Yesterday we published Part 1 of our interview with Philip Jacob, founder of Cambridge, MA-based StyleFeeder, and Shergul Arshad, the startup’s vice president of business development. The two men talked about the remarkable growth of the personalized shopping site, which has taken in $3.5 million in venture capital since 2007 and is already profitable. In Part 2 below, Jacobs and Arshad share their changing perspectives on Facebook (where StyleFeeder has a popular third-party shopping application), the evolution of the company’s machine-learning technology, and the different ways StyleFeeder caters to male and female audiences.
Xconomy: You said you had a million registered users. Does that include all the people who access StyleFeeder from inside Facebook?
Shergul Arshad: No, if you count Facebook the number is much higher. 2.5 million people have installed the StyleFeeder app on Facebook. But usership goes up and down depending on the latest bug or redesign that Facebook is going through. It’s not fair to count all those.
X: How important is Facebook for you these days as a channel? At one time it was your main source of new members, wasn’t it?
Phil Jacob: It’s no longer what it once was. Facebook has really deemphasized applications through a series of user-interface changes that make it impossible at this point to scale to the level that a Slide or a RockYou got to. We still have people using it, and there is this viral nature where people can see what other people have posted to their Facebook feed, and it does drive some traffic, but the window of opportunity for third-party apps is gone. But it was a huge success for us, in terms of driving awareness and registered users. It was the single best thing we’ve done from a growth standpoint.
X: What are your thoughts about the direction Facebook has taken?
PJ: It’s interesting. They have this “verified app” program, and we just got rejected, even though we are the largest shopping app on Facebook, because we have clothes on our site, and one of the pieces of clothing we have are thongs. Out of 14 million products, that is the one that got us rejected.
So Facebook is in a weird situation. I think they are struggling for a number of reasons. Their capital costs are just crazy—at one point they were spending $2 million a week just on new storage for their photos…I don’t want to get into an East Coast versus West Coast thing, but I think there is also a difference in mentality that occurs when you actually start focusing on revenue. Everybody can get aligned behind that; we can have conversations with investors and the conversations are so much easier because they’re not asking who are you, what are you—the numbers are there. But if you keep changing your goal as time goes on, there’s always some other metric that seems to be the important one. Facebook seems to keep shifting, which I think is dangerous for them.
X: Their most recent redesign seems to have been conceived to make them more like Twitter—which, ironically, is another West Coast startup without a revenue focus.
SA: It was publicized that they at one point wanted to buy Twitter, and it seems like somebody pretty high up within Facebook said, “If we can’t buy them, we can clobber them at their own game.” I think, personally, that has caused a lot of backlash. People use the tools in different ways. I used to benefit from both Facebook and Twitter greatly, but I think Facebook is starting to be in a position where by constantly prompting people for status updates, you just get more and more inane banter. By suppressing the third-party apps, Facebook is in many ways biting the hand that was feeding them. With an app like poker, a lot of college-aged people can play poker all day, and that was driving page views and ad sales, which is their core revenue model. But if you suppress poker in favor of inane banter, you’ve put the page views toward banter creation versus extracting value.
X: At the beginning, a big part of StyleFeeder’s story was around the machine-learning algorithms that Jason Rennie from MIT built to power your recommendation engine. Have you continued to refine and tweak that engine?
PJ: We don’t make dramatic changes to it. It works quite well the way it’s built. What I’m more interested in—and we have a big effort ongoing right now, with a product launch coming in another six weeks or so—is understanding more about the products we have on the site. We have thousands of data feeds coming to us, and as you might imagine, there is a varying level of data quality between Amazon at one end and
