual market of about £1.4 billion. Ooooh , now it gets interesting. But wait, that’s turnover, at a 5% commission this market would be worth £70 million to us if we could get everyone to bet through us. However, that is obviously very unlikely. Nearly all personal bets happen face-to-face in a transaction that goes something like this:

Punter A “That US soccer team are a bunch of numpties, they have no chance”.

Punter B “They will still cream your Scotland team”

Punter A “You’re on – a tenner?”

Punter B “Done”

Then they shake hands.

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Notice they don’t then run to their PC and type in the details of the bet. They have another pint and then watch the game. Sometimes bets don’t get collected but generally that isn’t a big issue. Now, there is a potential market with regards bets between friends who are remote from each other. Generally, the same exchange that happens above gets transacted by email, text or phone. Now what percentage of 2.8 million bets per week are remote bets? Well the prevalence survey helps us again. It found that the place bets were struck broke down as follows:

Place of work                25%

In the pub                    25%

At sports ground           19%

At home                       17%

At friends home            16%

Elsewhere                     9%

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Now if we assume that you are very unlikely to have a remote bet in the pub, at the sports ground or in someone else’s home. Also let’s assume that 20% of bets at work and 10% of bets at home are remote bets (which feels very optimistic). Therefore we can estimate that only about 7% of those 2.8 million bets per week are remote bets meaning the annual potential commission would be £5m. Worse still, to achieve that revenue we would need to sign up 2 million users which equates to £2.50 per user per annum in revenue. You need a very low customer acquisition and service cost to make that business work. You could argue that you will only target people who only bet with friends online but there is no evidence that people like that exist. Betting is a social activity and is technology independent.

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Despite this, there was a boom of person-to-person betting sites in 2000, to name but two others, Betswap and Betmart, both of which came up with a very similar model to flutter totally independently. Even late last year a new site, Gottabet, launched. Having worked at flutter, looking at Gottabet was like watching Star Wars Episode 1, the same idea but more modern technology (no Jar Jar Binks thankfully). Which leads me to my final question, why do internet entrepreneurs and investors seem to love this market? I think it comes down to the simple fact that internet entrepreneurs and investors tend to be young, competitive internet-savvy members of that 4%. And while it makes sense to build a product that you yourself would like, it is always important to make sure that you aren’t too atypical of the rest of the population!

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For Gottabet I see if they can develop a bet creation process that is as simple as a text message or an email then they could take a chunk of the remote private betting market but it will be a challenge. Additionally, they could focus on the other part of their proposition which is challenge bets for play money. If they can become the ubiquitous challenge bet widget (which they can then market to the US) then they could be in with a shot at an advertising funded model.

Welcome to my Blog

In this blog I plan to cover:

• Prediction markets
• Betting exchanges
• Social news aggregation services like Digg and Newsvine

What I plan to explore is does the wisdom of the crowds idea hold true in producing useful products and accurate predictions? I hope to conduct comparisons between sites, track performance, analyse why some sites are successful and others not, look at their usability and underlying mechanisms and finally explore what future developments could we see.

I plan to post about once per week, probably on a Sunday so stay tuned. A note on the name of the site: 'Big Hand Small Map' is a phrase which is commonly used in the British Army to describe a presentation where you don't really know the detail and therefore you have to wave your hands a lot!