Transaction Costs Make Or Break Great Ideas

I’ve long been a fan of Gary Vaynerchuck. He’s innovative and in many ways represents much of what is good about the new media / user generated content revolution. That’s why I was stoked to stumble on to Cork’d. I signed up for the service and immediately started kicking out my first wine review.

However, during the process I started to have that sinking feeling; “this takes too much time, I don’t think I’ll do it more than once or twice.” This sucks because I really like wine (full bodied reds) and want to learn, share and interact with others who know a hell of a lot more than I do. I’d like to bookmark and rate what was good, get reviews from others and have shopping / wish lists filled. Turns out I’m not alone and someone in the same shoes had already expressed a better idea.

corkd_transaction_costs.png

I think it’s pretty clear that Cork’d has transaction costs which are too high for many, if not most, enthusiasts to bear. The reward of “bottle bookmarking”, or getting a review isn’t enough to outweigh the pain of taking notes, writing reviews and tagging. Ultimately some form of these features is probably part of a potential success story, but too often we just assume that a great idea and a web presence with social features (tagging, ratings, comments, friends, api, media) is all that it takes. Services have to do more than fill a void, they have to find the pain and then assuage it. Bring the service to the customer rather than forcing them to come to you.

The ideal social site for wine looks an awful lot like Cork’d except it has a mobile, rich media twist (phone pics as Justin notes). Combine that with a catalog of vintners / vintages and OCR technology capable of extracting label and vintage information from the bottle and you’re well on your way to having transaction costs low enough to inspire repeated, consistent use. Then you bring in tagging and ratings that are proactively suggestive and wine enthusiasts will eagerly provide the body of knowledge and social networking needed to make the service thrive.

Oh and did I mention there are business models here? I’m sure Google and the other search brats would love to place targeted ads for the thousands of wine retailers and wholesalers out there. A retailer with web presence like Wine Library or a consortium of wine retailers / wholesalers would be perfectly happy to have an active social network on their property with the ability to fire off an order with a single button press. Hell, bring Amazon into the mix and pass them the shopping lists generated on the social site. Amazon takes a small fee, passes some back to the social network operators and lets local distributors actually fill the orders–it’s a win, win for everyone.

In short, we need to be better at connecting the cloud to people. Find their passions and bring the service to them. It’s that simple.

2 Comments

  1. Posted July 1, 2008 at 8:09 am | Permalink

    Right on man. Great post. I heard Gary speak at a conf and it does sound like they want to move Cork’d in a more mobile direction, which is AWESOME!

  2. Matthew Dyer
    Posted July 2, 2008 at 8:40 am | Permalink

    I wonder how much the mobile input portion needs to be tied to content/social media side of things though. If I’m a devoted wine drinker (I’m not, although I do enjoy a nice white now and again) but I’m also a rabid librarything.com user (a similar site centered around one’s book collection, something more my speed) maybe what I’m really interested in is one tool to do all my note-taking for me.

    As my personal computering cloud gets bigger (work laptop, home laptop, home desktop, mobile phone, internet data stores, social networks) I find that I don’t have room to add more to the cloud without bumping things out. Twitter meant that I no longer check MySpace or Facebook. Friendfeed keeps people who haven’t moved on up to date, but I don’t have the “processor time” in my personal cloud to interface with more than a few services at a time.

    Moore’s Law doesn’t apply to my brain or attention span, so the transaction itself is going to need to evolve before I can really branch out and grow the size of my personal cloud.

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