Mobile Commerce

Last night the Gotham Gal and I went to one of our favorite local spots, sat at the bar, had a glass of wine and a nicely cooked mediterranean seabass. As we sat down, I checked in on foursquare and was alerted that there was a special. Spend $10 or more and get $5 off. So I clicked on the special, loaded it to my card with one click, and when we paid our bill, we got the $5 discount on our credit card bill.

It was simple.

Mobile commerce is simple. Because you have your payment credentials stored in the web service (in this case foursquare). But the same thing could have happened with a direct checkout in the Etsy mobile app. Or in the eBay mobile app.

According to this post on AllThingsD, both eBay and PayPal will transact over $10bn this year on mobile devices. That's a 100% increase over last year.

I've been talking a lot about mobile here at AVC lately. That's because I am seeing the same kinds of things in our portfolio companies that eBay is seeing. Mobile is exploding. And that doesn't just mean mobile browsing, mobile gaming, mobile social networking. It also means mobile commerce.

If you are a transaction driven company, a marketplace, a retailer, or some other transaction oriented business, you had better be investing big time in mobile. Because if you aren't, your competitors surely will be.


Comments (Archived):

  1. Kasi Viswanathan Agilandam

    Mobile is THE device and will become the ONLY device whence fold-able computer screen are commercialized.

  2. JamesHRH

    The people I know in the space agree totally.THe area does not seem to have enough ‘shape’ to make an outcome prediction easy. It will be interesting to see if @fakegrimlock’s unified theory applies or whether it becomes a feature of a number of platforms.

    1. Kasi Viswanathan Agilandam

      unified theory?? I thought only Einstein wasted his last few decades of life on unified theory :-)(one size never fits all…was proven earlier once).



    2. Matt A. Myers

      First I’ve heard of @fakegrimlock’s unified theory?

      1. JamesHRH

        I am paraphrasing, but he comments a lot about social media needing to be unified & simplified.

        1. FAKE GRIMLOCK


  3. Kasi Viswanathan Agilandam

    Consumer goods (FMCG) is definitely going to be dominated by the mobile commerce in the recent times. But corporate goods (even SME’s and very small SME’s like stores and restaurents) are going to be dominated by desktop commerce for quite sometime. Until mobile and desktop becomes one-device in future.

  4. Rohan

    1 touch buying.Mobile version of Amazon’s great 1-click buying.. Clear goal, at the very least.

    1. Carl Rahn Griffith

      Indeed, Rohan.Interesting thing will be how to best address the UX re: the big differences between impulse purchases – eg, iTunes, Amazon – and planned purchases; depending on who gets what cut of the transaction and how that evolves. PayPal somewhat shot itself in the foot with creeping commission charges especially in the eBay context and premium purchases.Watch this space re: Telcos. The new Banks?Yikes…

    2. Abdallah Al-Hakim

      agreed. you have to make super easy for me

  5. David Hirsch

    Agree 100 percent but there is still a boat load( much much more) of commerce that happens offline that is influenced by digital and mobile. 20 plus percent of traffic to Macy’ is mobile. So in this case where the credit card is not stored mobile matters huge too. In this case of point of sale in store mobile usage customer reviews real time matter more than a mobile transaction. What’s bigger than mobile comnerce is just commerce( ubiquitous commerce) .most certainly influenced by digital and facilitated by mobile but the transaction happening offline.

    1. JimHirshfield

      Exactly! Throughout the ages, commerce has been mobile. The farmer takes product to market …consumer gets off their duff and goes to buy stuff. Seems obvious, but perhaps some have lost sight of fact that immobile commerce (at home on amzn, for instance) is a recent (last 15 yrs) phenomenon.Original mobile payment device is human hand, as in “hand over the cash”.

      1. Kasi Viswanathan Agilandam

        I believe still the payment device is human hand :-)you gotta press the button!!!P.S. liked the analogy

      2. awaldstein

        “,,,perhaps some have lost sight of fact that immobile commerce (at home on amzn, for instance) is a recent (last 15 yrs) phenomenon.”Nice!

      3. Abdallah Al-Hakim

        it is interesting that to note that some regions in the world, most notably eastern Africa, might are innovating in the mobile commerce space. This could be one area where the West looks to developing countries for leadership in this type of innovation

        1. FAKE GRIMLOCK




    2. fredwilson

      getting the customers payment credentials stored so you can transact easily is the big win

      1. Dan Wick

        This is very key. Traditional web-based ecommerce “shopping cart abandonment” applies even more so to mobile. Customers have very little tolerance for any friction upon checkout, especially for smaller transactions.And using 3rd party payment stores like iTunes, Amazon, PayPal, etc. are great, but they eat into margins quicklyPayPal’s acquisition seems to be about making it even easier fo PayPal to control the CC storage for mobile by making it dead simple to enter CC payment info. A customer’s tolerance for entering new payment info into a mobile device is very low. Not necessarily because of security concerns, but because their time is so short and their session with your app or service is brief and often in the moment and on the go.BTW, what Foursquare has done with their partnership Amex is super smart because Foursquare controls that payment store with Amex and doesn’t depend on a 3rd party.

        1. awaldstein

          Well said and I”m completely on board with you on this conceptually.Really dislike PayPal as a process though. I cringe whenever I”m pushed to use them online. Process is painful. I truly dislike dealing with anyone that doesn’t handle disputes.

          1. John Revay

            Yup. Hate PayPalI still like Google checkout

        2. FAKE GRIMLOCK


          1. ShanaC

            i think we have adaptive complexity – we’re in a world that is expanding, and we’re not used to it. Our kids might be though…

      2. markslater

        correct. think uber.

        1. fredwilson

          i have a funny uber story that points that daughter texted me frantically the other day. she had left her purse at home and she had no cash, no metrocard (subway), and no credit cards. she was trying to get home from pretty far away and didn’t know what to do. i said “download uber onto your iphone, log in with my credentials (which i gave to her), and then hail a car. i will be paying for your ride home” she did it. it worked great.then i told her she could keep the app on her phone but she could only use it in emergencies

          1. Abdallah Al-Hakim

            I had similar story two weeks ago. I went for a bike ride with my wife and stopped for lunch at a Toronto neighbourhood. We ordered lunch and then immediately (by pure chance) realized that we both forgot our wallets at home. I chased down the waitress and canceled the order but it did strike me that it would have been nice to have had the ability to pay with my mobile. One side note on this story was that the couple next to us offered to pay for our lunch and they insisted on it!!

          2. fredwilson

            hard to beat a free lunch!

          3. Abdallah Al-Hakim

            it was even better because it was our wedding anniversary :)I insisted that we send them a cheque in the mail. Still, it makes me love living in Toronto even more when I run into these types of people

          4. JLM

            .I put my credit card numbers on my phone. I give them to a merchant in a pinch and I have never had a problem.Of course, my children have learned this trick and I have had to change my credit cards once or twice. Those little felons.If you think about it, it is just like a web transaction..

          5. fredwilson

            you have one perfect daughter. i have two. twice as expensive.

          6. JLM

            .Actually, I suspect daughters are like twin engine airplanes, 4 times as expensive..

          7. fredwilson


          8. markslater

            its funny my wife was out with her girlfiends last week for the first time literally since sebastian was born. He started crying uncontrolably and i could not stop him. i texted my wife and told her to walk out of the front of the louis boston and to get in to the black car outside……she was home in 6 minutes and seb was counting sheep – crisis averted!

          9. fredwilson

            there’s something about mom at that age

    3. ShanaC

      Having just been in macy’s recently (helping a male friend buy a replacement trench coat) – this is a huge deal. Macy’s et al need to find a way to link their mobiel shopping experience with the in person experience. Even more important when you think there is also a trend towards customization – weird sizes will drive business

  6. awaldstein

    Couldn’t agree more Fred. Frictionless transaction is the dna of mobile.I’m fuzzy on the transactional systems though.If you are a restaurant delivering food in NYC, you work with the seamless web. If you are in a marketplace their value add is customer traffic and the transactional system, often their own.What do you see as the trends behind the click for the mobile transactions? If you are selling something through your app, where to you look to find the best transactional partners? If you are creating a marketplace that works with various merchants, where’s the smart handshake to different POS systems?

    1. fredwilson

      its a mess right now. this is where a lot of our mobile companies spin their wheels.

      1. Mark Essel

        no up and coming b2b to tackle transactions?what’s out there paypal, braintree, stripe, dwolla cc @awaldstein:disqus

        1. falicon

          Square is working towards this I believe…

          1. Mark Essel

            Yup, I think you’re right. Got a message about it from them at some point (got the free credit card reader a while back).

    2. William Mougayar

      Bingo. Frictionless is the WORD. It opens up a number of possibilities. But it takes time getting used to. There’s a behavioral barrier as well.

      1. ShanaC

        Friction can be good – it creates tension, and prevents people from buying silly things.

      2. awaldstein

        I think in this case the problem is not behavior.Tens of millions each day use one click frictionless commerce on iTunes and Amazon on their mobile. Not an inkling of behavioral issues on these truly frictionless transactions.The issue is that the behavior is there but most platforms are a huge pain. Eventbrite, PayPall, and any of the slew of others are all a bit of a kludge and discourage me from signing up for anything.I can think of a dozen companies including my personal ones that need a smart wallet. None to be found that I know of.

        1. Yaniv Tal

          are you referring to a wallet that would allow you to pay for things online (through your phone)? the big issue is that security and ease of use are conflicting criteria. if any website could have one click ordering through paypal fraud would go through the roof and that would raise the cost for the entire ecosystem. that’s one of the reasons that i think NFC is such a good solution for inperson transactions. it’s frictionless but secure. that said, i bet a similarly secure solution could be developed for over the air but it would have to come from the OS guys. the secure element credentials themselves could be used (carrier willing) and transferred over SSL using a new protocol for phone authentication over the air. you still run into the kid problem (like itunes which still requires you to enter a password) but this might get you closer.

          1. awaldstein

            Password is fine.You are of course absolutely correct between the tradeoff between security and UX. That’s the perfect system that no one has really done yet.What I really want is something, mobile and web both, that allows users within a community or marketplace to have an account that can speak seamlessly across a variety of online POS systems. And have smarts that can let it sort which is the best store to do business from by surfacing select pieces of their inventory and their shipping rules.No small ask πŸ˜‰

          2. Yaniv Tal

            and you want it yesterday right πŸ˜‰ that sounds like a 10 year game. the open data movement is gaining ground and will ultimately get us to that point. in the restaurant industry there’s an openmenu data format that enables this kind of standards based interoperability for discovering what’s on a restaurant’s menu. they don’t try to standardize order placement protocols though. i agree that it would be great to have all retailers open up their data like that. it would really let us optimize commerce on a whole new level. +10 for that vision!

          3. awaldstein

            This is a great comment. Really useful in understanding the landscape.Doesn’t solve my need but at least I know to be realistic about my search for a solution,

          4. FAKE GRIMLOCK


  7. David Semeria

    Fred, what are you thoughts around mobile being a much stronger bridge between the digital and physical worlds than the PC / Laptop?Imagine a business that needs a physical salesforce to be effective – such a business would be less scalable than a purely digital one. But using a mobile app as the “glue” many of these hyperlocal business could be federated into a much larger national / global entity.It’s a similar logic that led to the formation of co-operatives in the past.

    1. Carl Rahn Griffith

      Interesting! I need more coffee before re-reading/re-thinking that. Deep! Looking forward to Fred’s response πŸ˜‰

    2. awaldstein

      HI David…What I notice from my own behavior is that I transact on my phone more than I shop.I’m out and about and want to see a movie, it’s a directed act to sort and buy. Finally decided to book that trip to Milan that is on reserve, I find my reservation and transact. Dinner reservations and on and on.What I don’t do is browse and surf. What I never do is pay attention to ads.The phone is my space. Small. By definition more intimate and focused. I need context built in and a one click transaction for most everything. That segues to Fred’s FourSquare example.I”m noodling on how this federates..

      1. Carl Rahn Griffith

        Good points, Arnold.I find ads an utter waste of space in this medium – let alone a profligate waste of business development investment/budget.The deal – in the context of your mobile activity at a given time – is the advert.

        1. awaldstein

          My phone space is all about ME. My space. My lens.I’m sure the ad world will disagree but on my phone, I’m interested in action.FourSquare is leading the way. Smart catalogue brands like the Gap have a huge opportunity to make every shared object transactional on mobile it they want to make the leap.

          1. Carl Rahn Griffith

            Agree.It – the mobile phone – has very much become our talisman/amulet.Note to mobile app developers: Not to be messed with. Use wisely.

          2. FAKE GRIMLOCK

            TALISMAN! ME LIKE!

          3. Kasi Viswanathan Agilandam

            @awaldstein:disqus can i say?mobile commerce = Me commerceDesktop commerce = Us commerce

          4. awaldstein

            I think it goes further and there is a uniqueness in mobile behavior.The more the individual is empowered, the greater the dynamics and connections with a community. So true in avc.On mobile it’s different though. The actual space is mine! And in every case I can think of it not social. Community within a mobile paradigm eludes so far as I can see.

          5. Kasi Viswanathan Agilandam

            My bad … was trying to play with my vocabulary and as usual did not work :-)What i meant by ‘Us’ commerce is ‘corporate’ or ‘b2b’….not community or in-and-around-me.

          6. awaldstein

            Ahh….get it now.Yes, this maps to @hymanroth:disqus vision well.And BTW…you have excellent vocabulary. It’s a pleasure to converse with you!

          7. Kasi Viswanathan Agilandam


          8. falicon

            Sms, kik, groupme…thats where social is on mobile….

          9. awaldstein

            I’ve played with some, maybe I should more.Let me clarify though. Social as communications as chat I get of course.Community though…point me where you think this is happening on mobile.

          10. falicon

            I think the community around mobile is mostly offline…ie it gets you to the community (and then records snapshots of the experience)…but you are right in that community engagement doesn’t happen on mobile (yet)

          11. fredwilson

            the app store leaderboards suggest that is true. that and gaming.

      2. David Semeria

        Hi Arnold.Let’s take Fred’s example of local deals. I can guarantee that most local businesses in Italy have never heard of the LBS leader, Foursquare.But these businesses are visited on a regular basis by all manner of salespeople. What if the salespeople could explain and propose a series of mobile services (not just 4Sq) that could benefit the business?You do this in many contexts: from shops, to taxis to restaurants.This could then lead to global (federated) apps: taxis, restaurants, shops, wine merchants πŸ™‚ etc

        1. awaldstein

          Got it.I think the logic is very sound and it’s already happening in small pockets.Someone approached me with a mobile app for the construction biz that had parts of this.Some web-based vertical marketplaces actually started out like this. They connected the businesses with suppliers as the core economic model, then funneled in the consumers on top once there was some aggregation.

        2. kidmercury

          absolutely……it’s all about federations

          1. falicon

            unless you are a Cardassian…

      3. fredwilson

        i buy movie tickets and reserve seats at restaurants when i am out and about. that’s why flixster and open table are on the home screen in this post…

        1. awaldstein

          Similar behavior then in this case.Flixster is new2me. I’m going to try it today.

          1. bsoist

            It’s my favorite app for movie times, reviews, etc.

        2. JLM

          .Are you using your 7″ Nexus or your phone?I ask because I think the 7″ form is likely to drive more of this behavior..

          1. fredwilson

            not yet. but i want to try it out as a phone. i have a phone client on it.

          2. JLM

            .I am getting ready to go bluetooth on a tablet. I am thinking about that 7″ form size..

          3. John Revay

            Pls keep us up to date. I might make that change depending on form factor

        3. bsoist

          I love both those apps (not on home screen because I don’t need to get to them that quickly). We noticed a while back that open table will get us a reservation when the restaurant tells you they are fully booked. Great app.

          1. JLM

            .Exact same experience..

          2. falicon

            Oh great tip…I will have to look into that now. Thanks!

        4. Yaniv Tal

          would you use NFC at the restaurant if you had the option? we’re moving to austin where ISIS is starting their NFC mobile wallet beta. some people seem resistant to the idea of ordering on their phones (which i personally think would be a great experience) but i think the payment part is a no brainer. it automatically adds the coupon, you don’t have to hand anything over to waiter or wait for them to come back. you just tap your phone and you’re outta there.

          1. ErikSchwartz

            LevelUp works great for that (although not NFC).

          2. Yaniv Tal

            i really hate qr codes. credit to those guys for getting a solution up and running so fast but i really see it as a stop gap. the industry needs payment standards (a la magnetic stripe) so that different providers can play in the space. unless they’re going to get on all public transportation, airports, restaurants, retailers, etc it’s just one more fragmented place for me to keep track of my credit card and keep it up to date.

          3. Timothy Meade

            The problem with QR is it is a legacy technology with a limited set of valid contents. It requires extra work on the part of the phone to get in focus, and it’s used in the most generic sense. If you didn’t care about error a partial match would be enough with the right technology, and context.

          4. JLM

            .This is an exciting concept. Living in Austin, I have been watching it carefully.NFC is a way underutilized technology.The challenge is going to be to get the merchants to embrace the service..

          5. Yaniv Tal

            it’s taken the industry a long time to embrace it but all of the pieces are finally in place. the banks, carriers, and handset manufacturers are all on board (and investing hundreds of millions). as the handsets continue to trickle out the final frontier is going to be arming merchants and delivering those solutions that truly fullfill the NFC promise. each click will be make or break in this context. the hardware needs to be low cost, easy to maintain, and unobtrusive. the value to the merchant is huge since it gives them useful data about their customers that they wouldn’t otherwise have. integration with loyalty programs will also be a huge driver. for the consumer you get frictionless access and payment wherever you go. we’re specifically focused on restaurants and the experiences we can deliver there but there’s going to be a lot of value in having a single mobile wallet (ISIS or google wallet) that’s protected like fort knox that you can use wherever you go. if you can’t tell i’m really excited for this!

          6. JLM

            .The promise of NFC technology is so broad that you will not even have to click anything to make it work. NFC can access your device from 50-100′ away.You should be able to just nod and have everything taken care of.Eventually, the NFC reader will know that you are at table #5 and all you will have to do is look at something and nod your head.This is going to be great stuff.When you get to Austin, please give me a call.And remember, no state income tax in Texas.On Earth as it is in ATX!.

          7. Yaniv Tal

            let’s not get caught up in the technical points but i love your enthusiasm! my cofounders and i are moving in a month and a half. i’d love to meet up when i’m in town. we chose austin pretty hastily but i’m really excited to give this tech frontier boom town a go πŸ™‚

          8. JLM

            .Texas creating and luring new jobs to the Lone Star State. What makes Texas and ATX great.I may have to take you over to see the Governor with an entire company moving to ATX.Welcome and we are very glad to have you.On a very serious note, if I can help in any way let me know. I have a few empty cubicles that I can lend you if you get in a pinch.And your first trip to Franklin BBQ is on me..

          9. Yaniv Tal

            amazing hospitality. thanks jeff!i should clarify though: we’re not really an entire company.. more of a scrappy seal team 6 gearing up to launch an offensive on some sleeping dinosaurs.

          10. JLM

            .Hell, I intend to tell the Governor that you are the first wave — you scrappy seals — of a potential company of Amzn size.And remember one very important thing:EVERYTHING IS BIGGER IN TEXAS!.

          11. Yaniv Tal

            i might have to undergo a lot of inducting – being a california guy, but i think it should be a really good time! thanks again for the hospitality. i’ll connect with you on linkedin.

          12. spider09

            Likewise, Yaniv. As an AVC (mostly) lurker who 1) lives in Austin, 2) spent several years with one of the largest independent payment processors (and with a toe still dipped in that pool) and 3) knows several local restaurant/bar owners who would likely be willing to act as guinea pigs for your product, please don’t hesitate to ping me if there’s anything I can do to help. Address is washburj at that google electronic mail service. Good luck and welcome!

          13. Yaniv Tal

            oops wrong post. where’s the delete button!

          14. ShanaC

            can we get some reports as ISIS roles out?

          15. fredwilson

            i might. i have been trained by american express to use their cards in the US

        5. LE

          “i buy movie tickets and reserve seats at restaurants when i am out and about.”Keep in mind that that behavior is more prevalent in a city “don’t need a car” type culture. In the suburbs when you are out and about you are in a car not walking or on a bus or subway. You can be walking down 2nd ave and having mobile can do many things. While the suburban equivalent might be a shopping mall or strip center, you aren’t visiting those that frequently and when you do you generally park and walk to a single store or two that you are interested in.That said mobile hasn’t solved the problem of finding the nearest store of the type that you need at the moment for something you need to buy when you are sitting somewhere in a parked car. Many times you need something that the local might CVS have but you’re thinking you need to go to either Lowes or Home Depot and you’re not even sure which one is closest to where you are, since there are so many around and you aren’t necessarily in the same neighborhood that you are the majority of the time.

          1. FAKE GRIMLOCK


          2. panterosa,

            NY is other world to ‘USA in car’ for sure.Mall mimics streets in NYC. Too bad you have to drive to get there. So unNYC/truly urban vibe.

          3. Timothy Meade

            That’s why voice matters so much and Siri eventually supplants Google.

          4. Timothy Meade

            Siri, I need a small hammer for picture nails. Okay, they have one at CVS for 7.95 or 2 miles away at Home depot for 5.95

    3. fredwilson

      it’s a huge deal. when your computer is on you and you are in a store, and your computer can talk to their computer, its a new world.

      1. awaldstein

        That to me is the future of merchandizing right there!Little still semi-stealth startup is doing some things here with the big brands.

      2. JLM

        .When your mobile device is also your credit card, the devils of instant gratification are unleashed. Impulse buying at a new and higher level.When a bargain element is injected, you almost can’t resist..

        1. LE

          “Impulse buying at a new and higher level.”One extra thing the phone can do that a credit card can’t (in addition to reducing friction). It can offer audio and visual feedback as reinforcement. Like slot machines.

      3. kenberger

        this is why i have been such an early adopter and lover of the 7″ tablet form factor: it’s small enough (for me) to carry around a lot, but big enough to act like a real computer.However, as a mobile developer, I understand that the mainstream action is always going to be closer to the 4.x” form factor. Succeeding there takes a new and largely uncharted effort.

        1. kidmercury

          have you tried the galaxy note? aka the “phablet”? 5.5″ screen or something, with stylus. i think that is going to be my next phone/small screen computer.

          1. kenberger

            sure, demoed it. Great option if you are the type that can just use that device all the time. If you are a niteclubbing type, or don’t have big pockets, it’s not the solution. Forget the stylus (did we learn nothing from Pocket PC?!)my way is to keep a great regular sized phone at all times, and then most of the time also have a 7″ tab on me. But that’s me (tall male who tends to have big loose pockets).

  8. Boss Hogg

    Your full attention might have been worth more than $5 to your companion

    1. Kasi Viswanathan Agilandam

      How about saving that $5 and tipping extra for the service …both companion and server smile priceless :-).

  9. Eric Leebow

    Yes, mobile commerce is growing, yet one thing you didn’t mention about this transaction was if it required you to have a certain kind of credit card in order to complete the discount. This is one of the challenges that some people have, and are all people willing to get or use a new card just for discounts. Just one of the things about Foursquare is all the great promotions.

  10. Laurent Courtines

    Any good books out there on mobile UI and development. Must want to get a professional view to validate some of my thoughts. Thanks AVC community. You are always the best-

    1. falicon

      All the stuff from is pretty good…not all specifically mobile focused (but all relevant to it)…they are all short and easy reads too…

  11. Abdallah Al-Hakim

    contextual and transactional are the two strengths of mobile. How does online security figure on the mobile compare with the web. I have little worry when purchasing something from a trusted site online but I am not clear on the security stringency of mobile payments

    1. fredwilson

      i just put a password on my phone’s lock screen. i have never done that before. security is a big deal when your phone is your wallet.

  12. nilburns

    when you write commerce in the mobile context what do you mean? At foursquare it sounds logical since you have location. But how do you apply it for etsy and for all other “un-local” commerce entities? Having an html5 or app (or any good/decent UI in your mobile phone) doesn’t mean conversion. How do you fly above the clouds here?

    1. fredwilson

      i favorite a bunch of sellers in etsy. when one adds something to their shop, i want a notification. and that’s an easy purchase on my phone.

  13. Luke Chamberlin

    Networks with built-in opportunities for commerce. Mobile ads suck and you’re going to see a flood of companies move in this direction.

    1. fredwilson

      yup. albert wrote a great post about that earlier this week…



      2. Abdallah Al-Hakim

        Yes, Albert’s post was excellent and with many good comments

  14. John Revay

    Mobile Bingo App anyone?

  15. Jan Schultink

    Fred says “mobile commerce is simple”At the end of the 1990s, Paypal on PC started off as “pay by sending an email”, we need an equally simple, universal API for mobile payments, the equivalent of the twitter @ handle that anyone can integrate in platformsI wonder who will be the billion dollar company that gets this universal API sorted first. Amazon, Google, Apple, Facebook, Foursquare, a yet to be named startup?

    1. awaldstein

      Really important point.I find it really messy out there today still.

      1. Jan Schultink

        Yes, messy is the word

    2. Jon Thompson

      Dwolla. Oh, and they’re USV funded.

      1. Jan Schultink

        Interesting, will check them out

      2. fredwilson

        from your mouth to god’s ears!

  16. BillMcNeely

    How do you think mobile commerce will impact the car buying process? As a car salesman it’s an artificially opaque process to hide a low margin business.

    1. fredwilson

      i dont’ know enough about the car buying process. we buy cars over the phone. we do our research online, then call a dealer and buy it.

      1. BillMcNeely

        A mobile app identify preferred pricing through employers/ affinity groups /rebates as well as one that delivers Black Book and Dealer Auction to your phone would save consumers thousands

      2. LE

        “we do our research online, then call a dealer and buy it.”I thoroughly enjoy the process. If you said “free tickets to broadway show” or “buy this car for me” I’d rather buy a car for you.That said I don’t drive it down to the the last penny or waste time in the process. One time I bought a car for list price though. It was a Mini Cooper S convertible (fabulous car highly recommend) and the only place that had it at the time was Mini of Manhattan in NYC which is obviously not where I live. All the paperwork over the phone and went and picked it up. I kept it a short time, had fun, and sold it for a few thousand less than I paid.

  17. jason wright

    I remember having a restaurant meal with a friend and my mobile phone rang. I answered it. Later my friend reproached me for allowing my mobile to disturb our evening together, asking why I hadn’t switched it off earlier. Food for thought.

    1. Kasi Viswanathan Agilandam

      Were you in the middle of a serious conv? OR You just ideal and answered and he/she asked you to switch-off?ADD :-)p.s. attention deficit disorder.

    2. fredwilson

      if it was one of my children i would have answered. since i was with my wife last night, i don’t think i would have picked up for anyone else except my parents.

      1. ShanaC

        upvote for being a good dad!

        1. Kasi Viswanathan Agilandam

          no up vote for being a good kid?

          1. Mark Essel

            money on Fred picking up for his kids or parents calling, even while out on a hot date with GG.

          2. ShanaC

            kids aren’t here

        2. LE

          “upvote for being a good dad!”I was out with my daughter a few weeks ago. She got a call from a friend (I didn’t mind because it gives us things to talk about I love all that shit). Anyway the friend was out with her dad and all upset that someone came over to the table, sat down and the friend had nothing to say or do as she was totally ignored. I really bonded with my daughter over that we got into an entire discussion of how f-uped that behavior is (I’m no dad of the year but that’s not one of my ills that’s for sure.). It went into how that happens with friends as well and at parties.

      2. LE

        “except my parents”Last night I had a message from my mother that I missed. I said to my wife “shit someone is sick”. And it was true. #thatage

    3. StartUpJerkFest

      was it opportunity calling?

  18. $27180517

    Considering what just happened to the credit card industry, this should be a boon to mobile commerce…just another reason for retailers to accept payments like Paypal cause if they plan on just upping fees for consumers to use more cash rather than cards they are going to inevitably lose part of their customer base, especially on larger ticket items.

  19. kirklove

    I Sodi over Perla… makes me rethink my very high opinion of you. πŸ˜‰

    1. fredwilson

      it would have been three nights this week at perla (i’m going sunday night) and our friend who we wanted to take their canceled on us. so we took it down a notch. they do a very nice seabass at i sodi

  20. John Best

    Big thumbs up that the alert was relevant, useful and not intrusive. I’m seeing more and more complaints from people that apps are spamming their social networks on their behalf .

  21. Kevin Stecko

    Am I the only one that felt like Fred’s example was a terrible promotion by this bar / restaurant? Fred already spent the money. This restaurant gave away $5 and got nothing in return. It could have paid off huge if Fred mentioned them or linked to their site in his post, but since he didn’t do that it was truly a waste of money. It’s Fred’s favorite spot, he’s coming back again no matter what. I get that the execution of this deal isn’t the point of Fred’s post.Maybe I am missing something, though. Does this restaurant get permission to market to Fred by giving this coupon? If not, I say this is a failed promotion.

    1. StartUpJerkFest

      it does seem like it is not a great profit maker for the place, and it’s not an attraction issue, because you are already there. is more of an incentive to spend more. in theory the bar got more cash in the transaction, but jeez… “spend more than $10” in NYC? isn’t that a minimum? a bottle of beer is like $10 isn’t it?

    2. ShanaC

      No – actually it is perfect, because it is the kind of thing that rewards existing behavior. Think Skinner’s box – you want to reward multiplicity, not loss.

      1. awaldstein

        Perfect answer Shana.Customer value for restaurants is loyalty, repeat visits and referrals.Example for me was actually quite perfect for that.

        1. JLM

          .Exactly — loyalty, new customers, increased visits.Classic marketing outcomes..

          1. panterosa,

            JLM – “Exactly — loyalty, new customers, increased visits”You list these as three things.Yet I see them as one thing:loyalty=new customers=increased visits

        2. ShanaC

          thank you πŸ™‚

      2. matthughes

        Yes – well said.The restaurant over-delivered.

      3. JLM

        .But the restaurant did nothing tangible to drive the NEXT VISIT.Effective promotion and marketing is all about getting MORE customer visits.You can take a $5 hit on a piece of new business but it is inadvisable to take a $5 hit on existing business.The average spend of the customer can go down if the frequency of visits goes up.In Fred’s case, he is already a “loyal” customer and the value of his becoming an advocate for their product is also a great thing. If they had given him a transferable $5 discount coupon, then they could have broadened their customer base.Fred could have given it to Shana C and she would take a pal and thereby increase the customer base.Now, if Fred had mentioned the actual name of the restaurant on, then impact would have been over the moon.This is the classic CTA v LTV writ large..

        1. leigh

          Transferable coupon in that case much better πŸ™‚

        2. CJ

          Doesn’t ‘warm and fuzzy’ count? A deal for existing customers can make me visit more frequently, it can also make me spend more when I’m there. Maybe this trip I’m aiming to spend $40, but see a $15 off $75, so I spend the $75 and the business gets net $60 instead of $40. That’s a win.

          1. JLM

            .No question. That is why marketing is so damn interesting. There are just so many little nuances which can drive outcomes.The most important element in any loyal customer relationship is the investment of energy.I go to restaurants where I know the chef and the owner for the ego enrichment of being treated special.Then I think to myself — hell, they treat everyone special.Well played. Thanks..

          2. CJ

            Any establishment that can make everyone feel both special and exclusive at the same time has cracked the secret to long-term prosperity.

          3. JLM

            .Well said and very keenly insightful. Thanks.Well played..

        3. LE

          “But the restaurant did nothing tangible to drive the NEXT VISIT.””Effective promotion and marketing is all about getting MORE customer visits.”True.But also consider that effective marketing and promotion is getting people to buy things that they weren’t going to buy, in the same visit, or more of something they were already planning to buy, (5 for a dollar instead of .20c each etc.) or spend more then they were planning to spend when they came in.Supermarkets, Walmart and other Big Boxes, QVC are good at that. So they are not trying to cannibalize sales they were going to get anyway.Have you ever seen the shit the losers people cart around at Walmart?As a general rule people of all income brackets respond to these techniques. The reason? People are on the fence many times about making a purchase. A bone that gets them off that fence and allows them to rationalize taking action will work.That’s one reason why fixed pricing doesn’t work with selling cars. While most people don’t like to negotiate (I do) most people need incentives to make decisions.Picture below of a promotion of a local sushi restaurant that is highly successful and has been going on since they opened. Takes advantage of a slow night of business.

          1. JLM

            .I am going to have sushi for lunch today because of you. You have impacted and influenced my personal outcome.Do you want to go along?.

          2. LE

            “Do you want to go along?”You need to tell me in advance so I can have the G5 gased and ready to go to fly into AUM!Why not show them the photo of the special and see if they will add it to their restaurant? Let me know what they say.

          3. JLM

            .If you are going to the trouble of gassing up the G V, let’s go to Las Vegas and get some real sushi.I have never flown into KAUM. Very impressive that you even know it exists.I think maybe you really do have a G V?.

          4. LE

            “you really do have a G V?”No, not a GV but a BEECH C-90. Lost that in the divorce.#onlyjoking (only dream of being a pilot..)

          5. panterosa,

            @JLM:disqus and @domainregistry:disqusI do hope one day you will come for sushi at our place.@PantherKitty and I are getting quite good, especially with my new Japanese assistant (who shops and makes/advises).And no, it won’t be a Sunday or Monday.We make a mean hand roll, have some great pickles, miso flown in from Japan. I spent a day at the Japan Society in a seminar on sushi, which now I learn from Japanese friends, means I know more about the history of their food that they do. I have plate decoration and presentation down better than many restaurants (major protocol on that).I have my dad’s old bamboo roller, from the 70’s (he was in Japan in WW2) for 6 piece rolls. I will be getting a new knife too, to make the right cut motion.

          6. panterosa,

            @JLM:disqus and @domainregistry:disqus I do hope one day you will come for sushi at our place. @PantherKitty and I are getting quite good, especially with my new Japanese assistant (who shops and makes/advises).And no, it won’t be a Sunday or Monday.We make a mean hand roll, have some great pickles, miso flown in from Japan. I spent a day at the Japan Society in a seminar on sushi, which now I learn from Japanese friends, means I know more about the history of their food that they do.I have plate decoration and presentation down better than many restaurants (major protocol on that).I have my dad’s old bamboo roller, from the 70’s (he was in Japan in WW2) for 6 piece rolls. I will be getting a new knife too, to make the right cut motion.

          7. PhilipSugar

            Having eaten a ton of sushi its slow because people like me know that is when the fish are the oldest. Those are the days they get rid of the extra fish they didn’t sell on the weekend. Not my day to go.

          8. LE

            It’s amazing how as you get older you learn so many things (either by reading or through experience or from a friend) and how that knowledge is both a benefit and a detriment depending on the situation.I remember my ex father in law who had just gotten his house painted by some hack painter. There were drips of paint all over the siding. It didn’t seem to bother him at all. He was fine with it. I thought at the time (many years ago when I was way more uptight) “boy that must be great to not have something like that bother you”. I actually saw it as a positive (and that attitude actually helped him in his business.)

          9. JLM

            .Funny that you mention that. I subscribe to the theory that “80% right and done on time” is the sweet spot when it comes to competition.Then I tend to circle back and become an imperious prick demanding perfection but only after we have our foot on the competition’s throat.As I get older, I do find myself being so much more calm knowing that after the first pass I will get it perfect.I recently had an experience that was so satisfying to me that I went home for the rest of the day. The guy who had the wheel just did it perfect — as good as I ever was on my best day. Ever.I went home and just threw in the towel.I have had 10 or so such experiences in my life..

        4. Dale Allyn

          @JLM:disqus That was exactly my first reaction. I like the possibilities here (really big), but Fred was already “captured”. He and Joanne had wine, dinner, etc. Then for the act of checking-in they got a benefit. This is fine as a first step in “training” users/patrons to explore the process, but there needs to be more for the restaurant to benefit in a meaningful and lasting way. As I said (and you partly illustrate) lots of opportunity here if it is executed.

          1. fredwilson

            i think the reason i got that offer is that i have checked in there a lot. maybe as many as five or six times.

          2. Dale Allyn

            There are lots of ways to leverage such things, and getting patrons to look for them will be meaningful. Frequency rewards programs, feedback, introduce a friend and get a special perk, etc.

        5. Mark Essel

          So you would have liked, “give a friend a coupon/get a coupon” for your next meal? I find that I lose (and heavily discount) future discounts.It’s all about now! Instant gratification :DHere we go, how about a teaser/free sampler of something new?

          1. Dale Allyn

            Mark, I think you’re right about putting too much workload on the patron. Your sampler idea is sort of what I was thinking too. There are lots of ways to see this going in a way that the customer can learn to love the experience more with each visit.

          2. JLM

            .Hell, I keep all of that stuff and use it always.Personal quirk, I am sure..

          3. Mark Essel

            You’re not alone. My pop does as well.

        6. fredwilson

          hey, i linked to the establishment in this post!

          1. JLM

            .Ooops, my bad. They should comp you for a year..

          2. fredwilson

            Lifetime I think πŸ˜‰

          3. JLM

            .At least until SS kicks in for you and why not?.

          4. fredwilson

            i hereby renounce social security. i don’t need it and i don’t want it. same with senior citizen discounts. i am still 20 years old in my mind and hopefully will be until my time on earth is over.

          5. JLM

            .Fred, I respect your renunciation of SS. I don’t think you have to worry about it anyway because it is already taxed and shortly it will be means tested, so you will have nothing to renounce.But, Fred, not taking your senior citizen discounts?How about the Senior Citizen INTERNATIONAL HOUSE OF PANCAKES discount?I H O P?You know I am one of your greatest admirers but you must reconsider this. The IHOP Senior Citizen discount is one of the greatest pleasures in the world.All those fluffy pancakes, the melting butter, the crispy bacon — and a huge chunk of IHOP is owned by Michael Dell.How is Michael going to feel when he finds out you have renounced the IHOP Senior Citizen discount? He is going to be……………………………………CRUSHED.So, Fred, you have a few years to think about this and maybe I can persuade you in the end.Perhaps as a compromise, you could take the IHOP Senior Citizen discount and buy GG a very nice emerald and diamond ring? A very expensive one.GG, help me here. The world is tilting on its axis.Please, Fred. Don’t make me beg. Consider Michael’s feelings. Please..

          6. fredwilson

            i might have to go back on my renouncement.

          7. LE

            And have the table setup like that scene in goodfellas.Actually a parody on that would be a good promo for foursquare “what if you got treated like…”You are Liotta Gotham Gal is Lorraine Bracco. At the very end you pull out your mobile phone and get word on a special via foursquare.…It would blow this one by Chris Christie away:

          8. fredwilson

            that’s good. i want to do that scene

          9. LE

            I would make a few changes such as the first shot with you parking your scooter instead of a car. I can think of plenty of inside jokes but it has to play mostly for the mainstream otherwise a waste of effort. No question it would be big if it had the right production standards and cameos (which you can dole out like aliyahs at a bar mitzvah). Switch the foursquare reference to the opening shot possibly. The key is getting a mix of internet folks and a few mainstream people that everyone knows by face. (Might be able to snag Christie to be one of the guys who gets tipped for doing something for you he certainly looks the part as well as Booker.) Could easily work other USV companies into it as well.

          10. Dave Pinsen

            Via Foursquare, which those of us who aren’t members can’t view, apparently. Which is interesting, because I can view your Foursquare checkins on Twitter.

          11. fredwilson

            is that really true?i thought those checkin pages were public if i linked to themoy

          12. Dave Pinsen

            Here’s what I see when I click on the link in the post:

          13. fredwilson

            shit. i need to figure out something else it seems

          14. Dave Pinsen

            Maybe embed your tweet of your foursquare checkin?

          15. fredwilson

            that’s a cool idea. thanks!

          16. William Mougayar

            I think you may need to follow more of those people on Foursquare that you don’t mind making that info public for.

      4. bsoist

        Exactly! Compare this to the typical “next visit” requirement. Fred and GG visit again but he forgets about the coupon. Instead of being excited about a $5 discount, he would be annoyed/frustrated/whatever at least twice. Granted, he probably wouldn’t forget or he could have redeemed it ahead of time to his card, but the serendipity of the “use it tonight” is part of the experience. Worth the $5 investment, if you ask me.Asking him to earn the $5 somehow by posting to his blog/twitter/facebook is an interesting idea though.

        1. LE

          “excited about a $5 discount, he would be annoyed/frustrated/whatever”Yes. And that spans all income brackets just like getting a freebee spans all income brackets.

      5. Kevin Stecko

        Obviously I see the value in rewarding a loyal customer for being loyal, especially if this weren’t Fred’s favorite restaurant. I still contend that giving away money that was already spent is a horrible idea. I don’t have a business with bricks and mortar so I don’t know the ins and outs of 4square marketing. But if giving away money that was already spent is one of their go to moves I would advise them to change that up. You want promotions to encourage more spend, not less. There are tons of ways I could think of to do this, and it doesn’t have to be about the next visit. It could be about improving the experience this visit, which would make a next visit more likely.

        1. ShanaC

          right, but that still doesn’t change what I said – we don’t know the precise circumstances of Fred’s visit. As long as the reward is set up to make sense in a skinner-like condition, then sure, $5 could be very cheap

      6. LE

        I could argue either side of this as I spend so much time thinking about and studying things that involve marketing and manipulation.One thing I will say is that I think they did this because it’s easy for them to do. I don’t think there was some grand plan put together to figure out the benefit or most importantly what might have been better.The restaurant gave away $5 and got good will. Agreed. I mean they didn’t loose any that’s for sure.It would have made more sense perhaps to take $4 (their cost) worth of food (which they would sell for $8) and offer the table a free extra appetizer to test (which someone might order next time) or a free test desert etc. to build good will. (Numbers are arbitrary to prove a point).One of the biggest issues that I have with food is discovery. What should I order? The fear of not liking what I ordered. So restaurants could even offer food as “no questions asked love it or don’t pay” and come out ahead. But of course that isn’t mobile unless you promote it that way which you can. That also works with getting others to try foursquare. If they see the neighbor table is getting swag then they want to know why and then they use foursquare as well.The problem which tech is not going to solve for small business is time. If you come up with a solution it has to be something that is “sign here and we do the rest”. Not to give someone an assignment to do. It’s “here are three choices pick one” (not 17 choices).

        1. ShanaC

          that could have been the offer, instead it was $5.Either way these offers have to be structured like some sort of skinner box deal…

    3. Brandon Marker

      never underestimate a happy customer. You are thinking Groupon-type, empty customers.These are customers that most likely chose to come in, without the coupon. Good service, good food and drink, and a little discount. I’d go back in good! And $5 off a couple of drinks and Branzino–that’s a drop in the bucket.

      1. LE

        Don’t get me wrong building good will is great. But in the end people dine somewhere because of in arbitrary order:a) food b) atmosphere c) price d) location e) the way they are treated (which is really “b”)f) some rating somewhere (zagat etc.)g) a friend setup etc….where the order changes depending on the particular diner.In the end I don’t think goodwill really enters that much into it.And with food in particular people are really quick to desert a place where the food quality has gone down. The goodwill will get you extra slack of course but it’s not going to defy the laws of food addiction (lest you think people dine out for nutrition and not the buzz.)

        1. Brandon Marker

          not disagreeing with you, as restaurant promotions are TOUGH.A $5 discount, for argument’s sake, can work itself into b, c, and e. Promotions are still done today because they work. It just has to hit the target market (which something like Groupon does not do). Foursquare does, for a good part of it, because they are usually already in there by the time they see the promotion.A discount to your target market (usually those who come in to try it or like the establishment) is a successful promotion. McDonald’s knows that all those deals aren’t gaining a billion new customers. They get some sales they otherwise wouldn’t have, but their target market is the large user of them. Plus, that $5 discount was probably an AmEx one.The biggest thing for me here, is if it were 2 drinks for 11.50, it sucks. But they got drinks, and a Branzino. This probably amounted to $40+ with tax and all. $5 isn’t too huge of a loss, as it sometimes justifies that, “one more drink” thought.

          1. JLM

            .In a mass market like that served by McDonald’s part of the promotion matrix is to recapture “lost business” — customers who have not been there is some period of time.’Therefore many of their promotions are really targeted on these lost customers who unfortunately they cannot track.Lost business recapture rates for sound businesses are as high as 40% while the attainment of “new” customers using similar channels may be as low as 1%.Huge difference..

          2. Brandon Marker

            thanks for the numbers and clarification! I was mistaken on the above comment πŸ™‚

          3. JLM

            Picking the low hanging fruit.

          4. LE

            “McDonald’s knows that all those deals aren’t gaining a billion new customers.””but their target market is the large user of them. “Right.McDonalds of course also has another nut to crack.They are trying to create a little of regularity and addiction. If people don’t come in regularly the place is out of sight out of mind and people fork to a new routine. By constantly promoting, the right type of venue keeps people coming in and addicted and prevents them from trying a new place and that place becoming routine.This probably also works with a “our favorite place” place like Fred visited. A place that you visit when you don’t want to have to think or aren’t in the mood to take “door number two”. I’m guessing everyone has that default place that they know won’t disappoint when you are in a pinch.

          5. JLM

            .An interesting thing about McD is that they like to be one of 3 corners at an intersection all having fast food joints.They sincerely believe that they can compete most effectively eyeball to eyeball.If you have to drive to get to them, they think there is an annoyance lost opportunity cost..

          6. LE

            “An interesting thing about McD is that they like to be one of 3 corners at an intersection all having fast food joints.””If you have to drive to get to them, they think there is an annoyance lost opportunity cost.”McDonalds also is a real estate company. They are the landlord generally and make money off of that in addition to franchising.More importantly (and more to your point) is that they invest in the best high traffic locations because a good location is like free advertising. It’s the same reason brands fight for eye level row on the supermarket shelf or end cap.Many small operators make the mistake of thinking they can pay less “rent” (thinking of it as rent and not as “marketing”) and do ok. But rarely have I seen it work that way, at least not at scale.With retail “out of sight” is “out of mind”. A great location pays for itself if one runs the numbers (to be sure for a certain type of retail that is).I’ve seen many shopping centers fail simply because of the setback from the road or the slope in front or placement of the stores relative to the road. Or parking. Or road access how easy is it to enter the center.Here’s the interesting thing about all of this. Entrepreneurs think they need to read books, go to seminars and hire consultants to tell them what to do. They fail to do the one thing that is most important and doesn’t cost anything. To pay attention to what others are doing and figure out why and observe peoples behavior. It’s not rocket science (and much more fun).

          7. JLM

            .I agree more with you than you do with yourself.I think I might have projected that comment.McD’s is a real estate company with a captive tenant and a commissary.If you follow the real estate practices of Dollar General, WalMart and Mickey D’s — you are mining centuries of experience.Well played..

          8. panterosa,

            Mickey D’sThe French call it McDo’sMy brother in law calls it McF**kbags.My art pal used to called their OJ ‘McJuice’ (still makes me laugh out loud – the first time he said it was 6am on road and I spit the McJuice out all over my dashboard laughing, while he drank his McCoffee).I used to have a big name chain as a NNN tenant. It’s all about RE and not about what you sell – burgers, diapers, who cares? (Mine sold diapers). Total tyranny of Location Location etc. – with right turn in, good parking, easy exit view to main road. Really, you could sell tiddlywinks and they’d still come if you are in prime spot.Amazing. I sat on this thought a while back then. And then decided to sell the damn thing, get proceeds and get out, make content, and leave behind the lemmings. It depressed me the predictability of it all.

          9. Timothy Meade

            There’s a business that, if I ever launch it, I will put one of my locations next to the locations of another franchise. I consider that they’ve done the research, the scouting, figured out if it’s a worthwhile location. The businesses aren’t directly related but target the same business person demographic. (Also, I think the market for this business could open up if some big changes in the retail scene that are likely to happen, happen.)

          10. LE

            ” the locations of another franchise”That’s a great thought (along those lines Starbucks goes one step further having figured out that gays are the canaries in the coal mine to good up and coming locations and considers that in location searches).One thing to keep in mind. Some of the lesser franchises really suck at site location. Just make sure you don’t make the mistake of taking their lead.I opened a business many years ago in a retail location. I simply sat outside a competitors location for the day and watched the traffic.My location was 2 blocks away. Was the correct decision business is still operating many many years later (I sold it). Neighborhood has gotten much better as well.

          11. Timothy Meade

            Well it’s actually a franchise concept, though not the first one in the space, and the space itself will be changing.

          12. Brandon Marker

            agreed, very valid arguments. I do have a narrow viewpoint from managing in that industry, and forcing me to think out of that is nice.Promotions are always tough. The hardest part about that particular industry, is the independent owners usually make decisions based on limited data (why most will never market other than guerrilla techniques). A POS can tell you what your sales are and when, but there are an infinite amount of things that can effect business night-to-night. This is why the restaurant owners concede to the blanketed $5 off. While it may not help business, it isn’t big enough to noticeably hurt/drain the business. And maybe they get lucky, and its successful. Perhaps AmEx provided statistical data to support/validate the amount. Foursquare is then armed with the persuasion needed to have owners opt-in. Thus, the early coupons were mostly the $5/off when using an AmEx, spending X amount, and who knows from there. All speculation, of course…

          13. Timothy Meade

            Will resteraunts ever get CRM? The POS doesn’t have to be a POS, the person who pays by credit card is easily identified, and others could be more or less identified by a pattern of purchases, which could be fed into recommendations on a return visit. Out-of-band systems like Foursquare should augment the system by providing input data. Why can’t I check in to a single table, by QR or NFC, reward me by reserving it for me if I walk in and it’s available. Get me to opt in.

          14. Brandon Marker

            I have seen various startups working on this for the smaller, local restaurants. I like your tie-in with Foursquare-type services! I see the restaurants in Austin taking to technology as much as possible, and I could see them opting in to this.I think Open Table (as an example) is the answer, and other companies like them. They are expanding services and looking to acquire that additional tech. The restaurants working with them get access to that stuff in certain packages (additional revenue streams for Open Table), and it benefits the customers. Hopefully we see this kind of stuff soon.

        2. CJ

          Goodwill is the difference between being loyal or being a repeat customer. Goodwill is the conversion of a customer for a season to a customer for life and it can take many forms. It could be getting to know someone so you humanize the business. It could be ‘private’ deals, like this one. It could be remembering your order and your favorite booth, remembering the names of the wife and kids. Whatever it is, it changes repeat business into loyal business and loyal business keeps the doors open for so many different reasons.I’m a repeat customer at a lot of places where the food is good, I’m a loyal customer of very few – where the food is good AND I feel special.

    4. Tim

      I have to agree with @facebook-513707353:disqus here. Although to be clear, @fredwilson:disqus’s initial comment was regarding mobile experience and that it worked seamlessly (main take away).In terms of the actual ‘deal’, it’s not a good one for the restaurant. This is a classic example of re-rating your customers and taking money off the table with no particular return. This kind of deal is supposed to entice net new customers, not discount existing ones.Fred’s going to return because the food was cooked well, they were seated on time, and the wine list was to his and her liking. Getting the extra $5 was just a bonus and won’t positively alter behaviour in any meaningful way from the perspective of the restaurant.

    5. Tim

      I have to agree with @facebook-513707353:disqus here. Although to be clear, @fredwilson:disqus’s initial comment was regarding mobile experience and that it worked seamlessly (main take away).In terms of the actual ‘deal’, it’s not a good one for the restaurant. This is a classic example of re-rating your customers and taking money off the table with no particular return. This kind of deal is supposed to entice net new customers, not discount existing ones.Fred’s going to return because the food was cooked well, they were seated on time, and the wine list was to his and her liking. Getting the extra $5 was just a bonus and won’t positively alter behaviour in any meaningful way from the perspective of the restaurant.

    6. ddc

      It was the best advertising ever, I bet Fred has told the story a hundred times and the question is always Wait what restaurant? Is it good?

    7. Rohan

      Heh. I hope you aren’t affiliated to this mystery restaurant Kevin because I’m fairly sure Fred will pop up with the name soon. πŸ˜‰

      1. Kevin Stecko

        I’m not. I run an ecommerce business not involved at all with food. But I get all kinds of people trying to sell me marketing where they tell me how easy their tool makes it for me to give away margin. It frustrates me. I usually say to them “so you are telling me you can help me offer discounts to my customers? Why do I need you for that?”. Usually they can’t come up with a good answer.

    8. Kasi Viswanathan Agilandam


    9. rickbakas

      The more important message to get from this is the user was asked to do a little, but got a lot. That’s the key to mobile commerce. Any merchant could use a variety of tools to create an offer, but if they don’t keep it simple (3 clicks or less) the abandonment rate increases.

    10. PhilipSugar

      I disagree and agree with you at the same time. I work extensively in the loyalty space and have for 10 years. We’ve been working with casino’s who I would argue are the best at it for sixteen years. (they were the first because 25% of the U.S. population wants them abolished, 25% is underage and is not allowed to gamble, 25% just doesn’t) So mass marketing stopped for them years ago because you kick the hornets nest of people that hate you telling everyone else you are trying to get minors hooked on gambling.Where I disagree is when people think: hey, they were a customer anyway, why spend money on them. The point is that if you truly believe keeping and growing an existing customer is X times more profitable then finding a new one then why don’t you spend marketing dollars in that proportion. Alas many very large businesses believe that. I give you cable companies as the prime example.Where I agree is giving a cash discount on and expenditure that is purely experience driven. It focuses people’s mind on the cash part of things and that is not where you want to be because it means eventually you drive down your margins, lose the quality of the experience, and eventually are just a commodity provider. Instead if you provided the reward as a desert he had never tried or a new special appetizer I would understand much better.

      1. JLM

        .Very nice insight on the free desert idea.I met the love of my life in Paris — profiteroles — on my honeymoon about a third of a century ago in 1979.Free desert at a fancy restaurant. To this day when profiteroles are on the menu, my wife and I laugh uproariously and order them. Once we had profiteroles with pistachio ice cream. Not traditional.I have on several occasions wanted to order just the profiteroles and screw the entree but I have never been able to close that deal.I can still remember the first morsel of profiteroles melting in my mouth.The new wife has worked out very well also..

        1. Dave Pinsen

          Who the hell gave a down vote for profiteroles? What’s the matter with you?

          1. JLM

            .I think it might be my wife. Haha.It really could be.BTW, the profiteroles and I are………………………….CRUSHED..

        2. William Mougayar

          You’re speaking my language. Profiteroles on a Croquembouche is my favorite too. I predict we will have that one day, somewhere.

        3. Ciaran

          Escargot profiteroles. Surprisingly delicious (also discovered in a Paris restaurant)

      2. Dave Pinsen

        Great point about the superiority of a non-cash reward in this context.

    11. William Mougayar

      That’s not entirely correct. Other FS users that are seeing this restaurant either via Explore or Fred’s friends that are following him will see this promotion as well and might go there. I’m in SF now and just saw a similar promotion in my stream from The Grove, a popular coffee place for a 5$ off if I spend $10. But I have rob”sync” my Amex to FS first to be eligible. And I’m not even sure if I also have to use that Amex card to pay too.

    12. fredwilson

      i believe the offer was targeted at me because i am a loyal customer of theirs. at least that’s how i read it.

  22. Wells Baum

    When do you think mobile + tablet use of will exceed desktop? I wonder if this is already the case for the AVC readership in countries like South Korea? Please update us.

  23. StartUpJerkFest

    Hi Fred, I hear you are travelling to Buffalo next week for the Z80Labs lunch talk “Feeding Innovation”. It would be interesting to hear a statistic on the penetration of foursquare in Buffalo as compared to NYC. See you there!

    1. fredwilson

      maybe i can increase it when i am there next week. i am sure it isn’t anywhere near where it could be or should be.

      1. StartUpJerkFest

        that’s the spirit!

  24. JLM

    .The combination of 4Sq and a financial benefit changes the calculus completely.From a passive “look at me” single note emerges a driver — a driver of traffic — “I am going to select this particular location because there is a financial incentive”.If this financial incentive can be derived from 4Sq data — they know that JLM goes to a seafood restaurant every Friday night — then 4Sq has a bonanza in the data and can deliver value to merchants by driving traffic. Literally.This is another example of convergence, in this instance data and value, which can create tremendous advantage.The fact that this is happening on a mobile device which has become increasingly pervasive just highlights the long term potential of this development. The fact that it can be tailor made for a single consumer perhaps on a night the restaurant is not so busy?The next thing will be the inclusion of an incentive from the credit card companies to drive more sales. I understand this is in progress as I write.Is this a great country or what? And is this a great time to be alive?.

    1. James Ferguson @kWIQly

      @JLM – Yes and Yes – and NO – but not for the reasons mentioned.Such advantage soon becomes commoditized and omnipresent.If data and value are converged, and if data is accessible then the only value ownership is away from this convergence.Brad Feld has posted on this issue recently – regarding the value of going off-line.IRL you are an individual and not a number – your value is what distinguishes you, and not what makes you convergent.Your friends are those you chose and not those who track you.And your business is fundamentally human.Consider what happens if I am actually a Blog commenting machine of Turing Test capabilities…BTW assume also I can also recognise patterns like humans so these “Prove you are human” tests are pointless. – Competitive fallibility anyone ?Under these circumstances, there is no value in responding to a blog (it may be a completely virtualized exchange with no human intervention only random algorithmic regurgitations, because your persuasiveness is mute – you are teaching a machine to emulate you!What is great about today – and America (and the rest of the world – mostly) is that participation is optional, business can be done in a pub, on a handshake by those that risk being gulled, because to them true trust, though expensive and can never be a commodity – It will never converge with data.The ultimate Walled Garden – Real Life – technology not welcome !

      1. Mark Essel

        The precious value of real human interaction. Of course such fine company can be instigated on digital platforms (like this blog).

    2. William Mougayar

      I think the credit card company is already in the loop on that one. I’m suspecting Fred didn’t say that he had to “sync” his Amex card via Foursquare who popped that special deal. Is this correct, Fred?Β Then my question is : Does this benefit Amex or the restaurant or both? And who is paying Β Foursquare for this experiment?

  25. takingpitches

    With customers and companies moving toward mobile commerce, we need more ambitious entreprenurial efforts (such as Dwolla) to change those payment credentials, which today are the same old credit cards and debit cards.The $50 billion or so in transaction fees paid to debit card and credit card companies represents fertile soil to be worked. We all are paying higher prices for goods to make up for the fee structure, and merchants have little choice but to increasingly grin and bear it (although now they seemingly have more choice with the recent credit card settlement to impose surcharges). There are big profits for solutions that patch the hole in consumer and business pockets through which the 2-3% tax on all charges falls through. And with that type of margin to work with, there is wide scope for an entrant to offer a better deal to consumers and merchants while still making money.With all the intense interest in the mobile payment applications that tie the phone and payment systems, there is a real opening for disrupting the credit card transaction fee model by piggybacking on using the work done to create new payment habits using the new mobile capabilities.More of the hype around mobile wallets needs to be directed at developing new payment systems.

    1. Yaniv Tal

      part of our work is in mobile payments but it’s a large ecosystem and a lot is involved. as a startup, we’re working with payment processors since that’s a big piece of work that we can’t afford to focus on right now. the credit card networks are also a huge industry. visa and mastercard are not going anywhere any time soon and they’ve already made it aboard the NFC train. the problem is that you need a way to connect every merchant (and their bank account) to every customer (and their bank account). that’s a large network effects problem and to compound that, we’re talking about money here so every bank that you connect to has strict regulations – driving your costs out of reach for most startups.

      1. ShanaC

        how do you drive down the cost of creating network effects then?

        1. Yaniv Tal

          you do it little by little with a lot of pain.. remember the “MasterCard not accepted” signs from the 80’s? that’s what it takes… if somebody really wanted to solve this problem though i would say become a payment processor and work your way out. This is essentially what Dwolla is doing (and apparently doing a bang up job). the payment processors are definitely the most fat in the system. visa provides a pretty good service for their fee. when ISIS first launched they were really considering bypassing visa all together. remember ISIS is a joint venture by verizon, at&t and tmobile. these are HUGE companies. eventually they decided that the value that visa provided was worth their fee and they cut them in. if the numbers work that way at their scale, i’d say that’s pretty seems that the credit card number paradigm is going to stick for a while, even if it’s purely digital. so the other side of this is issuing credit cards to end users. the APR that you’re charged is separate from the transaction fees that are squeezed out of the transaction -> those are passed onto the merchant. there are a lot of companies already tackling the lending space to reduce the cost of borrowing and i think that’s already going phenomenally well.

          1. ShanaC

            I was born in the 80s, so no πŸ™‚

  26. William Mougayar

    There was a convo too on Continuations 3 days ago that led into mobile and commerce. And Twitter came to mind as potential “mobile commerce platform”. Can the tweet be also a transaction jump point?Someone mentioned as already doing it. What are you thoughts on Twitter for mobile commerce and Chirpify as an example?

  27. Ryan Frew

    @fredwilson:disqus All things said, any plans to make AVC & Disqus a more pleasant mobile experience in the near future?

    1. fredwilson

      i believe the disqus2012 team is focused on mobile devices and browsers now that the 2012 is out the door.

  28. NickNYC242

    Totally agree with the post and comments below – frictionless transactions, using social graph behavioral data is the new paradigm. The bigger question is once you have all this data and CRM value – how do you determine how and when to change the customer experience to support loyalty and repeat conversion. I think a $5 off coupon is a start, but in experience-driven industries, we’re going to have to go one step further.

  29. James Ferguson @kWIQly

    Just like to say that this very particular $5 was quite well spent. !I wonder – did they offer the same deal to non-Freds ?

  30. paramendra

    “Mobile is exploding.” That about captures it.

  31. William Mougayar

    Curious as to how they reconciled that you’re the one that clicked on the offer. There must have been a manual process of checking who’s who, right?

    1. fredwilson

      you connect your credit card to your foursquare account. then when you “load the offer to the card” its in their system. when you check out with your credit card, you get the discount on the credit card account.

      1. William Mougayar

        Got it. I figured later that Amex was the culprit on that. Thanks for clarifying.

  32. markslater

    Mark suster wrote a great post the other dayhttp://www.bothsidesoftheta…Conversation = conversion – in this context – conversation = transaction.People still want to talk with one another – maybe not by what we have come to know as a phone call – but people innately want to communicate – if they do – they will transact.Build a communications fabric that makes it dead simple for people to actually interact with people and commerce will follow very closely behind.dont believe me? go read marks data on conversion.

    1. fredwilson

      thanks. somehow i missed that. mark’s blog is great.

      1. William Mougayar

        It was prob in that Engagio email πŸ™‚

  33. ErikSchwartz

    I see this too and I think it’s going to be really challenging for a large number of mid level of online companies. These are the guys who play the SEM arbitrage game. They can buy very targeted traffic for .02 and sell hyper targeted ads against it for .04. This works because there is plenty of SEM inventory on search engines.In the mobile world you’re talking about much less SEM inventory because generally there’s only one or two SEM links per SERP (as opposed to ~10). Therefore the price to buy that traffic on mobiel SERP is going to be MUCH higher than on web SERP.This isn’t a big deal for the companies that organically rank highly or have an unforced social marketing component. But those that don’t are really going to hurt.

    1. ShanaC

      ooo, good comment – though I think serp will change because of locality – bid structure could be very different

  34. JLM

    .At the end of the day, all of this is measured by some yardstick of customer “loyalty” — creating it, expanding it, solidifying it. This is a subject that I have spent a lot of time thinking about and trying to measure and make work.Loyal customers are folks who will:1. Prefer your business to other competitors when making a fully informed decision.2. Be willing to pay a very slight premium for the pleasure of doing business with you and consider that part of the value equation.3. Refer your business to peers and others.4. Bring guests to your business. They will show off your business to other prospective customers.5. Invest energy in the relationship — tell you when you are failing to meet their expectations. Compliment you when their expectations are met.6. Will provide honest and critical feedback even when not solicited.7. Will inject personality into the relationship.8. Will give you a second chance when you screw up and will forgive you at the same time.Less than 20% of customers will meet these criteria upon critical examination and yet 40% of customers self-identify as “loyal customers”.I think the critical analysis as to what percentage of your customers are truly loyal is a great basis for charting progress..

  35. Scott Belsky

    As far as commerce on mobile is concerned, the broader point here is that “marketplace behavior” (the expectation of being able to buy or engage something you discover, wherever and whenever) is proliferating our lives. Mobile obviously plays a big role. But the bigger story is that, in the future, I think “marketplace” will be less of a destination and more of a given. The companies that develop their products and partnerships with this in mind will win.

  36. kidmercury

    in the long run this is where the world beyond the nation state really comes true. virtual currency and virtual banking will enable a totally seamless experience in a closed network. till then, i wonder if anyone can beat paypal. nfc has some textbook elements of a disruptive technology, in that it has the potential to introduce a new basis of competition, although i think the currency is the real trump card here. need a financial firm that knows how to create a strong currency and use this to create a strong subsidy for products/services. like inflationary monetary policy but in reverse. still seems impossible, but i think it’s one of those things that can be achieved within 10 years. the pieces of the puzzle are all there and almost ready, now it just needs to be connected and delivered in a format that customers can easily understand and utilize.

    1. ShanaC

      no crypt is perfect – so what you are asking for is the most trackable currency ever

      1. kidmercury

        the tracking part is easy if you keep the area you’re trying to track small. the technology need not be exceedingly complex, everything will be reversible anyway as transaction disputes will be routine.

    2. Yaniv Tal

      “inflationary monetary policy but in reverse”! i’ve already worked this out on pen and paper πŸ™‚ all we need to do is get rid of paper money and eliminate corruption from politics… oh wait.well you never know… life is long and eventually those old bastards will die off.. and maybe it’ll be possible to shame our generation out of being dicks πŸ™‚

      1. kidmercury

        the system is already collapsing. $15.88 trillion in national debt in the US, japan’s debt/GDP percentage is over 200, the eurozone problems are here and now. so what comes after the collapse? what comes after great depression 2.0 is finished?i realize there is a long way to go. first we need people to realize we’re in great depression 2.0. but they’ll realize that as they get poorer, and then they’ll start looking for solutions. at which point…….

        1. Yaniv Tal

          i have some ideas i feel pretty strongly about but i think we’re a cycle or two off πŸ™‚ it will happen in our lifetimes though. out of necessity we’ll invent systems that allow transparency and efficiency to dominate politics and finance once again. that’s the only way a country can be competitive. we did it 250 years ago and the rest of the world caught up. we’ll do it again.

  37. ShanaC

    I still think the most difficult part of what your asking is not for services, but for goods, particularly small goods that one can hold with one hand.Eg, I run out of allergy medication. I go to drugstore, by the generic on my phone with some sort of barcode scanner, pay for it on the phone, and walk out. who is to say that someone mimicking my body postures/way to hold the phone couldn’t do the same and just steal the allergy medication? And this assumes that a lot of retail will be around – I can now easily subscribe to allergy medication (I think)

  38. Dale Allyn

    Question, please pardon my ignorance: Can one check-in to receive the coupon/perk without broadcasting their presence (i.e. stealth) without the need for setting privacy globally in 4SQ?IOW, say you and GG go to your favorite spot and enjoy using their promo for a free appetizer with the purchase of two glasses of wine. Can you access the promo without letting others know that you’re there, i.e. delayed publication of your check-in?

    1. fredwilson

      yes, you can check in on foursquare privately and not share your checkin with anyone other than the system

      1. Dale Allyn

        Thank you. I thought this was the case, but not sure of the granularity (i.e. case by case) and how it might affect the promo, etc.

  39. Will

    Hey Fred, sorry to be a stickler. The last sentence shouldn’t be an if then, but more like an even if. Great Post.

    1. fredwilson

      start the paragraph with even if?



  41. William Mougayar

    Adding another story to this. I just got out of a cab in SF and paid with a credit card via Square. The driver asked me if I wanted an electronic receipt via my email or SMS.I still had to swipe my creditcard through the Square reader, but why not bump my pre-loaded iPhone against his? It would have been more seamless and would have counted for mobile commerce, right?

  42. Brad Lindenberg

    I think a few years ago this service wouldn’t have worked because people didn’t trust payments the way they do today. Today everyone is taking payments and consumers now trust storing their payment details on ‘non-bank’ or ‘non-paypal’ services. This in itself enables us to create new payment platforms and methods as the trust is there.I think the payment landscape will be fragmented and shared between service providers. You might take/make payments via Square at a garage sale, but take/make payments via Dwolla for transfers, Foursquare for loyalty, then you might use Google Wallet or iWallet (if they release it) from your phone with NFC when you pay for petrol, then you might use PayPal when you buy from a smaller merchant online that you’ve never bought before.Each platform has its strengths and place so I don’t see it as a winner takes all, I think each service needs to become the best at their niche but the space will continue to fragment.The winners of this game are Visa, MasterCard and Amex!

    1. JLM

      .The credit card space is ripe for a Charles Schwabing type intervention..

  43. Deap Ubhi

    Fred, why aren’t more companies building to mobile, especially commerce companies? The experience always seems to follow as an afterthought to the browser; but I have rarely come across any commerce company that is thinking about the mobile experience first.

    1. fredwilson

      good question. that’s why i wrote this post.

  44. Andrew Ciccone

    Please share with potential investors, …At Wireless PCT our services includes but not limited to Digital Television, Digital Phone, Video and Audio Conference, Fax and mobile services.Our unique hardware and apps includes Internet TV receivers and custom mobile devices. The core of Wireless PCT is based on continuous research and innovation.Offering attractive market share for interested partnerships and investors, http://wirelesspct/investor .

  45. Ciaran

    “Last night the Gotham Gal and I went to one of our favorite local spots, sat at the bar, had a glass of wine and a nicely cooked mediterranean seabass. As we sat down, I checked in on foursquare and was alerted that there was a special. Spend $10 or more and get $5 off. So I clicked on the special, loaded it to my card with one click, and when we paid our bill, we got the $5 discount on our credit card bill.”Whilst the payment method is beautifully simple, I worry that the actual deal highlights the fact that coupons are often just cannibalising existing custom. You already frequent the venue a lot (assuming it is, as you say, one of your favourite spots), do did that $5 actually make the vendor anything? I’m guessing not.If all the world of mobile has is coupons, we’re all in trouble.**I’m obviously exaggerating slightly, but hopefully you get the point.

  46. Kasi Viswanathan Agilandam

    ??? πŸ™‚

  47. William Mougayar

    You’re so transparent πŸ™‚

  48. Abdallah Al-Hakim

    maybe that should be the new social symbol for that particular action πŸ™‚

  49. Kasi Viswanathan Agilandam

    but i was interested in your thought. i use that … a lot ,,,.

  50. Mark Essel

    Ah yes, when and where did the mobile transaction happen (in a dept store, a competitor’s store!, etc)

  51. Dale Allyn

    Funny, I just deleted a comment prior to posting in which I wrote: If I were a restauranteur I might like patrons to be able to access my menu and rate the items they ordered. I could then tailor promotions to certain aspects of each guest’s habits and preferences, or attempt to lead them in new directions, while also getting important feedback on product success. This would be part of a loyalty program obviously.Add realtime reporting to management and your on your way. Not quite what you were saying, but sort of a similar vein of thought.

  52. JLM

    .A restaurant manager comes over to you in mid-meal and asks:”Everything good, folks?”What do you say? Really?99% of folks say — “Fine, fine.” Even when it sucks.Once upon a time, I said: “This is one of the worst dining experiences I have ever had.”The entire restaurant went silent and every eye was on me.I was so angry that I just exploded. Plus I had had several glasses of wine while waiting — Santa Magherita, one of my favorites.My wife sentenced me to some very serious “timeout” — the kind of timeout that is worse than mortar fire — after that but damn it felt good to say it. It was like a wargasm.I never mind paying a lot of money for great food but I am a cheapskate at heart and it pisses me off to waste money on bad food.I had an economic interest in a restaurant in which I never had a bad meal. Ever. I have been ruined since then..

  53. Dale Allyn

    Exactly, Charlie. There’s a lot of cool things that can be done here without intruding. The real benefit can be that it is intention-based which has way more mojo.

  54. William Mougayar

    I think you/others are missing the fact that Amex is in the middle of this promotion. They are the ones probably even subsidizing the $5. They are certainly driving it.

  55. Dale Allyn

    I don’t know that we’re missing that – I think that some of us are just riffing on the concept(s) as ways to encourage engagement and growth for not only 4SQ, but also for businesses and CC companies, etc.

  56. William Mougayar

    OK. But this promotion is driven by Amex. They are different motives than the owner of the establishment. If this was driven by the restaurant, it would probably have a different customer experience I think.

  57. Abdallah Al-Hakim

    so very true. However, people have no problems trashing the bad restaurants via social media but it is not same satisfaction as doing it in person