The Near Memo, Episode 16

Part 1 Video: (7:12) Are Yelp’s problems self-inflicted?

Part 2 Video (8:32): Google I/O AI & Local Shopping

Part 3 Video (17:15): Google going into Retail, really?

Reference Articles:

What Happened to Yelp: A Hospitality Reviews Case Study

Google I/O: AI Everywhere, AR Maps, Shopping Graph

Google Store, No Data for Profit, Snap AR Spectacles

Transcript:

Greg: Okay. Hello, everybody. Welcome to episode 136 of the near memo. Actually it's only episode 16 and I'm home.

Mike: I think that's quite an accomplishment.

Greg: Yes. Yes. My

David: podcast is that put us in now it's top 1%.

Mike: We don't know, but it's something better than the top 35%. So yeah. So 15.

Greg: Okay. So there was a lot of news this week.

Um, uh, a lot of it coming out of, uh, Google IO. A lot of announcements and, uh, Google opening a store. We're going to be talking about those things, but first we're going to talk about Mike's very in-depth and interesting. Look at, um, the sort of trajectory of Yelp reviews. So Mike, why don't you lead us

Mike: into that?

Through my relationship with gather up, I'm able to look at review corpuses. Both cross large segments, popular businesses. Like I did two weeks ago with the Google review ascendancy in the restaurant industry, as well as focusing on and this one focused in our case study of a resort spa, hot tubs you had been to been

Greg: to.

Yes. You spoke very, uh, very, uh, effusively about, about it. It's a

Mike: great place. If you're ever in Santa Fe, this is the place you should go. They managed to pull off. Sort of new age-y stuff without it feeling new agey. Right. It was very peaceful, lovely place. Great restaurant, great massages. Although I'm not a massage guy, my wife and children love them.

And great little hotel hotel where these sort of individual units that are very nice up in the Hills above Santa Fe. Anyways, we were, I was able to look at their review Corpus going back. To almost 2000. And it was just fascinating because Yelp is always claiming that it's Google causing their problems.

And when you look at the reality of reviews, it was quite clear that Yelp never scaled as much as anybody else that was doing reviews that Yelp never developed alternatives. Ways of making money and using reviews as a feature, as opposed to a product, they always use reviews as a product. Everybody else sort of used them as a feature, leverage those to become successful, whether that was open table or TripAdvisor or Google or any of the others.

And so it just, it's a lens on this whole question of Google's antitrust. It's one way of looking at it, right? The problem in the discussion about Google is you end up. Simplifying it too much. Google is a monopoly. Therefore, when this problem occurred, they must've been behaving badly. Therefore Google is bad and we have to punish him as the argument.

And it's not a good argument. So I addressed all of those things on the article. And it's just interesting to me that largely conclusion Yelp just never, ever really broke out the way everybody else did. And you need to in the internet to be successful. Oh,

Greg: you, you could, you could make the argument that yes.

Product is advertising and they've used reviews as a way to get consumer consumer eyeballs to the site. I mean, that's, they've been their sort of strategy until pretty recently.

Mike: They never had the scale to make that work because advertising that Google and Facebook do is at such scale that they can drive the marginal costs.

They have no cost to an ad. Yelp has huge cost to an ad because they have such an infrastructure to sell it and such limited ability to deliver it. And it's not that well targeted. So ad they never had the scale to succeed at that. And. It becomes obvious when you look at this, that that's the case. I mean, so you could argue that just they've never done it and they can't really compete with the scale of Google and Facebook on that front.

David: And I think this actually gets partly at the crux of Yelp's entire business problem, which is they see reviews as their product and yet their customers are actually small businesses. Um, and so they're there constantly. In the, you know, trying to play middleman between their customers and the people they depend on to make their entire business model function.

Um, and I suppose that that's, you know, somewhat the case with, with plenty of marketplaces, but it's rare. I think to see, for example, you know, eBay merchants getting up in arms about eBay policies or Amazon merchants, you know, up in arms about Amazon policies to anywhere near the same level. Uh, that, uh, Yelp's advertisers or would be advertisers, uh, feel antagonistic towards them.

So, um, I think that it, Mike you're, it was a really great piece, as I said on Twitter. I think it's one of your, your best, most engaging pieces ever. Um, I think really highlights, uh, a number of trends, you know, sort of the last day, I feel like it's, it's almost like the last decade. Of our entire careers condensed into one post that's.

Right. It took a long

Mike: time to write that poem so that a conversation, can you say, well,

David: you see, you see the, you see the sort of Facebook giving up on local, too early, a story, you see the, you know, the rise of Google in local story. Um, and you see the rise of transactions as a critical central feature of local with, with open table.

So I thought it was just a brilliant post and, um, and illuminating for a lot of reasons beyond just the Yelp

Greg: lens. Well, it's, it's really a companion to the one that came before that about, about Google and how Google came to dominate. It's it's, it's another side of that story. So both of those were terrific

Mike: and, and in showing multiple sides, it reflects the starts to reflect some of the facets of this many, uh, cuts to the diamond.

It's not a simple question and it requires much more thought than most people give it.

Greg: Well, this is because this is the central problem. I think with the, the, the antitrust, uh, position is that. You know, a lot of the things that Google has done, it has done, um, well, and right without, uh, you know, intervening in an anti-competitive way in the market.

I mean, we can, we can point to things that Google maybe has done that, uh, that are anti-competitive, but, but most of what they have done has really been pretty effective obviously in the reviews context is, and it is an example of that

Mike: is after many false starts. Google plus the interpersonal problems they had with Google places, right?

It wasn't like Google just did this from the get-go. They had to fail three times or twice on how you count it, including their Yelp acquisition offers. I mean, that's three. Um, maybe it's four, if you count the GAD acquisition, I don't know. There's a lot of ways to count it. They failed a lot before they hit a successful formula.

They could afford to do that. Okay.

Well, I think Facebook came up with a better, better idea. They realized they didn't need reviews to convince businesses, to look at Facebook. They were looking and then Facebook reduced visibility of all business posts, thereby forcing them to boost their posts. They don't need reviews to get them to pay attention regardless.

Right. It's a brilliant idea.

Greg: In quotes. Um, so let's, let's move on to, to, uh, to, to, uh, to the, to the remaining sort of two items, which are Google, Google related. So this week Google held its developer conference, which, uh, concluded yesterday. I believe I only went to the portion of the first. First day. And there was just a ton of stuff that they, that they announced, you know, we can't, we can't capture all of that here, but what I was, what I was really struck by, I wrote about three things, uh, in the, in the newsletter on, um, Wednesday I wrote about, uh, uh, artificial intelligence and their deeper and deeper language understanding and how that's kind of behind a lot of their products.

Um, I also wrote about their, their integration, their deeper integration of, uh, augmented reality live view into, into local search, their exp they sort of previewed that a couple of years ago, and now they're introducing it. They're going to do it indoors and in transit stations. And they're also going to make it possible to scan the street and, you know, get information on businesses along around the street, sort of a, you know, a realization of what the layer browser more than a decade ago wanted to do.

And then the third item was the shopping path. Um, maybe Mike, you want to jump

Mike: in on the shopping graph? It's mostly, I think a marketing pack repackaging of what they've been doing. Uh, clearly what big three trends at Google is things around images in local images, transactions, and granularity, and more detailed about entities.

And they've been trying to collect this for. Particularly in the products they bought pointy, they opened up the merchant center, all these things, they opened up post the products, all these things to get products. And so this is sort of a repackaging of that, the fact that, and they've been wanting to do this since the days of frugal in 2008, uh, where, but it wasn't possible.

Earlier it wasn't possible then because there wasn't a Shopify then and merchants weren't that well organized, but now Google has achieved. Real-time almost near real-time inventory information, which is amazing with 24 billion items or however many, they said they had, it's pretty, pretty amazing. And I

Greg: think that's one of their key differentiators versus Amazon or their attempts, uh, to, to differentiate from Amazon is this online, offline real-time inventory thing.

And it'll be interesting to see. You know, um, it'll be interesting to see if they can penetrate the small business market more with, with, with pointy than they have already.

Mike: Right. The one thing I, I, I, I think I saw in this was a simplified Shopify interface. And David has mentioned in the past that the interface has been quite complicated

David: and it's to get into Google merchant center, such as a privacy policy and shipping information.

And there's a whole series of things. Uh, that that merchant center requires, and it seems to me that Shopify could be doing a better job of automating the sort of creation and submission of those policies to Google merchant center. Um, even myself as a relatively sophisticated marketer, uh, trying to help a small business who was a new Shopify merchant get set up in, in, in Google merchant center.

Um, was pretty, pretty overwhelming. It took three, three efforts, essentially three back and forth, uh, before the policies got approved. Uh, and this is just for a guy who was selling, uh, essentially a sort of custom custom run printed artwork, uh, through his Shopify store. Not, not a complicated product by any means.

So, um, I think that I I'm hopeful that this. Um, this initiative has real momentum from both Shopify and Google to streamline that process. It should be as easy as it is to get on GMV, uh, in my opinion, to get to get into Google merchant center. And right now, at least it doesn't seem to me to be, be that way.

Greg: Ultimately it will probably become that way. I mean, go ahead.

Mike: Sorry. I was just going to say that. Google inserting themselves in the sales process at this point where people are looking to discover inventory where it is, where they can buy it is the perfect Google play. It doesn't require any inventory.

It doesn't require any delivery services regarding customer service. They're able to insert themselves in the midst of millions of transactions successfully. So I think in that sense, it's a brilliant play. And the fact that it got elevated to the name of the shopping graph indicates that they think they've got it nailed.

Greg: Well, I mean, I think they still, they still lack. I mean, I think there's still some UI issues for Google and user experience issues.

Mike: Was it from their point of view though, that's just, you know, UI and UX never been their strong point. That's just sort of, they'll figure it out someday, but they think they have the fundamentals figured out.

Greg: Yeah. I, I, but I, I do think that the, the, the noise there's, there's still too much noise. I mean, if you go into Google shopping, you've got a, you know, you've got a sort of a structured. Presentation, but there's still sort of too much noise in Google search to make it a true Amazon competitor in a certain sense, because Amazon is so, so intuitive, structured.

It's all there. People are familiar with it, but, um, uh, let's just talk for a second about Shopify, right? And how Shopify is really now in an incredible position as the sort of distribution vehicle for all of these different platforms. Uh, for, for small business customers. I mean, they have quietly sort of built this empire of, of distribution and they're, they're really at the center.

Mike: Google said 1.7 million businesses. Were you using Shopify at the moment?

David: Is was up 70% year over year, according to Shopify annual report, which we covered last week. So, um, I, I, Greg, I agree with you that Shopify is clearly the, you know, clearly the, the lead distributor, uh, for SMBs. Um, I still think that both square and Squarespace are in really good positions, uh, square as a result of its sort of, um, historical.

Success with an offline point of sale. Um, and now, uh, pairing that with a really, a pretty good website products, uh, through their weekly acquisition. Um, and Squarespace, I think for, um, what would I say more, more experiential local brands I think is in a really good spot. And then also they obviously just acquired talk and they're apparently going to a direct listing.

Uh, to go public here shortly. So I, you know, I think that there, I think all three companies have executed fairly well in their own sort of lanes with the businesses that they've done the best with. And I think all three of them are, you know, Google is, Google is likely to partner with the other two, uh, as well, um, given that they all need to team up against Amazon.

Greg: So. Yeah. So, um, just to final, another final comment about, about, uh, IO, uh, we can talk at length about it, but just, um, the, the, the thing that mesmerized and kind of impressed me and, you know, I'm not a PhD in natural language processing or anything. It's just, just the sophistication now of Google's. Um, Algorithms it's it's it's it's it's, you know, it's language, uh, understanding is just getting so sophisticated and their capabilities just, and this was the intention of the presentation, but seemed to me to just so far outstrip all of their competitors, uh, it, it it's, it's, it's just really kind of, um, staggering to me, the kinds of things that they're doing, you know?

Mike: In the area of image recognition, where you can upload a screenshot and they'll grab a logo off 2% of the screenshot and tell you what model it is or what brand it is, shows you how they're tying that together with the graph to the shopping graph and all the other graphs. Like in other words, you upload a screenshot, somebody standing there with a pair of Nike's they know which model it is.

They tell you always local stores attended. It's quite, quite impressive. I agree.

Greg: It really is. So, um, uh, the final sort of item today is, is, uh, Google finally opening a retail store in New York. I mean, they had flirted with this over the past several years, they were going to open a store in Chicago. I believe they had talked about New York before they've done some pop-up stores.

They've done store within the store. Um, but they've never had a dedicated retail sort of flagship as this store seems to be. And it's, it's almost exactly 20 years after the first apple store opened in Virginia. So, what are your thoughts on that, David? Well,

David: I was just going to say, moving from position of essentially unrivaled strength in NLP and machine learning to one of unrivaled weakness, uh, in terms of, of, of physical presence and, um, historical wreck, historical track record of customer support anyway, uh, for Google and, and the three of us were chatting offline about, um, potentially what, what a missed opportunity this has been for Google.

Um, not just to sell hardware devices, which I've never owned a Google pixel, but I know plenty of people who have and have been fairly happy with it. So it seems like they've, they've done a pretty good job on the hardware front. Um, but they've missed the opportunity to scale that beyond the consumer, into the business market.

Uh, and, and I think anyway, it's been a missed opportunity for them to really get, you know, they've done some of these, get your business online, uh, seminars, but. I feel like it's a, it's a real place for them where they could have packaged a sort of business connectivity, uh, hardware offering with a marketing support genius bar in a really cool experience.

Um, if, if someone were, if that was, if that was an area that leadership at Google actually wanted to invest in, and I have a feeling that this, um, I, I would project the Google retail actually begins and ends and you know, New York and maybe a couple of other cities. Um, because they're going to realize that it doesn't scale very well and it's not something they do particularly well.

Um, so we'll see what happens. I I've been wrong on Google predictions before I've owed Mike many beers, uh, over the years, but, um, it doesn't seem like an area of, of historical investment for them and I'm not sure they see it as critical to their long long-term success. One thing I

Mike: noticed one way at thing I noticed about this story is that it's being placed in there.

Uh, Chelsea. Uh, building where they have thousands and thousands of employees that makes me think that it's as much about giving those employees an opportunity to experience the real world, which Google has. As a gap ad as it is about the consumer. And if they use it for that, why that might be very valuable to them and they might stay at that even if it's not successful.

Well, that's a pure retail strategy. It's kind of

Greg: a saving move in that regard too, because they can, they can use it in that context and not go beyond that. And, and it serves a purpose for their employees. I mean, it's kind of like the Google stores on their campus or they have. They have one or two like that retail stores.

I totally, yeah. I agree, David. I mean, years ago, this was a conversation I had with somebody about how Google could really, you know, before really they had hardware, how Google could really set up a genius bar, like educational, uh, offering for small businesses to learn about Google products, to learn about Google ads.

I mean, they used to do those Google use seminars. I remember, you know, what feels like 30 years ago, but not quite that long. Uh, Sheryl Sandberg standing up and introducing Google ad words and likening it to yellow pages, you know, in front of a small business audience. Um, and then they went off and separated the groups into beginners and more advanced.

And, and you could eat if you truly had the scale that an apple does, you know, which is a lot, um, you know, you could have a place where people could come in and get educated, ask, ask support questions, and it would be quite a valuable. It's channel for them, but I agree with you. They're probably not going to make that commitment.

David: Um, additional comment, like I think you're sort of, you know, public face for employees to interface with the real world, you know, that kind of comment. Um, it's interesting. The timing of this relative to all of the, sort of anti-trust anti-big tech sentiment that seems to be out there right now. And, um, we don't, I mean, I think that there are plenty of.

App makers that feel, uh, antagonistic towards apple, uh, as, as the ongoing court cases is proving that's happening today. But, um, I'm not sure that they quite, that, that there's quite the same level of resentment among consumers towards apple, as there is towards, uh, Google and Facebook. And this may be one way to try to put a.

Slightly more human face on a faceless trillion dollar multinational corporation. So, well, just,

Greg: just to follow up on that, I apologize for extending things, but just to follow up on that, um, you know, one of the subtexts in all the Google presentations was we understand you don't trust us. We know you don't trust us.

So they were just reiterating, you know, privacy, privacy, privacy prize, it received. We never do this. We never sell your data.

Mike: We never drive street card down the street and pick up all your wifi part ports that are open. We never do it.

Greg: Right. And so, and so that, that was interesting to me to observe. And also, you know, that's consistent with the Gmail messages that people are seeing.

About privacy. Um, and then, uh, apple has a new ad, which I linked to in the newsletter today, which is pretty interesting. Um, I don't know if you've seen it, it's a UK ad and it shows somebody, uh, moving throughout their day, going into different stores into, into taxis and going home and a progressively larger group of people following the person.

And these are the trackers, right? This is the physical manifestation of all the ad tracking. And then the guy presses the do not don't allow button and they all disappear. Right. It makes it very, very concrete. It's very clever ad and, um, pretty, pretty hard for, uh, Fe the Facebooks and the Googles of the world to, to overcome, um, you know, just on an emotional, visceral level.

So, all right. With that, everybody have a good rest of your day weekend. Evening morning whenever you're watching or listening to this. And thanks again for listening and he'd go, boy, go

David: blazers, NBA playoffs are kicking off this weekend. And, uh, those of us in the Pacific Northwest are pretty excited. So

Greg: all right.

Blazers

Mike: are a basketball team.

David: Portland trailblazers. Yes.

Greg: All right. A bunch of ours. All right. Anyway.

Or.