Prediction Markets at Google

Prediction markets are mainly used to gain new perspectives on problems from many different people to assist in predicting the future of a particular market. Within a company, they promote communication and collaboration as well as the ability to estimate, for example, sales of a new product. Thus, it is no surprise that Google decided to implement prediction markets into its product mix, as it seems to have the vital elements for success, a large diverse user base and the ability to provide financial incentives.

Although predictions proved accurate, providing decisive predictions about future events, attitudes varied widely among Googlers and the team wondered how it could encourage more traders and trading within the Google Company, bringing more liquidity to enhance markets. Google currently rewards its traders by converting each participant’s final balance into lottery tickets, drawing six tickets and giving $1000 to each select holder. The company felt that by providing this type of incentive, participants would trade based on true beliefs, helping them build a portfolio that did not rely on the occurrence of a single unlikely event.

It seems that overall, prediction market participants value reputation compared to monetary forms of incentives due to complexity, uncertainty, and low payoffs. Therefore, one way to bring more traders and trading within the company is to build in more social features and personalization, such as, creating individual profile pages or blogs to discuss markets. This would additionally allow others, not as familiar with a particular market, to learn and potentially make a prediction. Another way to increase participation is by rewarding several different categories of winners, allowing more individuals to win, producing a high level of involvement and retention. Google could also implement a type of crowdsourcing model in which company executives aim to change corporate strategies or product mixes based on learned opportunities from the prediction market. This allows the trader to desire accurate predictions to win this type of competition and also aids in building or maintaining a participant’s reputation, since a company will implement plans based on the accuracy of a prediction in the marketplace.

To further increase trading within Google, leader boards can be created and displayed predominantly in the office or company website, listing top contenders in each department, thereby fostering camaraderie among teams and increasing liquidity. Additionally, since it seems as though many of the participants came from engineering, sales, or operations groups, Google could throw launch events, aiming to make trading more fun and therefore more attractive to other departments, increasing interest levels. Lastly, more prizes, such as, T-shirts and hats to promote bragging rights can be used to promote involvement in the prediction market.

Mitigating TopCoder Client's Concerns

BLOG ENTRY: Clients of TopCoder’s competition-based outsourcing model would mainly be concerned with the quality and availability of the platform’s community of programmers, as this is the main value of the company. TopCoder aims to overcome this issue by attracting developers with algorithm challenges, online advertising, and “member development days.” Additionally, community norms were instated to promote a high standard of integrity, transparency, and quality. To retain qualified programmers, TopCoder offered consistent work streams, prize money, select networking opportunities, occasions to learn and improve in a supportive community, flexible work hours, and ratings that established status and prestige. To ensure the ideal number of submissions and participants, TopCoder adjusted prize amounts, the duration and timing of the contest, and the number of contests running at once. Although the company had accrued a massive community base, the number of active members was a small percentage of the entire population due mainly to a small chance of winning to obtain high ratings and prize money. Thus, TopCoder must both effectively target quality programmers from developing nations and increase the amount of overall winners to ensure participation. Furthermore, the company might implement classes to give novice developers the opportunity to learn and expound upon their abilities, supplying superior members for an increased number of competitions.

Another major area of concern for TopCoder’s clients is effectively determining their type of problem and providing the appropriate amount of detail for the TopCoder community to ensure active programmer participation and quality solutions. Clients found that contest participation decreased if the issue was unclear, too complex, or too vast in scope. Additionally, clients realized that members lost interest if a contest lasted over two weeks. TopCoder allows members to comment on client’s initial problems and ideas to determine its value to a company. Furthermore, a community-based peer system was implemented to grade and comment on contest submissions, ultimately selecting a winner. TopCoder must provide large incentives to ensure that expert and experienced members not only compete in contests, but also efficiently provide quality reviews and winner selections for clients. In addition, clients worried about intellectual property and security. To address this, TopCoder produced a white paper detailing confidentiality policies, intellectual property assignment rules. The company also allowed clients to keep their company names anonymous during competitions and permitted clients to require competitors to sign a standard Competition Confidentiality Agreement. The peer review process and option to run testing competitors also ensured code security and quality.

Lastly, TopCoder clients will likely be nervous about the effect utilizing the platform will have on internal employees, as job security will be threatened. Furthermore, even if TopCoder assisted a client with internal development, the company still had to have adequate staff to integrate the solution into its existing system, review codes for security issues, and make adjustments over time as necessary. TopCoder implemented its internal platform managers to work alongside the client inducing community participation, gathering feedback, and providing support, service, and project status updates. TopCoder could offer additional service tools by providing an online blog or forum in which clients could, at any time, voice a concern or obtain a progress update. The company could select and reward experienced community members to offer assistance during and after a solution has been implemented. Moreover, to ensure professional interactions between clients and community members, TopCoder could rate and reward developers to be posted on community profiles.

The Product Development Process: Community-driven vs. Traditional

Besides the obvious difference of developing a product online verse in a corporate office or retail environment, the major distinction between a community-driven product development process, such as Threadless, and a traditional product development process is the presence of diverse community member’s active participation in product creation. This enables a company to quickly and efficiently listen and gain insights from thousands of customers, with a broad array of information, knowledge, and experience, about potential opportunities to enhance and create new products and services fast. In Threadless’s case, the company discovered that members were using Threadless blogs as a tool to receive design feedback. This newfound realization led to the creation of a “design critique portal,” a service that satisfies both the designer and the potential t-shirt buyer by allowing the community to comment on an artist’s designs before submission. Furthermore, by designing and selling products hand selected by a community of potential buyers, the product’s ability to maximize revenues is substantiated. Threadless exemplifies this by typically selling out of all printed designs as well as by consistently increasing revenues, over a 5-year period, to an estimated $23 million.

Additionally, by allowing a community to develop a product, a firm saves money, since large salaries are not required to hire an elite group of internal designers, a process vital for the traditional product development process. Moreover, both R&D and marketing costs are lower if utilizing a community- driven product development process. Although this is true, in order to ensure success, a community-driven product development process requires a company to maintain both a functional and up-to-date website as well as the correct Internet bandwidth.

On the other hand, similarities between a community-driven product development process and a traditional product development process within a firm include the logistical capabilities to support printing, warehousing, and shipping and handling of returns. Most importantly, whether a community or traditional product development process is implemented, a company must ensure there is adequate supply and demand for the product in the desired market. Both product development processes must focus on a group of targeted consumers as well as a specific product to fulfill an unaddressed consumer need. Additionally, no matter which process is used, a firm must outline a marketing plan to attract, maintain, and retain profitable customers. This includes defining promotional methods as well as discounting and reward techniques, and selecting domestic and international markets to offer products. Threadless, for instance, created “The Street Team,” a point-based system, which allowed community members to receive credit earned towards future Threadless purchases. It is clear that there are numerous differences between implementing a community-driven and a traditional product development process within a firm, but at the end of the day, if a company does not have the necessary skills to effectively create and market a product to an outlined group of customers, then a company will never succeed no matter how a product was developed.

Why Wikipedia Works

While the creation of Wikipedia generated rapid growth due to the limitless opportunity for anyone to start a new article or edit an existing one at no cost, it also led to the creation of inaccurate and unreliable articles that did not meet established standards. Primarily, the website works well due to the obvious reason that enormous amounts of information may be easily found online for free. Thus, there is little cost to the consumer to find data about a particular topic of interest. Additionally, this platform quickly attracts a large consumer base forming a community- like atmosphere able to produce high traffic levels due to both word of mouth and to a high level of consumer involvement; offering millions of articles, photographs, and links to other websites in over 250 languages.

The website actually generates good content, as depicted by a study comparing the accuracy of science entries in Wikipedia and the online version of Encyclopedia Britannica, due mainly to its organized communication ability and perhaps most importantly its dedicated “Wikipedians” desire for empowerment and equality through the use of the “articles-for-deletion” process. Wikipedia enhanced its data collection by implementing changes when needed. When a biography remained uncorrected for over 4 months, the site made it possible for anonymous or newly registered users to create new pages and made it easier to track pages devoted to living persons. Additionally, Wikipedia created a set of specialized roles for registered users to maintain a sense of organization. Administrators, Bureaucrats, and Stewards obtained unique levels of privileges and were seen as having respect and familiarity with the Wikipedia policy as well as were known and trusted members of the community. These titles allowed these consumers to protect or deleted pages and promote or demote other users.

The supplied discussion page is used by Wikipedians to debate and eventually agree upon the appropriate content and structure of each article. Groups formed with similar beliefs, such as, “Inclusionists” and “Deletionists” and resulted in highly interactive discussions centered on the perfect combination between a specific page’s quality, quantity, and comprehension. As exemplified by the deletion debate over the Enterprise 2.0 article, numerous controversies and challenges arose, perhaps leading to an increased opportunity for a highly productive and highly collaborative environment by both utilizing the practices of knowledge and the visibility of outputs. Ultimately, the Wikipedia community sustains the interest and content for the website and without it there would be no Wikipedia!

United Breaks Guitars Breaks United

In a world where consumers have the opportunity to use social media as an emotional outlet to express and share experiences and feelings, companies must maintain awareness and respond quickly, especially to comments of disgruntled customers. As the United case notes, people who have negative customer experiences are more likely to tell almost five times as many people then if they have a positive experience.

The use of social media by a dissatisfied customer, as depicted in the United case, has the ability to reach and influence millions of consumers. Platforms such as YouTube and Twitter have some of the largest social networks, a main attraction to advertisers, and thus, anything displayed affects a brand’s image. Therefore, it is in a company’s best interest to properly train employees, specifically customer service representatives, to quickly and respectfully address and rectify a disgruntled customer. This may be implemented in many ways, such as, offering free or discounted merchandise. Additionally, the company may wish to respond to all consumers through a media outlet, email, or its own webpage, addressing the situation and apologizing for what had occurred. United made the mistake of taking a long time to mend Dave Carroll’s loss, losing credibility and further angering consumers.

Companies, like United, should value the responses of customers on social media outlets, as it is not only a promotional tool, but also a way to increase the effectiveness of their product or service offering. Companies should have not one, but many individuals in charge of actively reviewing all consumer communications amongst all media outlets. Furthermore, customers should be addressed on the chosen media outlet to show readers that the company is being proactive in its efforts to resolve the situation. Companies will rapidly go out of business if consumers are largely unhappy. Therefore, firms must remember to appease customers, regaining and reaffirming their trust and loyalty, especially amidst an online platform where billions of eyes are watching.

Hope for Hulu

Online streaming has supplied consumers with a unique option to instantly watch selected shows for free with limited interruption. At a time when viewers expect immediate supply of information, this development is necessary for the television industry. Comcast and Time Warner’s “TV Everywhere” initiative is ultimately a genius idea to promote the success of cable providers to obtain market share in the premium content online business.                                

Although this idea may be successful, due to the control the television industry has over consumers, it is likely that viewers will continue to use sites such as YouTube and Hulu. These sites offer two distinct advantages compared to cable providers: no charge and short advertising spaces. If Hulu changed its revenue model to subscription based or pay-per-view, its consumer base would diminish drastically. This negatively impacts the website as its success relies on cross- sided network effects to influence its three main groups of customers, content owners, users, and advertisers (its major source of income).

A potential option for Hulu is to implement a freemium model. Since the company has already generated a large viewer base, the company could offer versions to consumers, for example, options of decreased advertising, enhanced picture quality, or increased offerings of content. This allows the company to capitalize on tailoring to the needs of its consumer groups at a low cost. Additionally, it further supports the company’s advertising strategy to not only complement television, but also to create a more targeted, interactive and effective advertising experience.

The future of the television industry resides in the option to instantly download and watch a program. Whatever the revenue structure may be, consumers are relying on Iphones, Ipads, and computers for quick and quality information. Thus, it is imperative that companies such as Time Warner and Hulu fully research and implement technological savvy downloading techniques to remain competitive in the television industry. 

Focus at Google

It is obvious that Google has overall been an extremely successful competitor in each of its developed services, offered largely through the Internet. The company acts as an “infomediary,” mainly supplying large amounts of information to a mass consumer base, consisting of a multi-sided platform of consumers and merchants. Its main mission and respective strength or value is the ability “to make all the world’s information accessible and useful.” Therefore, it is recommended that Google focus its efforts on developing superior search solutions and monetizing them through targeted advertising.

Google already has the necessary tools to develop superior search tools. The company is known for its innovative engineers, who continually enhance algorithms, creating accomplished services such as Personalized Search, Search History as well as local and vertical search. Furthermore, the company heavily invested in its ability to produce lightening-fast returns on search queries. Additionally, Google refused to compromise the integrity of its search results, helping to build its invaluable loyal consumer base, as its success relies on a network of people and companies.

Advertisers were initially drawn to Google because its network offered more search traffic and allowed lower minimum CPC bids, yielding high switching costs. The company also acquired DoubleClick to increase effectiveness in placing display advertisements. Although this was true, estimates of click fraud varied widely and advertisers began to question both charges and ad placements. Therefore, it is vital that Google effectively advertise in a trustworthy manner, ensuring that both consumers and merchants feel secure. The company could develop a tracking system to show merchants the vitality of Google advertising based on a weighted cost-per-click ratio. Additionally, the company should continue pursuing efforts to target local advertisers, showcasing their ads to specific consumers in a particular region and increasing brand awareness and user acquisition. Most importantly, Google should charge merchants based on a versioning model, tailoring to each unique customer need. This will allow Google to produce customer- specific information, locking-in merchants.

Furthermore, the outlined suggestions will provide Google with the most promising opportunities over the next 5-10 years. Due to the growth and development of the World Wide Web, search has broadened to include print, video, mobile and potentially much more in the near future. Google could implement targeted advertising techniques on YouTube to grow its consumer and merchant base, since it has access to billions of consumers. Thus, there are numerous possibilities to utilize these avenues to develop and supply a more diverse and effective search tool, allowing Google to increase its user base to monetize through target advertising and ultimately continue to dominate the Internet world.

Success at Triangulate

As a start-up business, Triangulate offers two distinct services; its B2C business Facebook application, Wings and its B2B business, providing algorithmic engines to competitors, such as, eHarmony. Triangulate’s competitive advantage is its ability to collect data based on browser plug-ins and APIs for Facebook, Twitter, and Netflix, creating an engine that analyzes this data and generates inferences about users, which creates the capability to suggest high quality compatible pairings based on an algorithm using historical data for successful couples. So, why should the company give competitors its secret formula? In order to ensure success based on prior resource investment and outlined abilities, Triangulate should focus efforts on its B2C business, the Wings application for online dating and specifically, its user base and revenue model.

The company’s main problem in becoming successful with its Facebook application is the ability to acquire a critical user base that remains active and invested in the application in order to offer high quality matches. In addition to advertising on Facebook, the company should invest in paid search marketing. 60% of users are acquired through advertising, thus it is imperative that Triangulate determine the interests of its consumer base and advertise accordingly. Furthermore, the company should focus efforts on state-level targeting, since its user base was largely focused in California. This could be implemented by advertising on sites such as, LivingSocial or Ruelala. The service being offered has a network effect. The more people that use Triangulate’s online dating service, the greater the value to both potential and current consumers.

To ensure customers remain with Triangulate and to devise a successful revenue model, the company could offer distinct pay-as-you-go payment plans with built in loyalty programs. For example, the more users a customer brings to join the site or the more time spent on the site, the more messages they can send free to prospective dates, etc. Triangulate should implement a “freemium model” to attract a large user base and then charge prices to profitable consumers. Additionally, the company could create a loyalty program in which, if a consumer’s profile is “attractively” filled out and heavy uses the site, free social gatherings may be offered, by location, as an incentive. This would allow loyal customers to meet fellow consumers, engaging in a free opportunity to potentially meet someone of interest. Triangulate could also offer loyal customers a discounted date based on interest, partnering with LivingSocial or Groupon.

To additionally generate revenue, Triangulate could offer its accumulated consumer information to companies that would be able to utilize the data to market towards a selected target market. If Triangulate builds a large user base, then it will have invaluable data of thousands of consumers, increasing the value of the firm. The company could create revenue by supplying the information to interested outside parties, creating an additional profitable customer segment for the firm. 

Groupon, a recipe for disaster?

It appears that the cause of Groupon’s overall struggle is its inadequate executive management team, who has led the company with little focus and direction to make irrational decisions. Primarily, Groupon is recognized as a way that consumers may obtain promotions. The company had already conducted research showing that the largest variety of businesses using the groupon feature were services, an area in which deals for products were uncommon. Additionally, for services, a Groupon success was a curse for regular patrons as restaurants easily became understaffed and under stocked. Moreover, the firm’s customer base tended to be young, well-educated consumers that did not only value money saved, but also its convenience and variety.

Furthermore, Groupon prides itself on the ability to supply new customers to its vendors. Although this is the case, the company’s marketing strategy had no direction and frequently backfired. Groupon initially utilized a word-of-mouth plan. It then created a program for bloggers and websites to earn commission on referred traffic. In addition, the firm used Facebook and Twitter to create awareness as well as implemented odd contests to promote the brand. Perhaps what was more troubling was the use of the company’s paid advertising campaign with a Super Bowl ad, communicating an offensive message to consumers.

In order to ensure Groupon’s success of its vendors, consumers need to use the voucher. Many buyers bought daily deals and found they did not have time to use them, lowering the value of the purchase t both the customer and merchant. An estimated 30% of vouchers were not redeemed and although many state law stipulations implied the coupons could be used after expiration, Groupon did not communicate this to consumers. Furthermore, this led to mixed vendor reviews proclaiming that many Groupon customers did not follow rules, using multiple coupons for single transactions and leaving non-existent tips. To add to the confusion, Groupon was expanding rapidly at a time when vendors and consumers expressed mixed emotions about the product offerings in the original U.S. cities.

What is more puzzling is the company’s inability to adequately train and integrate new hires, a situation that contributed to service failures, resulting in the need to refund or credit customers. Furthermore, due to the rapidly growing success of competitors, Groupon was developing a variety of innovations, such as, Groupon Stores and Groupon Now. In addition to all these complications, Groupon’s pricing model was greatly flawed as some merchants bargained for increased share of revenues.

The company must specifically define and carefully implement an effective business strategy to attract and retain customers and vendors for its U.S. cities before even considering foreign territories. One way in which the company may turn itself around is by focusing on offering only services close to full price with an unlimited time to redeem the offer. This would allow consumers additional time to use the service, increasing convenience as well as bringing repeat and new customers to a venue over a longer period of time. Additionally, this option will not only increase the opportunity for additional spending and conversion from discount buyers to regular customers, but will also even out redemptions, enabling merchants to sufficiently service regular patrons. The company needs to focus its efforts on one strategy, not many at one time. As the company is successful, it may expand its service offerings and territories. 

The future of Netflix- Qwickster?

The decision for Netflix to divide its streaming service from its DVD service, Qwickster, is one that seems necessary for the company to differentiate product offerings as the future of the DVD business dwindles and focuses on live streaming. Besides the obvious advantages for Netflix to switch from DVD to streaming live content, it is vital for future corporate growth. This situation appeared ultimately inevitable and largely stemmed from Netflix’s ill-perceived strategy of recently increased prices, offering the two products separately with no discount for combining the two, in an effort to encourage online viewing.

In order for Netflix to dominate the media industry, it must remain innovative, as competitors, such as Disney Co. and Dish Network Corp., are heavily developing streaming services. A main way for the company to compete and ensure an ultimately successful move into the online market is by developing its live streaming business separately from the DVD business. Furthermore, this strategy could potentially lengthen the life of its DVD operation, as management can concentrate on specific needs for each market. The likely issue that will develop for Netflix, in this complex process, is the inherent need to communicate the value of this decision to its devoted customer base in order to retain consumers and avoid a negative network effect.       

                                                                                                     

Netflix must create value for customers by developing and conveying a large online content base that is depicts convenience. Currently, only 20,000 titles are offered online compared to over 100,000 DVD titles. The firm could partner with licensors to lower costs by offering invaluable data collected on customer’s consumer behavior. In addition, the company must utilize its recommendation system in addition to promoting older, less distinguished films to further lower costs and to “lock-in” customers. Another option is to maintain the current pricing system for online viewing or even to slightly lower it for loyal consumers, guaranteeing a high retention rate and a switch to the new feature. Ultimately, customer acquisition costs are extremely high for Netflix. Therefore, the company must devise a well thought-out plan, not only to keep customers, but also to encourage the utilization of the online feature, as it concentrates on the future of the media industry, the video-on-demand business.

What is the best way for Yelp to monetize generated reviews/content in the future?

Yelp was founded by two former employees of PayPal who noticed a lack of online information of consumer experiences with local businesses. Although the site’s popularity grew, providing millions of reviews of local establishments to both individual consumers and businesses, the company was unprofitable with an estimated $2- $6 million in revenues due to poor monetization skills amidst a recent decline in advertising spending. Due to the large success of building a community of reviewers, Yelp should focus its attention on developing its “Elite Squad” program to enhance trustworthy, reliable, and entertaining reviews, allowing the firm to update its monetization model by charging advertising and data fees to companies that seek invaluable consumer assessments of its venue and competitors.                                   

By 2008, Yelp had exceeded 20 million readers, many of whom were not contributing to the site. In order to capitalize on its competitive advantage, the firm must attract and maintain quality reviewers by rewarding the “Elite Squad,” therefore attracting loyal consumers and increasing its consumer base. This will entice businesses to take interest in the information learned from the site, increasing the willingness of companies to pay a premium to obtain invaluable information that will successfully assist in creating a competitive edge in its chosen neighborhood or industry. Additionally, if Yelp establishes itself as a reliable information source, companies will be willing to pay for advertising to target profitable readers, further increasing the profitability of Yelp. 

In doing so, Yelp must create pricing versions tailored to meet the unique needs of businesses by offering both high-quality versions of the site and subsequently lower quality versions. Furthermore, the firm plans to build large sales forces on both the east and west coasts. Its ability to form effective sales teams to support premium customers is crucial to increase profitability and enhance customer loyalty. Yelp clearly has the opportunity and skills to obtain substantial revenues and become a leading online information provider. Although it will be a challenge, the company must focus on its competitive advantage, quality information, and devise an effective business model to attract and maintain profitable customers.

Why did Webvan fail so spectacularly?

The failure of Webvan was largely due to the absence of an articulate, functioning business model and management’s inability to successfully change the model and redefine the business as deemed necessary. From inception, the company’s rationale of creating, delivering, and capturing value was incomplete, lacked focus, and was insufficiently researched. Webvan’s plan to primarily establish a large, critical mass by offering groceries online in hopes of eventual expansion into other categories on a global level as well as its mission “to deliver the last mile of e-commerce,” lacked the acknowledgment and action of vital steps necessary to achieve these goals in a new and evolving market.

The company immediately focused its attention on developing a web store, constructing distribution centers and creating information systems, continually ignoring the need to implement a marketing strategy to successfully attract profitable customers to an unfamiliar market as well as create awareness to promote the business. In addition, Webvan never defined profitable target customer segments and overlooked the urgency to determine consumer demand and the ability to meet customer needs. Webvan had the opportunity to be a highly successful organization, but the lack of pertinent research used to define its value proposition, target market, and most profitable revenue streams while repeatedly implementing ineffective cost-saving initiatives and compounding operations forced the company to abruptly close its doors.