Disclaimer: although I am a (recent) Google employee, I have nothing to do with the Google+ team or product strategy. My opinions are my own and not Google's. I have been using Google+ since end of May. 

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Google+ is clearly Google's best attempt yet in entering the social ecosystem. In fact many people, including myself, are actually quite surprised at how good of a first version it is. Some of us had given up on Google doing anything interesting in social. 

But IMO, the feature touted as the biggest innovation of Plus -- Circles -- is also its biggest drawback, and could turn into the achielles heel that hampers the growth of the social network.

What's wrong with Circles?

Google+ asks users to manually organize their connections into groups (Circles). While privacy is definitely a big positive of this design, and pretty much the reason Google+ does this, there are some serious negatives.

A major annoyance with the Circles feature is the need for a lot of upfront work, and ongoing maintenance. Others (@Kevnull | Yoav Shoham | @FastCompany) have also written about the tediousness of this task, and the inevitable inaccuracy of the result.

The tedium is easily apparent to anyone who's been on Google+ for the last few weeks. I have ~800 friends on Facebook. The thought of adding them all to Google+ and painfully categorizing them into Circles is daunting enough for me to not have attempted that task. In fact the majority of my connections on Plus are in my "Following" Circle - people I dont know at all but follow their posts, filled with primarily the same people I follow on Twitter already. I would be willing to bet that if Google published results of Circles created by Plus users, we would see that only a small fraction of users have bothered to create any Circles of their own beyond the default ones (Friends, Family, Acquaintances, Following).

As for the inaccuracy - few relationships in life are permanent (only family.) Co-workers leave for other companies, friends move to other cities or become not as close, even husbands and wives break up. For Google+ to work as intended, all of these relationship changes will require users to manually update their Circles. I highly doubt that the vast majority of users - like the 750 million currently on Facebook - will bother with this level of maintenance of their digital relationships. And this innaccuracy will have serious privacy implications, thereby negating the only real reason for Circles. (e.g., I continue sharing stuff meant for Google coworkers with my Googlers Circle, while half of them have left Google for competitors.) 

But wait, there's more... like how the hell does this work?

There are further issues around the sheer confusion of how Circles work and what you can and can't do with them. Circles seem to be closest to Twitter lists. They are great for filtering your inbound stream but useless for sharing out. I can easily see what my Photographers Circle has shared today, but if I wanted to share my latest photo project with them, I cant - some of them may not have added me to their Circles, and those who have may not have added me to their photography Circles, etc.

What if I wanted to discuss party planning options with my closest girlfriends for one of our friend's baby shower? It is pretty near impossible to figure out how to do that on Plus... in fact it may actually *be* impossible. If you know how to do this - please enlighten me! On Facebook - you simple start a message thread with the 5 friends you want to do this with. Since friendship is a 2-way street on Facebook, you can private message any of your friends. But on Google+ Circles are a one-way relationship (like Twitter) so you can't private message anyone. But shouldn't Plus at least have the equivalent of Twitter's DM?

I could go on and on... 

Implicit Circles may be an answer...

I am not pretending to have answers to the Google+ Circle problem, but at least part of the answer may be implicit, algorithmically created Circles. For a company as obsessed with the algorithmic solution to any problem as Google is, I am surprised they did not build at least some algorithms around Circle creation and maintenance into Plus. Something like: use my corporate email and school email to automatically create and maintain my co-workers and classmates Circle -  is so obvious that it seems strange that its missing. But beyond that, Google could use my location, interests, events, and contact frequency with connections to automatically create or at least suggest Circles for me. This would at least take the tedium of categorizing all your connections upfront and further maintaining them out of the picture.

As for the confusing way Circles are structured, a much needed feature is a concept of "Shared Circles" or groups that apparently Google is already working on.