Sunday, February 12, 2006

Classifieds are Transactional, Groups are Relational

Mike recently wrote a second review of the forthcoming Microsoft Expo (aka Fremont) on TechCrunch.

He said, "Expo is centered on the idea that people will trust others within a group, and so is allowing classifieds networks within groups."

I left a comment on the article, which I'll expand upon here.

The original concept of Tribe Networks was that classified advertising would work better within the trust circles of existing groups, or "Tribes". This focus - which wasn't something they publicly discussed - is why their investors included the Washington Post and Knight Ridder. While Tribe is still going, it's fair to say that this concept didn't work for them. Maybe Microsoft can do better, but I am not convinced.

There are two simple reasons why.

First, classifieds are inherently transactional, and long term relationships of trust simply aren't necessary. Each of us has a sphere of activities, interests, friends, and so forth -- and when a buyer and a seller get together to transact a piece of merchandise, none of that is relevant. I have both bought and sold cars via classified ads, and what mattered to me wasn't that the other guy was nice, or trustworthy, or that we had anything larger in common; what mattered was that his cash or his car was as represented, and I came to the exchange with one, and walked away with the other.

There are very rare exceptions to this dictum - just yesterday, my friend Niranjan regaled me with the story of his purchasing an absolutely mint 1964 Volvo P1800 as driven by "The Saint." He still visits the previous (and original) owners of the car once a year to show it to them, and they sold it to him at a below-market price on the basis of his winning personality and love for the car. But exceptions like these prove the rule. Ask yourself - how many goods have I purchased or sold through classified ads; how much did I really care to know about those sellers/buyers, and how much would I be willing to change the mechanics of the transaction - e.g. paying higher or taking a lower price, waiting longer for an item to turn up within my limited network, etc., just to take advantage of that fuzzy feel-good surround?

The second problem with this concept is that people are wildly inconsistent. The certified CPA is cheating on his wife. The marriage counselor that they are seeing is an asshole in business dealings. The ultra-reliable mechanic who fixes their car with fantastic attention to detail can't keep his personal finances in order. Within different contexts, people's behavior can be so different as to be contradictory, and therefore, all the social things you think you know about someone from a groups-like exercise such as this, may disinform as much as they inform.

I'll be very curious to watch this develop, but I don't see any magical secret sauce yet.

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