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Monthly Archives: February 2008

Front Porch Forum on YouTube

I guess Front Porch Forum has arrived… we’re now on YouTube!

Special thanks to CCTV Channel 17 (Meghan O’Rourke, Sam Mayfield and Lauren-Glenn Davitian) and the dozens of local folks who appear in the clip.


Supply and Demand says Building Community has Huge Potential

Front Porch Forum is in the business of helping neighbors connect and build community within their neighborhood. Some folks ask me “that’s not a business… why didn’t you form FPF as a nonprofit?”

Fair enough. Front Porch Forum is mission driven, like all nonprofits. But it’s also competing in a new and vibrant sector that’s got huge potential and few players currently.

Bill McKibben in his excellent Deep Economy cites work by economist Richard Laynard (in his book Happiness)…

“Both income and companionship have declining marginal returns.” The evidence shows that “increases in income produce large hedonic gains in developing countries… and… negative gains in the United States.”

Community follows precisely the opposite pattern: increased companionship “yields more happiness in individualistic societies, where it is scarce, than in collective societies, where it is abundant.”

Put another way… North America is awash with stuff for people to own/use, but is short on community… so Americans are placing an increasing value on what is in short supply… feeling genuinely connected to the people and community around us. And that’s what Front Porch Forum provides.


Yelp, Local Online Leader, worth $200M?

TechCrunch reported this week…

Yelp, the popular local review site, will soon announce a new $15 million dollar round of financing led by DAG Ventures. The valuation is rumored to be in the $200 million range. Yelp says that they will be using the money to expand geographically, add onto their sales team, and establish an office in NYC (they are based in San Francisco). This is Yelp’s fourth round of funding since their founding in 2004. Yelp is also boasting some impressive stats: 8.3 million uniques in the past 30 days and over 2.3 million review.

Mike Boland comments

Yelp has become a poster child for how to build a local reviews site and has become a clear favorite of the twenty and thirty-something urban “foodie”.

And Greg Sterling offers

Yelp’s success is about its “personality” and “transparency.” The site has managed to create a brand as a result of offering content that people have come to value and trust.

This brand identity is what now lifts it above many or most of its competitors.

But it’s the comment area on TechCrunch that starts to get at the most interesting points.  E.g.,

Comment No. 12 says in part…

Local interest websites are always non-viral, because they operate in the disjoint “internets” of each metropolitan area. So one needs to wait a very long time before they reach decent size. For Craigslist, it took 7-8 years. VCs will not wait that long. To accelerate this, you can throw money at the distribution/marketing. I do not know what the timescale for them will be in NYC, but VCs may get impatient, especially because this business is very recession-prone, and the recession is coming.

Comment No. 15…

i’m no expert, but $200mm for sub-$10 million revenue, no profits, and difficult to scale growth (building a community in a new metro area takes time and local ad sales takes sales manpower) seems really generous. i guess yelp is essentially the market leader and probably does get high return traffic from those who do use the site… maybe you can argue a decent ltv for each user?

And comment No. 37…

I helped start a review site that was funded at the same time as Yelp, InsiderPages, Judysbook, etc. After building the feature set, we set forth to capture the YP advertising market. Kelsey Group and other industry pundits were playing up the pending “massive” migration of local advertising from offline to online. We all wanted to be there to capture it.

There was one big problem with capturing those ad dollars: the cost of sale. Reaching out to local businesses costs money, a LOT of it. I’m not sure what Yelp’s rate in customer-review-leads-to-advertiser equation looks like, but here’s some back-of-the-envelope math:

2.3 million reviews
Assume average of 1.5 reviews per business location (this is generous)
yields
1.5 million businesses reviewed to date

Break down those businesses:
60% local, 40% regional or chain (some split along those lines)

The ad dollars are in the “national-local” or “regional-local” businesses. They have bigger budgets, and they’re familiar with the web play. But if you’re in the local review business, how many of your users will enjoy ads from Applebees and Home Depot?

So, you go after the “local-local” businesses, because that’s what brings the value of your site (Yelp) over the big guys (Yahoo Local, Google Local). Reaching out to these folks? You have to put feet on the street, and the cost of the sale just doesn’t pencil out.

Because of this, Yelp’s strategy is obvious acquisition. But at those numbers and a fourth round, they need to be eclipsing the {portal-name-here} Local properties in traffic. In short, good luck.

Front Porch Forum is not a local review site (although many of our subscribers do use it for reviews), but many of the points above apply.  We launched in our pilot area about 18 months ago and it gets a little easier every day in ways that money can’t buy.


Online Ad Spending

Greg Sterling reports this week

The IAB reported its estimate that 2007 saw 25% growth in online ad revenues for a total of $21.1 billion vs. $16.9 billion in 2006. You can expect the distributions to be similar to 2006:

  • Search — 41%
  • Display — 32%
  • Classifieds (which includes directories) — 18%
  • Lead Generation — 8%

And TechCrunch offers more data.

In another post, Sterling pulls together some other advertising data and estimates, including…

Most interesting to me in the MerchatCircle survey is the finding that most SMBs aren’t willing to spend more than $100 per month on online, whether or not they believe print YP to be an effective ad medium. That’s $1200 per year. Compare that with a rougly $3500 average annual print YP spend. ReachLocal, by comparison, says it’s getting a minimum of $1000 per month from advertisers, but it’s going after the bigger print YP spenders.

Anecdotally, Front Porch Forum is finding each small business it deals with to have a different story and approach to buying online ad space.  Some won’t take a freebie while others will spend in excess of the $1000/month mentioned above without hesitation.


Robert Putnam to Speak at UVM

Robert Putnam will speak at the University of Vermont on April 28, 2008, sharing a lecture titled “Civic Engagement in a Diverse and Changing America.”

Putnam’s Bowling Alone was a ground-breaker documenting the decline of many facets of American community life. Steve Yelvington writes about Putnam briefly this week… here.

Rich Gordon writes in more detail about Putnam’s more recent work, part of which Putnam summarizes as “In colloquial language, people living in ethnically diverse settings appear to ‘hunker down’ – that is, to pull in like a turtle.”

UPDATE:  Just got the following details…

2008 Mark L. Rosen Memorial Lecture
Robert D. Putnam
‘E Pluribus Unum: Rebuilding Community in a Diverse and Changing America’
Monday, April 28, 7 PM – Free and Open to the Public
Silver Maple Ballroom, Dudley H. Davis Center
Reception immediately following
Co-Sponsored by UVM Political Science Department and the Vermont Humanities Council

Professor Putnam is Peter and Isabel Malkin Professor of Public Policy at Harvard, where he teaches both undergraduate and graduate courses. He has written a dozen books, translated into seventeen languages, including the best-selling Bowling Alone: The Collapse and Revival of American Community, and more recently Better Together: Restoring the American Community, a study of promising new forms of social connectedness. His previous book, Making Democracy Work, was praised by the Economist as “a great work of social science, worthy to rank alongside de Tocqueville, Pareto and Weber.” Both Making Democracy work and Bowling Alone rank high among the most cited publications in the social sciences worldwide in the last several decades.


What’s the demand for neighborliness?

Various entrepreneurial gurus (Marc Andreessen, Paul ) point, when asked for the most important ingredient for a start-up, to the market.  That is, it doesn’t matter how clever your technology is, or your marketing, or how brilliant your team is if there is no demand for what you provide.  If you’re working in a market that does have a healthy amount of demand for what you deliver… success is more likely.  The existing market is the most fundamental driver of all.  So goes one view.

Front Porch Forum is in the business of helping people get to know their neighbors… and to enhance the sense of community within neighborhoods.  Ample evidence points to a growing desire from people who want just that (which I’ll save for another post).

And here’s a new documentary from England on the subject…

My Street
After 14 years of living on the same road Sue knew practically none of her neighbours. Intrigued by what stories might lie on her own doorstep, she began knocking on the 116 doors on her street and meeting some of the 300 people who are her neighbours.

What she found were remarkable stories, from millionaires living next door to people on benefits, to convicted drug smugglers and classical composers. Sue meets party animals and recluses, the very young and the very old, hears stories of success and tragedy and sees how illness and loneliness, hope and happiness have left their mark on the lives of her neighbours.

More from Kevin Harris about this.


Crime Data by Neighborhood

Great data available from the Portland, OR police department… crime statistics by neighborhood.

I’ve looked at the crime log for my city (Burlington, VT) and, regrettably, the data isn’t presented in a way that is very useful to the interested homeowner.  I assume that the data is collected to help the police do their job, more than to help inform the public.

I would find it valuable to know every time a string of cars are broken into in my neighborhood… dates, locations, details.  Same with grafitti, house break-ins, vandalism, etc.

I’m sure the police have this data… it’s just not easy to get to and may be under wraps for other legitimate reasons.  Sure would be nice to have the police dept. website presenting all this data with an RSS feed that popped up on my feed reader when we get an uptick in trouble… “eight car break-ins reported in your neighborhood in past two days.”

What I’m left with is our informal neighborhood watch via Front Porch Forum.  That is, some people post a note on their FPF neighborhood forum when they get ripped off.  This is much better than nothing, but not as comprehensive as I’d like to see.


Conventional Neighborhood Online Message Board

Some people outside of our pilot area may think that Front Porch Forum provides conventional online message boards for neighborhoods… not so.  Here’s an example of a straight-forward web-based threaded message board from a Seattle neighborhood… click here.  That’s a different animal.


Mapping Neighborhood Boundaries and Names

Adena Schutzberg writes in Directions Magazine about three different efforts to provide neighborhood data for GIS… Maponics, Urban Mapping, Inc., and ZillowThis article touches on several issues for each of these companies…

  1. Collecting and cleaning up initial data for neighborhood boundaries and names.
  2. Fuzziness of boundaries.
  3. Macro vs. sub-neighborhoods.
  4. Ongoing QA/QC.
  5. Business model.


Advice for Local Online Entrepreneurs

Andy Sack, founding CEO of now-shuttered Judy’s Book, offers this advice for folks looking to get traction in the “local reviews and word of mouth referrals business”…

i) GET TO CRITICAL MASS

  • Do this by limiting geography — stay in one geography for 3 years. Yes, 3 years. Do not expand geography for the first 36 months. Every successful online local business has been in one geography for 3 years.
  • Do this by limiting the number of categories or professions you’re trying to get word of mouth on. Do not try and do the entire yellow pages. Choose at most five categories. I might suggest: restaurants, dentists, doctors, auto mechanics, and real estate.
  • Do this by aggressive customer acquisition. Whatever your strategy for customer acquisition, get aggressive about. Do not sit in an ivory tower and expect to get to critical mass.
  • Aggregate content from other places on the web so you can avoid the empty database problem
  • Spend as little money as possible

ii) Go back to step i