This is how the song came about

Flo Rida was in the studio with Pain doing a song called “I’m Dancin’”, which is featured on T-Pain’s next album. One of T-Pain’s boys, Tay Dizm, was talking about how he met some fine girl on Zoosk. He was talking all kind of mess about how good she looked and that she actually had good credit. T-Pain responded from the booth and was like “I need me a Zoosk Girl“. The jokes then turned into a song and it went from there. Since the song was clearly a smash, we decided to work something strategic out with Zoosk to amp the promotions for the song, which is now Flo’s Hype Single off his album The Only One”.

Commented Poe Boy Music Group CEO Elrin “E-Class” Prince

Can’t wait to see how high in billboard rankings this song is going to go!

The selection committee has liked the idea enough to put it to community vote. Now, I need your help and votes to make sure it gets accepted. Please visit the panel picker and give it a thumbs up! Make sure you are logged-in or the vote won’t count.

See you all in Austin in 2010

Playing this pivotal role in our internet lives has given major email providers a significant power in shaping the online universe. With a reported 250 million mailboxes each, Hotmail and Yahoo Mail have been the elite in this universe and have brought significant riches to their owners. This is exactly why Google wanted a piece of this game and introduced Gmail in 2004.

But in the past year or so an interesting shift has been happening. Many of the activities that users were performing through their emails is now shifting to social networks which provide a more “social” version of the same. Here are a few simple examples:

• sending emails to family and friends == writing on their Facebook wall
• email photos as attachment == uploading photos to Facebook
• passing chain emails on == inviting friends to apps that do so on your behalf
• taking quizzes and sharing results == filling up quizzes on social applications

This shift is not just limited to personal interactions. Relationships that businesses were establishing with individuals through emails for many years are also moving to (or being augmented by) their social network equivalent:

• signing up with email and validating it == signing up with Facebook Connect
• receiving transactional email == receiving notifications on Facebook
• signing up for promotional emails == becoming a fan of the brand’s page
• receiving promotional emails == status updates from pages on Facebook
• viral growth through address book import == viral growth through Facebook invite

a very immediate implication of this shift is visible in what businesses go after

• buying email lists for promotional campaigns == buying applications with access to millions of users
• white listing business’ email with Hotmail/Yahoo == verifying business’ Application with Facebook (i am sure verification for pages will follow soon)

Obviously a lot of these activities are simply better when you add a social angel to them. Uploading photos to Facebook and tagging friends in it is a ton easier than composing an HTML email and writing captions around images and sending that to your friends. It’s a ton more fun to post that stupid quiz’s results on Facebook and see how your friends react. However, a more intriguing element in the social version of these interactions is the speed at which they happen. When you post a photo on Facebook you will receive your first comment/like/etc in a matter of minutes. Doing so through email usually gets your first reaction in half a day or so (talk about immediate gratification). The same holds true for business interactions. At Zoosk, we see this speed difference very clearly: users respond to notifications within minutes but emails usually take 12 hours or so for impact.

This speed is particularly intriguing and at times surprising. Is it because our email boxes are way more cluttered than our Facebook notification window? I find that hard to believe. There is already a considerable amount of “spam” in our Facebook notifications and feeds. So, why do consumers react to pings on Facebook so much quicker? I don’t know that answer to this question yet. Here are a few of my theories (leave your theories in comments)

• sense of urgency: my notifications/feed stories/etc will go away. I need to do something now
• state of mind: I am on a social network to sink time, so I am more open to triggers
• social element: my friends will see my action and potentially participate with me so I am more inclined to do something

right now it seems like these two systems are running in parallel. I receive an email for almost every Facebook notification that I receive. But I suspect that this balance won’t last for long. Especially if the effectiveness and speed of this new medium continues to be superior to email as we push more and more interactions onto it.

[side note: This is a critical time in web email services' life. If they are not careful, their power could diminish very quickly. Hotmail and Yahoo are both responding to this shift with "Windows Live Network" (or whatever the social element of hotmail is called) and "Yahoo Connections" both of which are trying to bring social (as in my friends and family) to their experience. I am not convinced that just capturing my social graph (which by the way they both do a horrible job of it) is going to be enough. We recently saw Google take a more ambitious approach to evolving email with their Wave project. The big three internet companies have failed to get social networking right and now they are seeing their grip on email (the other starting point for our surfing habits besides search) is eroding because the same social networks are replacing them.]

As for businesses, this shift/battle means that they need to perfect both mediums until (or if) a clear winner emerges. You still need to whitelist your email servers and also get your Facebook application verified. Yes, this means more work, but you have more opportunities to stay connected to your users. The trick now is to make sure your communication strategy takes the special characteristics of each medium into account and uses them appropriately.

These ads are so profitable that they usually outbid any other advertisers on any network. If Google was not fiercely combating them, the would take over the overall online advertising universe. The actually come in a very few formats that I am sure you have noticed them

• Crush Ads: Someone has a crush on you!
• IQ ads: What is your IQ?
• Age Ads: How old are you really?
• and a few more “creative” ones

What percentage of ads on social media are composed of these scams you might wonder. According to insiders in multiple ad networks, it is as high as 70% of their revenue! Basically if you are monetizing your product through social ad networks, your business is probably being financed by scam ads.

We learned this very quickly when we were running social ads on Zoosk last year. First sign was when we started getting complaints from users that we should stop charging their cellphones. But Zoosk didn’t have any mobile features at the time. Once the volume of these complaints got to a level above noise, we did a few follow ups and quickly learned that these users were tricked by the scam ads to give out their cellphone numbers and not knowingly they were being charge on a monthly or sometimes biweekly basis for something around $10!

We tried to block these advertisers manually from our apps, but it turns out that if your ad network doesn’t fight them it is very hard for the publisher to effectively block them. We knew that we would be getting lower eCPMs by doing so, but we decided to switch from all the known social ad networks for basically this reason.

At the same time I understand why these up and coming ad networks can’t afford to remove these advertisers from their networks. Publishers flock to highest paying network on a whim and if a network drops 70% of their revenue, it will certainly die. Only Googles of this market can afford to fight these guys hard. I must give Facebook credit. They at least try to block these advertisers through their “ad policies” and even though I don’t agree with their method of combating these guys, at least they try.

What about publishers? Properties such as Zoosk that manage to directly monetize consumers have an easier way of turning down higher eCPM payouts by cutting scam ads (which I am super happy about . However, if advertising is your main revenue stream, it is very hard to turn down the higher eCPMs.

That being said, I want to argue that publishers should fight the urge to stay dependent on such ads for their own long-term livelihood. These ads and companies behind them won’t last long term. In many countries around the world consumer have finally been able to fight these scams. Over the past two years consumer rights groups have been able to pressure phone carriers to not allow these offers to operate on their network. As you can imagine carries play a very tricky role in this whole game. They don’t mind the revenue generated by these offers (sometimes they get half of the payout on these offers) but also don’t want to be known for supporting scams. And they have started to give in to the pressure from consumer rights groups. Even china recently passed laws that make the life for the companies behind these offers so hard that most of them have completely disappeared. I am sure US carriers will do so in the next 12-18 months as well.

Once 70% of revenue of ad networks disappears due to legislation or carrier policy change social media publishers relying on these advertisers will see a significant drop in their eCPMs (remember when Facebook forced Social Media and Cubics to clean their act to some extent last year? first effect was slashing eCPM rates). If your company is addicted to such incomes and hasn’t worked “harder” to figure out better ways to monetize you will be in a very grim situation once the plug is pulled. Not to mention that you would be doing your customers a big favor by saving them from these notorious scam techniques on the web today.

So what do you say Social Media publishers? Let’s fight these scams to both protect our users and also build companies that can outlast scammers.

As this economic downturn puts pressure on more and more web startups to skip the dwindling online advertising revenue stream and go directly to the consumers more entrepreneurs will get exposed to this mess. Since I have been dealing with this problem for almost a year now, I thought I should just summarize what is wrong with this ecosystem. Hopefully this post provides some guidance to fellow web entrepreneurs that are/will go through the same and save them some time.

I am also going to propose some basic requirements for anybody who wants to solve this problem. My hope is that somebody in the payment business will take a look at this list and hopefully provide a product that satisfies these requirements. I really believe that there is a huge opportunity here and whoever cracks this problem properly will benefit immensely. If I was not busy building Zoosk, this would be on the top of my list of opportunities to tackle.

Side Note: I am going to focus on payment methods that make the most sense for consumer web startups in this post. So this is in no way a comprehensive survey of the industry, just a peak at what might make sense for a typical web startup. Let’s start by looking at existing solutions:

Accepting Credit Cards on Your Site

In order to accept a credit card on your site, you need two things. 1) a merchant account 2) a gateway to talk to your merchant account.

A merchant account is basically a relationship between your business and some bank that enables the flow of money from customer’s say VISA card to your checking account. A gateway is an API provider that sits between you and your bank and connects the two worlds (Sometimes these two are bundled together).

There are multiple ways to get a merchant account

• apply at your local bank such as silicon valley bank
• apply at a gateway reseller such as authorize.net
• apply at a global bank such as HSBC

In order to get a merchant account you need to select a bank you want to work with, fill out an application form, pay some application fees and wait to be rejected! Why? Because banks like to only work with very “established” businesses with years of audited financials and history of accepting payments. So, if you are a tech startup who is just getting started with payments you will get rejected.

Merchant Account – The Good:

• direct control over user experience
• low decline rates
• competitive and low transaction fee rates

Merchant Account – The Bad:

• well, being rejected for one really hard to get when are just starting

Does this mean you need to scratch accepting credit cards all together? No! It’s not that bad. There is PayPal after all! PayPal offers a product called Payments Pro which basically is a simply merchant account + gateway without all the requirements of one that you have to deal with when working with real banks. It’s a great service for when you are just getting started. The application process is fairly simple and you can be accepting “major” cards on your site within hours.

PayPal Payments Pro – The Good:

• direct control over user experience
• quick approval + setup

PayPal Payments Pro – The Bad:

• limited number of currencies (USD, CAD, GBP, EURO, and AUD as of this writing)
• high decline rates (i think PayPal runs out of processing quota with some of their internal merchant accounts!)
• higher transaction fee rates
• HORRIBLE and SLOW management interface (think Bank of America Online if you have used it; now make it even worst!)

Another drawback of PayPal is that their business rules are designed for small merchants. You will achieve their highest merchant level if you do more than $100,000 a month in revenue! For example if you have $100,000 in your PayPal account you can’t take money out of your account (say you try to withdraw $10,000)  if you have a chargeback for $10 which is a very normal thing for a business doing more than half a million a month!

Sending Users to a 3rd Party for Payments

The idea here is that you pass on all the complexity of handling payments to a 3rd party partner and just get a notification when the transaction is complete. PayPal’s Express Checkout product is a good example of this solution. You add a button on your site, the consumer clicks on it, goes to PayPal’s site and uses their series of payment options and when the transaction completes they are sent back to your site with some way of notifying you of the transaction status.

Other examples of this method include Google Checkout and PayByCash.

3rd Party Payments Sites – The Good:

• no hassle
• many payment options

3rd Party Payments Sites – The Bad:

• no control over user experience
• especially not suitable for recurring charges because you don’t have a monetary relationship with your customer
• lower conversion rates because of 3rd party’s policies (consumer has to setup an account with some of these before they work for example – another drop rate)

Payments Through Mobile Phones

There is a lot of excitement around enabling consumers to pay through their mobile phone. Startups such as echovox (operates Zong) and Mobillcash provide services to merchants to accept payments through mobile phones. There is even some evidence that conversion rates are usually higher when consumers are asked to pay through their mobile phone as opposed to credit cards.

Mobile Payments – The Good:

• higher conversion rates (maybe?)

Mobile Payments – The Bad:

• no control over user experience
• you get paid very late (sometimes it takes 6 months)
• carrier usually takes something around 50% of the transaction as fee!
• limited price point options (pre-set price points by carriers; also above $10 transactions are usually not suitable for mobile payments)
• very complex and always changing carrier policies (major risk to build a business on: a policy change in China mobile caused meetic to drop their whole business there!)
• especially not suitable for recurring charges anymore because of new carrier policies fighting “crush like” scams

So What is a Poor Man to Do?

It might be my super sensitivity to user experience, but I have found that sending users to 3rd party sites (yes, even if it is an iframe within my site) is not worth it. The payment page is one of the most “intimate” parts of your relationship with your user and if you want to create a lasting relationship with her, you better have it perfected. A generic 3rd party provider will never provide that experience. So, if you can, have full control over your payment page. At the very least the most commonly used method should be in your control.

Setting up a merchant account (or two or three – more on this below) is the long-term correct answer in my opinion. The problem is that you won’t be able to do so at the beginning. So, I would recommend starting with something like PayPal Payments Pro but planning for migrating to a grownup payment provider as you close in on the $100,000 revenue milestone.

The World is Flat Except When You Bank

Another complication in this whole story is the global coverage of any of these methods. It turns out that with today’s Internet penetration across globe you can get users everywhere but not so much their money! Even within continental Europe, the payment methods and their availability varies significantly. As an example even to this day Google Checkout only supports two currencies: USD and CAD! At least PayPal covers Western Europe!

In our experience, we have found that quoting customers a price in their local currency is a MUST if you want to have good conversation rates and compete with local merchants. Just as translating your site to French helps you grow in France, asking your French customers to pay in Euros also will help with them paying you.

Also remember that VISA and MasterCard are not the only payment methods (can somebody tell PayPal product managers about this one?). If you want to sell well in France, make sure you can accept Carte Bleue (a local debit card). If you are operating in Ireland, don’t forget Laser Card. And the list goes on and on. The bad news is that very few merchant accounts accept all types of local payments. That’s why you might end up having a merchant account at each of your major markets to really optimize the experience in that country.

My Ideal Solution

So, if I was going to start a payment company, what would my requirements look like. Here is the short list of my “wants”

• SaaS: Don’t expect your merchants to embed your iframe in their website, open a popup, or send folks to your site. Simply provide a few API calls and get out of their way. You don’t need to have consumers create accounts as long as get paid on every transaction. (for the record zuora.com is not truly SaaS!)
• Comprehensive: Accept all major payment methods (credit cards, debit cards, bank transfers, etc) in each market you enter
• Local Currency: Allow your merchants to quote in local currency
• Accountant Friendly: Provide APIs that would help your merchant’s CFO stay GAAP compliant! (read revenue recognition, VAT taxes, etc)

and in return charge higher transaction fees. I promise you that if you do this right, you can ask for twice as much as a normal merchant account charges and your merchants would still love you. And please let me know when you have it ready

2008 flew past me too quickly. I think I accomplished a lot but let go of many important things while doing so. Some of it already has faded from my memory (living in Hayward for a year) and some of it hasn’t fully clicked yet (helping 150 million singles connect on Zoosk). I still think 2008 was definitely a net positive year for me as an individual, but I can do better, don’t you agree?

So, I am going to do the cliché and come up with a few goals for 2009 for myself which I am announcing below. Why publicize them? In the hope that peer pressure from all of you great friends will help me achieve them faster and maybe even better. So, if you see me off track, please let me know in no uncertain terms and don’t let me to chicken out

1. Get my Health Back: Since I suffered stress fractures on my feet in 2007 it has been down hill for my health. I stopped working out regularly once I had both feet in cast for a few months and after that my startup life totally kicked health to the curbside. The obvious effect has been gaining plenty of undesired weight! Even more so, in the past 6 months I have started paying for my negligence in other ways as well. I now get sick too quickly. I have had back-pain, neck-pain, etc. THIS HAS TO STOP BEFORE IT GETS MORE OUT OF CONTROL. So, 2009 will be the year that I get back my health. First stop will be to get back into a consistent training program. Sitting on a stationary bike or running on a treadmill never does it for me. My answer: working out boot camp style Maybe even playing soccer again if I do well.
2. Grow Zoosk’s Brand: Last year, my company Zoosk came out of nowhere and caught social dating by a storm. We have added more than 12 million users and made 150 million connections possible. Zoosk is now available in 12 languages some of which I don’t understand at all (btw, it is a very strange feeling to play with a site you built in a language you don’t understand). Pretty impressive if you ask me, but that’s just the beginning. In 2009, we will keep on growing but will have a much stronger emphasis on our brand. In our top countries, I want “cool online dating” to be equivalent to Zoosk in the minds of consumers. We have a tough road ahead of us with entrenched competitors and their multimillion dollar marketing campaigns to trump. But we have smart people on our team that don’t quit. I believe we can go beyond our wildest dreams in 2009. It will be a lot of hard work but man it is fun.
3. Get Social Again: Ironically, working at a social web startup damages one’s own personal social life. The long hours of work and the do more with less attitude definitely keeps you away from getting together with friends new and old. But I am going to attempt to make the two coexist in 2009 much better than last year. I think the second half of last year showed a clear improvement in this regard thanks to moving to San Francisco and also because my girlfriend joined me in California. My plan is to build on that improvement in 09 and spend more time with people I care about and meet more people that are not directly business related. So, if I haven’t pinged you in a while harass me about it and don’t take “i am busy” for an answer. I need your help on this one.
4. Share Ideas with Community: I think I have done a poor job sharing some of my learnings from the startup journey with others in the past year and a half. A good example of this negligence has been this very blog and lack of posts on it. I will be trying to revive my blog and post more often about things I learn while growing Zoosk. There is a lot of knowledge that people in my position gain (sometimes the hard way) that can easily be shared to help other entrepreneurs. Again I can use your help here. If there is anything in particular that you want me to talk about drop me a line or leave a comment and I will try to write up about it. I have learned plenty from reading about other people’s experiments and it is just fair for me to share back.
5. Read More: Yes, I read a lot of blogs and other media through out the year but since I started Zoosk, my non-industry reading has plummeted to unheard of levels! I used to read WSJ and The Economist regularly plus books on culture, history, business, and politics. Last non-work-related book that I have read was in 2007! That’s just a shameful stat if you ask me. I need to reverse this trend quickly or I will turn into one of those ignorant folks that doesn’t know much beyond his nose . The fix: start reading periodicals first and gradually make room for longer readings such as political books.

As you might have noticed by now, the challenge in front of me for meeting these goals next year will be smart time management. Most of these goals are in direct competition for my time and energy and to achieve them, I will need to balance my resources wisely. As with any other goal, I will need some metrics to see how I am doing on each of the five. For four of them it’s fairly easy:

• Health: my weight will be a good proxy for my progress at least for the first six months.
• Zoosk Brand: again we have plenty of metrics tracking this diligently.
• Sharing Ideas: I can look at the popularity of my blog as a decent proxy for this one.
• Reading: My book reading wishlist should start shrinking (or at least it should have new titles in it)

The hard one to gauge is going to be number three. The best metric here will be my friends’ and how they think I have done. So, please let me know.

One last note: In 2009 I will turn 30. Yes, the big three o! For some reason round numbers in age are more important than others. Don’t ask me why, they just feel that way! Crossing 25 was a major turning point for me as I looked back at my life and what I had accomplished by living for a quarter of a century! (scary, huh!) Now we will see what turning 30 will do. One thing I am sure of is that 2009 will be another amazing year with its ups and downs. Can’t wait to live it

Cheers to a great year for all of us…

the gap between “good” and “perfect” isn’t much. One flawed particular, qualification, or requirement is enough to make a perfect thing, a good one.

If you want to succeed in most competitive challenges of today’s world, good is not enough. Usain Bolt wouldn’t capture the imagination of millions if he was just good. Beethoven’s piano sonatas wouldn’t last for centuries if they were just good.

So does this mean that we all need to be perfectionists?

Perfectionism, in psychology, is a belief that perfection can and should be attained. In its pathological form, perfectionism is a belief that work or output that is anything less than perfect is unacceptable. At such levels, this is considered an unhealthy belief, and psychologists typically refer to such individuals as maladaptive perfectionists. (wikipedia)

Not very healthy to be a perfectionists! so now what?

But let’s step back. What does it mean to be prefect? Is that a relative judgment or an absolute one? Can something that was prefect 100 years ago still be considered perfect? Is there really no room for the gymnast who scored a perfect 10 in past Olympics to do better?

I really think perfection is a moving target that is affected by our understanding of the space in which the work exists, the time it was produced, and even the resources/constraints that the performer had at the time of production. Of course, the efforts of other actors in the same era affect the perfection judgment significantly.

So how can we hit this moving target and join the greats? I think the healthy balance here is to strive for the perfect work or output (whatever it means to us at the time) but not to deem anything less unacceptable. Put the work out there. Get feedback and improve upon it. And repeat…. Just be conscious that there is always room for improvement, even if you can’t see it now.

This is one of the reasons why I love working in technology so much. The meaning of perfect in this field changes so quickly that you can’t escape seeing the moving target. What was a perfect web application 10 years ago now would seem so broken! And I am sure what we see as perfect today will feel broken in a couple of years. The challenge is to keep up with moving target and try to stay as close to it as possible all the time.

Now back to perfecting that simple web form!

So, let’s see how this test turns out

Aha! I just figured out the photo stuff! Pretty neat and intuitive. Attaching a photo I snapped yesterday of first Zoosk roof get together. Now let’s see how it posts…

285 days, I am proud to announce that I have landed in urban life again (aah, it feels good ). If I skip the show (or long depending on how you look at it) time I have spent in east bay, I have upgraded from Seattle to San Francisco and I couldn’t be happier about my latest move.

Although I should day that moving a house plus an office in the same week is not something I will look forward to again! It was overwhelming to say the least. But it’s beyond me now and I am looking forward to a great time in SF.

Again, I have a place I can call home. Hello San Francisco!

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