Finite state models of a customer’s behavior

Product experiences that map existing human behavior are often successful, as customers do not need to change behavior to be able to use them. Based on this hypothesis, I’ve used finite state models as tools to inform my choices while designing new products. These models identify distinct states that a user passes through while completing a task. Let me use the finite state model of a typical leisure traveler to illustrate various products and services that are geared towards specific states.

A traveler goes through three main states for any given trip. After discovering and deciding where to travel, she finds the best deals and books transportation, accommodation and activities. She often shares her opinions, feelings, photos, videos, reviews, etc. for that trip with her friends and fellow travelers. She uses multiple services and interacts with many friends and strangers through each state during the trip. In most cases, transaction only occurs when a user transitions from “Discover” to “Travel” state as shown in the state diagram below.

StateModelOfATrip

Discover: Travelers often discover and decide their destination through one of the following channels:

  1. Social Discovery: Many travelers end up discovering new destinations through social networks such as facebook or Google+ and from day to day conversations with their friends. Once they’ve decided their destination, they proactively end up asking for advice from credible friends. While most users rely on in-person conversations or using the social networks directly, some have started using services such as Gogobot, Trippy, Chalo.io, etc. to discover destinations and activities. As per the latest report on Social Media in Travel 2011 by PhoCusWright, referrals from Facebook to hotel websites are converting at a higher rate than referrals from traveler review websites. Facebook’s higher conversion rate provides some provocative circumstantial evidence that travelers may be engaging in travel planning and shopping activites on the social network.
  2. Q&A: From TripAdvisor to Quora, travelers rely upon one of tens of generic and travel- specific Q&A services to get destination-specific questions answered. While there are many travel-specific Q&A sites and mobile apps such as Bootsnall, gtrot, WAYN, igougo, etc., TripAdvisor is the unanimous leader for finding answers to almost any travel- related questions.
  3. Destination Reviews: While many sites such as TripAdvisor, igougo, Tripsay, Lonely Planet, Fodor’s, etc. offer destination reviews, travelers have started relying more on hotel reviews offered by online travel agencies. Such reviews play an important role in a traveler’s purchase decision.
  4. Travel books, magazines, blogs and TV shows: Some travelers get inspired to travel to certain destinations based on an article they may read in a travel magazine or a travel show they may have watched on TV. Many travelers still buy travel books from leading publishers such as Lonely Planet, Fodor’s etc. to learn more about new destinations.
  5. Search engines and filters: Both Google and Bing offer travel-specific vertical search. Additionally price-sensitive travelers often use vertical search engines, filters and aggregation services offered by companies such as Kayak, Hipmunk, SideStep, etc.

Travel: The second state entails booking the trip and managing itinerary.

  1. Deals and booking: Travelers use a combination of leading travel search engines and online travel agencies to find the best deals and book them. Customers often pick one travel agency over another or purchase directly from the airline, hotel or rental car company on the basis of two main criteria – price and convenience.
  2. Trip management services: While most leading travel agencies offer basic itinerary management and on-trip alerts, lately customers have started adopting services such as TripIt and Trippy that aggregate multiple itineraries and offer comprehensive yet simple ways to manage a trip.

Discuss: The final state often loops back to the “discover” state through social discovery.

  1. Reviews and ratings: Travelers often express their opinions about a destination and rate hotels they’ve stayed in and services that they’ve used after a trip. While most travelers express their opinions on social networks, many take the time to leave a review on the online travel agency’s portal or one of the travel advice websites.
  2. Share photos, videos and notes: Many travelers share their notes, photos and videos from trips with their family and friends via email, social networks, blogs, etc.
  3. Plan a new trip through social discovery: Seeds for travelers’ next trip are often planted during or right after their current trip. Based on their interactions with friends and fellow travelers, they often discover new destinations for their next trip.  Typically, a traveler connects and interacts with one or more of the following:
  • Friends who have been to the destination they’re traveling to
  • Friends who stay at the destination they’re traveling to
  • Fellow travelers to the same destination
  • Friends who want to visit the destination they are traveling to

The travel industry has products and services that specialize in each state as well as some large incumbents such as Expedia, Travelocity and Priceline which offer services for each state. Finite state models have helped me stay focused on the customer’s core needs while building new products and I continue to use them. What is the finite state model of your customer’s behavior?

-Kintan

Delta between thought and action

On my comfortably long flight from San Francisco to Dubai last week, I got a chance to reflect upon things I’ve learned since my last trip to the subcontinent. Amongst many things across various personal and professional realms, the highest order bit was obvious – delta between thought and action determines the impact one can have.I define this delta as the difference between the moment when a new thought strikes your mind to the moment you act upon it. The smaller the delta, more thoughts one can act upon. There is a fine line between acting hastily versus quickly. I’m referring to the latter. While it is important to think and analyze before investing meaningful resources on any idea, how quickly one can transform the thought to action indicates his or her expertise. 

One of the core leadership principles that Amazon.com cultivates amongst its leaders is “Be right a lot.” This trait, often considered a barometer for one’s judgement, is highly sought after at Amazon, because leaders are required to decisively execute on a “lot” of ideas. Last year, our small team at IMDb shipped five products in nine languages that directly impacted over 30 million users worldwide and started working on three additional gutsy products slated to be launched this year. Following factors helped us keep the delta between thought and action minimal and instill a strong bias for action:

1. Become an expert – be in the top 1% in your craft: Develop subject matter expertise such that no one can do it half as good as you can. Over the last year, our team developed expertise in building mobile products on multiple platforms mostly by building those products, but also by attending conferences, talking to industry experts and hiring the experts. This engineering expertise helped us quickly prototype a ton of ideas and see them in action, so that we could make product decisions based on working prototypes as opposed to wireframes. Roger Federer or Sachin Tendulkar doesn’t think before hitting every shot. Right shots are second nature for them. Building similar expertise dramatically shrinks the delta between thought and action.

2. Stick to your decisions: Stand by the decision, despite short-term setbacks. Often, there were instances when we were operating on incomplete information and several folks rightfully questioned our decisions. It was important to not waver from the critical path to success, even with incomplete information. For instance, shipping our iPad app at launch without having access to a real iPad was a bet and we were operating on incomplete information. Once we decided to ship an iPad app, we stuck to it despite early setbacks in the iOS SDK an it paid off. We repeated it when we shipped the IMDb experience on Windows Phone 7 later that year and that paid off too. When there isn’t a lot of data to support the decision, it may get tempting to waver at the first setback. It is important to resist that temptation. While decisiveness plays a critical role in shrinking this delta, it ultimately boils down to conviction in one’s ability to execute on an idea.

3. Ship: Given a choice between shipping and not shipping, ship!

As I said, this post is a note to self and while it may seem preachy, it isn’t intended to be. As an entrepreneur, I often measure the delta between my thoughts and action and then challenge myself to shrink that delta by at least half.

What’s the delta between your thoughts and action?

-Kintan

What keeps me going? – joy, action and imagination

Joy, action and imagination are my biggest motivators and we work very
hard to ensure that everyone I work with also experience them through
their work. I’ve been taking a lot of interviews lately to hire for our
growing team. One of the most common questions, I’m asked by candidates
is “What makes you coming back to work day after day at IMDb?” I love
this question, because it provides me a direct segue to “sell” the
culture. I’m writing this post to not sell the culture, but to
highlight the key factors of a high-performing team.
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I didn’t start out on day one with an intention of looking for joy, action and imagination in everything I did. In fact one of my biggest motivators has always been “the impact made by the product”. After my team shipped the beautiful IMDb app for iPad in April under extremely tight constraints, I asked myself –

“What kept/keeps us going as individuals and as a team?”

“What made a team member create a custom video player from scratch on the day of launch, when we discovered a bug in the default video player provided by the iPad SDK? All other apps launched with that bug, except ours. What led us push the envelope?”

“What kept a new dad of a one month infant code furiously (of course by choice)?”

Joy, action and imagination surfaced as obvious themes.  We realized that we truly enjoyed working on the products which we were working on. I enjoyed some of it so much that I would even pay someone to let me work on it. When “What’s in it for me?” is measured in terms of joy, the equation becomes more so interesting.

Action is an overloaded term. In a product manager’s language, action = shipping. There is something innately magical about shipping products. Projects with in-built inertia in the form of unrealistically long product cycles and fluid ship dates tend to suck the magic out of shipping. Our approach of being shipping-oriented (action-oriented) assures us that we’ll continue to experience the sheer joy of shipping on an ongoing basis.

Nobody likes to work on unimaginative and bland products. In an ideal world, all unimaginative tasks could be automated and delegated to machines. We ensure that we stretch our imagination and be creative in our approaches as well as products. Imagination is often considered our biggest asset as humans. We make sure that we ruthlessly leverage this asset. Whether it is designing the user interface for an iPad app (which could be visibly imaginative) or it is optimizing the backend caching so that the app is shockingly responsive, we ensure that imagination is the highest order bit in our approach.

Joy, action and imagination continue to motivate me and my team members. Your motivators could be completely different. The highest order bit is to identify your motivators, communicate them to your team members and leverage them to continue to do great things.

What motivates you?

Kintan

ps 1: On a related note, the 37Signals guys have listed passion, pride and craftsmanship as key tools to optimize a person’s happiness and thus productivity in their latest book – Getting Real. http://gettingreal.37signals.com/ch10_Optimize_for_Happiness.php

ps 2: I realized that I had first heard about joy, action and imagination from Subroto Bagchi in his book – High Performance Entrepreneur.

ps 3: The beautiful photo used in this post is from flickr.com and is used under Creative Commons

iPhone appstore marketing – old school marketing rules apply

What's the primary difference between a brick and mortar mall and an online marketplace for both buyers and sellers?

The buyers are able to instantly search and discover desired products and sellers are able to target their services to buyers who are most likely to search/discover their products. While location is critical for the success of a store in a brick and mortar mall, it doesn't have any significant impact for sellers in an online marketplace.

The appstore is more similar to a brick and mortar store than it is to an online marketplace. Discovering apps is painful for users and making the apps more discoverable is even worse for app developers. iPhone users don't typically search for apps (search in appstore is not the best either). Users install the apps which are either listed as the top 25 apps in a particular category in the appstore or the ones which are featured by appstore's editors.

Ranking:

There are several interesting blog posts out there, which talk in detail about increasing the appstore rankings. These rankings are based on the number of downloads in the last few days (with today's downloads given the highest weight). Many app developers use in-app advertisements from companies like TapJoy and AdMob to boost their downloads. faberNovel from France has explained "how rankings work" in detail here: http://www.slideshare.net/misteroo/how-to-market-your-app

Getting featured by Apple:

There is no secret sauce here, except to make an app really "interesting". If the app is unique and interesting, the editorial teams at Apple are always on the lookout to highlight those apps for the users.

Brick and mortar approach:

I want to highlight that app developers can take lessons from old school marketing to succeed in the appstore. Imagine you're are a retailer and are deciding to open a store in a new shopping mall near your home. The highest order bit in that decision would be the location of the store. Location also decides the price a retailer would pay because there are fixed number of stores in the mall.

In a mall there are three types of stores:

  1. Large department stores like Macy's (Nordstrom, JC Penney, etc.) open a large prominent store either near one of the entrances of the mall. These stores depend on both location and their advertisements for bringing the buyers to their store.
  2. Other retail brands like Gap, Abercrombie and Fitch, etc. which have one flagship store in some section of the mall. These stores depend primarily on their advertisements (their brand) to bring buyers to their store.
  3. Coffee shops like Starbucks often decide to open multiple coffee shops throughout
    the mall (say one near each entrance of the mall.) These stores depend
    primarily on their location in the mall, to bring buyers to their store.

 
image from www.flickr.com

The app store is not much different from a mall. Each of the
categories (Entertainment, Lifestyle, Games, Navigation, Reference,
etc.) serve as individual sections of a mall. Users typically browse
only a few categories on the appstore, when they're browsing for new
apps. If your app is not a top app (overall) or is not present in a
category browsed by a particular user, then that user is unlikely to
discover your app.The ideal approach could be to launch a portfolio of apps (often in different categories) and try to cross-sell the apps.
Pick three or four primary categories where your apps could fit (say
Games, lifestyle and entertainment) and develop three apps instead of
focusing on just one app.

 
image from www.flickr.com

Most app developers often don't have an established brand or large
advertisement budgets, so the most optimal strategy for them would be
akin to #3 above. Larger established brands often take approach #1,
where they launch a high profile app (say NY Times) and promote it on
their website. That app could become the #1 app in one category (say
News) and users who browse the "News" category on the app store would
discover the app. However, they'll still miss out on millions of users,
who never browse the "News" category. The key would be to choosse two
or three categories in addition to news and launch apps in those
categories. For instance, NY Times could launch a politics trivia game
under the Games category and  a "What happened on this day in the
past?" app in the Reference category in the app store.

Sometimes launching multiple apps in the same category could be effective as well. Several game developers launch multiple apps either under Games or Entertainment categories and cross-sell them heavily to drive downloads. It is important to note that real estate is limited to top 25 slots (most users only browse for the top 25 apps), so having two or three apps in the top 25 means that your competitors would have to fight for a slot from the remaining 23 slots.

Net net, taking the "Starbucks" approach of launching multiple apps is likely to generate more awareness and downloads for apps instead of taking a Macy's approach and focusing on just one flagship app (at least until the "discoverability" problems are fixed in the appstore.)

Kintan

ps: Thanks Mike Schneider from www.hivebrainsoftware.com for sharing some of these observations earlier this year.

ps: photos are used under Creative Commons from flickr.com   

In search of an optimal micro enterprise

I’ve believed firmly that microfinance is one of the most effective instruments to alleviate global poverty on a huge scale. I’ve been fascinated with microfinance, because it fosters entrepreneurship amongst the poor. However, the entrepreneur in me was always curious about the business plans (demand/supply, distribution, access to markets, etc.) of this class of new micro-entrepreneurs. I’ve always wondered, if there were proven micro-enterprises, which could be easily replicated or even franchised. In my search for such proven micro-enterprises, I’ve always looked for three key parameters in this order:

1. Direct access to highly scalable markets

2. Alignment of required skills in an entrepreneur

3. Transparent accountability

During my current visit to India, I got a chance to explore both rural and urban poverty and share my thoughts on poverty with several leading individuals and institutions. During these visits and conversations, I focused on finding consistent themes in finding examples of optimal micro-enterprises. After visiting a few rural areas, it has been apparent that “milk production” is clearly a micro-enterprise with the most direct access to the markets, due to the well-established dairy cooperative system in India. 

Direct access to highly scalable markets : It is safe to say that there is seemingly infinite demand for milk by the milk processors, a sophisticated distribution channel to collect milk from every village daily at a standardized rate and a well-understood payment channel which enables the milk producers to get paid thrice a week (every ten days).

If a poor person is empowered to purchase a water buffalo or a cow through a microloan, he/she can immediately become an entrepreneur and start leveraging the established distribution channels to sell the milk produced by that buffalo/cow.

Alignment of required skills in an entrepreneur: Maintaining water buffaloes is common in most rural areas in India and most rural poor are familiar with the tasks involved in maintaining water buffaloes.

Transparent accountability: Since the entrepreneur will get paid
only by the milk processor (which is part of the national dairy
cooperative system – Amul),all monetary transactions can be easily tracked, thus adding transparency and accountability.

There are several open questions and I’m working on finding answers to them by visiting more villages and talking with both the poor and thought leaders in poverty alleviation. But, from a variety of micro enterprises I’ve looked at/thought of so far, “milk production” seems to be the most optimal.

Thoughts?

Let’s eliminate rural poverty, one buffalo at a time!

Kintan