Don’t believe us? Just look at the highly popular apps from Yelp and Amazon. Yelp’s app search ignores your implicit cuisine preferences, which it could easily extract from your prior queries and navigation. Yelp also overlooks contextual factors like weather and time of day, showing “Bars” and “Nightlife” prominently in its Nearby feature, even at seven in the morning!

Ditto for Amazon’s PriceCheck app, which seems to not only ignore your purchase history but also whether you’re searching for that toaster oven from your home or at your local Target.

We don’t mean to pick on Yelp and Amazon – we’re confident that if you spend some time thinking about any favorite app, you’ll come up with several ways in which it could make your life easier by intelligently utilizing your prior usage, your social graph, your location, time of day, and so on.

The good news is that things are quickly changing for the better, thanks to the emergence of a new class of apps which embody the definition of “smart” by being personalized, contextual, and proactive. Just as the rise of services like Pinterest changed user expectations around visual design and intuitive interfaces, we believe that these new smart apps will train users to expect all their mobile apps to:

• know them (who);
• remember their past interactions and preferences (what);
• factor in their context (when, where);
• and even take permission-based actions on their behalf.

The hottest area for this trend is the personal productivity space. Three years ago, Siri gave users a glimpse of how smart apps could make them more productive. However, while Siri continues to provide a convenient speech interface and integrates nicely with core iOS apps (phone, calendar, reminders, etc.), it has been leapfrogged by Google Now, which leverages deep Android OS integration and connection into Google services (Gmail, Google Apps, Google+ and your search history) to provide a more personalized, contextual and proactive virtual assistant experience.

Google Now has its own limitations, especially the lack of integration with other key services like Facebook, Twitter, Microsoft Exchange or other email providers. Entrepreneurs are hoping to exploit these limitations: witness the recent debuts of apps like Mailbox, Tempo, Cue, Grokr and EasilyDo. These apps use intelligence to organize inboxes with a simple swipe, show you useful details for calendar events, provide routes that avoid traffic, dial into conference calls, and suggest friends who need to be congratulated or consoled.

Smart apps don’t all have to be virtual assistants or personal productivity apps. We see a raft of opportunities across the board for entrepreneurs to disrupt entire categories. To share a few examples:

• Newsreaders are getting increasingly smart. Prismatic incorporates not only your interests (personalization), but also your location (context) to determine what articles to show you. The Relevance app explicitly asks you for an important piece of context (how much time you have to spare) to serve you just the right number of stories. We hope that these and other recent newsreaders are intelligently using user-level engagement feedback in the way they rank articles.
• In the world of commerce, Walmart has built some modest smarts into its new mobile app. If the app senses that you are in a store, it offers you a store-specific experience, including local ads, rollbacks and new products. We’d love to see Walmart take the next step and provide in-store aisle-level directions so you don’t have to ask an employee where the diapers are stocked.
• We’ve all heard about the holy grail in local: As you walk down the street, you get notified about a special offer on your favorite coffee at the nearby café. While we’ve yet to see anyone actually deliver on this promise in a meaningful way, we’re optimistic that apps like Spindle, which claim to use both personal and contextual signals to push relevant local information, might actually get us there this year.
• Why should consumer apps have all the fun? On the enterprise front, ServiceMax (which Mayfield has invested in) is a company providing solutions for field service management (think Pitney Bowes repairmen). Its mobile app automatically updates a technician’s schedule with incoming service requests, based on parameters like customer revenue, customer and technician location, technician skills and prior interaction with the customer. If you work in a field services organization, this is actually a lot more exciting than having your news organized smarter or getting that surprise special on your coffee.

Why is this change happening now? We see several factors converging to unleash smarter apps:

• Mobile First – Mobile has become the primary entry point for all types of users, who are using smaller form factors with much less real estate, yet want to be able to do the same or more as they do on their desktop. While many companies realized this a couple of years ago (think Facebook implementing mobile-only signup), most apps that go beyond passive consumption are still mere companions to their desktop counterparts. Personalization, context and proactive suggestions are tools to reduce the number of steps required by a user to accomplish a task on mobile.

• Device, Network, and Cloud Infrastructure – Mobile devices are much more powerful in terms of processors, sensors (cameras, GPS, etc.) and improved battery life, always-on cellular or Wi-Fi access is a relatively safe assumption, and low-cost, geographically distributed, high-performance cloud infrastructure (thanks to Amazon Web Services) has enabled analytical processing across vast amounts of data.
• User Behavior – Users are now more willing to share data with apps if they believe that this will result in a better experience for them. It has become quite easy and commonplace for mobile apps to get access into contacts, calendar, location and even services like Facebook and email. EasilyDo (a Mayfield portfolio company) reports that virtually all its users give the app access to their contacts, over 50 percent of its users give access to their Facebook accounts, and over 30 percent of users give access to three or more connections including an email account.

If you’re excited about this new wave of smart apps, join the club. We believe we are just in the first innings in the creation and delivery of smart apps and looking forward to partnering with entrepreneurs building disruptive mobile apps and companies.

This post originally was published on VentureBeat.  Image: Blake Patterson/Flickr

The Customer is Queen:

Actively listening to your customers and rapidly iterating to reflect customer needs has never been so important. From a vendor of cloud-integrated storage appliances to a mobile fashion marketplace, Mayfield Fund entrepreneurs like Ursheet Parikh and Guru Pangal of StorSimple and Manish Chandra of Poshmark, who constantly listen, react and respond to customer feedback, are finding a quick path to customer engagement.

Discover innovation across the value chain:

Innovation extends across the value chain beyond the technology level to product building, distribution and pricing. Entrepreneurs like John Newton and John Powell of Alfresco are using open source models to build products, distributing them through frictionless free SaaS models like Jerome Ternynck of SmartRecruiters, and using break through utility pricing and packaging models like leasing of solar panels by Lyndon and Peter Rive of Solarcity. Identify innovation points across the value chain to rapidly and successfully scale your company.

Focus – start-ups die of indigestion, not starvation:

It’s really easy to lose focus as an entrepreneur with a big vision (or an investor who is presented with many great opportunities). Phil Fernandez has built Marketo into a large and successful business by initially targeting the marketer with a marketing automation application, a category that was dismissed as being too narrow when they first started. Nailing that need first, allowed them to expand and offer a comprehensive revenue performance management platform to the marketing and sales organizations. Sticking to your roots and core competencies will get you to your final destination quickly and with much less heartburn.

Surround yourself with excellence:

As an IIT student in New Delhi, a graduate student at Stanford, a serial entrepreneur whose companies were acquired by Microsoft or went public, as well as a venture investor over the last decade, I have been lucky to be surrounded by brilliant, hungry, hardworking and persistent people. Learning from them has been exciting and rewarding, as together, we have built organizations beyond our personal expectations. Do not fall into the trap of hiring B people as they will hire C people and you will soon find yourself at the end of the alphabet.

Pain killers sell, vitamins do not:

You have to ensure that your company addresses a real pain point of your target customer. Sometimes it takes a while to evolve your idea or even pivot from the original one to nail the real pain, as was the case with Gigya, which was founded as a social widget and application distribution platform with a media/advertising business model. However, they evolved their technology and pivoted to address the much needed and cumbersome task of enabling websites to become social. Their SaaS offering is used by over 500 global businesses to leverage social logins, social apps and game mechanics that create loyalty and engagement with their customers and audiences.

Delight the user:

In an era of “appification” and “consumerization of the enterprise”, products only have seconds in which to captivate and engage users. UX/UI design is playing a critical role in leading social Web e-commerce companies like Fab.com which are providing curated experiences that will let them grow into an Amazon-size platform for design. Learn from these design leaders and do not be afraid to iterate, iterate and iterate until you get it right.

Capital efficiency is a must:

In an era of Big Gulps and multi-billion dollar valuations, it can be hard to go against the mega-trend mentality of the crowd. Do not be afraid to raise small amounts of capital and spend it efficiently so you can prove the product-market fit and the go-to market strategy before raising a lot of capital.

Adapt continuously, as dinosaurs do not survive:

As Eric Ries outlines in his book, The Lean Start-up, the build-measure-learn feedback loop is a new way of thinking about product development and a must have mindset for entrepreneurs today. Dinosaurs became extinct for a reason, so free yourself from old models and stay nimble and in touch with today’s times.
And finally,

Remember that it is a marathon, not a sprint:

One of our most successful enterprise infrastructure companies, 3PAR Data, took over a decade from founding to dominating the category of utility-based storage and being acquired for $2.35 billion by Hewlett Packard. There were many twists and turns along the way, according to their CEO David Scott, but the company stayed focused and patient through them all.

I hope these learnings will help in your journey from founding to fame. Good luck building great companies.

This post originally appeared on SiliconIndia

Far from living by John Wanamaker’s maxim about not knowing which half of advertising spend works, the explosion of measurable real-time data has transformed the world of adtech (advertising technology) away from the traditional “ad” and much further towards the emerging “tech.” Here are some trends we are seeing:

Networks Shift to Platforms: Technology, data, and audience targeting have evolved the world of display advertising from basic ad networks to ad exchanges with real-time bidding in a marketplace. That requires demand-side platforms such as Turn on one side (for brand advertisers) and supply-side platforms like Rubicon Project on the other (for publishers). (Disclosure: Mayfield is an investor in Rubicon Project.) Humans are becoming less involved in decisions to buy and sell ad space, as those trades are made in milliseconds through a market that looks more and more like a Wall Street trading desk. The industry is shifting away from older ad network and agency business models, which investors tend to disdain because of inherent challenges with scalability and arbitrage.

Beyond Google? As advertising becomes more and more about data and technology, Google seems to be in a great position to be dominant, with offerings across the DSP, SSP, mobile, video, and now social space. However, the ecosystem outside of Google is just starting to flex its muscles, and not all publishers are content with giving Google the keys to their user data kingdoms. Yahoo, Facebook, and Microsoft are the knights to save the day as they ramp up efforts to compete, while Twitter is expanding the market with new social ad formats. They are joined by technology vendors like Adobe, Salesforce, Accenture, IBM, and Oracle, who are now starting to get into the game.

Click Through Ain’t Enough: With the rise of multiple new formats of rich, interactive media (including social, mobile, video, gaming, etc.), we need better and more real-time measurement of ad effectiveness and engagement. Tracking basic “clicks” and “page views” are no longer enough in today’s world. The Internet Advertising Bureau has even put forward new display units to keep up with the times. Companies like MOAT (disclosure: Mayfield is an investor) go beyond clicks to measure in-view impressions, in-view time of ads as well as user interactions. Companies like these are terrific examples of next-gen brand intelligence and analytics software-as-a-service (SaaS) platforms that provide deeper insight. Similarly, intent-based search and sentiment analysis are playing important roles in the worlds of search and social sedia.

Point Solutions Squeezed: The market landscape is littered with a plethora of “point solution” adtech startups, usually trying to capture a small percentage of ad expenditures. As a result, these companies face challenging exit opportunities, because their IPO and M&A options are limited, and their valuation multiples are often limited.

However, it’s important to recognize whether a company is building a niche solution or is vulnerable because it’s dependent on a single platform. For example, the entire social media ad agency category looked extremely promising at first, but the leaders ended up getting acquired quickly as the market consolidated in less than 24 months. Meanwhile, the rest of the social ad space never grew much beyond the Facebook platform.

SaaS Rising: The next generation of adtech companies are product/platform plays with a SaaS business model, which benefits from recurring revenues and deeper tech and data defensibility. To be fair, SaaS startups typically take longer to scale up and tend to grow linearly instead of exponentially, but they are less susceptible to the “easy come, easy go” ups and downs of ad networks and performance-based advertising companies. In response, incumbent ad companies are attempting to morph or bolt-on SaaS components to their offerings. The truth is that most SaaS ad solutions are sold as “tech-enabled services” (with the majority of early revenues coming in the form of professional services). Still, an adtech SaaS company that has an underlying technology or proprietary data set that enables it to scale will have stronger appeal for the public markets or a tech-oriented acquirer.

Managing Across Screens: The complexities of managing and measuring multi-platform campaigns in real-time across many screens (PC web, tablet, smartphone, set top box, connected TV, social apps, etc.) is a growing need that is still largely unmet. Today different groups at agencies and brands buy mobile and display ads, and they and aren’t communicating with each other. As a result, there is lost value as most buyers aren’t tracking the user across these different screens. Meanwhile, incumbent ad networks will attempt to expand onto newer platforms, while pure-play startups optimized for each emerging format will seek to land-grab and dominate new territory. Systems that can help advertisers and publishers manage across multiple networks and screen types will be critical.

Consumerizing Adtech: Adtech interfaces have typically been quite dry and non-intuitive (much like enterprise software overall), but we’re seeing the front-ends of next-gen adtech products benefiting from the same beautiful chrome, intuitive design, gamification elements, and mobile app interfaces that consumer software products have adopted. Tomorrow’s adtech offerings will have user interfaces aimed at delighting the worker using them, simplifying their daily workflow, presenting relevant and actionable insights, and perhaps even making the marketer or salesperson’s job more fun in the process.

As we often hear in the boardroom at our adtech companies, trends like these force adtech companies to reinvent themselves — or die — every 18 months or so. It’s a very dynamic and tough space, but it’s poised for impressive growth as advertising extends across all the many new screen types. Furthermore, the exit prospects grow better as the value chain begins to resemble the tech-oriented world of Geek Boys rather than the relationship-based, old-school  world of Mad Men.

Overall, the future for adtech looks promising in our view, and at Mayfield Fund, we continue to hunt for disruptive startups riding these waves.

This post originally appeared on VentureBeat

Photoshop by Tom Cheredar/VentureBeat

Amazon has clearly been leading the way in API-fication by providing a broad range of fundamental software services packaged as APIs. From the basic EC2 compute and S3 storage capabilities, they have expanded to now offer more than 30 services across infrastructure categories of compute, storage, networking, database, deployment/management and messaging. All of these components are incredibly valuable and important, but an application developer still has to construct higher level business processes from these fundamental building blocks. In addition, they have launched the AWS Marketplace, which is a catalog of hundreds of software packages that cover everything from application development to traditional business software. However, this marketplace has only taken the first step in making it easy to install and deploy software applications or stacks as machine images. They haven’t yet enabled third-party companies to provide application components packaged purely as APIs.

We are still in a time of transition. More and more technical organizations are realizing they really don’t want to install and manage software — even if it is running in someone else’s data center. The preferred model is to rely on software service providers who can (and must!) deliver a high quality services. Amazon has proven that developers are quite happy to outsource the data center, and Salesforce.com has proven that end users and IT organizations are content to simply consume a Web-based application — but what about all the layers in between?

Enter business process APIs

Enter the providers of business process APIs.  These APIs have three characteristics that distinguish them from infrastructure-level APIs:

-       They are truly plug-and-go, requiring minimal programming, and thereby approaching the promise of *legofication* that I alluded to in my last post;

-       They are usable by a broader range of developers, beyond the most technical ones, including HTML designers and higher-level coders;

-       By targeting business processes such as payment processing or expense management, they are directly linked to revenue generation.

The following table lists some of the new API services providers (APIsps) who provide packaged business process services. (Note: my company is an investor in Alfresco.)

In analyzing some of the data from ProgrammableWeb, it appears the infrastructure services are those getting the most reuse. Not surprisingly, the basic capabilities of mapping, messaging and search are the top three. However, many of these basic services are free (or very cheap), so they might not drive significant revenue. Those involving search and transactions (Amazon eCommerce and eBay would definitely provide more lucrative revenue opportunities. There is a long tail of services, which I simply aggregated under “Other,” but within that group are undoubtedly some high value business processes.

Moving on from packaged software to SaaS

After years of packaged software use and the transition to open source, applications seem to be well down the path of SaaS-ification, with the next wave involving the decomposition of the various application services into APIs. One of the comments (thanks Darren) on the previous article reminded me about the long path we have been on to properly package these APIs. It all started with portable DLLs and shared libs, and then we went through a bad phase with DCOM and then moved onto to XML and SOAP which were unfortunately too prescriptive and constraining. Thankfully, http and RESTful services emerged to provide a Web-style stateless approach. Each of these iterations has made it much easier for developers, but I am sure there are amazing ways to further improve the packaging and consumption of APIs. The LEGO (Lightweight Enterprise Gadget Orchestration) concept was an attempt to push the community to think about what comes next. And the NextStep Interface Builder idea that I mentioned last time is another area that a bunch of young companies seem to be exploring.

We are still early in the APIsp adoption phase. Entrepreneurs and developers should identify the top business services and work to create elegant and simple ways to drive these processes through code and beautiful end-user experiences.

This article originally appeared on Gigaom.
Image courtesy of Flickr user kennymatic.

The Rise of Vertical: The e-commerce market is large enough to support vertical marketplaces that super-serve consumer needs and are defying the “winner take all” theory that eBay or Amazon will be the only game in town. These vertical marketplaces have tuned the user experience to very specific needs by vertical and are easier to achieve liquidity due to their focus. Examples include Homeaway (vacation rentals), Etsy (niche artisan goods), and OpenTable (restaurant reservations).

Global? Not As Much: The incumbents have not been able to execute a “global playbook” strategy across geographies, as local giants have emerged that offer a customized business model depending on the geography (China: Taobao [has more than 65 percent of the market and growing according to CrunchBase] and India: Flipkart) with many more to come.

Platform Disruption: New platforms such as mobile are proving to be disruptive for incumbents and require a different approach.  Poshmark (a Mayfield investment) is a great example of a vertical women’s fashion marketplace where consumers can list fashion items in their closets in just a few clicks, and any customer can purchase simply and directly from the phone. The ease of listing (via your camera on the phone) combined with the simple viewing metaphor (similar to Instagram but for fashion items to purchase) were purpose-built for this platform.

Offline/Online Marketplaces: We are beginning to see offline models disrupted by online marketplaces, which was very difficult before smartphone, Internet ubiquity, and examples of rapid local scaling like Groupon and Yelp. Craigslist reigned here for a while, but now users demand a simpler, more vertical experience and safety/social identity lacking on that marketplace. That said, these are not easy as they are highly local and require operational excellence in addition to a great mobile/online product. Examples include Uber and Zimride’s Lyft in the transportation space (Mayfield is an investor in Zimride), TaskRabbit for personal services, Postmates for delivery, and Airbnb for real estate rentals.

As a result, there is still a lot of potential for creating game-changing companies that use the marketplace as a model. With the rise of the social and mobile web, today’s marketplaces demonstrate some unique characteristics that entrepreneurs should think about. I’m categorizing six of them under the acronym “ACCESS” – accessibility, curation, community, efficient commerce, simplicity, and symmetry.

• Successful marketplaces on mobile platforms now provide addictive, anywhere – anytime accessibility. The best example of this is OpenTable’s mobile app, which easily lets users find and make restaurant reservations  (almost 10 percent of its cumulative 350 million reservations or 30 million diners have made reservations using its mobile app).
• Marketplaces grow their inventory rapidly by crowdsourcing items, such as eBay or now Etsy, but curation matters more than ever and can come from both data/analytics and social signals. A good example of this is the Showrooms metaphor from Poshmark, which lists 4,000 items daily, but where sellers can showcase their fashion items by “designer,” “theme (evening wear),” or “recently added.” This curation is critical when a customer is mobile and just has a few minutes to be satisfied.
• By adding the social layer, today’s marketplaces build community that goes beyond reviews and ratings of 1.0 marketplaces. This social layer brings true identity to the sellers and buyers and enables interactions regarding advice (and of course purchasing) directly from trusted friends. Importantly, the social layer acts as a powerful free marketing channel, as users show off to friends what they bought or are interested in, build up their personal tastemaker brands, and help friends also interested in the category. (A good example of this is Mayfield investment Fab whose subscribers are proud to show off their design sensibility through the products they have bought. In fact, 50 percent of new Fab users are brought in via social media).
• Efficient and frictionless commerce is a business model that is well understood by users and, for this, Amazon’s one-click commerce still reigns supreme. This is now a must-have in mobile marketplaces. A recent example is Cherry, the on-demand mobile car-washing service, which requires three clicks to find, schedule, and pay for your car wash.
• Using a design-first mentality, today’s marketplaces demonstrate stunning simplicity of use. A good example of this is Exec, a mobile TaskRabbit-type app that allows users to enter the task they need completed and pay for it without much data entry.
• Finally, pioneered by the collaborative-consumption movement, marketplaces are becoming increasingly symmetric, with significant overlap between buyers and sellers, as people rent and share their own belongings – instead of historically a few merchants selling new goods to many, many buyers. A recent good example is Zimride, whose Lyft service in San Francisco — where people offer rides in their own cars — is growing exponentially).

The era of the “mobile social vertical” marketplace has just begun, and entrepreneurs all over the world are creating companies to leverage these foundational behaviors. We are excited to support entrepreneurs in changing the face of e-commerce through next-gen marketplaces.

This article originally appeared on Techcrunch.

Although the majority of API attention has centered on consumer Web services, an emerging cadre of startups are focused on infrastructure and business processes. These newcomers are providing a broad range of critical services neatly packaged as frameworks or APIs. Some of these companies, such as Salesforce and Google Maps, are next generation SaaS providers that have built solutions to serve both end users and developers. Others, including Mailchimp and Twilio, are pure play offerings that solely target developers as customers.

Open source helped to reignite the open systems movement in the late 1990s, which popularized the idea of creating public projects and actively soliciting community feedback and involvement. Tens of thousands of open source projects have been created, but only those projects that built sizable communities have thrived. Most of the large infrastructure software categories were eventually filled by strong open source projects and some spawned successful commercial software companies, including RedHat, XenSource, Sourcefire, MySQL, JBoss, Talend and Alfresco. These companies span a broad range — from operating systems/hypervisors to security to middleware and database/content management.

Developers now expect the same instant gratification as end users. Instead of having to download, configure and manage all the associated software components, more and more of these capabilities need to be packaged “as-a-service” — hence, the move to cloud services. It is also important to remember that software development is an art, and programmers want a very simple and elegant programming interface.

These developer-focused startups provide simply packaged programming interfaces for a wide range of cloud-enabled services — from such basic infrastructure capabilities as storing and retrieving files to much more complex business processes, including invoicing, billing and payment processing. In some instances, startups begin by offering a constrained solution around a key feature/function, but then leverage that starting point to broaden the service into a more complete offering. This is the approach that CloudFlare and Urban Airship took, for example.

Targeting developers is not the only thing these startups are doing differently. Leveraging the inherent distribution of the app economy gives these new companies another intriguing opportunity to disrupt the incumbents. The explosive growth in mobile applications and the associated re-platforming means that developers are rebuilding from the ground up and evaluating new technologies at all layers. In addition, the emergence of so many new languages even further complicates the problems for incumbents. Originally written for the C++ and Smalltalk audiences, one of my favorite programming books of all time, “Design Patterns: Elements of Reusable Object-Oriented Software,” by the famous Gang of Four, has certainly influenced software architects on clean and reusable design abstractions.

Here is a broad, but by no means exhaustive, list of some of the potential infrastructure categories and disruptive companies. (If you want an exhaustive list of APIs check out ProgrammableWeb.) Some of the categories are unfilled by potential disruptors, and other categories include pure cloud services as well as software products. (In a follow-up post, I will share another list that includes a range of higher level business process type services.)

In some ways, this isn’t an entirely new approach. During the Web and client server technology cycles, some successful software companies used a similar model of providing libraries (and even DLLs). Crystal Reports made it extremely easy for developers to embed reporting within their applications; Hummingbird and Wollongong offered (TCP/IP) networking stacks; Visigenic provided (ODBC) database libraries/drivers; and Neuron Data and PowerBuilder provided platforms for user interfaces. These examples show that it was possible to build successful businesses at all levels of the software stack.

Consequently, APIs are only the latest packaging as developers transition from objects and class libraries to RESTful services. However, it seems that the promise of service oriented architectures is finally being realized, and it is creating a strong opportunity for innovative business models.

So what does all this mean? Client-server software was replaced by on-premise Web-based apps, which are in turn being replaced by cloud/SaaS solutions. Perhaps the next generation of software will be solutions composed from these APIs/services. All of these exciting startups are proving that developers need — and want — these services. But ultimately, building complete solutions might require a LEGO-like construction kit. Is the future of software about Lightweight Enterprise Gadget Orchestration? Perhaps, there is even an opportunity for someone to provide an Interface Builder (remember NextStep?) that can natively access the myriad of emerging SaaS/APIs.

This article was originally published in Gigaom.

Gamification is expanding beyond the initial verticals of media and fitness: The next target verticals are education, eCommerce, local retail (example: Belly), and financial services.

Gamification is not just for consumer end users, but also corporate employees: Corporations can not only gamify their products and services for consumers and end users, but also leverage game mechanics to make work more fun, measurable, productive, and rewarding for internal employees. In fact, the internal enterprise-facing gamification market may turn out to be just as large (if not larger) than the consumer-facing opportunity, given the budgets and SW/SaaS spending involved with worker productivity.

Companies that let customers embrace gamification in baby steps will win: Rather than slamming existing and new users into a fully gamified experience out of the gate, companies may want to allow users to opt in to the game mechanics that they find most compelling and appealing. After all, different personalities “play” in different ways, and a common mistake for businesses is to assume that a single gamification element will appeal universally to all users. That said, simply bolting on gamification-lite to an existing business is likely to flop (remember when many companies attempted to add in avatars or virtual currencies because it was the trend at the time?) Companies should first think about their key business goals and target outcomes, match appropriate game mechanics to these goals, and then weave them into the user experience as seamlessly as possible — even if this means allowing users to initially opt-out or not engage in gamification elements.

Gamification needs to address all four phases of the user life-cycle: Think about leveraging game mechanics to facilitate and graduate users along each specific phase of the user experience: 1) new user onboarding (gamification is an excellent way to implement interactive tutorials); 2) user engagement; 3) conversion of free users to paid (or opt-in data sharing); 4) retention of power users. Remember that different mechanics are best suited for certain personality types and phases.

Gamification and Social often go hand in hand: Just as games come in single-player and multi-player flavors, gamification can be oriented towards solo or social play. For many companies, implementing gamification may first require installing social plumbing. As an example, Mayfield portfolio company Gigya (www.gigya.com) is a SaaS social infrastructure company that provides a suite of tools (like Social Login) that enables any business to add a social layer to their Web presence. Interestingly, they have found that users who are logged-in with Social Login spent 30% more time on-site than users who sign in with native site login. Customers like Pepsi use Gigya to build custom co-viewing experience sites for Pepsi-sponsored TV shows like The X-Factor, The Grammies and the SuperBowl, allowing users to collect “caps” (badges) and gain social ranking by commenting, sharing, and liking other users’ comments. Verizon Wireless created a community site of local events called VerizonInsider, where users are rewarded with points and badges for interacting with content.

Gamification design is about to emerge as a specific skill set: There’s likely to be a whole new talent pool trained at places like Playdom and Zynga that will be branded as “gamification designers” – many of our portfolio companies are already actively hunting for such people!

The possibilities for gamification are universal and endless: Every aspect of the human experience is a journey of sorts, meaning that there is a learning and leveling curve, a start, mid-point, and end goal…and multiple ways and strategies to reach the destination. Gamification should be thought of as helpful signposts, markers, scorecards, feedback loops and treats to guide the user along the way, show him or her different ways to “play” and provide hints as to what may be behind choice A, B, or C that they’re about to make.

Note to Entrepreneurs: Please avoid the “gamification as panacea” trap, tacking gamification as a “badge” onto every pitch, as VCs can see through this, just as consumers will shun bolted-on game mechanics.

We will be hosting an interactive evening workshop on gamification and game mechanics on June 6 at the Mayfield Fund offices on Sandhill Road, which will cover a broad range of topics including consumer motivation, leveling curve designs, pros and cons of various gamification tools; freemium conversion tuning for microtransaction and subscriptions; and using the seven deadly sins as a design framework.

We have reserved 10 spots for TechCrunch readers/entrepreneurs.  To be considered, please comment and share this post to Facebook and we will pick the folks who we think will benefit the most from the discussion.

This post was originally published on TechCrunch.

Gaming has gone mainstream: Many sub-two-year-olds have played with a touch screen, and games are the No. 1 form of entertainment for the under-25 crowd.

Discoverability is still elusive: There is at least one game that is relevant to each of us, whether Call of Duty, League of Legends, Words with Friends, or whatever your taste might be. And many of the hidden gems on platforms like social, browser, and mobile are still hard to find.

Gaming has become a conversation: With the onset of cloud gaming, the activity has gone beyond an isolated, immersive experience to a dialogue between players themselves, as well as between the player and the game developer/publisher (with ongoing content and item additions as iterative weekly “expansion packs,” as well as games operators studying emergent player behavior and quickly productizing around unexpected use cases). The freemium business model accelerates the need to shift from a priced, pre-packaged offering to a free2play service that’s server-driven, and terrific companies like Gaikai, Riot Games, and Kixeye have taken established genres and evolved them with new formats (in-browser, on Facebook, digital download) and new business models.

Mobile is the new creative playground: With consoles, TVs and set-top boxes opening up platform and network APIs and becoming increasingly cloud-connected, and with the ubiquity of mobile devices, gaming can still create “indie” sleeper hits vs. the Hollywood model of four dominant studios with a handful of tentpole blockbuster franchises – look at the success of Angry Birds as a starting point. Tablets are especially ripe for richer game experiences, including “midcore” gaming with RTS and RPG genres.

Gaming pushes the boundaries of technology and spurs innovation: The gaming industry has piloted tech innovations like IM, gesture control, and 3D graphics, which are being used by mainstream consumers. One of our companies, Couchbase, recently provided the noSQL database platform that supported the rapid growth of OMGPOP’s Draw Something from zero-25 million users in six weeks.

Gamification – leveraging game mechanics for non-game purposes — will disrupt many industries: The era of gamification tools, such as badges, leaderboards, levels, “missions,” and scores, is going to turbocharge end-user acquisition, onboarding, engagement, retention, and conversion in fields ranging from health, wellness, fitness, and nutrition to financial services, HR, and customer support work. And gamification will provide game designers with new professional opportunities and creative outlets to make a big impact by applying their gaming chops outside of the games industry. As an investor, I’m excited about the potential of learning from gaming to design microtransactions and freemium conversion models (leveraging behavioral economics, social psychology, and the 7 Deadly Sins as a design framework) that help us monetize other media like movies and music. This is what led me to invest in enterprise gamification companies like Badgeville, which is killing it as a SaaS company (much like Salesforce.com did for CRM systems, Omniture for basic web analytics, and Mayfield SaaS portfolio companies Gigya and Marketo are doing for social infrastructure and marketing automation, respectively).

Each of us has that picture of who we want to be and where we want to go. This is the version of ourselves we want the world to see. Convincing others that there is no gap between that image and our real selves used to be the domain of public relations professionals and doting parents. But in this era of social networks and constant connectivity, we all take the reins of our own reputations.

This brings up what I refer to as the “Aspirational Self.” It’s what we do when we post to Facebook or Twitter — constructing and branding the person we want to be seen as, by portraying our most desirable qualities. You tweet on the Saturday night when you’re at the club with Kanye, not the following Saturday when your date cancels and you wind up doing the laundry you’ve put off for two weeks. (In many ways, social media itself is an implicit “game,” in which failed status updates and tweets are the ones which attract no comments or likes…)

Quantifying the Aspirational Self

So how do we further our Aspirational Selves? On social networks, we solicit “likes,” “shares” and “follows,” which are forms of approval and validation by others. Tallying those affirmations enables us to be ranked, attract a following, and achieve more perceived respect. This same need and new ability to practically measure and score our lives are what drives the Quantified Self movement.

The Aspirational Self and the Quantified Self dovetail to create a kind of feedback loop that drives self-promotional behavior in the user on social networks. Some of the smartest new companies have taken this aspect of the social networking explosion and used it as leverage on consumer behavior. The results are striking.

Bringing it to market

The healthcare industry has always sought effective ways to motivate patients to actively improve their habits. With that goal in mind, Healthtap enables consumers to ask questions of more than 10,000 certified U.S. doctors through a free mobile app. But despite how impressive and useful this is for end users, the company’s real spark of genius lies in how they leverage the root desires of the doctors through this notion of the Aspirational Self.

Doctors carefully answer consumer questions in the hopes of attracting “Agrees” from their peers. It’s a participation model driven not by monetary incentives, but instead by the identification and public validation or their individual sub-specialties. It turns out that while doctors may care what consumers and patients think of them, they care even more about what fellow physicians think of them. The more doctors “level up” in their specialties, the more their expertise and status is highlighted, leading to a better “score” that can be seen by other doctors and patients — an important consideration in attracting new patients or winning respect from fellow healthcare professionals.

Beyond the health sector, we’re starting to see the Aspirational Self being used to engage consumers in other areas of their lives.

Poshmark, a fashion app that enables users to sell their clothing directly to other users, takes what people do offline and heightens the experience with more measurable behaviors. People can host virtual “trunk shows” that many users can attend online. To attract enough buyers to their shows, hosts actively build up their reputation in the Poshmark community through likes, agrees, and followers. Aspiring fashionistas—or just women who want to sell a seldom-worn skirt—can become curators and emerging style icons, building up a following of their own, just by using the app regularly.

Multiplayer Marketing

We’ve reached the era of the Quantified Self — and quantified respect, too. Facebook and Twitter helped set this loose, and now it’s time for entrepreneurs to harness it and make it work. The implications for advertising are huge–what better way for a product or brand to reach new users than a recommendation from a consumer rated as an expert by his peers?

The implication for the consumer and his Aspirational Self are just as huge. If I buy one pair of an exclusive run of 200 Air Jordan sneakers, the first thing I’m going to do is tell people I got them. The purchase and the subsequent sharing of that purchase both become steps in attaining that Aspirational Self. Product promotion and self-promotion become intertwined, and, as the old ad slogan goes, they’re two tastes that taste great together.

This post was originally published in TechCrunch