Inside My Brain

Thoughts about startups, tech, marketing, and life

CATEGORY: Technology

Is the startup you’re building big or cool enough?

I think about this a lot.

Is WinOptix is a big enough idea? Is my target market big enough? Is the concept interesting or impactful enough?

A lot of this “big enough” doubt comes from reading a lot of tech and startup news.

“Startup X raises $50 million dollars and now is worth $2 billion.”

“Startup Y has $100 million in revenue with no marketing.”

“Startup Z goes public, the stock pops, and the company is now worth $5 billion.”

I need to stop reading all of crap.

The fact of the matter is that I don’t know if WinOptix is big enough yet.

Yeah, the government contracting market is really big, like trillions of dollars big. But at the moment, I’m only targeting IT service providers, which is much smaller.

Can the product be eventually sold to other types of government contractors, or additional markets outside of govcon, so that the market gets much larger? Maybe. But I don’t know. I’m not there yet.

Here’s a post from Rob Go of NextView Ventures that talks about the “market size fallacy” for seed stage startups. That post makes me feel better every time I read it. It basically says, “you don’t know until you find out.”

And the product is in such an early phase that I don’t know if it will be cool or impactful enough.

There’s been a good amount of interest from prospective customers and partners. Industry experts believe in the concept and like what they see in the product. But I won’t really know how impactful the product will be until I get more paying customers.

There’s a lot of things I don’t know. But that’s OK.

So if you’re not sure how big your market is or how impactful your product is, that’s OK too.

Maybe your company isn’t venture scale. Maybe it is. So what?

Maybe your product is in a boring industry. Or maybe it’s in a hot sector like AI or blockchain. So what?

It’s tough to stop having FOMO, but it’s necessary. It’s hard not to think about chasing the shiny object. I think about cooler technologies and products all the time. But it just takes my focus away from what’s important.

So is the startup you’re building big or cool enough? Don’t worry about it, it probably doesn’t matter.

Is your business model minimizing financial risk for your customers?

I’ve written in the past about business model innovation, and how companies can not only innovate with their product, but also with the way they charge their customers and garner revenue.

A business model innovation that I like and have been noticing recently is one that that minimizes the financial risk for its customers. While the free trial and freemium models do this to a certain extent, some companies go even further.

There are two models that I highlight in this post:

  1. When companies provide a service first, and get paid later when a certain event occurs
  2. When companies have you pay first but then refund money if you don’t use the product in a given time frame

Here are three companies that do a great job of minimizing financial risk for their customers.

Lambda School

Studies from Georgetown University and Pew Research Center have shown that college graduates make significantly more per year, and over a lifetime, than their counterparts with no four-year college degree. That’s a comforting statistic for college grads, current students, and those thinking about attending.

But there is a lot of risk in attending college.

First of all, the cost of attending college has become astronomical.

Tuition and fees at ranked private schools average over $41,000, with some of the top schools charging over $55,000 per year. Yucky to the bank account.

Growth of college tuition

Growth of college tuition – graph courtesy of US News

So unless you have rich parents who can pay for your education (lucky you), or you ace all of your high school classes and entrance exams and get a full scholarship (smart you), you’re likely going to have to take out student loans. And these loans will follow you around forever, even if you declare bankruptcy.

Second, even if you graduate college, you might not get a job upon graduation, or months or even years after. That’s pretty terrible.

Because of this increased risk of attending college, there’s been a growth in popularity of vocational programs and coding bootcamps like General Assembly, Flatiron School, and many others that have come and gone. These programs can either be in-person or online and teach you tech-related skills like web development and digital marketing. Classes typically last a few months, depending on whether you’re a full- or part-time student.

The problem is that these programs are still pretty expensive (full-time, in-person coding bootcamps can cost up to $20,000) and you’re still not guaranteed a job after you graduate. So are these programs really solving the problem?

Lambda School has a really innovative business model that aims to minimize their students’ risk of gaining a useful education.

Lambda School provides computer science and data science courses taught live and online by instructors who have worked for the largest tech companies like Google and Apple.

The big differentiator is that you don’t pay a cent for this education until you graduate and make more than $50,000 per year in salary. At that point, you pay 17% of your salary for two years. 

So let’s say you graduate from Lambda School and get a job as a Data Scientist making $75,000 per year. 17% of $75,000 is $12,750; assuming you don’t get a raise within your first two years, you would pay $25,500 to Lambda School.

That’s less than one semester’s worth of tuition and fees at some universities.

With no upfront monetary investment.

And you already have a high-paying job before you pay anything.

That’s pretty amazing.

I’m not sure how innovative their curriculum is; live online education has certainly been tried before. It’s the de-risking of the cost of the education that’s really innovative.

I learned about Lambda School from this episode of This Week in Startups.  The founder, Austin Allred, shares a ton of info about why college tuitions have soared and why he started Lambda School.

Education is one of the most important sectors of our economy and it’s clearly broken. I’m rooting hard for Austin and Lambda School to succeed so this huge problem can be fixed.

MaxSalePrice

Selling a home is a stressful task and a lot of work.

You need to make your home look nice, work with agents, price it correctly, give tours, and much more, in a short amount of time.

In the end, you want to maximize the sales price of your home. And one way to do this is to do home improvement projects before you put your house on the market. A remodeling of your kitchen, new hardwood floors, and a fresh coat of paint can significantly increase the value of your home.

These projects aren’t cheap, though. A kitchen remodel can cost over $40,000, a full paint job can cost $10,000, and installing hardwood floors can be many thousands as well.

And you have to find trustworthy contractors and pay them upfront to do this work.

MaxSalePriceMaxSalePrice logo is flipping this model on its head.

The company will work with you and your real estate agent to figure out what improvements are needed to maximize your sale price. Then their contractors will execute these projects, and you don’t pay until you close the sale of your home, regardless of how long it takes to sell it.

Everyone wins here. You maximize your revenue from your home, your agent gets her cut of a bigger pie, and MaxSalePrice gets paid for its work.

I know the company’s CEO, Rick Rudman, pretty well. He started and sold his PR software company Vocus for nearly $500 million and was the CEO of social media software Tracx. The more he told me about MaxSalePrice, the more interesting it sounded. I think it’s a really great business model and I’m sure MaxSalePrice will be really successful with Rick at the helm.

Slack

Workplace communication provider Slack does many things really well, and their business model is one of them.

Slack has a pretty amazing free plan. You get unlimited public and private channels, 10,000 searchable messages, up to 10 apps, and much more. It’s very compelling for small teams.

Slack logoOnce you grow out of that plan, Slack can cost up to $15 per user per month.

The innovative aspect of their business model is what they call “Fair Billing Policy”, where your company will only get billed for the people who use it each month. So if an employee you’ve already paid for becomes inactive, Slack will add a prorated credit to your account for the unused time.

There are very few enterprise apps that get used by every employee every single day. Even though Slack is likely to be one of these apps, they still minimize financial risk for their customers by providing refunds for inactive users.

That’s a characteristic of a truly customer-centric company. It’s no wonder why they’re valued at more than $5 billion.

Conclusion

I really love it when companies innovate with their business models, and these three companies are doing a great job of taking care of their customers’ wallets.

It has really made me think of how to structure pricing for my startup, WinOptix, and how I can de-risk this process for my customers.

Have you seen other companies whose business models help minimize financial risk for their customers? Are you doing so for your customers?

I’d love to hear your thoughts in the comments.

What I love and hate about learning to code

Since I became an entrepreneur nearly six years ago, I’ve attempted to learn to code a few times but never really stuck with it. I took some online courses learning Ruby on Rails and Javascript (Meteor and Node), but all that knowledge just faded away over time because I failed to continue to work at it.

I think it was because I wasn’t building projects that were that interesting or helpful to me. Now I’m learning Python and have stuck with it longer than anytime in the past because I’m working on things that directly impact my life.

I’ve written a small script that automates some of the reporting that I do for my day job (and I continue to improve it) and am working on a program that syncs my Amazon Alexa shopping list to Trello, which my wife and I use to organize our shopping list. You can read more about these projects in this Quora answer.

There are great and terrible things about learning to code. Here are my thoughts on what I love and hate about my journey.

What I love about learning to code

Thinking deeply

I enjoy thinking deeply through the problems that I face when learning to code.

When I’m learning something new, especially something as difficult as software development, I have to really concentrate to understand what I’m doing and what’s happening.

Still, most of the time I have no idea what’s going on.

But I do enjoy getting really deep in thought and pretending that I understand what I’m learning. 🙂

Logical thinking

Regardless of the programming language that you’re learning, you have to apply a lot of logic. I really enjoy thinking through what is the best logic I should use.

For loops, if/then statements, different ways to format your data – you have to be able to apply these techniques, and many more, in various situations. There’s always more than one way to do something with code, and the logic you apply will determine what’s the best solution.

Researching

I truly enjoy researching solutions to specific problems that I’m facing. I spend A LOT of time on Stack Overflow searching for solutions, and I really enjoy doing this research. I obviously don’t always know what I’m researching, but I like the process of researching and implementing a solution.

It’s an amazing feeling when something works

It’s an amazing feeling when, after a lot of thinking deeply, applying logic, and researching, the script you wrote actually does what you want it to do.

It’s actually my third favorite feeling in the world (the top two are bodily functions that I won’t get into, haha).

The Challenge

Learning to code is hard. And I like the challenge that it offers. It’s invigorating.

What I hate about learning to code

It’s really time consuming and fucking hard

I like the feeling of getting things done. And often I’m not getting anything done when I code.

There are times I just sit there and stare at the blinking cursor with no idea what to type next.

It takes FOREVER for me to write code. I’ve been working on some of these scripts for months and sometimes it seems like I’m going backwards.

It’s literally like learning a new language.

I do enjoy the challenge…most of the time. But there are times when learning to code just seems too hard.

I feel like I’ll never amount to anything

I don’t think I want to become a full-time software developer, but even if I did, I can’t imagine getting good enough at programming to become one.

I feel so far behind and don’t believe that I can really ever catch up to developers who have years or decades more experience.

When I get stuck on a problem and can’t figure it out, feelings of inability and stupidity pop up. It’s tough.

Conclusion

Learning to code is fun and shitty at the same time.

One minute I’m pumping my fist because something worked, the next minute I’m smashing my head against my desk because I broke something and have no idea what.

Hopefully the pros will outweigh the cons and I’ll just keep cranking away at it.

 

The plight of the non-technical startup founder

Tech startups are hard.

You need all kinds of people to make a startup successful.

Depending on the type of product you’re building. who your customer is (consumer vs. enterprise), what stage you’re in, and other factors, you’ll need product leaders, software developers, sales reps, marketers, designers, operators, recruiters, administrators, and many other roles.

But in the very early days of your startup, if you’re a non-technical founder, by far the most important member of your team is the software developer. If you can find one.

No matter how much you know about the industry, the user, the product features, and everything else, the software developer will be the one who can actually ship a product.

You can do all the research in the world. You can talk to scores of potential customers to learn their pain points. You can create mockups and wireframes.

But all of that doesn’t mean much if you can’t ship a product.

That’s why software developers are the rock stars in the tech startup world. They can bring ideas to fruition.

As a non-technical founder, I know that I’m at a disadvantage. My coding skills, while improving little by little, are not even close to the point where I can build an app.

I need to be able to recruit software developers to help me build my product, and I’m competing against every other non-technical founder to do so. Not easy.

Once I successfully recruit them, I need to be able to communicate my vision of the app so they can build it. And a lot can get lost in translation.

Such is the plight of the non-technical founder.

Startups are hard. And if you’re a non-technical founder, they can be damn near impossible.

Rant over.

The three technologies I’m most excited about in 2018 (aka my favorite buzzwords)

I’ve always been excited about how technology can change our lives, and there’s been a lot of new, almost Star-Trekky changes recently. But I’m most excited about the future of these three technologies and how they’ll gain widespread adoption in 2018.

Artificial intelligence

AI and machine learning were huge buzzwords the past few years, almost to the point of annoyance.

Every startup said that they were an AI company in some way.

Google identified that the world was transforming from mobile-first to AI-first, and they’re doing everything they can to usher in this world (Note: I believe Google more than the other startups).

Sales of the Amazon Echo broke records. 

AI products are getting better and smarter everyday. And in 2018, I think we as consumers will get more comfortable with AI handling more important aspects of our lives such as our calendars, emails, and shopping lists. I think we’ll get over the privacy concerns and the notion that AI robots will take over the world (they’ll just do backflips).

AI will be extremely prevalent in the enterprise, too, which will be evident in the ways we interact with these companies.

Enterprises will continue to use machine learning to have a deeper understanding of our habits, and thus the messages they send us will be more relevant (as creepy as that may be). Bots will automate many of our conversations, and they’ll be so accurate that we’ll think it’s a real person while accusing them that it’s a bot. There may be other times when AI is used and you won’t even know it.

AI has been hot, but I think it’s only going to get hotter and more widespread.

Voice recognition

As AI improves, voice recognition is going to get better in lockstep.

Siri sucks, but Alexa and Google’s voice assistant (who really needs a proper name) are pretty amazing. These are just previews of how voice will change how we interact with our devices.

I believe the existence of remote controls for our TVs, speakers, and ceiling fans is trending toward 0.

I think typing, like I’m doing now, will eventually go the way of the dodo.

I think we’ll interact with our devices with our voices so often that humans in the room will be confused whether we’re talking to them.

The enterprise will certainly be impacted as well. AWS recently announced Alexa for Business, where companies can build Alexa skills to pull up lead information, turn off conference room lights, or schedule a meeting.

We’re going to use our voices way more often in 2018.

Blockchain

I can feel your eyes rolling already. Bitcoin this, blockchain that. Blockchain was going to be the first section of this blog post, but I thought that many of you would get sick of hearing about it and stop reading.

Yes, Bitcoin, Ethereum, and the hundreds of other cryptocurrencies are overhyped. Yes, it’s very early in the life cycle of the technology, and lot of it is speculative. Yes, you might have fomo for not buying Bitcoin earlier (half kidding).

All that Bitcoin stuff aside, the actual blockchain technology is going to change the way the internet and the entire world runs.

I won’t get too deep into the details of the technology; you can read this article for a great overview of how blockchain works.

Just imagine not having to trust Equifax with all of your credit history. That trust was breached. Instead, your credit history will be distributed across thousands of nodes all over the world, encrypted and immutable.

Blockchain can be used to track the source of every resource in the supply chain, so you can find out where your T-shirt was sourced from and feel better that some 9-year old Vietnamese kid didn’t produce your shirt in a sweatshop.

While it might take a while to pan out, blockchain is going to be one of the most transformative technologies we’ve ever seen.

Conclusion

Buzzwords, buzzwords, buzzwords. I’m not breaking any ground here, as these technologies have been hyped and touted as the next big thing for a little while now. But these are the three tech developments that I’ll be tracking closely in 2018, and I think they’ll dramatically alter the way we live.

Slack, distractions, and Twist

If you read this blog, you know that I’m all about finding ways to increase productivity and minimize distractions.

And the more and more I use Slack, the more I hate it because it’s a constant stream of distractions.

I’m not alone. See here, here, and here.

Don’t get me wrong – Slack is an extremely well-designed, well-built platform. The integrations are great and the ability to build tools and bots on top of it is pretty awesome. It’s a valuable messaging tool, which is why the company is the fastest growing business app ever.

The underlying philosophy of Slack and many business communication apps – a stream of messages with little organization – is what’s bothersome to me.

My problems with Slack

Imagine you work on a remote team and you’re 12 hours ahead of most of your team members. While they’re in the middle of their work day, you’re deep asleep. Not only will you be bombarded with notifications, but you’ll also wake up to a cacophony of messages with very little idea of what subject was started where and by whom.

Another example is going on vacation. I was on a two-week trek to Thailand and got pinged with many messages that had nothing to do with me. The messages that were relevant to me were buried deep in multiple channels. I actually didn’t realize I missed messages until one of my co-workers asked me if I saw the message he sent to me.

And I know that I’ve sent many messages that were missed or unread.

At the core of the problem is notifications.

Yes, you can set certain your notification preferences – such as seeing all notifications, only those messages that mention your name, or no notifications for a channel. Those aren’t granular enough, and I find that I still miss a lot of stuff no matter which option I choose. And all you hear all day is that knock brush sound.

Another issue is that Slack doesn’t provide you with email notifications, so it forces you to use its tool to check notifications and messages, which again leads to missed messages. This is great for their engagement metrics, but not great for productivity.

Twist – a more thoughtful communication tool

I’ve been using a relatively new messaging tool called Twist, which is built by the same company who created the popular Todoist productivity app.

The philosophy and benefits of the tool are laid out nicely in this Medium post written by Twist’s creator.

We use Twist for WinOptix. Our team is pretty small (only 3 of us, all part-time), so our message volume isn’t very high. But we’ve already seen benefits from the different approach Twist has taken to messaging.

Channels and Threads

Like Slack, Twist has channels that you can denote subjects for, such as “Design”, “Development”, “Marketing”, and more. But Twist goes one level deeper with threads within each of these channels. So under “Development”, we have a thread for “Development Task Organization”, where our developer and I discussed the best way to organize development tasks, and “FPDS data – GitLab Repo” where we talk about how to access troves of government contracting data.

These threads portray the messages in a more granular fashion so you have a better idea of what the conversation is about.

Twist's channels and threads

Twist’s channels and threads

Sender can choose who receives notifications

The next big feature is the ability for the sender to select who receives notifications. This is HUGE.

Let’s say that I just want to ask our developer a direct question. I’ll just select his name in the “Notify” field and ask away. He’ll be the only one who receives a notification. Everyone else who is part of that channel will be left alone but will still be able to view that message at any time.

This is the best of both worlds. This gives the sender the power to minimize distractions for his or her team, not just the receiver to minimize distractions for herself.

In Slack, you can type “@username” to specifically mention someone in a message, but if other employees in that channel have selected to receive notifications for all messages, they’ll still get pinged with this message.

(BTW, as I’m writing this, I just got pinged with a Slack notification that had nothing to do with me. Ugh.)

Email notifications

Everyone hates email, but I don’t think it’s that bad. I used to receive 200 emails a day, but I’ve pruned that down to less than half. Maybe I’ve just gotten less popular. :/

I might be old-fashioned, but my email inboxes are the center of my work life.

Anyway, I love how Twist sends me email notifications about messages that have been recently posted. This allows me to see if I missed anything important without having to check all of the messages in the app itself. And the asynchronous nature of email lets me review messages whenever I please.

Conclusion

This may seem like I’m hating on Slack, but I’m not. It’s a really great piece of software, but it just doesn’t work all that well with the way that I work.

And I’m not getting paid by Twist to write this post. I just think it’s a very well thought-out tool that focuses more on productivity as opposed to just communication.

The caveat here is that we don’t yet have a high volume of messages, but I think that the way Twist is set up, ramping up the volume won’t be as distracting.

Anyway, if you’re frustrated with the constant pinging and missed messages, I’d suggest giving Twist a shot. If you do, let me know what you think!

Let Your Personality Shine in Your Product

A couple of years ago, the folks at startup accelerator Y Combinator put on a series of lectures called “How to Start a Startup” at Stanford University.

My favorite lecture was lecture 7, “How to Build Products Users Love“, which was presented by Kevin Hale, Founder of online form company Wufoo and now Partner at YC.

There is a TON of great information about user onboarding, customer support, and much more.

But the enduring theme that I took out of the lecture was how to incorporate your personality into your product to make it something that your users love to use.

With Wufoo, they did things like include interesting microcopy, like having “RARRR!” pop up when you hover over the dinosaur login button:

 

Wufoo login microcopy

 

 

Another example was from one of Wufoo’s customers who included some hilarious microcopy in their sign-up form:

Corkd form microcopy

 

Every time you open Slack, they’ll have an amusing message waiting for you to start your day:

Slack quote

 

Of course, you need to build a product that provides value to the user, is fast, doesn’t crash all the time, has solid design, and has all of the other baseline things that a good product should have.

But these little user experience details count a lot, and incorporating your personality into your product wherever possible can delight users and keep them coming back. It can build trust, put a smile on users’ faces, and make them feel loved.

While product designs will differ, many products that do similar things tend to feel the same. There are many online form tools like Wufoo that get the job done. But the microcopy and other details that reflect the company’s personality can be the difference in winning or losing that customer.

Have you encountered a product where you saw the company’s personality shine through? I’d love to hear your thoughts!

Testing Mockups Before Coding – Lessons Learned from Past Startups Pt. 4

mockups

This is the fourth post I’ve written about some of the mistakes I’ve made with past startups. You can find the other three here:

  1. Alignment with Idea – Lessons Learned from Past Startups 
  2. Alignment with Co-Founders – Lessons Learned From Past Startups Pt. 2
  3. Real Customer Development – Lessons Learned from Past Startups Pt. 3

This week we continue the theme of customer development mistakes I’ve made in the past. Similar to last week’s post, this one is about building the application too early, and how you can test your concept with wireframes and mockups before coding it.

Lack of testing mockups for Dokkit and ribl

We didn’t do any customer development for Dokkit and built an alpha version of the app too early.

After some debate about what the app might look like, my co-founders cranked out the V1 of the app in a couple of months.

A smarter path would have been to create mockups of the app and test them with our target audience.

You can create clickable mockups using tools like InVision, Balsamiq, or Mockflow (which I use) that simulate how the app might work and behave. It won’t look like the polished app you envision, but it can reflect the core features and functionality that the first version of your app might have. And you can create pretty detailed mockups in a few hours or days, not months.

Same with ribl. Instead of spending a couple of months to build the first version of the app, we could have created mobile mockups with InVision, Fluid UI, or the many other mobile mockup tools on the market.

And we could have tested these mockups on both Android and iPhone before spending all the time building for both platforms (another big mistake that I’ll probably blog about in a future post).

Because you can edit mockups easily, you can rapidly incorporate your testers’ feedback into the next version of your mockups and test them again. This rapid iteration cycle will allow you to continuously improve the “product” to the point where you’ll feel pretty comfortable that you’re building something people want.

Testing mockups with WinOptix

After I believed that the concept of WinOptix was validated via over 40 customer development interviews, I started working on the mockups.

It took me a decent amount of time putting these mockups together because I just didn’t have a strong vision of what the app might look like. I got some great input from Dave and Carolina, the developer and UX designer whom I’m working with, and incorporated their feedback into the designs.

After we were done with creating the mockups, I had a bad feeling that the tests were going to go horribly and that the mockups were completely wrong.

There was only one way to find out.

I reached back out to the people whom I interviewed and up until today, I’ve shown seven of them the mockups.

We weren’t as wrong as I thought we’d be, which was pleasantly surprising. I received some excellent feedback about changes that need to be made, features that should be added and subtracted, and what parts of the mockups really stood out.

It would have taken a few months to build a first version of the app that I mocked up in a couple of weeks. So we saved a ton of time, and I saved a bunch of my development budget.

My goal is to show the mockups to at least 15 people.

The ideal situation is that one of the test subjects becomes so impressed with the value that WinOptix might bring to their organization that they’ll pre-pay us to build the app. If that doesn’t happen, hopefully a couple of the respondents will agree to trial the app when our V1 goes live.

Regardless, we’ll review all of the feedback and determine what changes need to be made and how to proceed from there.

Conclusion

Testing mockups is a continuation of the early-stage customer development process and is a MUCH cheaper and faster way to obtain feedback from your target customer.

Your mockups might be completely wrong, or they may be on point. Either way, you’ll have a much better idea of what your next steps are without spending tens of thousands of dollars and/or months of your time coding the first version of your application.

We’ll see what happens as things progress with WinOptix, but testing mockups has been really beneficial so far.

I learned this lesson the hard way and I hope you won’t have to!

Here are some other resources about how to use mockups before building your app:

What are your thoughts about testing mockups before coding your app? Have you had success doing this? I’d love to hear your thoughts in the comments.

OpenTable vs. Yelp for restaurant reviews – what I learned from making dinner reservations

restaurant_interior

When you’re looking for restaurant reviews, where do you go?

I think most of you would say Yelp. I tend to do the same.

But earlier this week, while I was searching for a restaurant to make a rezzie for Valentine’s Day, I realized that OpenTable has SO MANY MORE reviews than Yelp. Did you know that?

For Rural Society (where we’re going on Tuesday – have you been?), Yelp has 280 reviews, while OpenTable has more than two times the number, 571.

For Woodward Table, Yelp has 370 reviews, while OpenTable has 1136! More than 3x!

For Art and Soul, Yelp has 719 reviews and OpenTable has 3840! That’s more than 5x!

What’s going on here?

The questions I pondered were:

  1. Why is Yelp so much more top of mind than OpenTable when looking for restaurant ratings and reviews?
  2. Why does OpenTable have so many more reviews?
  3. Which site should I trust more when looking for restaurant reviews?

Why is Yelp so much more top of mind than OpenTable when looking for restaurant ratings and reviews?

This is the case because Yelp’s primary reason for existence is to provide reviews of local businesses, primarily restaurants, to its users.

One the other hand, OpenTable’s main use case is to make reservations, and the reviews are a secondary feature.

Thus, Yelp is able to focus on communicating its core value proposition of restaurant ratings and reviews. So when they run online or TV ads, they can focus on how they have real reviews from real people. Then when their users talk about their app, they’ll use the same jargon.

That focus can be a very powerful thing in staying top of mind and acquiring users.

Why does OpenTable have so many more reviews?

The reason why OpenTable has so many more reviews is simple – because they own the transaction of making reservations.

People primarily use Yelp to research restaurants they might eat at. And while you can make reservations through Yelp (they actually had a partnership with OpenTable for years to do so), this is a secondary offering. There are relatively few transactions that happen on Yelp.

You use OpenTable to transact, and that’s a very powerful place for them to be. In order to make a rezzie, you need to sign up and login. Then they can capture and store your info and restaurant preferences, and deliver deals and specials to you.

And because they own that transaction, they are able to prompt you for a review after each time you’ve gone to a restaurant, which is why they have so many more reviews than Yelp.

Owning the transaction was one of the primary reasons why Unilever spent $1 billion to acquire Dollar Shave Club.

Because Unilever typically sold their products through supermarkets and drug stores, they had no relationship with the end customer. They had no idea who was buying their product and how often. On the other hand, Dollar Shave Club had tons of information about their customers’ buying habits.

Apparently, that’s worth a lot of money.

Which site should I trust more when looking for restaurant reviews?

This is an interesting question.

Yelp has done a great job recruiting reviewers who write very in-depth, comprehensive reviews of their experiences. Most Yelp reviews are multiple paragraphs long and many include images. On the other hand, the reviews on OpenTable are typically much shorter and less detailed.

But with Yelp, you can only give a single star rating, which represents the overall experience with your meal. On OpenTable, you can provide ratings for food, ambiance, service, and value, which give the reader a more multi-faceted profile of the dining experience. Both are on a scale of 1-5, which I really hate. It doesn’t give the reviewer enough of a range to give a meaningful rating; I prefer 1-7. Just sayin.

And the amount of reviews! Yelp has significantly fewer reviews per restaurant than OpenTable. If you’re a proponent of the wisdom of the crowds, OpenTable is the place to be.

And from a small sample size that I looked at, it seems like the ratings on Yelp, on average, are lower than that of OpenTable. Are Yelpers more discerning? I’m not sure.

Conclusion

I found it very interesting when I discovered that OpenTable had so many more reviews.

From this discovery, I came to two conclusions.

Yelp will probably still be the first place I look when searching for restaurant reviews, but I think I’ll also refer to OpenTable’s reviews for more context.

I also realized how valuable owning the transaction is for a business; in this case, for amassing a high volume of reviews. OpenTable has a great business where restaurants pay them for every reservation made by a diner, and they are certainly the market leader when it comes to online restaurant reservations.

And even though reviews are a secondary feature of the platform, they are extremely valuable. OpenTable has done a great job in amassing so many more reviews than Yelp. And I think if they wanted to highlight their restaurant reviews to garner more traffic and go head-on against Yelp, they can certainly do so effectively.

Funny how much you can learn from making dinner reservations, huh?

Photo courtesy of Tzahy Lerner on Wikimedia Commons

I love when things just work

Good products just seamlessly work, with no problems. I love when that happens.

My Macbook, even though it’s old, still works just fine. My Android Nexus 5 phone has lasted almost three years (a lifetime for smartphones) without being buggy. My thermos keeps my tea hot for hours, just like the label said it would.

Comcast cable and internet works half the time (thank God I have Fios now). The Bluetooth connection in my car sucks. The Hootsuite Android app, while valuable to someone who manages multiple social media accounts, sometimes doesn’t listen to me. My dishwasher is the quietest dishwasher I’ve ever used but the dishes don’t always come out clean.

If you can depend on a product just doing its job as advertised, that’s a good product. The other bells and whistles are just gravy.

Some of the best products are the ones we don’t have to think about. It’s pretty simple – build something that works, do what you say you can do, and everyone wins.

I love when things just work.

What are some of the products that just work for you? Talk to me in the comments!

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