But why China wins? I believe that China is winning because it got to an optimum between education, wealth, human rights and discipline. It seems like the formula to a national success is MIN (human rights, wealth) and MAX (education, discipline). 

20 years ago, China didn’t have enough educated professionals: the country was poor but people were very disciplined and the government disregarded their basic rights. This is a great climate for  massive projects like building highways or railways : few skilled engineers and thousands of hard workers, working for pennies, 16 hours a day. Today, these projects are the base for China’s growing economy.   But China didn’t stop there: the government (yes Ron Paul, the government) is making an enormous investment in education and sees steep increases in high school and higher education. Now, armed with employees that are as motivated and discipline, but also well educated, China can compete and win the most sophisticated manufacturing projects in the world. Yes, they run the risk of any other fast growing economy- with more wealth comes less discipline and motivation (try to wake up 8000 American workers at midnight and send them to their work stations just because someone changed a design in Cupertino…) but China is many years away from this prosperity level and you can rely on the Chinese government to keep its people disciplined for years to come.

What can we do? admit that we are wealthy and lazy. We will not win over China by being harder working or more disciplined or strip our people from their basic rights. We can only win (or at least give a good fight) by out investing China in education. After all, our starting point is so much higher and if we act fast enough we can open a big enough gap. Highly educated and innovative people can be lazy: most innovation in the world happens because a smart person wanted to work less. You just can’t be lazy and not educated. This is where Greece is. And no one wants to be Greece right now. 

So let’s stop pretending that we can bring back manufacturing jobs to this country by waving our hands and changing the laws. We can’t. Not now. We can super charge our education system today so we can benefit from this investment 10 and 20 years from now. The economic battle with China is going on for over 20 years now. China has the patience and a plan, and we talk and complain. Guess who’s going to win this fight?

It’s not a bitter victory but it is disappointing that the only thing that got the collective web to react was a direct attempt on its revenue and profits. We all know that the subtext to all the freedom speak was money. Great deal of money.  In a coordinated campaign that lasted only few short weeks and peaked today, the entire country got convinced that SOPA was evil, only to serve the interest of the internet companies. (Disclaimer, FWIW, I agree with the position of the silicon valley here, but this is beside the point).

So where is the opportunity? we just discovered that the valley can take a stand, and mobilize the public opinion. For one day, Washington was not only influenced by the car/drug/weapon industry lobbyist: it was influenced by us. It’s a great power we can use to influence our policy makers to do other things that the vast majority of the tech minds here believe in like a universal healthcare for example.

If this is too controversial, how about taking a stand on something every educated American can agree on? We need to fix our education system. While not impacting today’s revenue, great education system is the only thing that will ensure that 20 years from now, the Silicon Valley is still the center of global innovation and not a follower of countries with much better education like Finland or South Korea.

High tech is an industry with long term interests like any other industry. Today it discovered that it can influence the congress without lobbyists and dirty politics- it can do it out in the open. It is too much to expect that this power will be used again for better causes?

• Plan to go every day: No, I don’t really go every day. I just pack my gym bag, get everything in place and plan a convenient time based on my next day schedule. Sometimes the day goes as planned and I end up going and sometimes something changes and I don’t but since I plan to go every day, I still get to go 3-4 times every week in average.
• Treadmills are evil: but at the same time, they are the fastest way to get a good 30 min of cardio. At first, I tried the classic “30 min workout” music on my iPod to stay engaged but I couldn’t get myself to persist. Than  I tried TV but there is never something good and the commercial breaks are huge downer when you run. Than I tried to listen to audio books: it was an improvement, but still, the 30 minutes felt like 30 days. Just when I felt I could not listen to one more book, I bought an iPad. Since I rarely watch TV at home, there are million TV dramas that everyone talks about and I never got to see. I started downloading seasons and watch one episode every visit to the gym (right now I am watching Breaking Bad, gym TV at its best). Now since my rule is that I can’t watch it at home, I kind of looking forward to get to the gym and enjoy 30-40 minutes of good, commercial free TV.  
• I go mindless on the weight machines: You need to do weights. It helps burn more calories and keep your bones strong. Every trainer I ever went to built a free weight routine for me that required a notebook with sketches and instructions and my full attention. Once you get to heavy enough weights you even need a partner to make sure you don’t drop the weights on your head.  I know it is more effective but I ended up not doing it at all. Finally, I decided to focus only on the weight machines, so after few times of getting used to them, I can perform it mindlessly while listening to an audio book or a podcast. Now I can finish my weight routine in under 30 minutes, while I listen to Marketplace.
• Your gym must have a towel service: being able to goto the gym in the middle of the day or in the morning is critical to keeping my gym commitment. If the gym doesn’t have a towel service, you are much less likely to go in times where you need to shower after (first you need to remember to bring one, than figure out how to get it to dry. Too complicated…)
• Pick a gym near work: this way you can go before work, after work or even during lunch. Since you are at work 5 days a week, a gym near work is much more valuable than a gym near home or half way.
• Do something when traveling: make time to go to the hotel gym even if it is tiny and doesn’t have the equipment you are used to. Even if you do 50% of what you usually do at home, it worth it to keep the routine going.
• Don’t be social: I know that going with friends is a great motivator but at the same time it adds complexity and coordination and creates one more reason not to go (“Joe can’t go today. Let’s go tomorrow…”). If there is 50% chance you can make it to the gym at a given day, adding another person cuts your odds in half.
• Classes are extra: Just like the social advice above, classes add complexity and create a binary situation (I missed the spinning class, so I will not go today at all). If you want to go to classes, make it an option, not the rule.

Let’s start with some numbers: Based on CrunchBase, Gowalla received a total funding of 10.4M. Given the fact that investors tend to own preferred stock (that has priority over employees and founders that typically own common stock) and the fact that Gowalla’s investors admitted that they were not made whole, we can assume that the founders (and the investors that approved the deal), valued the company at a low double digit valuation. This is not uncommon: Investors often get nothing in return to an investment so getting some of their money back is not the worst outcome in the world. What’s striking is that this is what the number 2 in the LBS market worth. 

You see, until last week, the LBS market was red hot. Research firms estimated a market size of 2.8B in 2010, growing to be 10B by 2015. (BTW, the full report will cost you almost $4,000- still want to buy it?) Foursquare, a leader in this space, was valued at 600M less than 6 months ago. In this red hot market, Gowalla was always considered as number 2, loved by its users and reasonably successful but the Facebook deal raises real question marks over the short term prospects of this market and the hype around it.

What does it mean to VCs and entrepreneurs in this space?

• OMG- a plan that had 2M users for a free app would have been the dream of any entrepreneur and investor. Many checks were written for companies aiming at this level of “success”. VCs are quick to learn and I don’t assume it will be remotely as easy to get a check for an LBS company anytime soon.
• OMG- in a space where success means winning over the market before you can generate any meaningful revenue, you have to be number one to stand a chance. You can’t be a Living Social, number 2 to Groupon yet a huge money making machine. You can’t aim at the moon and hope to get to the stars. Gowalla proved that the reaching the stars in this space means nothing. 
• OMG- entrepreneurs will be asked to come up with monetization stratégies that don’t rely on network effect. In other words, welcome to 2003, 1999 is over. 

So sorry to hear about Bizzy. I am building a very similar service but with a twist/different monetization/different target audience: can you share your learning from Bizzy?

I answered few in writing, few via phone calls and even had couple of face to face meetings but when number 20 hit my inbox, I figured it time to have a permanent link I can send people to… Every answer here deserves a post of its own, and one more for the questions I haven’t answered yet, but let’s start with something… I also tried to write the answer in a more general way, so they are useful to the broader audience. So here are some of the questions I’ve been asked:

• What worked? this is a very open ended question but here are some highlights:
• People loved our product. this is the entry ticket to the game. Building a great product gives you the right to play, although not necessarily the right to win. I would invest (almost) any amount of time and talent in building a product that will wow the users. People expect nothing less and with so many options, will not touch any product that seems to be sub standard.
• Leveraging existing behaviors-  It’s an uphill battle whenever you want to teach users to do something new. Foursquare, for example, did a great job teaching few million active users to check in. The moment we piggybacked on Foursquare check ins, the number of people “Checking Out” with Bizzy grew dramatically  People loved to check out, they just didn’t remember.
• We had a unique voice- Early on we hired Emily that became the voice of Bizzy. She wrote our blog posts, tweeted on behalf of Bizzy and most importantly, wrote the UI language for Bizzy so that bizzy sounded like a person you want to hang out with, and not like a robot.
• What didn’t work? also, an open ended question… the short of it is:
• We didn’t rally the number of customers a consumer app needs in order to survive. The model of “let’s get bazillion users and monetize it later” requires to acquire, something like bazillion users… Unlike products that are monetized from user #1, in most consumer internet products you play an all or nothing game and if you don’t get to 100s of thousands of users within your first year of operation, you may as well relaunch if you still have the money. It worked for Path.
• We were part of a big company. ReachLocal was as good as it gets when it comes to hosting a startup and supporting our urge to innovate but we were not a real startup, despite the fact everyone tried their best to behave like one. We didn’t wake up every morning thinking a dollar we spent today might be the last one. As Chris Dixon said: you are either a startup or you are not. It’s hard to explain the type of “fear and greed” motivation you get from being a real startup but it has been fueling the Silicon Valley for 50 years now for a very good reason.
• Where did you get your data from? Phew! this is an easy one.. we got our data from number of sources but if I had to do it all over again I would go exclusively with the last source we added: Foursquare venue API. Is it perfect? no- it is littered with duplicates, wrong categorizations and goofy venues like  ”4062 Jew canoe” but it is free, up to the minute with new venues and best of all, global. We augmented the venue data with our users’ ratings, tips and insights.
• Can we buy your user list?- in general, I will not recommend for anyone to buy any user list, especially not one of a free product. There are so many apps out there and so much spam that it is more likely that a user that gets an unsolicited email from you to never use your product, rather than giving it a try.
• What were the issues with monetization? Bizzy was pre-monetization and our focus was all about providing our users with the best recommendations and discovery experience. I would assume (and experienced in the past) that any local company will face a massive challenge getting enough businesses to spend enough money in a scalable way to make a profit. Small local businesses get many phone calls from the Groupons of the world, email marketing providers and everyone else that the biggest challenge will be getting them to pay attention to what you have to offer, especially if you have less users than Foursquare or Groupon…
• What are the biggest challenges in user acquisition: It’s another case of “I need a post just for that” but in short…
• There is tons of noise in the market and dozens of new consumer apps a day
• Since there is so much noise, you need continuos tech press love to rise above the noise
• It’s hard to get a this level of love, unless you are already famous
• Viral marketing works well. You just need a really big base to make a difference. If my math is correct,  a base of 1000 users that grows a stunning 1% every day, will yield under  40,000 users in one year. If you started with 100,000 users after a successful launch, it will be just under 4M users, which means that it is nearly impossible to rely on virality alone to grow a consumer based product.

Granted, these lessons might be very different for other entrepreneurs in different companies so debating my learnings and doubting them is welcomed…. I will not take it personally…

Hi Gadi,

It’s very sad to see you guys go. Bizzy is a very fun and useful product and while it had its glitches, I enjoyed playing with it for most of the time. I’m writing to let you (and the team) know how impressed I was with the recommendation engine from Bizzy. Many times I would come across something on the Internet, mark it as a future to-do and only to see it popping up on Bizzy shortly after. It literally reads my mind sometimes. Given the sample size (many venues only had 1 or 2 votes), I was blown away by what Bizzy was able to do. Thank you for letting me feel amazed, and please keep me updated on your next venture. I am sure it’ll be more interesting than this one!

Regards, Ethan

Thank you Ethan. And big thanks to the hundred of users that cared to email, tweet and call. It makes it so much more likely that I will wake up one of these morning and do it all over again.

Now it has some sentimental value…

There will be time for lesson learned and what’s next. Today, I just enjoy the public and private love we are getting from our users. I mean, it would have been horrible to tell your users you are shutting down and get no one to react… But in Bizzy’s case, we got hundreds of emails, tweets and phone calls from users all over the country and it really helps to keep our collective spirit high… Tomorrow we might wake up with a hang over, but today, I would like to share some of the funny/heart warming responses we got…

Sugar sent a quick email that turned to be quite common:

WHAT??????????? Say it ain’t so!!!!!!

Jeff did a great job summarizing everyone’s feelings: 

Executives of Bizzy, an online check-in service primarily for restaurants, are traversing the Pacific Northwest, getting in front of customers at local restaurants and bars to introduce themselves and get feedback. The jaunt through Oregon and Washington is an abbreviated sequel to a trek in July that took Bizzy execs from Silicon Valley across the Southwest and Texas and up to Washington, D.C.

The eye-catching publicity swings, while time-consuming, speak to the lengths some social-media start-ups are willing to go to gain traction in a marketplace larded with competition.

VIDEO: Bizzy’s founder explains his app for foodies
After a quick powwow with folks at the Portland Incubator Experiment which nutures new businesses, Bizzy’s Ryan Kuder and founder Gadi Shamia host a dinner for foodies, followed by free beer at a popular tap room. About 25 customers and would-be Bizzy users show up for brews — either through Facebook notifications, tweets or old-fashioned word of mouth.

“This is prospecting for us,” says Kuder, a former Yahoo marketing executive.

“We want to meet real people using our app, listen to what they want, and create buzz,” Kuder says.

Doniree Walker, a food and lifestyle blogger in Portland, is an early advocate because she’s been able to “discover great restaurants.”

Read the full article on USA Today site

The rise of Web 2.0 gave birth to products like Yelp, focused on collecting reviews from local business patrons and organizing them into search results, with the most liked businesses at the top. Yelp created a step function improvement over what Google and Yahoo had to offer, allowing real customers to voice their opinions and be heard.

Seven years later, it’s time to re-imagine local search for this decade. This next generation search will be highly impacted by the two leading trends of the last few years: social and mobile.

Read the full post on Search Engine Watch