Google (Alphabet) has its own eponymous app for both iOS and Android devices called “Google”. Sometimes it is more colloquially referred to (especially inside the company) as Google Now. The premise is a smart app that trolls your emails, location data, maps history, calendar, and other information that Google knows about you to offer you recommendations and information that Google thinks you would want to know.

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Each snippet of information shows up in a little card. There are cards for weather, traffic, public transportation information, news, sports scores, airline reservations, your calendar schedule, stock prices, restaurant reservations, and more. Google wants to predict what you might be thinking and when and offer you specific answers to your internal questions based on a host of information already saved somewhere inside your personal Google account. It also wants to keep you updated on your life events that might be happening via your emails and calendars. Users can click cards for more information, swipe away cards when they are deemed unnecessary or not useful, and scroll to find more cards.

Furthermore, the app features Google voice search command that one sees so often on TV commercials. Open the app, tell your phone your search query, and most of the time it’ll give you a nice little list of results with some snazzy narration.

If one is an avid Google user and funnels his or her email, calendar, internet browsing, video watching, and social life through Google properties, then the app can actually be quite useful. I especially find it useful regarding upcoming flights—the app goes through your email confirmations received from airlines and displays all the relevant information for you in a little, easy-to-digest card format. Another cool use case is for traffic. Presuming Google knows where you work and where you live, it can give you real-time traffic information (taken from standard Google Maps app) and suggest when you should start heading home (via a push notification). Another nice touch is that it includes calls-to-action with some cards, whether it’s to buy tickets to an event, book a hotel, reserve a table at a restaurant, or buy a product. So far, no ads have shown up in the card feed—probably because the usage is so low there are no advertisers willing to spend money to reach minimal eyeballs. Another plausible explanation is that Google doesn’t want to clutter this product with ads as it has with so many of its other products.

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The service has been out for quite some time (I have been using it since 2013 and only because I was working at Google) but an informal HBS straw poll of 10 students showed that not one person had even heard about this app offering from Google. I can confirm that sentiment elsewhere in the tech-hub and tech-forward Bay Area, California nonetheless. Few outside of Google actually know Google even has an app, let alone what it does or how it can be useful. Despite massive TV advertising, among the generation of 20-30 somethings this Google app has been far from a hit.

One of the more amazing but downright eerie features of the Google app is the location history. If you have the app and have your location services on (which I presume many users do by default but there is definitely an option to turn it off), Google will track your every movement via your phone and GPS. Look at where I went on December 29, 2014. I can confirm I did play golf that day out in Eastern San Diego and then returned home.

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How about Sunday September 28, 2014? I clearly made a full day of Harvard. I wonder what I was doing on Linden Street?

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I flew home on Thanksgiving Day in 2014 to surprise my whole family who thought I wasn’t coming home for the holiday. Good thing they have no idea this even exists on Google.

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It even tracked me during FIELD II all the way in Brazil on January 4, 2015. Don’t tell mom I went to Bar Tize in Belo Horizonte!

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One doesn’t have to think very hard about all the possibilities of how this information could be useful, harmful, interesting, and disastrous all at the same time. I am sure this would take relationships to a new level if only people actually knew about this. For Google and for me, it’s scary—Google basically knows everywhere I go and when I go there with a good degree of accuracy. Should I be upset or should I be thankful in case this information actually comes in handy one day? I think that’s up for an individual to decide. But regardless, Google has done a poor job marketing this feature—I wonder why…

 In summary, if you are a Google maniac and run your life through Google products, Google Now could be very useful for you. I actually really, really like the idea of smart recommendations and trying to predict what you are thinking and/or the information you need. I think it’s the future of the connected world—having technology think for you. And I believe Google is the one company in the world best positioned to do this due to the extensive data they have on all of us. However, without adoption or a solid marketing effort (a problem that is pervasive throughout Google for most of its products and services), this app is nothing but a fun little app for Google employees, ex-employees, and those who love their TV commercials or happen to stumble upon it one day. Perhaps Google doesn’t care to advertise it because they are still working on making the cards relevant and smart and don’t want mass adoption of a less-than-optimal solution.

Finally, the location history is an interesting one. I love showing my friends the technology and most are very intrigued when I do, wondering if they can figure out their own location history. Most are disappointed that they can’t because they don’t have the Google App installed. But then they have no real desire to install it, so they don’t.

Overall, it is definitely a fun little exercise to think about what Google can do with Google Now and what the future might hold.

By: Danny Belch


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Highlight (http://highlig.ht/), an ambient location-based social network and social discovery tool, was poised to be the breakout app of SXSW 2012.[1][2] Highlight is a mobile app that runs in the background on users’ smartphones, alerting them to interesting people nearby–friends, friends of friends, and people with similar interests–using push notifications. Highlight promises to help users meet interesting people in a frictionless way.

Given the level of hype surrounding Highlight ahead of the conference, the general consensus was that Highlight and similar apps like Glancee failed to breakout at SXSW[3], and may have missed their chance to succeed entirely. Why did Highlight fail and what could they have done differently?

 

Highlight screenshot

 

Problems

 Highlight exhibits strong network effects; as more users join the service, users are more likely to discover interesting people using the app around them. To help facilitate interactions despite a small early user base, Highlight made their service extremely sensitive (i.e., they would send notifications even for the most tenuous of connections). At SXSW, a conference filled with tech early adopters that had almost all signed up for the service, this level of sensitivity proved overwhelming for users, who were flooded with notifications. Outside of SXSW, users found that notifications, when they did pop up, were uninteresting and unactionable.

Highlight also quickly developed a reputation as a battery killer, despite the app’s use of Apple’s battery-conserving background location services[4]. This dampened the app’s appeal[5], especially at a conference where people rely on their phones to stay connected throughout the day. Even outside of SXSW, people with smartphones rely on their phones to stay connected while out and about, and will be reluctant to use an app that reduces battery life.

Solutions

Highlight can overcome network effects in its early stages by providing standalone value independent of network effects. Perhaps Highlight could provide info about interesting places nearby, sourced from a robust location database like Foursquare’s Venues Platform (https://developer.foursquare.com/overview/venues). Highlight might show popular landmarks nearby. It could even go a step further, showing only landmarks most likely to be interesting to users given their interests, incentivizing users to input their interests during signup. Though Highlight’s long-term goal would still be to facilitate social discovery, the addition of standalone value could keep users coming back until a critical mass of users is reached, and incentivize them to input valuable data in the process.

With standalone value established, Highlight can keep the bar high for notifications, only notifying users when a truly interesting and actionable person is nearby (i.e., someone with a significant number of friends and interests in common). This will ensure that the social discovery feature is actually useful and compelling, and will rarely be a nuisance.

Finally, Highlight should make it easier for users to take action once they’ve discovered someone that they want to meet. Users should be allowed to silently “tap” nearby users that they find interesting. In the event of a mutual tap, Highlight should reveal the mutual interest to both users, reveal richer information about each user, and allow the users to set a meeting place and time and/or actively guide them to each other using GPS. Without such a feature, it might be too overwhelming to approach another stranger discovered through the service, and notifications might simply go ignored.

Closing thoughts

Highlight is an exciting concept, and it’s not dead yet. In fact, the team released an updated app with “expanded profiles, ‘high fives,’ and improved notifications” just yesterday[6]. The prospect of more easily discovering and interacting with interesting people nearby (in a non-creepy way) is an exciting one. But maybe Highlight needs to try a different tack to succeed. Or, maybe it’s just ahead of its time.

 

[1] Foursquare And Glancee Are Cool, But Here’s Why I’m So Excited About Using Highlight At SXSW, Eric Eldon, TechCrunch, http://techcrunch.com/2012/03/03/myhighlight/, written 3/3/12, accessed 11/21/12
[2] The two hottest apps you’ll “run into” at SXSW, Robert Scoble, The Next Web, http://thenextweb.com/apps/2012/02/24/the-two-hottest-apps-youll-run-into-at-sxsw/, written 2/24/12, accessed 11/21/12
[3] How Glancee And Highlight Are Fixing Those Background Location And Notification Problems, Eric Eldon, TechCrunch, http://techcrunch.com/2012/03/13/locationsignals/, written 3/13/12, accessed 11/21/12
[4] Location Awareness Programming Guide – iOS Developer Library, http://developer.apple.com/library/ios/#documentation/userexperience/conceptual/LocationAwarenessPG/CoreLocation/CoreLocation.html, accessed 11/21/12
[5] The Real SXSW “Winner” Is The Mophie Juice Pack, http://techcrunch.com/2012/03/17/the-real-sxsw-winner-is-the-mophie-juice-pack/, written 3/17/12, accessed 11/21/12
[6] Highlight Launches Android App And New iOS App With Expanded Profiles, “High Fives,” And Improved Notifications, Ryan Lawler, TechCrunch, http://techcrunch.com/2012/11/20/une-autre-version-de-highlight/, written 11/20/12, accessed 11/21/12


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In the last decade the online economy has provided countless nightmares to the brick-and-mortar retail model including the rise of profitable e-commerce platforms, digitalization and streaming of content, and freely available expert and peer revi

ew on products (reducing the utility of the in-store salesman). Fortunately the rise of the smart-phones may let traditional retail catch a little break and create unique opportunities to increase the efficiencies of current advertise expenditures. At least that is the idea Shopkick has been successfully selling for little more than a year.

Business Model

Shopkick is a location-based application that differentiates itself by rewarding users merely for entering retail establishments. It also differentiates itself from competing location-based social networks like foursquare with a more passive system that only requires the user to open the app. Rewards are measured in kicks that can be exchanged later for gift cards, digital content, products like Xbox 360 or Sony Flat-screen TVs or even donated to charity. Users also win kicks for scanning specific product’s bar codes or performing more elaborated tasks further down the convertibility lane like entering dressing-rooms.

But can this kind of advertisement be profitable? Shopkick CEO claims that nonbelievers are usually not aware of the value of foot traffic to brick-and-mortar retailers. Grocery and fashion stores have conversion rates of 95% and 20% respectively compared to 3-5% on e-commerce shops, meaning that traditional retailers are willing to pay a lot more for traffic (an expense that is usually hidden in the high rents they pay for high-traffic locations). Additionally entire product lines are dependent on concepts like impulse purchases.

Growth

Shopkick success started by developing a patented technology that identifies when users enter a store: a $ 100 device that emits low frequency sound waves that can be detected by the phone’s microphones. This device addressed the inaccuracy of GPS (especially in urban areas) and Wi-Fi and cell tower triangulation technologies (which are still street-bound and unable to identify in which floor users are located).

This technology enabled negotiation for trial phases in key retailers allowing Shopkick to attract its first users. The company has been experiencing exponential growth signing up its first million consumers in 7 months and its second million in only 4 months. According to the company the average user opens the app 14 times a month and looks at products from 16 stores each time. Since launch in Aug 2010 they had over 7M product scanned. Besides its strongly growing user base, Shopkick counts with other relevant assets including operating contracts with large retailers like American Eagle, Best Buy, Macy’s and top Brands including P&G, Unilever, Kraft, Colgate, Clorox, Disney, HP and Intel. The network effects are clear: the larger number of consumers the more interesting the value proposition to retailers and brands; the larger the number of affiliated merchants the larger the potential rewards consumers will be able to collect.

Relevant Questions

The main question in retailer’s minds when pondering about Shopkick is how incremental can this additional traffic really be? Even if it is incremental, what is the conversion rate of this traffic compared to usual traffic?

According to Sports Authority’s VP of E-Commerce: “We do see these people come through the checkout [lines]. I think there is still the question in terms of incrementally—is this actually an additional sale? But with the user base being young and pretty tech-savvy, which is an attractive user base, you have to believe that at least some of those are new customers”

Shopkick executives state that the additional traffic is real and valuable. The company claims one of its largest and more committed retail partners has already shown $50M incremental sales due to Shopkick. Individual campaigns show that when a store doubles the kicks per walk-in, next week traffic sees increase in Shopkick users from 50 to 100%.

The market seems to agree… Wall Street Journal elected Shopkick as one of the top 10 apps in 2010 and relevant retailers like BestBuy moved quickly from trials to national roll-out. Some even see it as a platform to become the largest shopping rewards network in the world.

Other questions managers will have to answer as the business scales include:

  • What is the right balance between value to users and value to retailers? For example sorting out free-loaders that collect points by entering stores in their way to work or male users scanning barcodes of women’s fashion magazines.
  • Where to fall in balancing the value of exclusive contracts against the potential network effects and risk of providing blank spaces that invite competition.
  • Where to fall in balancing the trade-offs between signing restrictive and discounted contracts with large retailers vs. depend longer on external capital that will dilute founders’ equity stakes.
  • Can this model be profitable in smaller retailers? Is this kind of advertisement too sophisticated for this public? What kind of subsidies can the company afford in order to bring them on board? (e.g. the CEO has announced the intension to provide the technology for free to increase adoption among smaller retailers)

Additional sources of value:

I am particularly bullish about the concept and believe there are two additional sources of value that can make Shopkick even more successful as it scales.

First, the opportunity to send consumer-personalized advertisement the moment a consumer enters a store or the moment a consumer scans a bar-code, which could dramatically increase the efficiency of ad and promotional dollars.

Second, focus even more strongly on Brands to capture “trade-marketing” budget. Shopkick rewards for scanning products is a very strong tool for product introduction, inviting customers to see innovation the moment they enter stores. Additionally, larger retailers have squeezed manufacturer’s margins due to the negotiating power of the scarcity of good shelf space. Millions of dollars in trademark budgets are spent to guarantee products have big displays in high shelves. Shopkick may be an alternative to that, guaranteeing brands that consumers will pick-up and consider their products despite the fact that retailers are increasingly auctioning visibility or reserving shelf-space to store-brands. Of course, striking the right balance between the value to retailers and the value to brands is a big challenge in capitalizing this opportunity.

Please contribute with comments regarding other sources of value and potential challenges/questions you believe the Shopkick business model will encounter in the future.


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