if you’re an avid reader of this blog, you probably know that I have a very strong interest (some would say an obsession) with Alexander Hamilton.

knowing this, reader (and world class entrepreneur) Scott Faber sent me this Alexander Hamilton song that was performed recently at the White House:

Settlers
of Catan, a hyper-social strategy board game, has become the new “in” thing
in Silicon Valley.  My guess is that more
Silicon Valley elites play Settlers than play golf.

Playable by people of any age, golf was once the king of all
social games. Although viewed by Venezuelan
President Hugo Chavez as a “bourgeois” form of entertainment that should be
eliminated, the sport has traditionally been the go-to game for people –
especially those in the business world – who enjoy socializing through recreational
activities.  

But in Silicon Valley, golf is mostly dead. It is a game
that a few people enjoy and the rest of us have heard of but probably haven’t
played.  Sure, some venture capitalists play
golf, but mostly with each other. While there are some entrepreneurs enjoy playing
golf, just as many enjoy kite-surfing, snowboarding, road biking, running, and
yoga.  

I recently attended a high-level technology conference that
was held right next to a beautiful golf course.  In my unscientific poll of about 30 attendees,
only one actually went golfing, and over half had never golfed in their life.

In contrast, Settlers of Catan (or “Settlers,” as it’s often
called) is booming and is quickly becoming the activity of choice for entrepreneurs
here in the Valley. I got into Settlers because Reid Hoffman, the founder of
LinkedIn, had been telling me about what a great game it is for over a year.  Then one day, some of the engineers at Rapleaf
(most of whom had been playing Settlers since college) challenged me to play
with them, and I’ve been hooked ever since.

It wasn’t long after my Settlers initiation before I began
to discover Silicon Valley technologists meeting and huddling over the board
game. In fact, there might even be a high correlation between technology
innovation and Settlers play – some of Silicon Valley’s most talented players
include Mark Pincus, Zynga CEO; Marissa Mayer, Google’s VP of Search; Randi
Zuckerberg, Facebook executive; Barney Pell, Powerset founder; Tod Sacerdoti, BrightRoll
CEO; Saar Gur, Charles River Ventures partner; Scott Faber, Ingenio founder; Erin
Turner, Level Up founder; Ellen Levy, LinkedIn VP; super-angel Aydin Senkut; Ken
Sawyer, Saints Ventures CEO; John Lilly, Mozilla CEO; Matt Sanchez, Videoegg
CEO; Dave Wehner, Allen & Company managing director; Kavin Stewart, LOLapps
CEO; and many others.

But it is not just Silicon Valley stars who are contributing
to Settler’s growing adoption – many engineers and young founders play too. In the
Valley, where geeky is “in,” Settlers is going mainstream.

Reasons for Settlers’ success include its variety for winning
tactics, easy-to-understand rules, and its relatively quick and balanced game
play. For a more comprehensive overview of the game and its inventor Klaus
Teuber, please read the wonderful
piece that Andrew Curry wrote in Wired earlier this year (a must read).

At Rapleaf, Settlers has – along with karaoke and our yearly
camping trip – become something of a company activity, with people here creating
late-night Settlers pick-up games.  And
last month, Rapleaf and StumbleUpon (another “Settlers company”) got together
for a night of Settlers.

While Settlers’ game play is already pretty sophisticated,
Rapleaf players have embraced Silicon Valley’s innovative culture and started
adding in their own rules to make the board game even more complex, yet more
balanced, often forcing people to be even more creative in their tactics. You
can try for yourself by adding futures and other instruments into your next
Settlers game.

In the high-stech world of Silicon Valley, there is
something wonderful about an enjoyable low-tech game made from cardboard, dice,
and wooden pieces.  It reminds me of my youth,
a period in which many of us started with Monopoly/Clue, moved to Dungeons and Dragons,
and ended with Risk and poker.  

“Geeky” games have traditionally been male dominated and have
only appealed to the most dedicated players.   Thanks to its game play, however, not only
does Settlers have tons of female supporters, but it also appeals to people of
all ages.  Many people claim other games
like Ticket to Ride and Puerto Rico are much better, and they may be. But part
of a good recreational activity is having a lot of people to play with and, in
that regard, Settlers has certainly crossed the chasm in Silicon Valley.

We tend to behave similar to our friends. Generally
speaking, we like the same music, wear the same clothes, share the same
hobbies, eat similar types of food, and even vote in a similar fashion. Now,
there is evidence that we even like to use the same mobile phone service.

Michael Driscoll, founder of data analytics firm Dataspora,
studied over 2.4 million customers of a major mobile carrier and found that people
have a surprisingly strong influence on the service provider of their immediate
caller network (defined as the friends and family who the person calls at least
once a month for over one minute).  In
fact, Driscoll found that users who cancel service from the telecom company are
600% more likely to be within each others’ caller network, or directly
connected, than one would expect by chance. In other words, if you leave your
cell phone service provider, the chance of your friends and family also leaving
the service provider is significantly higher.

But is the contributing factor really social influence? Or
are these findings just a byproduct of the prevalence of family plans in which
entire groups of subscribers quit together?

To find out, Driscoll looked at cancellations within caller
networks one month apart since family plans customers switch carriers at the
same time.  His findings suggest that
family plans only explain part of the collective behavior, and that users
within the same caller network have significant influence over one another’s
phone service provider.

Driscoll discovered that a customer is twice as likely to cancel their phone service and three times as likely to port-out their
phone service to another provider if someone within their network had canceled
or switched carriers one month earlier. For the phone service provider, this
means that a departure by a few can quickly and easily turn into a mass
migration towards a competitor’s services.

 Some of this might be
explained by similar people leaving to get a new phone (like an iPhone) that is
exclusive to another carrier.   But only
some of the exodus can be attributed to something positive about another
carrier – dissatisfaction with one’s current carrier is another significant contributing
factor.

Telecom companies today seem to approach customer retention
efforts reactively, often offering last-minute promotions or free upgrades to
sway customers on the cusp of cancellation. Based on Driscoll’s findings, a
supplementary and cost-effective action phone service providers could take is
to proactively offer discounts or service enhancements to customers in a recent
canceler’s caller network, especially to customers with large networks
themselves.

While these exact findings are specific to the mobile
carrier and its customers, there are several lessons that all businesses can
learn about taking care of customers and customer retention.

First, take good care of your customers (especially your
best and most-connected ones). Your customers can be your biggest billboards
and will help you draw in even more customers, but they can also be your
biggest enemy and drive away both current and potential customers. To prevent
the latter, make sure you offer your customers – especially your VIPs –
exceptional customer service.

Second, try reaching out to the friends of customers you
lose. This may be done more easily for certain businesses than others since
networks within a customer base are usually not known. Companies unsure of
relationships between customers should (1) ask for or incentive customer
referrals or (2) use an outside service to determine customer social graphs and
friend connections.

Birds of a feather do many things together – including
leaving you for competitors.

(special thanks to Michael Hsu
for his help in writing and editing this piece)