Small Business Labs

What is Foursquare & Why is it Getting So Much Hype?

Foursquare is the leader in a new generation of "find a friend" applications.  According to their website, Foursquare "is a cross between a friend-finder, a social city-guide and a game that rewards you for doing interesting things."

To use Foursquare you simply tell the application where you are and comment in some form.  This is called a "check-in."  Foursquare targets mobile phone users and the vast majority of check-ins are done using smartphones. 

Below is an example "check-in" that I grabbed off the Foursquare feed:

Graham W. in London, United Kingdom:

wrote a tip @ Thai Aubergine: Try the chef's special Salmon. It was awesome.

As you can see, a "check-in" is very Twitter like but focused on location.  Check-ins can contain any information, but I chose this one to illustrate Foursquare's growing use as a local review and recommendation site.

 

Foursquare rewards usage by awarding badges and points to active users.  For example, people who check-in the most at locations are declared Foursquare Mayors for that location (they get a mayor's badge).  The game play features are designed to encourage use.

 

The Foursquare business model is not yet fully fleshed out, but it is clear that lead generation and advertising are going to play major roles.  Businesses are already starting to use Foursquare check-ins and related information to reward people who frequent their location. 

 

Hubspot has a good post on adding Foursquare to your marketing mix and the Foursquare website has examples of how small businesses are using their service.  Small business use so far mostly consists of loyalty programs based on Foursquare status.  For example, some retailers reward mayors and/or multiple visitors with free goods or discounts. 

 

Foursquare is getting a lot of hype for several reasons.  First, it sits at the intersection of a number of interesting technology trends: location-awareness, mobile computing, social media, social commerce, the real-time web and social games.  This is an exciting mix for the geeks that hype these things.

 

Foursquare is also easy to understand, is fun to use and has the potential to add value to both consumers and businesses.  It also benefits from the "shiny new object" syndrome - the tech field has a non-stop need for new things to talk about. 

 

Foursquare is not without competitors, big and small.  Twitter is adding support for location data, Google plays in this space, Yelp has added competitive features and a number of start-ups are targeting this area.  So while Foursquare is the flavor of the day, long term success is not guaranteed. 

 

As a consumer, I like Foursquare.  But the vast majority of small businesses do not need to worry about Foursquare for now.  Just be aware and be ready if and when it does become important to your customers. 

 

But if your customers are serious techies - a bar targeting 20 somethings in the SOMA area of San Francisco, for example - then it is well worth investigating. 

 

***Update:  Good overview presentation on Foursquare for businesses from We Are Social***

Webinar: Using Facebook to Grow Your Business

MyVenturePad, in partnership with SAP, is hosting a free webinar -  Using Facebook to Grow Your Business.  The webinar is scheduled for February 2nd at 1:00pm Eastern (10:00am Pacific). 

The webinar will cover:

•  How small businesses are using Facebook to improve customer service, generate leads and increase sales
•  How to get started on Facebook
•  How to grow your presence and fan base
•  How to create an interactive community of fans for your product or service

The webinar features:

Clara Shih:  author of the best selling book The Facebook Era: Tapping Online Social Networks to Build Better Products, Reach New Audiences, and Sell More Stuff, which has been featured in The New York Times, Fast Company, CRM Magazine, and is being used as a textbook at Harvard Business School.  Clara is also the CEO of Hearsay Labs, which provides software to help companies manage and measure their social media presence.

Jonathan Smart: a small business owner who has been successful in using Facebook and other social media tools for his business. He's the president of the Jimmy Smart Allstate Insurance Agency in Columbus, Georgia, helping clients with insurance for homes, autos, renters, landlords, boats and more.

I will moderating the discussion and will be sharing recent survey data and research on Facebook usage by small businesses. 

I look forward to seeing you on the 2nd.  Please click here to register for the event. 

The End of Men

I jokingly refer to a set of trends related to changing gender roles as "the end of men." I am joking, so please don't send hate mail.

But there is a growing set of data and trends indicating that men are not as well equipped for the demands and stresses of modern society as women.  Men die younger, have substantially higher substance abuse rates and are much more likely to be in jail. 

Recent studies also show a major shift in mental health, with depression rising among men and decreasing among women.

Men don't do as well in school as women.  The chart below is from The Rise of Wives, a Pew study on marital changes caused by women outpacing men in education and earnings growth over the past couple of decades.

    

The shift towards women in college is so pronounced - over 58% of U.S. undergrads are female - that many universities have affirmative action programs for men. 

Women still earn less than men, but the gap is closing.  The Rise of Wives points out that women's inflation adjusted earnings grew 44% from 1970 to 2007, compared with just 6% for men. 

Structural economic shifts will likely result in additional gains for women. The U.S. Bureau of Labor Statistics Occupational Outlook job forecast shows that categories with higher levels of women employment are expected to outperform categories dominated by men over the next 10 years.  This means the earnings gap should continue to close, and earnings parity may happen by the end of the next decade.   

We're also seeing a shift towards women small business owners, a trend we highlighted several years ago in the Intuit Future of Small Business report Changing Face of Entrepreneurs.

Adding to this is a recent study by the Guardian Life Small Business Research Institute.  While they don't explicitly state it, you can't read their research summary without thinking their results show that women are better suited for small business ownership and management than men. 

So while I am joking about the end of men, the rise of women is a clear trend. 

Time Spent on Social Networking Sites Exploding

Can't say this is new or surprising, but it is still worth noting that the amount of time people are spending on social networking sites like Facebook, Twitter and LinkedIn is rapidly expanding. 

The chart below - from Nielsen Wire - show that the time spent on social networking sites increased 82% year over year and is over 5 hours per month. 

The chart also shows that the global, unique number of people who visited social networking sites in December exceeded 300 million. 

As our post last week shows, Facebook is dominating this sector. 

Small businesses have noticed and a rapidly increasing number are creating Facebook pages and fan sites.  A fun and interesting example I ran across last week is the fan page for artisan soap maker Sarva Soaps.

Top 10 Social Networking Sites

Marketing Charts has a good post on the top social networking sites.  Not surprisingly, Facebook is by far the leader.  Their chart, shown below, ranks the top 10 sites by visits.  The data is for the U.S. and from Hitwise. 

 
  
This chart is another data point showing that Facebook may be taking over the web.

Reshaping Business Education In a New Era

The McKinsey Quarterly's Reshaping Business Education in a New Era is one of the best descriptions of how business education needs to change I've seen. 

It is an interview with Blair Sheppard, Dean of Duke University's Fuqua School of Business and he discusses the changing student expectations and environment business schools face. 

The key points are (1) there is growing student interest in social entrepreneurship and public-sector management; (2) business schools need to provide an integrated curriculum that includes other departments and majors beyond the business school (environmental education and public policy studies are given as examples); and (3) the schools need to provide a broader, more diverse set of degrees and programs.

Registration is required at McKinsey Quarterly, but this interview is well worth the effort.  There is also an interview transcript.

Follow the Money to Spot Trends

One of the tools we use in our small business trend identification process is "following the money."  By this we mean keeping track of where venture capitalists, private equity firms and money managers are investing. 

The reason we do this is simple.  The rewards associated with successful investing are enormous - just ask anyone working for Goldman Sachs.  Because of this, the financial industry attracts very smart people and spends a lot of time, energy and money trying to understand where things are going. 

Money management firm Oppenheimer recently released their list of 2010 investment themes.  One of their key themes is the recovery will be led by the BRIC countries (Brazil, Russia, India, China) and other developing nations.  The chart below from their report highlights expected 2010 economic growth for selected countries.

 

This growth picture is a key reason we believe small business globalization will increase in 2010 and continue to grow in the coming years. 

Autism Clusters and the Coming Human Enhancement Divide

NPR has a fascinating, but not surprising, story on autism clusters.  According to researchers at UC Davis, clusters of children diagnosed with autism tend to occur in places where parents are older, well educated and white.

It's not that these people have more kids with autism.  The clusters occur because this socio-economic group is more likely to go through the time consuming, complicated and often expensive diagnosis process. 

This is an early sign of the coming human enhancement divide.  Simply put, rich people are going to have better access to technologies and drugs that improve cognitive ability and other forms of human enhancement than poor people.  The same will be true for rich countries versus poor countries. 

Cognitive enhancement is already here in the form of drugs (called nootropics) that improve concentration.  The ADD drug Ritalin, for example, is widely used by students, high tech workers, financial professionals and others interested in gaining a mental edge.  

More powerful nootropics are under development, and other forms of human enhancement and genetic engineering are much closer to use than commonly believed.

I'm often asked what future trends scare me.  Cheap, easy to make bio-weapons tops my list. 

But not far behind is human enhancement.  This field and technologies are moving much faster than our ability to deal with the related ethical and moral issues. 

Pet Industry Trends

One of my favorite list of trends is the annual Pet Industry Trends from Laura Bennett and published on SmallBizTrends.

We own 3 dogs, so this topic is near to my heart.

My favorite trends relate to the activities of pet parents.  These are people who treat their pets as children.  Great quote from the trends list:

"Pet parents are including their pets in their own lifestyles so visits to the spa, exercise regimes, and restaurants have become more common in urban areas."

The number of pet parents continues to grow and as baby boomers age, we will see more of them.

My brother and sister-in-law are pet parents.  Their dog, Chico, goes with them everywhere including spas, the gym and restaurants.  Chico has organized "play dates" and they spend more time worrying about his emotional well-being than we do with our human kids. 

I'm not a pet parent, I'm a dog owner.  The big difference is my poor dogs will never visit a spa, or go to the gym with me.  I do take them to a local restaurant on occasion, but they are tied up outside.  Chico sits at the table. 

The article mentions proposed legislation - the Happy Act - that would allow taxpayers to deduct up to $3,500-a-year in pet care expenses, including vet care.

Given the state of human health care in this country and our growing deficit problem, this may be the dumbest way to spend tax money I've heard in a long time.  The article says it is unlikely to pass.  I hope this is true. 

Despite being just a dog owner, I enjoy reading about pet trends.

Myths About Entrepreneurial Risk and Growth

Several interesting articles this week on entrepreneurial risk and and small business growth.  Over at Business Week, John Tozzi covers the recent New Yorker article Sure Thing (subscription required to read the full article) by Malcolm Gladwell.  It says entrepreneurs are not wild risk-takers.

As John points out, anyone who has been an entrepreneur or small business owner - or has talked to them about business will not find Gladwell's article surprising. 

I'm curious about where the myth of entrepreneurs being unbridled risk takers comes from.  I can't think of a single successful entrepreneur that fits this description. 

This week's other interesting myth article comes from the New York Times.  Why Would a  Business Say No to Growth covers a pizza shop in Chicago that is choosing not to grow.  The article's closing sentences are "Is there something wrong with that? If not, why don’t more people make the same choice?"

Actually, the majority of small businesses do make this choice.

We did some research about 1.5 years ago on how small business owners define success.  We found few small business owners had an objective of growing their small business into a medium or large business.  Most felt their businesses weren't capable of becoming big, or they believed it wouldn't be worth the effort to get big. 

Since that project, we generally ask entrepreneurs and small business owners about this in our interviews and surveys. 

We consistently hear from established small businesses that most are looking for modest growth and many no growth, with owner lifestyle reasons increasingly the reason given. 

Unlike the risk myth, I understand where this comes from.  High growth entrepreneurs are widely celebrated.  This leads to the impression all entrepreneurs are trying to build the next Google or Apple, even though most are not.