Open up your mind and say, ahh...

In times like these, cost cutting and streamlining are compelling business strategies. Business executives sometimes have second thoughts about their loyalty programs and ask our consultants whether it’s really worth the cost.

The answer, however, depends on how well the program is aligned with the type of customer base being served.

A loyalty program, or frequent-buyer program, rewards customers with points, miles, or other credits that can be redeemed for discounts and free products. Loyalty programs have become ubiquitous in a variety of industries, from airlines and groceries to credit cards, packaged goods, mobile phone carriers, coffee and restaurant chains, and retailers of all kinds. But they are probably over-used; last year in the U.S. alone, researchers tallied more than 2 billion loyalty program memberships, which means the average U.S. household belongs to about 18 different loyalty programs.

Loyalty programs do cost money, not just in terms of the rewards themselves but also the administrative burden, so it’s not uncommon for executives to question their decision to implement one. Evaluating a program, however, should be based on two issues: First, under what circumstances will a loyalty program generate incremental repeat business? And second, how valuable are its other benefits, including the chance to gain insight into individual customer needs and preferences?

In 1996, Martha Rogers and I published our second book together, Enterprise One to One, and we tackled the first question head on. We concluded that a loyalty program can directly increase customer loyalty when a business’s customer base had two characteristics:

1. Just a few high-value customers do the vast majority of business; and

2. Customers’ needs are fairly uniform, meaning there isn’t much product differentiation in the category.

(Recently my Twitter buddy Arie Goldshlager alerted me to the fact that in 2011 two Yale marketing professors, K. Sudhir and Jiwoong Shin, were given the John D. C. Little Award in marketing science for having proved Martha’s and my argument mathematically.)

The long and the short of it is that paying customers for their loyalty is more likely to generate a direct profit when your customers have similar needs but highly different values. The airline industry is a great example. At an airline, the top 1% or so of flyers generate a substantial majority of the profits, and yet customers are fairly uniform in terms of what they actually need. Aside from seat or meal preferences, customers all want the same basic thing–to get safely and reliably from Point A to Point B–and pretty much any airline that flies a route can do the trick.

So airlines can profit by purchasing customer loyalty directly, but if your business is not characterized by a similar kind of customer base, with a small minority of extremely high-value consumers who have relatively undifferentiated needs, then it might not make as much sense for you.

Which brings us to the second issue: What are the other business benefits a loyalty program can generate? The real secret to the vast majority of loyalty programs has to do with compiling and using customer-specific data. By encouraging customers to identify themselves (in order to get their benefits) you can track their purchases and interactions, and then use insights from this data to tailor your offer, your product or your service to individual tastes. In effect, rather than rewarding customers for their patronage, you’re rewarding them for identifying themselves.

This strategy, however, will be more compelling when you don’t already have a natural mechanism for linking customers’ purchases to their identities, and when your customers are highly diverse in their needs. Grocery retailing is a good example here. There are about 40,000 different products on the shelves of a typical U.S. supermarket, but the average household will stock less than 1% of them, and every shopper buys a different assortment, with different brand preferences, types, and sizes. Moreover, unless shoppers somehow identify themselves at the cash register, the grocer has no practical way to keep a record of any individual shopper’s purchases. By using a loyalty program to identify individual customers and track each customer’s transactions, however, a grocer can compile enough data to make personally relevant offers.

Tesco is a U.K.-based grocery retailer that does exactly that, for instance. One of the world’s most sophisticated users of customer data, Tesco launched its Clubcard loyalty program in 1995, and it now sends a quarterly newsletter to 16 million U.K. Clubcard members in 9 million different versions! Every Clubcard member gets a highly customized set of discounts and offers, and the company claims a response rate on the newsletter of some 25%. Analysts have estimated that the program could be generating more than £100 million in incremental revenue for the company every year.

In recent years, Tesco has been expanding beyond the U.K. with a number of innovative offerings in different countries, and I think if there’s one business model that might eventually give WalMart a run for its money in the U.S., it would be Tesco’s. WalMart offers “everyday low prices” to every shopper, but some day Tesco could offer “personalized lower prices,” based on each individual shopper’s own needs.

So if you want to avoid wasting money on your company’s loyalty program, ask yourself a few basic questions:

• How much of your business comes from the top 1% or 2% of your customers?
• Is it possible to identify and track your customers’ individual purchases even without a loyalty program?
• Do your customers have diverse needs and preferences? and
• Are you prepared, organizationally, to treat different customers differently?

Image: Flickr user Mcscrooge54

Texts gone awry have taken center stage in the viral humor arena as sites such as Damn You Auto Correct and When Parents Text take off.

This time, we’re taking a look at SmartphOWNED, a humor blog launched in January 2011 that was intended to feature auto-correct fails. The site, however, has evolved into more than that. Many of the most-shared texts on the site are witty exchanges between friends, parents saying awkward things (without an additional auto-correct blunder) and text art (such as the “iPhone Whales” slide above).

One of our favorites is this creative use of emoji to illustrate Lil Jon and the East Side Boyz’s “Get Low.” The 13 text conversations in the gallery above are the SmartphOWNED creator’s picks for funniest on the site.

“You often overhear conversations between other people but you rarely have opportunities to read their text conversations. It feels more private – like you’re reading someone’s diary,” Emerson Spartz, CEO of Spartz Media told Mashable. “It’s easy to imagine yourself as one of the characters because you can’t see or hear the authors. Because you can place yourself in the story, it’s easier to immerse yourself in the moment.”

Spartz is quite the veteran when it comes to viral web culture. He created MuggleNet, the world’s number one Harry Potter site, when he was just 12 years old. Today, SmartphOWNED is Spartz Media’s top blog with 50 million monthly page views.

As the AP notes, at last week’s Mobile World Congress there was a good deal of attention delivered to a company called Pinger. This was partly due to the company stall’s fortuitous location at the trade show, partly because it’s a leading example of new-generation companies that offer their free or low-cost non-SMS messaging services to smartphone customers. International phone networks were also at the show, of course, and they were loudly complaining about Pinger and its ilk.

Telecom Italia’s CEO Franco Bernabe is quoted in a thinly-veiled attack at these companies: The players “have based their innovation in the mobile domain, without a deep understanding of the complex technical environment of our industry” and that is causing more and more “problems to the overall service offered to the end user and driving additional investments for mobile operators.”

So, let’s get this straight: These firms are innovating on a long-established platform and because they’re successful–thanks to offering cheap or zero-cost messaging to their clients–it’s squashing the overall performance of your network and making you invest more money? Interesting argument.

It’s not at all because you’ve failed to innovate yourself, and networks like yours around the world have ripped off consumers for years with vastly-inflated fees to send (and in some cases receive) SMSs? No, that would be silly.

What Franco and his fellow cell company CEOs are really afraid of isn’t Pinger, of course. It’s Apple and Facebook and Skype. The first two of these are changing how consumers use IMs on a vast scale, and enabling them as direct replacements for SMSs on smartphones–with Apple’s iMessage business the most obvious attempt because it threads both SMS’s and iMessages together seamlessly in a single app. Because these chat channels use data, rather than SMS’s, they don’t cost consumers SMS fees, and that’s actually making the industry lose potential cash. Ultimately your cell phone network will be like your water company–a boring, necessary, but brand-irrelevant pipeline for a utility. Only flowing data, not water.

Image: Flickr user ranjithsiji

Bot Vid: Quadrotor. James Quadrotor.

The University of Pennsylvania’s GRASP lab has done it again–another quadrotor video that’ll make you gasp. This time the team has taught a swarm of quadrotors to play the James Bond theme tune on a selection of musical instruments. It’s astonishing, and even comes with its own special Bond effect light show. On a more serious note, the swarm precision here demonstrates how hugely complex tasks could be performed by groups of these machines. And the drum-tapping bot is a hint at how quadrotors may find a use performing repairs or clean-up jobs on the outside of structures like skyscrapers.

I’m sitting in my rental car outside of eBay headquarters on a rainy day in San Francisco. I’m about to step into my second day delivering an Outthinker workshop to group of technology execs from various companies. Television news here centers on the rapidly reorganizing technology landscape: the Yelp IPO, Yahoo suing Facebook during its pre-IPO quiet period.

But the most game-changing technology news has gone mostly overlooked. Comcast, the largest U.S. cable service provider, announced it will soon launch a video-streaming service aimed at beating Netflix. It’s easy to miss the strategic importance of this move. But if you understand the strategic narrative that cable companies have played again and again to devastating effect, you will recognize this as the critical turning point in the plot.

The battle to own the “digital home” has been waging for years, but over the past 12 months, it has really heated up. Apple is rumored to be launching a television, Amazon’s video-streaming business is taking off, Samsung and other electronics firms are embedding ever more online video services into their TVs, and television channels are increasingly streaming directly. How this all plays out will have significant consequences for investors and television viewers around the country.

The future may look uncertain, but look to the past and you will see a pattern that points clearly to where things may be going. A shift is underway. Cable companies look poised to turn the tables on Netflix and other video streaming players. The recent relative stock performance of Comcast and Netflix underscores that this is happening (see the stock chart below). That in a few days Netflix will lose its rights to carry Starz video content, including my daughter’s favorite Disney films, offers yet more evidence.

Here is what the past tells us about who may win and lose in this high-stakes game:

1. There are only three sources of advantage, and Netflix has none of them: For any company to win over the long term, they must secure one of three sources of competitive advantage: customer captivity (think Microsoft Windows), economies of scale (think Walmart), or preferential access to resources (think De Beers Diamonds). Netflix once enjoyed customer captivity, but this advantage has eroded thanks to its missteps that upset customers, drove an exodus of more than 800,000 Netflix users, and sent its stock price reeling.

2. The tortoise inches toward the finish line: Cable companies have historically played the tortoise to high-tech innovator hares. They adopt a predictable pattern–they let someone introduce a new service, watch the market grow, and much later step in and take away the opportunity. This is how cable companies beat out TiVo (which introduced the world to the DVR) and Vonage (which convinced Americans to embrace VoIP). Comcast’s announcement is the most direct message yet that it intends to seriously attack the new video-streaming opportunity Netflix has ushered in.

3. Google and others understand the game: This is why Google is making steady inroads into the home. In Kansas City, Google has launched an experiment with potentially huge consequences. It has begun wiring homes with high-speed fiber optic service, which positions it to get into the cable service provider game.

4. Netflix’s last hope is to become HBO: There is little reason to believe Netflix can regain customer captivity or create economies of scale, so the company’s only hope is to secure preferred access to content, which it is attempting to do by producing its own shows and movies. If Netflix can succeed at this, it will begin looking more like HBO. If it fails, it falls.

As you watch your company evolve, look for these three sources of advantage and see who is moving toward them ahead of you. Do you have customer captivity? Do you have economies of scale? Do you have preferential access to a key input? If not, start making plans, like Google is doing and Netflix probably should have done, to build such power now.

Want more? See author Kaihan Krippendorff’s Outthinker series on YouTube. 

Image: Flickr user Travis K

When I interviewed entrepreneur and author Guy Kawasaki recently, I chatted with him at great lengths about his Twitter publishing habits. Take a look at his feed, and every few minutes you’ll see a new post, from why videos go viral to Playboy’s plans for a strip club. With so much tweeting, I asked him if he lost followers. In true Guy style, he admitted that yes, he had lost followers–but not nearly as many as he gained. Incidentally, in the time I wrote this post, Guy Kawasaki tweeted five times and gained 41 new followers, debunking the theory that too many tweets is bad for your presence.

While Guy’s follow/loss philosophy make sense, for most people it’s unsettling to see our numbers on social media sites take a hit, even temporarily. However, we rarely talk about what actions will hurt your friend and follower count in the social space. With that in mind, here are five ways to drop your network numbers in a flash.

1.  The self-congratulatory retweet.  While a little self-promotion is good for personal branding, you can take things a step too far. I’ll be the first person to admit that every now and again I’ll retweet a compliment from a follower, immediately realizing that I forgot to retweet with comment or a “thanks.” Yes, this itsy bitsy RT with comment feature is your friend. If someone tweets about something you do or why they think you’re great, make sure that you thank them in a retweet with comment, but avoid retweeting without any humbling context or word of gratitude.

2.  Bad tweet timing.  About a year ago Kenneth Cole pushed “send” on an unfortunate tweet that caused a digital uproar. The fashion designer said ”Millions are in uproar in #Cairo. Rumor is they heard our new spring collection is now available online.” Ouch. Timing was everything (wrong) with this message, which was sent during the dawn of the Arab Spring; it came off as crass rather than triumphant. While online users love humor, this tweet deserved the hashtag #toosoon. Don’t make this mistake.

3.  Too much automation.  Services such as HootSuite make it easy to cross-post to multiple social networks. Scott Stratten, author of UnMarketing, recently shared a tweet from a company called Von Zipper (@VonZipperUSA).  The message read, “You think this post can get a thousand likes??? Let’s see if we can get there!!!” This is a perfect example of automation gone wrong. If you are using a social media dashboard, you most likely have the option to select which networks receive a tweet. Try to avoid cross-pollinating language. In other words, avoid the @s if you’re sending a message to Facebook and the “likes” if you’re posting to Twitter.

4.  Offensive comments.  When you’re participating in the social media space, you always need to remember that in one fast click you’re defriended, blocked, or uncircled. According to a December 2011 Nielsen McKinsey survey, the number one reason Facebook users, for example, remove friends is due to offensive comments. While the digital space welcomes healthy debate, it’s not so kind to rudeness.

5.  The silent treatment.  If I follow someone but eventually notice that they don’t follow anyone or they fail to reply to tweets, I often unfollow. Twitter is about good dialogue, having a conversation. Unless you’re the Dalai Lama (he follows no one, which somehow seems appropos), chances are that your followers will expect more engagement. Don’t sweat it if you can’t reply to every single person all the time, but at least try.

Want more tips from the pros on personal branding and working smarter? Check out Amber Mac’s Work Flow series. 

Image: Flickr user Kapungo

LONG BEACH, Calif. — You may not be shocked to learn the founder of LinkedIn thinks the key to career success is understanding the dynamics of networks and how to leverage them to your benefit.

But Reid Hoffman took that truism a step further at TED on Wednesday, detailing the four attributes that makes someone “network literate” and encouraging them to “be the entrepreneur of your own life.”

The first attribute Hoffman says is necessary is having a baseline understanding of how network technology works. He noted how his personal network on LinkedIn has around 2,600 people, but that there are more than 15 million within three degrees of him.

He thinks the discussion of Dunbar’s number – the idea that one can only maintain 150 connections at one time – may be true in your mind, but is made less relevant by technology.

Moving on, Hoffman has a new spin on the familiar adage “you are the company you keep.” Using the term “network identity” to describe the connections that one has, he says, “the brand of you is not just what you broadcast about yourself, but what others say about you.”

He notes that Zynga – one of the companies he’s invested in – initially thought of itself as a gaming company, but its users do not think of themselves as gamers, but rather the games they play give them a network identity.

Once you’ve established a network and a network identity, Hoffman believes the most important skill is being able to derive information from it. In fact, he argues that being an “expert” has more to do with being able to find the right information than actually knowing it.

He notes how when he’s looking for an opinion on a prospective startup investment, he’ll reach out to members of his network and ask for a 1-10 rating of the entrepreneur.

As an extension of that, Hoffman says the last piece of being network literate is understanding and developing your network’s capabilities. Again using his investment philosophy as an example, Hoffman says that he doesn’t, “form a thesis and find people that fit it … rather I network with the people that will bring me interesting entrepreneurs. “

The timing of Hoffman’s talk is not coincidental – he recently published the business book “The Start-Up of You,” which explores many of the principles outlined in his TED talk and details why the network is the competitive advantage in today’s career landscape.

In business, the consequences of failing to properly frame or assess an issue can be dire. Often such a misdiagnosis is the result of not having the right information. Though the necessary information is often available, businesspeople sometimes don’t know how to find it or don’t see it in front of them. The reason? Poor listening skills.

To improve your listening skills, you must first figure out exactly what is keeping you from seeking and hearing the information you need. Are you hearing only what you want to hear? Are you answering only your own questions? Are you faking it? I’m going to describe six of the more common archetypes of bad listeners. I call these “archetypes” because no one is a pure case.

What Kind of Listener Are You?

The Opinionator: I knew one CEO of a major industrial company, a seasoned executive, who had a habit of cutting people off three sentences into the presentation of a new idea. “Look,” he would snap, “let me tell you how I see this…” From there, he would proceed to express his opinion with no uncertainty.

This CEO was a classic example of the first type of poor listener: the Opinionator. At the heart of an Opinionator’s problem is his tendency to listen to others really only to determine whether or not his ideas conform to what the Opinionator already knows to be true. The Opinionator may believe that he is listening intently, and indeed he may very well be, but that doesn’t mean he’s listening with an open mind. This kind of listener probably has the best of intentions, but the net effect of this listening style is that conversation partners feel intimidated or at least somewhat uncomfortable, and colleagues’ ideas–good or bad–are routinely squelched.

A telltale sign of an Opinionator is the tendency to start sentences with “Listen . . .” and to end them with “. . . right?”

The Grouch: Whereas the Opinionator’s listening is limited by his belief that his ideas are right, the Grouch is blocked by the certainty that your ideas are wrong. A typical Grouch, a top executive officer I worked with at an industrial corporation, made no secret of his contempt for other people’s ideas. This Grouch might express his displeasure differently to different people, but his responses all seemed to carry the same implicit message: “You’re full of it. You’re a fool. Why did you even think I’d be interested in this?”

I used to coach teams at his company to prepare them for dealing with him. The first fifteen minutes of the meeting will be hell, I told them, but if you press on bravely, he will eventually acknowledge you. It was true; by the end of many meetings, the Grouch would say, “OK. Yeah, I get it. I understand this now.” I knew plenty of people in the company who just didn’t have it in them to break through those barriers every time they needed to express an idea to him, and I worried about what it cost the company in missed opportunities over time.

The Preambler: In 2004, Jon Stewart appeared as a guest on CNN’s Crossfire. Instead of engaging in the expected witty banter, Stewart confronted the two hosts, saying that the “debate” and “discourse” on the show was a sham, a theatrical device designed to let them vent their own political views. Television pundits have become the very embodiment of the poor-listening archetype I call the Preambler, whose windy lead-ins and questions are really stealth speeches. The Preambler uses this technique to steer the conversation, or to send out a warning, or to produce a desired answer, as if the dialogue had been scripted.

The Perseverator: Of course, the problem with speeches and loaded or rhetorical questions is that they are the very definition of one-way communication, and that’s not very conducive to problem solving.

The Perseverator talks too much, in the way the Preambler does, but presents difficulties that are more subtle but no less confounding. The Perseverator may appear to be engaged in productive dialogue, but if you pay attention, you might notice that he’s not really advancing the conversation. As often as not, he’s actually editing on the fly, fine-tuning what he is saying through constant reiteration. His goal is only to help him sharpen his point or shoehorn your thoughts into supporting his prejudices and biases.

The Perseverator may seem to be engaging in a dialogue, until you figure out that his statements not only don’t advance the conversation, but may not even be directed at you. He is busy thinking out loud, and will eventually lead everyone back to the same predictable place.

Answer Man: Everyone likes to be the problem solver. You grab the spotlight and deliver what’s needed to figure out a difficult problem or lay down the path to a required action. An extreme version of the problem solver reveals himself in conversation as the Answer Man.

This is the person who starts spouting solutions before there is even a consensus about what the challenge might be, signaling that he is finished listening to your input in the conversation. On the surface, the Answer Man may seem quite similar to the Opinionator, but there is a fundamental difference. The Opinionator is hamstrung by the certainty that he or she is simply right. The Opinionator knows what’s what. The Answer Man, on the other hand, is desperately eager to please, or to impress, with his quickness and brilliance.

It might seem like this individual has to be the smartest person in the room, but more often, what he or she needs is to be valued, to be indispensable. Some think having the answer and having it right now is the hallmark of a great leader, but insufficient discussion can lead you to act on a half-baked and overly simplistic understanding of a situation.

The Pretender: So do we conclude that the quiet, polite listener is the good listener?

Not necessarily.

How many times have you had this experience? You talk with a boss or a colleague, arguing your points elegantly and articulately. You’re convinced that you’re having an impact because the other person nods wisely at all the right moments, and laughs when he’s supposed to. Maybe he even finishes some of your sentences, not in a rude way, but in a way that shows he is engaged with your train of thought. And then, as soon as you walk out of the meeting, you have the uncomfortable sense that he hasn’t really heard a word you were saying; or maybe he heard it all and just didn’t care. This guy is a great actor, and he has just put on a great show. He’s the Pretender. The Pretender isn’t really interested in what you have to say. Maybe he’s already made up his mind on the subject; maybe he’s distracted by other matters; maybe he has to put on a show of listening for political reasons. Whatever the reason, we’d all be better off if he would drop the pretense.

The greatest Pretender I ever came across was the CEO of a many-tentacled health-care corporation, a man I always think of as the Suit. This man was straight out of central casting: good looking and polished, clever and charming. He had all the right moves. You’d swear he was hanging on every word you uttered, and you’d walk out of his office feeling like a million bucks, won over completely by his knowing, empathetic smile. It might take a while, but eventually you’d realize that he hadn’t acted on anything you said, even though he had given every indication he was processing what you had to say and was in agreement. The Suit firmly believed that it was his job to make all the stakeholders within the company feel like they were being heard, that they were connected to, and well cared for by, the people at the top. If that was his only mission, and he accomplished it very well, but I have to ask, at what price? He let people talk, but he didn’t take in what they were saying. The result was a lot of ill-informed choices.

You are likely a good listener at times. However, if you are honest with yourself you will recognize that many of these archetypes of bad listening apply to you at different times and in different situations.

You might be a Grouch on certain subjects or at different moments in the business cycle, but act more like a benign Pretender in other circumstances. You need to be able to recognize the behavior of each of these types–in yourself, as well as in others–as the first step toward improving your own listening skills and raising the overall level of communication and decision making in your organization.

Adapted from Power Listening by Bernard T. Ferrari by arrangement with Portfolio Penguin, a member of Penguin Group (USA), Inc., Copyright © 2012 by Bernard T. Ferrari.

Image: Flickr user Abrinsky

As an editor, I’m pretty much contractually obliged to be cautious. So many rumors are constantly swirling around the next hot Apple gadget that one has to keep an open mind about all of them — every last one could be wrong. The company could teach the NSA a thing or two about secrecy, so there’s never any official denial or confirmation.

But sometimes, just sometimes, you get a hot tip from a good source with an unblemished track record. It confirms something you’ve been feeling in your gut for days, and you start scribbling down all the reasons why it would make sense.

That’s what happened Monday, and that’s why I’m prepared to cast caution aside and call it: the device we’ll be watching Apple unveil on Wednesday is called the iPad HD, not the iPad 3.

The first clues on this trail came last week, when a Gizmodo tipster uncovered evidence that Griffin and Belkin — longtime Apple peripheral makers trusted by the company — had ‘iPad HD’ cases buried in acres of dry accessory listings like the ark of the covenant in a warehouse of boxes. The site added another, less appealing rumor from an app developer on a Romanian forum that claimed to see an iPad HD show up in the apparently un-spoofable usage stats for his app Tapatalk.

Then Monday we got a heads-up from our source that the iPad HD name was a go. We started hunting for a second source. Shortly thereafter, CNET and VentureBeat got the same word from their sources.

This matches the pattern of activity around the iPhone 4S launch — a couple of days beforehand, we saw a sudden flurry of rumors to the effect that everyone expecting an iPhone 5 had got the wrong name. Unfortunately, they were all but drowned in a sea of iPhone 5 rumors. This time, we’re paying closer attention to alternate names.

Why It Makes Sense

Practically the only new feature that seems certain to arrive in the iPad HD is the retina display. Indeed, it was surprising that Apple didn’t include it last year in the iPad 2. (Retina technology had arrived the previous summer in the iPhone 4).

But when was the last time you heard your friends or family — the non-geeky customers Apple is targeting — use the word “retina”? How many of us, outside the tech bubbles of Silicon Valley and Alley, gets what that means? It sounds cool, but it isn’t going to shift units. And if there’s one thing we understand about Apple CEO Tim Cook, it’s that he’s all about shifting units.

HD is a different matter. We all understand the meaning of those two letters, thanks to your cable company and the inexorable rise of HDTV. We may not all get the difference between 720p and 1080i, but practically everyone on the planet understands that when something goes high-def, they’re in for a better visual experience.

Doug Ludlow is the CEO of Hipster, a virtual postcard site that has been talked about as much for its viral publicity campaigns as for its actual product. Fast Company caught up with Ludlow to talk about zero-gravity flight, the concept of the bubble, and his company’s Pabst Blue Ribbon expenses.

What is Hipster?

We built Hipster to be a fun way to share where you are and what you’re doing. Using your iPhone or Android, you send a postcard from where you are and share it with friends.

Why did you feel the postcard needed reinvention?

Postcards work because they’re a fun metaphor people are used to using. Hipster didn’t start out as a postcard company, and our goal is not just to be a postcard company, but for now the metaphor is serving us really well.

Originally Hipster was a location-based question-and-answers site. Why did you pivot?

We decided after a lot of soul-searching that location-based Q&A was not a good business to be in. The network effect was just not large enough. After a lot of brainstorming, we said, what if we got rid of the question, and just had answers? We’re very glad we did that.

Hipster created quite a stir just from its landing page, before you even revealed what the service was. How many people did you sign up?

37,000. There was a big dose of luck. It kind of went viral. There was a combination of beautiful imagery, a viral mechanism, and the name was kind of funny, an attraction by itself.

The word hipster seems to pack something like the force of an ethnic slur in some circles.

I don’t see it like that. We chose it largely because it’s two syllables, in the English language, and it’s something urban. You don’t associate a hipster with the country, you associate it with cities.

After your landing page went viral, your recruiting campaign went viral.

We wanted to build a team, and we started using Craigslist, Crunchbase–all the places you go to try and find team members. But even the coolest job posting absolutely got lost in the noise. We knew we had to do something to break out and get attention. We just had the idea, why don’t we play on the name Hipster itself, and offer a year’s worth of PBR? We built a campaign around it, and that went extremely viral. We got 850 job applications, of which 10% were truly high quality. We ended up hiring two people, and they’re both getting a year’s worth of PBR.

How much is that setting you back?

The way they do it is they just submit receipts from Safeway or a bar, and we reimburse them that way.

Are they coming to the office drunk?

Not at all. I think they appreciated the $10,000 bonus more than they did the PBR.

I’d be throwing keggers every weekend.

Don’t tell those guys that.

And most recently, you have this new, dare I say, gimmick…

It’s absolutely a gimmick. Yes. Hipsters in space. Outer space is maybe a bit of a stretch. We’re sending one winner up in a zero-gravity flight. They take you up in a modified Boeing 747 and do parabolic loops. It costs a little over $5,000, not that crazy at all. We figured it’s a marketing expense well paid for. It’s been a very successful program. There’s been a big spike in users signing up.

How many users do you have today?

We broke 100,000 users in January, and we’re well no our way to 200,000 now.

How do you outdo this gimmick?

I really don’t know. Maybe our gimmick days might be over after this. I think at this point, we’ve pulled off three successful publicity campaigns, and hopefully the flywheel has been spun fast enough where it’s self-propelling at this point. This could be our last gimmick, but don’t quote me on that.

Have you ever thought that the real talent of the Hipster team is for marketing? Maybe you should make a Hipster-branded ad agency.

We did talk about that quite seriously after the hiring campaign. But you can’t serve two masters. When the book closes on Hipster, years from now, maybe some of us will go and do something along marketing lines.

Have people likened Hipster to Color, which was originally a location-based photo sharing service?

One nice compliment when we launched was that it was “Color done right.”

We recently profiled the founder of Color, Bill Nguyen. Interestingly, he wasn’t hurt by being associated with the word “bubble.” How do you feel about that word?

I really don’t think we’re in a bubble right now. The term “bubble” is so over used–it’s almost like the word “hipster”–that it almost doesn’t mean anything anymore. People project what they want “bubble” to mean onto it: inflated value, a lot of VC, a ton of small companies… It means a lot of things, to the point where it doesn’t mean anything.

This interview has been condensed and edited.

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