kottke.org posts about business

You should consider subscribing to WikipediaOct 17 2014

Last week, Emily Dreyfuss wrote a piece at about Why I'm Giving Wikipedia 6 Bucks a Month.

"Give me money, Emily," Wales begged, "then go back to researching Beyonce lyrics."

"Excuse me, Jimmy," I wanted to say, "I don't appreciate being watched as I read about how her song "Baby Boy" includes a lyrical interpolation of "No Fear" by O.G.C."

Later, Wikipedia replaced Wales with other employees of the Wikimedia Foundation, which maintains Wikipedia with grants and donations. They moved me about as much as Wales did, which is to say not at all.

Today, while scanning my third Wikipedia article in as many hours, I saw the beggi.... er, note was back. It's at the bottom now, without the pleading visage of a Wikipedian, and now includes an option to pay monthly.

I was annoyed, again. That's the first instinct of anyone who spends time on the Internet and is constantly bombarded by pleas for money. But then I realized something: My annoyance was a symptom of my dependence on Wikipedia. I rely on it utterly. I take it completely for granted.

I found her argument persuasive, so much so that I just signed up to give Wikipedia a monthly amount as well. I consider it a subscription fee to an indispensable and irreplaceable resource I use dozens of times weekly while producing kottke.org. It's a business expense, just like paying for server hosting, internet access, etc. -- the decision to pay became a no-brainer for me when I thought of it that way.

Do other media companies subscribe to Wikipedia in the same fashion? How about it Gawker, NY Times, Vox, Wired, ESPN, WSJ, New York Magazine, Vice, Washington Post, The Atlantic, Buzzfeed, Huffington Post? Even $500/month is a drop in the bucket compared to your monthly animated GIF hosting bill and I know your writers use Wikipedia as much as I do. Come on, grab that company credit card and subscribe.

The Chinese black market iPhone tradeSep 20 2014

Casey Neistat visited several Apple Stores in NYC on the eve of the iPhone 6 launch to observe the folks standing in line. He found that many of those in line, particularly right in the front, were Chinese resellers.

The iPhone 6 won't be available in China for several months, so a lively and lucrative black market has sprung up. The video shows several typical transactions: two phones (the maximum allowed per person) are purchased with cash and then the people sell those phones to men who presumably have them shipped to China for resale.

I remember last year, when the iPhone 5s came out, there was always a line of mostly Asian people outside the Soho store in the morning, even months after the launch. (via @fromedome)

Microsoft buys MinecraftSep 15 2014

Mojang's popular game Minecraft has sold over 54 million copies. But that, and the $2.5 billion that Microsoft just paid to acquire the company, dramatically understates the impact that this game has had on [Dave Pell's] third grader and his friends. They all wear Minecraft gear and watch Minecraft videos on YouTube. And several of them completed a week of Minecraft Camp over the summer. The way I see it, $2.5 billion just became the most anyone has ever spent on a babysitter.

The Verge: Why parents are raising their kids on Minecraft.

Markus Persson, the founder of Mojang (known as Notch), explains why he's selling -- and leaving -- the company: "It's not about the money. It's about my sanity."

Shake Shack IPOSep 05 2014

Dang! It looks as though the Shake Shack is gonna IPO at a value of $1 billion. (BTW, $1 billion would buy you about 210 million ShackBurgers.)

At that level, Shake Shack would debut at 50 times projected earnings of about $20 million this year, the people said, asking not to be named because the details are private. The company has tapped JPMorgan Chase & Co. and Morgan Stanley to manage the share sale, said the people.

That valuation would put it in line with other dining chains that have tapped into investor appetite for new stocks in recent years. El Pollo Loco Holdings Inc. (LOCO), which raised $123 million in July, now trades at about 60 times projected 2014 earnings, while Potbelly (PBPB) Corp. trades at over 64 times estimated earnings, data compiled by Bloomberg show.

The Shack has about 50 locations worldwide. But their flagship Madison Square Park location will be closing for a few months soon for renovations...hopefully they'll have it back open for the IPO.

The last blockbuster syndromeAug 07 2014

Using Motorola, Nokia, and Nintendo as examples, Tero Kuittinen explains how dominant tech companies are lulled into "a comfy trip to the grave" by huge but ultimately short-lived successes before new paradigms take over.

For years, Nintendo has believed it could reject smartphone and tablet apps, yet still flourish. The reason for this delusion is familiar -- it's the toxic Last Blockbuster Syndrome that doomed the consumer electronics divisions of Motorola in 2004 and Nokia in 2007. Often at the start of a massive trend shift in consumer electronics, dominant dinosaurs get one massive hit built on a nearly obsolete paradigm, and that allows them to be lulled into a comfy trip to the grave.

The best example from the past few years is when Motorola, Nokia, and RIM were flying high with their phone products when the iPhone came along and changed the game.

Trending: insider tradingJun 17 2014

A new study finds that insider trading is much worse than commonly thought: a quarter of all public company deals may involve some kind of insider trading. From the NY Times:

The professors examined stock option movements -- when an investor buys an option to acquire a stock in the future at a set price -- as a way of determining whether unusual activity took place in the 30 days before a deal's announcement.

The results are persuasive and disturbing, suggesting that law enforcement is woefully behind -- or perhaps is so overwhelmed that it simply looks for the most egregious examples of insider trading, or for prominent targets who can attract headlines.

The professors are so confident in their findings of pervasive insider trading that they determined statistically that the odds of the trading "arising out of chance" were "about three in a trillion." (It's easier, in other words, to hit the lottery.)

Only about 5% of the deals are ever litigated by the SEC. (via mr)

Something only Apple can doJun 16 2014

An instant classic John Gruber post about the sort of company Apple is right now and how it compares in that regard to its four main competitors: Google, Samsung, Microsoft, and Amazon. The post is also about how Apple is now firmly a Tim Cook joint, and the company is better for it.

When Cook succeeded Jobs, the question we all asked was more or less binary: Would Apple decline without Steve Jobs? What seems to have gone largely unconsidered is whether Apple would thrive with Cook at the helm, achieving things the company wasn't able to do under the leadership of the autocratic and mercurial Jobs.

Jobs was a great CEO for leading Apple to become big. But Cook is a great CEO for leading Apple now that it is big, to allow the company to take advantage of its size and success. Matt Drance said it, and so will I: What we saw last week at WWDC 2014 would not have happened under Steve Jobs.

This is not to say Apple is better off without Steve Jobs. But I do think it's becoming clear that the company, today, might be better off with Tim Cook as CEO. If Jobs were still with us, his ideal role today might be that of an eminence grise, muse and partner to Jony Ive in the design of new products, and of course public presenter extraordinaire. Chairman of the board, with Cook as CEO, running the company much as he actually is today.

This bit on the commoditization of hardware, and Apple's spectacularly successful fight against it, got me thinking about current events. Here's Gruber again:

Apple's device-centric approach provides them with control. There's a long-standing and perhaps everlasting belief in the computer industry that hardware is destined for commoditization. At their cores, Microsoft and Google were founded on that belief - and they succeeded handsomely. Microsoft's Windows empire was built atop commodity PC hardware. Google's search empire was built atop web browsers running on any and all computers. (Google also made a huge bet on commodity hardware for their incredible back-end infrastructure. Google's infrastructure is both massive and massively redundant - thousands and thousands of cheap hardware servers running custom software designed such that failure of individual machines is completely expected.)

This is probably the central axiom of the Church of Market Share - if hardware is destined for commoditization, then the only thing that matters is maximizing the share of devices running your OS (Microsoft) or using your online services (Google).

The entirety of Apple's post-NeXT reunification success has been in defiance of that belief - that commoditization is inevitable, but won't necessarily consume the entire market. It started with the iMac, and the notion that the design of computer hardware mattered. It carried through to the iPod, which faced predictions of imminent decline in the face of commodity music players all the way until it was cannibalized by the iPhone.

And here's David Galbraith tweeting about the seemingly unrelated training that London taxi drivers receive, a comment no doubt spurred by the European taxi strikes last week, protesting Uber's move into Europe:

Didn't realize London taxi drivers still have to spend years learning routes. That's just asking to be disrupted http://en.wikipedia.org/wiki/Taxicabs_of_the_United_Kingdom#The_Knowledge

Here's the relevant bit from Wikipedia about The Knowledge:

It is the world's most demanding training course for taxicab drivers, and applicants will usually need at least twelve 'appearances' (attempts at the final test), after preparation averaging 34 months, to pass the examination.

Uber, in this scenario, is attempting to be Microsoft in the 1980s and early 90s. They're implementing their software layer (the Uber service) on commodity hardware, which includes not only iPhones & Android phones, mass-produced cars of any type, and GPS systems but also, and crucially, the drivers themselves. Uber is betting that a bunch of off-the-shelf hardware, "ordinary" drivers, and their self-service easy-pay dispatch system will provide similar (or even better) results than a fleet of taxi drivers each with three years of training and years of experience. It is unclear to me what the taxi drivers can do in this situation to emulate the Apple of 1997 in making that commoditization irrelevant to their business prospects. Although when it comes to London in particular, Uber may have miscalculated: in a recent comparison at rush hour, an Uber cab took almost three times as long and was 64% more expensive than a black cab.

Restaurant ticketing systems are a hot ticketJun 09 2014

Alinea stats

For three years, Nick Kokonas's trio of eating/drinking establishments in Chicago (Next, Alinea, and Aviary) has been using a ticketed reservation system. In this epic piece, Kokonas details why they started using tickets and what the effect has been (emphasis mine):

Our ticket implementation strategy at Alinea was to create a "higher-touch" system than we had previously used at Next. Every customer buying a ticket at Alinea must include a cell phone number where we can reach them. About a week before they dine with us we call every customer to thank them for buying a ticket to Alinea, ask if they have any dietary restrictions or special needs, and generally get a feel for their expectations and whether it is a special occasion. We can, in fact, spend more time (not less) with every single one of our customers because we are only speaking with the customers we know are coming to dine with us. Previously, we answered thousands of calls from people we had to say 'no' to. Now we can take far more time to say 'yes'.

The results on Alinea's business are staggering. Bottom line EBITDA profits are up 38% from previous average years. No shows of full tables are almost non-existent and while partial no-shows still occur they are only a handful of people per week at most. That allows us to run at a far greater capacity with less food waste and more revenue.

Will be interesting to see if more restaurants adopt this model...I bet a bunch of restaurateurs' eyes lit up at the 38% increase in profit. But not every restaurant is Alinea and not every restaurateur is a clever former derivatives trader.

50 Cent, life coachMay 27 2014

Let's talk cultural mesofacts. You likely recall 50 Cent as a rapper In Da Club but much has happened since then. 50 diversified like crazy: started a record label, parlayed a possible Vitaminwater endorsement into an investment worth $100 million, and, relevant to the matter at hand, wrote several books, including a pair of self-improvement books: Formula 50: A 6-Week Workout and Nutrition Plan That Will Transform Your Life and The 50th Law. Zach Baron recently recruited 50 Cent to be his life coach for a GQ piece and it ends up going way better than he expected.

50 Cent thinks for a minute. Actually, he says, my girlfriend -- the one I just mentioned, the one I'd just moved in with? 50 Cent would like her to make a vision board, too. Then we're going to compare. "Take things out of your folder and things out of her folder to create a folder that has everything," he says. "Now the vision board is no longer your personal vision board for yourself: It's a joint board." That joint board will represent what we have in common. It will be a monument to our love.

But there will be some leftover unmatched photos, too, in each of our folders. And that's what the joint board is really for -- what it's designed to reveal. "The things that end up on your vision board that aren't in hers are the things that she has to accept," 50 Cent says. "And the things that she has that you don't are the things that you have to make a compromise with." In a healthy relationship, he explains, your differences are really what need talking about. This is how you go about making that conversation happen.

This article just keeps getting better the more you read it. (via @ystrickler)

Hachette job: Amazon UnprimeMay 23 2014

Internet mega-retailer Amazon is trying, mob-style, to pressure Hachette for better terms on ebooks by disappearing the publisher's book from amazon.com.

The retailer began refusing orders late Thursday for coming Hachette books, including J.K. Rowling's new novel. The paperback edition of Brad Stone's "The Everything Store: Jeff Bezos and the Age of Amazon" -- a book Amazon disliked so much it denounced it -- is suddenly listed as "unavailable."

In some cases, even the pages promoting the books have disappeared. Anne Rivers Siddons's new novel, "The Girls of August," coming in July, no longer has a page for the physical book or even the Kindle edition. Only the audio edition is still being sold (for more than $60). Otherwise it is as if it did not exist.

No question about it: this sucks on Amazon's part and demonstrates the degree to which the company's top priority isn't customer service. Better customer service in this case would be to offer these books for sale. I noticed another less nefarious instance of this the other day: because Amazon is offering a streaming version of The Lego Movie (which presumably has a high profit margin), they are not currently taking pre-orders of the The Lego Movie Blu-ray (out on June 17), even though Barnes and Noble has it for pre-order and Amazon has no problem offering for pre-order a Blu-ray of The Nutty Professor that isn't out until September. I guess it makes sense to drive sales to the high-margin streaming offering but not letting people pre-order what is likely to be a very popular Blu-ray is baffling.

Anyway, if this trend continues, I'd look for Amazon to start more aggressively promoting the Kindle editions of books, to the point of manipulating available inventory as with Hachette. That is, if they're not doing it already.

Leadership from withinApr 10 2014

In recent years, Chipotle has worked to promote their managers from within the company. And the tactic seems to be working.

The common element among the best-performing stores was a manager who had risen up from crew. So Moran started to outline a program that would retain and train the best managers, and reward them to the point where they would be thrilled to stay on.

After Flores expressed his frustration, Moran showed him his early notes for the restaurateur program, which is unique among fast food restaurants in that it ties pay and promotion to how well you mentor people, rather than store sales.

"It was a great meeting but I didn't know what was going to happen. At most companies you meet the top execs and then you never hear from them again," Flores says.

A few weeks after the October meeting, while vacationing in Houston, Flores got a call on his cell from Ells and Moran letting him know that he had been promoted to restaurateur and was getting a $3,000 bonus. Rather than waiting until he returned to Milwaukee to get him the check, it was delivered to him in Houston the following day. At the time his salary was around $38,000, and the bonus was meaningful.

"That's when I knew the company was special," Flores said.

Interesting bits of business wisdom throughout this piece.

UPS trucks don't turn leftApr 07 2014

Well, they do sometimes but not very often. Left turns cross traffic, which wastes time and causes accidents. So UPS routes are designed with mostly right turns...three rights make a left, you know.

UPS engineers found that left-hand turns were a major drag on efficiency. Turning against traffic resulted in long waits in left-hand turn lanes that wasted time and fuel, and it also led to a disproportionate number of accidents. By mapping out routes that involved "a series of right-hand loops," UPS improved profits and safety while touting their catchy, environmentally friendly policy.

I wonder though, does this make the drivers unhappy?

Building the next PixarMar 26 2014

Fast Company talked to a number of ex-Pixar employees about how they are using lessons learned at Pixar in their new endeavors.

"Delight" may be an intangible concept, but it's a useful term to describe Pixar's relationship with its audience, and one that any company can strive for even if they don't make heartwarming cartoons.

It seems counterintuitive that simple pleasure would be a core principle of something as elaborate as a Pixar production, but Suzanne Slatcher says she has translated this idea directly to her new career.

"Food is a bit like cartoons," says Slatcher. "It's not some high-minded thing that people will make themselves like because they think they ought to. The food has to work on that very simple level of just someone is watching TV and they're shoving it in their mouths."

The idea that "everybody deserves quality" is a fundamental Pixar concept that Slatcher applies equally to snack foods.

"Pixar makes amazing, beautiful, hilarious, deep, wise films for kids, and adults can watch them and everybody watches them 25 times if they've got kids, and it's still funny. It's really, really great quality, where most things made for kids are made very cheaply. A lot of time and money is spent making the most accessible thing possible, and that's such an inspiration and so not what you learn at art school," Slatcher says. "The Good Bean could choose to be the darlings of the foodie world, using obscure, exotic spices, trying to be clever, but we'd rather make affordable, accessible food."

Creativity, Inc.Mar 21 2014

Ed Catmull has written a book about Pixar's creative process: Creativity, Inc.

Creativity, Inc. is a book for managers who want to lead their employees to new heights, a manual for anyone who strives for originality, and the first-ever, all-access trip into the nerve center of Pixar Animation -- into the meetings, postmortems, and "Braintrust" sessions where some of the most successful films in history are made. It is, at heart, a book about how to build a creative culture -- but it is also, as Pixar co-founder and president Ed Catmull writes, "an expression of the ideas that I believe make the best in us possible."

For nearly twenty years, Pixar has dominated the world of animation, producing such beloved films as the Toy Story trilogy, Monsters, Inc., Finding Nemo, The Incredibles, Up, and WALL-E, which have gone on to set box-office records and garner thirty Academy Awards. The joyousness of the storytelling, the inventive plots, the emotional authenticity: In some ways, Pixar movies are an object lesson in what creativity really is. Here, in this book, Catmull reveals the ideals and techniques that have made Pixar so widely admired -- and so profitable.

Catmull was a founder of Pixar and while he never got the press Jobs and Lasseter did, he was instrumental in the company's success and is currently president of both Disney and Pixar's animation studios. Fast Company has an excerpt of the book.

Candor could not be more crucial to our creative process. Why? Because early on, all of our movies suck. That's a blunt assessment, I know, but I choose that phrasing because saying it in a softer way fails to convey how bad the first versions really are. I'm not trying to be modest or self-effacing. Pixar films are not good at first, and our job is to make them so -- to go, as I say, "from suck to not-suck."

Think about how easy it would be for a movie about talking toys to feel derivative, sappy, or overtly merchandise driven. Think about how off-putting a movie about rats preparing food could be, or how risky it must've seemed to start WALL-E with 39 dialogue-free minutes. We dare to attempt these stories, but we don't get them right on the first pass. This is as it should be. Creativity has to start somewhere, and we are true believers in the power of bracing, candid feedback and the iterative process -- reworking, reworking, and reworking again, until a flawed story finds its through line or a hollow character finds its soul.

More on the mattress racketMar 19 2014

I wrote a post the other day about how name-brand mattresses are a scam and lower-cost alternatives. In a 2009 interview with Terry Gross on Fresh Air, Josh Kosman provided one reason why mattresses are so expensive: private equity firms.

In the mattress industry, private equity firms bought Sealy and Simmons, the number one and number two brands by a mile. They stopped really competing against each other. They cut costs, and they raised the prices of the mattresses. They started focusing only on the top end and stopped even making mattresses really for middle-income people that cost less than $1,000. So basically simplifying this over time, as they bought Simmons and sold it to another PE firm three or four years later, and same with Sealy, the buyers -- the sellers would make a lot of money, and the buyers felt, well, we can keep raising prices because there's no competition. We own Sealy, and we own Simmons. It's different firms, but they both have the same aim: to make a short-term profit, not to beat each other up on price. What happened over time was they couldn't raise the prices anymore, and the prices were raised double the price of inflation, double the rate of inflation. They cut the beds in half, so you came up with no-flip mattresses. That cut their manufacturing costs, but it also...

...it also sent their earnings soaring, even though the beds don't last as long. (thx, @gokari)

Busting the mattress racketMar 18 2014

Maybe it doesn't belong in the annals of great literature, but Seth Stevenson's Slate piece on mattresses from November 2000 has been stuck in my brain for more than a decade. Mattresses are a scam, says Stevenson:

Is there a more maddening industry? They confuse us with silly product names (the Sealy Posturepedic Crown Jewel Fletcher Ultra Plush Pillowtop or the Sealy Posturepedic Crown Jewel Brookmere Plush?). They flummox us with bogus science ("pocketed coils"? "Microtek foundations"? "Fiberlux"?). And they weigh us down with useless features (silk damask ticking?). It's like buying a used car, and almost as expensive -- I've seen mattresses going for $7,000. What's a consumer to do?

The secret to mattress shopping is that the product is basically a commodity. The mattress biz is 99-percent marketing. So just buy the cheapest thing you can stand and be done with it, because they're pretty much all the same. And that's all you need to know. But do read on -- the world of sleep products is quite fascinating, and I'd like to share it with you.

So when I had to do some mattress shopping recently, I remembered reading a thread on Hacker News about Tuft & Needle. T&N is a start-up that, in the parlance of Silicon Valley VCs, is disrupting the mattress industry by offering products of similar quality at dramatically lower prices with an emphasis on customer service. Recode recently ran a piece on the company and their founders.

Park and Marino, who previously worked together at Los Angeles tech startup Mulu, turned to mattress-making in 2012 after Marino was disappointed by a $3,000-plus mattress. So the two posed as the owners of a small mattress store and called around to vendors to uncover the real cost of making Marino's expensive purchase. The final calculation -- a total of about $300 -- confirmed their suspicions: There was significant opportunity to improve.

When I looked on Amazon, Tuft & Needle's mattresses were, as billed, the top-rated mattresses on the site. So I bought one. (I also bought a DreamFoam bed, which is even cheaper than Tuft & Needle and also highly rated.) The beds from both companies come rolled up and vacuum packed. Once you puncture the thick plastic packaging, air comes whooshing back into the mattress, inflating to its proper size over a matter of hours. This process sounds exactly like the repressurization of an airlock from any number of sci-fi movies. As far as comfort goes, I can't tell the difference between these beds and the $1700 memory foam mattress from Design Within Reach.

So yeah, if you're in the market for a mattress, do some poking around...you might just save a few hundred dollars. (Note: these beds are memory foam beds, which are not everyone's cup of tea. I switched to one several years ago and love it. YMMV.)

Why did Facebook buy WhatsApp?Feb 20 2014

I don't know if Facebook buying WhatsApp for $16 billion is a good idea for Facebook or not, but I'm pretty sure it's a potentially good idea. I'd heard of WhatsApp before, but I first took real notice of it last July when researching this post about Instagram businesses in Kuwait.

Several of the businesses I found used WhatsApp for messaging...browse via Instagram, arrange to buy via WhatsApp. Very low cost, more flexible than SMS, cross-platform, no giant social network appendage to deal with (e.g. Facebook/Twitter), and it's not email. And, the thing that struck me, WhatsApp (and Instagram) being used for financial/business transactions. Services teens use for social grooming are certainly interesting and important (after all, teens' social grooming is how, eventually, we end up with more teens), but when you've got something being used in all sorts of places all over the world as a social tool *and* a marketplace, you've got yourself a platform and that is potentially very valuable.

Candy Crush IPOFeb 18 2014

Your addiction to various things digital might be wasting a lot of your time. But it's paying off in a big way for companies like King Digital Entertainment, the folks behind the wildly popular Candy Crush Saga. King just announced plans for an IPO. Can a company with one very big hit really go public? On one hand, consider this: "Of the 5000 companies in NASDAQ, only 6 have as much revenue ($1.88b) and fat profit margins (30%) as King." On the other hand, it's tough to stay on top in the hit-driven game industry. Want to invest in this IPO? First, you need to consider how long King will wear the crown.

Candy Crush Saga really has created some incredible numbers.

Entrepreneurs and con artistsJan 06 2014

James Surowiecki writes about the similarities between confidence games and American entrepreneurial spirit.

It seems that con artists, for all their vices, represent many of the virtues that Americans aspire to. Con artists are independent and typically self-made. They don't have to kowtow to a boss -- no small thing in a country in which people have always longed to strike out on their own. They succeed or fail based on their wits. They exemplify, in short, the complicated nature of American capitalism, which, as McDougall argues, has depended on people being hustlers in both the positive and the negative sense. The American economy wasn't built just on good ideas and hard work. It was also built on hope and hype.

How to make a t-shirtDec 03 2013

From the cotton in the fields to the manufacturing machines to the container ships, NPR's Planet Money looks at the often complex world behind the making of a simple t-shirt.

We flew drones over Mississippi. We got mugged in Chittagong, Bangladesh. We met people whom we'll never forget -- the actual people who make our clothing. At every location we had radio reporters and videographers.

Amazon SourceNov 06 2013

Amazon introduced their Amazon Source program today, which enables indie booksellers to sell Kindles and receive a cut of future Kindle book sales made on those devices.

Retailers that are part of the program can use Amazon Source (http://source.amazon.com) to purchase Kindle devices and accessories for resale. Retailers can choose between two programs:

1) Bookseller Program: Earn 10% of the price of every Kindle book purchased by their customers from their Kindle devices for two years from device purchase. This is in addition to the discount the bookseller receives when purchasing the devices and accessories from Amazon.

2) General Retail Program: Receive a larger discount when purchasing the devices from Amazon, but do not receive revenue from their customers' Kindle book purchases.

Amazon Source aside, I've often wondered if an independent bookstore could sell their usual selection of paper books but also sell Kindle books to those who wanted them. The bookstore would basically buy the books as gifts for the customer through Amazon and take the affiliate fee (which is 8.5% with sufficient monthly sales volume) as profit. (The fee on magazine subscriptions is 25%!) I love frequenting indie bookshops -- the browsing experience of a good bookstore is still far superior to that on Amazon or a Kindle -- but I don't buy paper books anymore. So I usually leave bookstores with a list of 2-3 books I later buy on Amazon...it would be nice if the bookstore gets a cut of that action. If it worked well enough, the physical books in the store would be more like advertisements for the digital copies than salable items and you could change how you stock the store...less overall inventory or a more varied inventory with far less overhead.

Knowing next to nothing about the economics of bookstores, I don't know how well that would actually work, but it would certainly be an interesting experiment. (via @tcarmody)

An open letter of thanks to the Costco CEOOct 24 2013

Usually open letters to big companies take the form of scolding. Chris Horst wrote the CEO of Costco a different sort of open letter.

For his entire life, Matthew has been classified and known by his "special needs". Since the day he began at Costco, however, his coworkers and customers have valued him because of his unique strengths. There are many companies which "succeed" at the expense of their workers. I am a firsthand witness to a counterintuitive company: Costco succeeds through the flourishing of its employees.

Matthew worked for years in the Costco parking lot (bearing the wind, rain, cold and snow), taking pride when it was free of carts. And, true to the rumors (that Costco promotes from within), he eventually was given the opportunity to work in the warehouse as a cashier's assistant, supporting customers as they check-out. He absolutely loves his job...and his customers absolutely love him.

Costco is a famously decent employer, as far as massive corporations go. Their workers, though mostly not unionized, are paid more and get better health care than their competitors. They promote from within. The CEO only makes 12 times more than a typical employee (Wal-Mart's CEO's salary was 58 times a typical employee's salary). (via @khoi)

Macklemore on his "year that changed everything"Oct 22 2013

Ben Haggerty, better known as Macklemore, whose independently produced album The Heist went Platinum last year, reflects on the 12 months since the album's release and his decision to go big in lieu of going home.

I was in Madison, Wisconsin. We were about two-thirds of the way through our first "World Tour," a title we were beating people over the head with, trying to enforce our premature "stardom" on the world. I was skating around the city, looking for lunch, when Zach called me. And I'll never forget the way that Zach explained what this deal meant in regards to me.

He said, "Basically, if you sign this deal there is a potential that you will turn into a super star. Your life will change drastically. And once that happens, there is no going back. If we don't go this direction, there is a ceiling to your career. You can continue to play the same rooms you've been playing and have a strong run as an underground rapper. But taking it to the next level will not be attainable. I see positives and negatives to both sides, and will support you either way. What do you want to do"?

I knew immediately that this a decision that would alter my life forever. I knew that getting played on the radio would alienate a core group of fans; that I'd be labeled a sell-out, maybe even a "one hit wonder" if the song got big. But despite those risks, I knew at the core what I wanted.

Macklemore seems like a pretty solid guy, like the type of person who would sing questionable karaoke versions of his own hits:

See also: you're not selling out, you're blowing up and my thoughts on staying small or going big. (via bryce)

Powers of Ten for startupsOct 22 2013

In response to a question on Quora of how significant transportation startup Uber is, Michael Wolfe offers an answer that isn't so much about Uber in particular as it is a way of looking at businesses from the perspective of the owners/investors.

If you think of Uber as a town car company operating in a few cities, it is not big.

If you think of Uber as dominating and even growing the town car market in dozens of cities, it gets bigger. (Data point: there are now more Uber black cars in San Francisco than there were ALL black cars before Uber started).

If you think of Uber as absorbing the taxi markets, it gets pretty huge.

[...]

If you think of Uber as a giant supercomputer orchestrating the delivery of millions of people and items all over the world (the Cisco of the physical world), you get what could be one of the largest companies in the world.

Good companies always seem to be playing a different game than you think they are...outsiders see only the tactics and not the strategy. And the best ones succeed.

Restaurant ditches tipping, service gets betterSep 30 2013

Jay Porter recently wrote a series of posts about his experience running a restaurant that abolished tipping. Here's part one:

This is a summary of the experiences I had in our no-tipping lab, and in my next few posts I'll dig a little deeper into each of them. Then I'll finish this series by talking about what I've learned this year from a couple new friends who are researchers from the University of Guelph, and who have brought me in contact with some deeper thoughts about the tipping issue, from the social justice side. After seeing what they and their colleagues have uncovered, I've become convinced that thoughtful cultures who value civil rights will make tipping not just optional but illegal; and that this could actually happen sooner rather than later, when courts assess the reality of the situation.

If you want the Cliff Notes version, Porter wrote a shorter piece for Slate.

When we switched from tipping to a service charge, our food improved, probably because our cooks were being paid more and didn't feel taken for granted. In turn, business improved, and within a couple of months, our server team was making more money than it had under the tipped system. The quality of our service also improved. In my observation, however, that wasn't mainly because the servers were making more money (although that helped, too). Instead, our service improved principally because eliminating tips makes it easier to provide good service.

Steve Albini's letter to NirvanaSep 26 2013

I loved every little bit of this letter that producer Steve Albini sent to Nirvana before the recording of In Utero, the band's final studio album. In it, Albini clearly and succinctly lays out his philosophy about recording music and has specific suggestions for working with Nirvana. But the last few paragraphs, about his payment, are awesome. I've reproduced the selection here in full:

#5: Dough. I explained this to Kurt but I thought I'd better reiterate it here. I do not want and will not take a royalty on any record I record. No points. Period. I think paying a royalty to a producer or engineer is ethically indefensible. The band write the songs. The band play the music. It's the band's fans who buy the records. The band is responsible for whether it's a great record or a horrible record. Royalties belong to the band.

I would like to be paid like a plumber: I do the job and you pay me what it's worth. The record company will expect me to ask for a point or a point and a half. If we assume three million sales, that works out to 400,000 dollars or so. There's no fucking way I would ever take that much money. I wouldn't be able to sleep.

I have to be comfortable with the amount of money you pay me, but it's your money, and I insist you be comfortable with it as well. Kurt suggested paying me a chunk which I would consider full payment, and then if you really thought I deserved more, paying me another chunk after you'd had a chance to live with the album for a while. That would be fine, but probably more organizational trouble than it's worth.

Whatever. I trust you guys to be fair to me and I know you must be familiar with what a regular industry goon would want. I will let you make the final decision about what I'm going to be paid. How much you choose to pay me will not effect my enthusiasm for the record.

Some people in my position would expect an increase in business after being associated with your band. I, however, already have more work that I can handle, and frankly, the kind of people such superficialities will attract are not people I want to work with. Please don't consider that an issue.

(via @akuban)

20 smart business notions from Jeff BezosSep 23 2013

The Motley Fool collected 20 snippets of business wisdom uttered by Amazon CEO Jeff Bezos over the years.

All businesses need to be young forever. If your customer base ages with you, you're Woolworth's.

Totes agree with this, which is why I use words like "totes". (Obvs.)

The unhappy traveling salesman problemSep 06 2013

Solving the traveling salesman problem is difficult enough without having to consider the happiness of the salesman. But Tom Vanderbilt reports that's essentially what UPS, FedEx, and the like have had to do.

People are also emotional, and it turns out an unhappy truck driver can be trouble. Modern routing models incorporate whether a truck driver is happy or not -- something he may not know about himself. For example, one major trucking company that declined to be named does "predictive analysis" on when drivers are at greater risk of being involved in a crash. Not only does the company have information on how the truck is being driven -- speeding, hard-braking events, rapid lane changes -- but on the life of the driver. "We actually have built into the model a number of indicators that could be surrogates for dissatisfaction," said one employee familiar with the program.

This could be a change in a driver's take-home pay, a life event like a death in the family or divorce, or something as subtle as a driver whose morning start time has been suddenly changed. The analysis takes into account everything the company's engineers can think of, and then teases out which factors seem correlated to accident risk. Drivers who appear to be at highest risk are flagged. Then there are programs in place to ensure the driver's manager will talk to a flagged driver.

In other words, the traveling salesman problem grows considerably more complex when you actually have to think about the happiness of the salesman. And, not only do you have to know when he's unhappy, you have to know if your model might make him unhappy. Warren Powell, director of the Castle Laboratory at Princeton University's Department of Operations Research and Financial Engineering, has optimized transportation companies from Netjets to Burlington Northern. He recalls how, at Yellow Freight company, "we were doing things with drivers -- they said, you just can't do that." There were union rules, there was industry practice. Tractors can be stored anywhere, humans like to go home at night. "I said we're going to need a file with 2,000 rules. Trucks are simple; drivers are complicated."

Memo to the Buzzfeed teamSep 05 2013

I loved reading CEO Jonah Peretti's most recent memo to the team at Buzzfeed.

But there are many exciting, tempting, glamorous, lucrative opportunities that we will NOT do in the coming year and as more of these opportunities present themselves it will take discipline to stay on track. We will NOT launch a BuzzFeed TV show, radio station, cable network, or movie franchise -- we'll leave that to the legacy media and Hollywood studios. We will NOT launch a white labeled version of BuzzFeed to power other sites or a BuzzFeed social network -- we'll leave that to pure tech companies in Silicon Valley. We will NOT launch a print edition or a paywall or a paid conference business -- we'll leave that to other publications. We have a great business model that has a bright future as social and mobile continue to become the dominate form of media consumption. We will stay away from anything that requires adopting a legacy business model, even a lucrative one like cable syndication fees or prime time television ads. What seems like a lucrative opportunity today is often a distraction from building something much more exciting tomorrow. We need to stay patient and focused.

Here's his 2012 memo. I've worked at a desk in the Buzzfeed office for as long as they've had an office (Fay Da posse represent!), and it's been fascinating watching Jonah and his team turn a big idea and small blog into a media juggernaut.

Walmart's worst nightmareAug 11 2013

WinCo is an Idaho-based grocery chain that frequently beats Walmart on price while providing health care benefits for any employee working over 24 hours a week as well as an annual pension.

While all of these factors help WinCo compete with Walmart on price, what really might scare the world's largest retailer is how WinCo treats its employees. In sharp contrast to Walmart, which regularly comes under fire for practices like understaffing stores to keep costs down and hiring tons of temporary workers as a means to avoid paying full-time worker benefits, WinCo has a reputation for doing right by employees. It provides health benefits to all staffers who work at least 24 hours per week. The company also has a pension, with employees getting an amount equal to 20% of their annual salary put in a plan that's paid for by WinCo; a company spokesperson told the Idaho Statesman that more than 400 nonexecutive workers (cashiers, produce clerks, and such) currently have pensions worth over $1 million apiece.

Toyota donates efficiency to non-profitJul 29 2013

In 2011, Toyota offered to donate their celebrated business management process to The Food Bank for New York City. After some initial skepticism, the donation has "proved transformative" for the Food Bank.

"They make cars; I run a kitchen," said Daryl Foriest, director of distribution at the Food Bank's pantry and soup kitchen in Harlem. "This won't work."

When Toyota insisted it would, Mr. Foriest presented the company with a challenge.

"The line of people waiting to eat is too long," Mr. Foriest said. "Make the line shorter."

Toyota's engineers went to work. The kitchen, which can seat 50 people, typically opened for dinner at 4 p.m., and when all the chairs were filled, a line would form outside. Mr. Foriest would wait for enough space to open up to allow 10 people in. The average wait time could be up to an hour and a half.

Toyota made three changes. They eliminated the 10-at-a-time system, allowing diners to flow in one by one as soon as a chair was free. Next, a waiting area was set up inside where people lined up closer to where they would pick up food trays. Finally, an employee was assigned the sole duty of spotting empty seats so they could be filled quickly. The average wait time dropped to 18 minutes and more people were fed.

Kuwait's booming Instagram economyJul 12 2013

In Kuwait, people sell all sorts of stuff on Instagram, using the service as a visually oriented mobile storefront instead of using a web site or something like eBay. From an interview with artist/musician Fatima Al Qadiri:

BR: Kuwait is a crazy mix: a super-affluent country, yet basically a welfare state, though with a super neo-liberal consumer economy.

FQ: We consume vast amounts of everything. Instagram businesses are a big thing in Kuwait.

BR: What's an Instagram business?

FQ: If you have an Instagram account, you can slap a price tag on anything, take a picture of it, and sell it. For instance, you could take this can of San Pellegrino, paint it pink, put a heart on it, call it yours, and declare it for sale. Even my grandmother has an Instagram business! She sells dried fruit. A friend's cousin is selling weird potted plants that use Astroturf. People are creating, you know, hacked products.

I dug up a few examples: Manga Box is an Instagram storefront selling manga (contact via WhatsApp to buy), Sondos Makeup advertises makeup services (WhatsApp for appts.), sheeps_sell sells sheep, and store & more is an account selling women's fashion items. There was even an Insta-Business Expo held in April about Instagram businesses.

The Entrepreneurship and Business Club of the American University of Kuwait is holding an "INSTA BUSINESS EXPO" which will consist of all your favorite and newest popular entrepreneurs that grew their businesses through Instagram. Not only that, there will be guest speakers by Entrepreneurs that made it through Instagram as well!

(via @cmchap)

The worst charities in AmericaJun 14 2013

The Tampa Bay Times and The Center for Investigative Reporting spent a year investigating bad charities and this is what they found.

The worst charity in America operates from a metal warehouse behind a gas station in Holiday.

Every year, Kids Wish Network raises millions of dollars in donations in the name of dying children and their families.

Every year, it spends less than 3 cents on the dollar helping kids.

Most of the rest gets diverted to enrich the charity's operators and the for-profit companies Kids Wish hires to drum up donations.

In the past decade alone, Kids Wish has channeled nearly $110 million donated for sick children to its corporate solicitors. An additional $4.8 million has gone to pay the charity's founder and his own consulting firms.

No charity in the nation has siphoned more money away from the needy over a longer period of time.

But Kids Wish is not an isolated case, a yearlong investigation by the Tampa Bay Times and The Center for Investigative Reporting has found.

Using state and federal records, the Times and CIR identified nearly 6,000 charities that have chosen to pay for-profit companies to raise their donations.

Then reporters took an unprecedented look back to zero in on the 50 worst -- based on the money they diverted to boiler room operators and other solicitors over a decade.

These nonprofits adopt popular causes or mimic well-known charity names that fool donors. Then they rake in cash, year after year.

The nation's 50 worst charities have paid their solicitors nearly $1 billion over the past 10 years that could have gone to charitable works.

Despicable. And a reminder that before you give, you should check on a site like Charity Navigator or GiveWell for organizations where a sizable portion of your contribution is going to the actual cause. For instance, the aforementioned Kids Wish charity currently has a "donor advisory" notice on their Charity Navigator page. (via @ptak)

Protected bike lanes = good for businessMay 09 2013

Some interesting data about how protected bike lanes in NYC dramatically increased retail sales of local businesses.

A new study from the New York Department of Transportation shows that streets that safely accommodate bicycle and pedestrian travel are especially good at boosting small businesses, even in a recession.

NYC DOT found that protected bikeways had a significant positive impact on local business strength. After the construction of a protected bicycle lane on 9th Avenue, local businesses saw a 49% increase in retail sales. In comparison, local businesses throughout Manhattan only saw a 3% increase in retail sales.

And that's just one of the many tidbits from a NYC DOT report released last November (right around the time of Hurricane Sandy, which is probably why no one noticed at the time); read the whole report here:

Among them: "retail sales increased a whopping 172% after the city converted an underused parking area in Brooklyn into a pedestrian plaza", and traffic calming in the Bronx decreased speeding by ~30% and pedestrian crashes by 67%. (via @lhl)

A list of horrible business ideasApr 17 2013

Here's a list of business ideas that seemed outlandish, ridiculous, and even downright stupid. See if you can match some of them to the billion dollar businesses they became before you click through.

Airlines are cool. Let's start one. How hard could it be? We'll differentiate with a funny safety video and by not being a**holes.

It will be ugly. It will be free. Except for the hookers.

We are building the world's 20th search engine at a time when most of the others have been abandoned as being commoditized money losers.

Give us all of your bank, brokerage, and credit card information. We'll give it back to you with nice fonts. To make you feel richer, we'll make them green.

It is like email, SMS, or RSS. Except it does a lot less.

The world needs yet another Myspace or Friendster except several years late. We'll only open it up to a few thousand overworked, anti-social, Ivy Leaguers. Everyone else will then join since Harvard students are so cool.

Apple's halo carMar 21 2013

I really enjoyed this piece by John Siracusa about why Apple should continue to make a high-end personal computer (like the Mac Pro) even though it's not a big seller or hugely profitable. Basically, the Mac Pro is Apple's halo car:

In the automobile industry, there's what's known as a "halo car." Though you may not know the term, you surely know a few examples. The Corvette is GM's halo car. Chrysler has the Viper.

The vast, vast majority of people who buy a Chrysler car get something other than a Viper. The same goes for GM buyers and the Corvette. These cars are expensive to develop and maintain. Due to the low sales volumes, most halo cars do not make money for car makers. When Chrysler was recovering from bankruptcy in 2010, it considered selling the Viper product line.

But car companies continue to make halo cars in part because they are great cars, or at least have the potential to be great cars, and when a car company stops caring about making great cars, they lose their identity and credibility...with consumers, with employees, with investors, and with competitors. Halo cars are the difference between being a car company and being a company that sells cars.

Normally I'm not a big fan of advice like "do what big car companies do", but what Siracusa's piece demontrates is one of the things that's problematic about data: there are important things about business and success that you can't measure. And I would go so far as to say that these unmeasurables are the most important things, the stuff that makes or breaks a business or product or, hell, even a relationship, stuff that you just can't measure quantitatively, no matter how Big your Data is. (via df)

2012 shareholder letter from Warren BuffettMar 05 2013

Chairman and CEO Warren Buffett recently released his annual letter to the shareholders of Berkshire Hathaway for the 2012 fiscal year. In his estimation, Berkshire didn't have such a good year.

When the partnership I ran took control of Berkshire in 1965, I could never have dreamed that a year in which we had a gain of $24.1 billion would be subpar, in terms of the comparison we present on the facing page.

But subpar it was. For the ninth time in 48 years, Berkshire's percentage increase in book value was less than the S&P's percentage gain (a calculation that includes dividends as well as price appreciation). In eight of those nine years, it should be noted, the S&P had a gain of 15% or more. We do better when the wind is in our face.

Perhaps with Anne Hathaway's Oscar win in February, they'll have a better year this year.

Dell to go privateFeb 05 2013

In 1997, Dell Computer CEO Michael Dell famously said of Apple:

I'd shut it down and give the money back to the shareholders.

Today, Michael Dell is part of a consortium giving the money back to the shareholders and taking Dell Inc. private.

Under the terms of the deal, the buyers' consortium, which also includes Microsoft, will pay $13.65 a share in cash. That is roughly 25 percent above where Dell's stock traded before word emerged of the negotiations of its sale.

Michael S. Dell will contribute his stake of roughly 14 percent toward the transaction, and will contribute additional cash through his private investment firm, MSD Capital. Silver Lake is expected to contribute about $1 billion in cash, while Microsoft will loan an additional $2 billion.

Amazon is a charity run by the investment communityJan 30 2013

I love this description of Amazon by Matthew Yglesias:

That's because Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers. The shareholders put up the equity, and instead of owning a claim on a steady stream of fat profits, they get a claim on a mighty engine of consumer surplus. Amazon sells things to people at prices that seem impossible because it actually is impossible to make money that way. And the competitive pressure of needing to square off against Amazon cuts profit margins at other companies, thus benefiting people who don't even buy anything from Amazon.

That's the beauty of low margins. (via @tcarmody)

The implications of Amazon's razor-thin marginsJan 24 2013

An insightful piece by a former Amazon employee about how the company's low margin strategy helps them remain competitive.

Attacking the market with a low margin strategy has other benefits, though, ones often overlooked or undervalued. For one thing, it strongly deters others from entering your market. Study disruption in most businesses and it almost always comes from the low end. Some competitor grabs a foothold on the bottom rung of the ladder and pulls itself upstream. But if you're already sitting on that lowest rung as the incumbent, it's tough for a disruptor to cling to anything to gain traction.

An incumbent with high margins, especially in technology, is like a deer that wears a bullseye on its flank. Assuming a company doesn't have a monopoly, its high margin structure screams for a competitor to come in and compete on price, if nothing else, and it also hints at potential complacency. If the company is public, how willing will they be to lower their own margins and take a beating on their public valuation?

Because technology, both hardware and software, tends to operate on an annual update cycle, every year you have to worry about a competitor leapfrogging you in that cycle. One mistake and you can see a huge shift in customers to a competitor.

Not having to sweat a constant onslaught of new competitors is really underrated. You can allocate your best employees to explore new lines of business, you can count on a consistent flow of cash from your more mature product or service lines, and you can focus your management team on offense. In contrast, most technology companies live in constant fear that they'll be disrupted with every product or service refresh. The slightest misstep can turn a stock market darling into a company struggling for its very existence.

Two gun control suggestionsDec 18 2012

Eliot Spitzer has a pair of suggestions related to gun control: pressure the owners of gun companies and regulate the sale of bullets.

There may be too many guns to rid the streets of guns, but there are not that many bullets, especially in the calibers needed for the types of weapons used in these shootings. Let's create a regime that makes sale of bullets to anybody not licensed to carry a gun illegal, makes resale illegal, micro-stamps bullets so they can be traced. No Second Amendment issues here.

There is some movement on the first issue already. Cerberus, a private equity firm that owns a large gun company, is selling the company because of pressure from their investors.

The private equity firm said it had made the investments in gun manufacturers on behalf of its clients, which include pension funds and other institutional investors. Cerberus added that it was the role of legislators to shape the country's gun policy.

"We believe that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so," Cerberus said.

This is where the phrase "passing the buck" comes from.

Climate change slows skiing downDec 13 2012

Climate change, already on the hook for potentially killing spaghetti, will have a big impact on downhill skiing and snowboarding in the United States.

Under certain warming forecasts, more than half of the 103 ski resorts in the Northeast will not be able to maintain a 100-day season by 2039, according to a study to be published next year by Daniel Scott, director of the Interdisciplinary Center on Climate Change at the University of Waterloo in Ontario.

By then, no ski area in Connecticut or Massachusetts is likely to be economically viable, Mr. Scott said. Only 7 of 18 resorts in New Hampshire and 8 of 14 in Maine will be. New York's 36 ski areas, most of them in the western part of the state, will have shrunk to 9.

"Made in the USA" is back, babyDec 06 2012

Earlier this morning in a post about Apple manufacturing their products in the US, I wrote "look for this "made in the USA" thing to turn into a trend". Well, Made in the USA is already emerging as a trend in the media. On Tuesday, Farhad Manjoo wrote about American Giant, a company who makes the world's best hoodie entirely in the US for a decent price.

For one thing, Winthrop had figured out a way to do what most people in the apparel industry consider impossible: He's making clothes entirely in the United States, and he's doing so at costs that aren't prohibitive. American Apparel does something similar, of course, but not especially profitably, and its clothes are very low quality. Winthrop, on the other hand, has found a way to make apparel that harks back to the industry's heyday, when clothes used to be made to last. "I grew up with a sweatshirt that my father had given me from the U.S. Navy back in the '50s, and it's still in my closet," he told me. "It was this fantastic, classic American-made garment -- it looks better today than it did 35, 40 years ago, because like an old pair of denim, it has taken on a very personal quality over the years."

The Atlantic has a pair of articles in their December issue, Charles Fishman's The Insourcing Boom:

Yet this year, something curious and hopeful has begun to happen, something that cannot be explained merely by the ebbing of the Great Recession, and with it the cyclical return of recently laid-off workers. On February 10, [General Electric's Appliance Park in Louisville, KY] opened an all-new assembly line in Building 2 -- largely dormant for 14 years -- to make cutting-edge, low-energy water heaters. It was the first new assembly line at Appliance Park in 55 years -- and the water heaters it began making had previously been made for GE in a Chinese contract factory.

On March 20, just 39 days later, Appliance Park opened a second new assembly line, this one in Building 5, to make new high-tech French-door refrigerators. The top-end model can sense the size of the container you place beneath its purified-water spigot, and shuts the spigot off automatically when the container is full. These refrigerators are the latest versions of a style that for years has been made in Mexico.

Another assembly line is under construction in Building 3, to make a new stainless-steel dishwasher starting in early 2013. Building 1 is getting an assembly line to make the trendy front-loading washers and matching dryers Americans are enamored of; GE has never before made those in the United States. And Appliance Park already has new plastics-manufacturing facilities to make parts for these appliances, including simple items like the plastic-coated wire racks that go in the dishwashers.

and James Fallows' Mr. China Comes to America:

What I saw at these Chinese sites was surprisingly different from what I'd seen on previous factory tours, reflecting the political, economic, technological, and especially social pressures that are roiling China now. In conjunction with significant changes in the American business and technological landscape that I recently saw in San Francisco, these changes portend better possibilities for American manufacturers and American job growth than at any other time since Rust Belt desolation and the hollowing-out of the American working class came to seem the grim inevitabilities of the globalized industrial age.

For the first time in memory, I've heard "product people" sound optimistic about hardware projects they want to launch and facilities they want to build not just in Asia but also in the United States. When I visited factories in the upper Midwest for magazine stories in the early 1980s, "manufacturing in America" was already becoming synonymous with "Rust Belt" and "sunset industry." Ambitious, well-educated people who had a choice were already headed for cleaner, faster-growing possibilities -- in consulting, finance, software, biotech, anything but things. At the start of the '80s, about one American worker in five had a job in the manufacturing sector. Now it's about one in 10.

Add to that all of the activity on Etsy and the many manufactured-goods projects on Kickstarter that are going "Made in the USA" (like Flint & Tinder underwear (buy now!)) and yeah, this is definitely a thing.

As noted by Fishman in his piece, one of the reasons US manufacturing is competitive again is the low price of natural gas. From a piece in SupplyChainDigest in October:

Several industries, noticeable chemicals and fertilizers, use lots of natural gas. Fracking and other unconventional techniques have already unlocked huge supplies of natural gas, which is why natural gas prices in the US are at historic lows and much lower than the rest of the world.

Right now, nat gas prices are under $3.00 per thousand cubic, down dramatically from about three times that in 2008 and even higher in 2006. Meanwhile, natural gas prices are about $10.00 right now in Europe and $15.00 in parts of Asia.

Much of the growing natural gas reserves come from the Marcellus shale formation that runs through Western New York and Pennsylvania, Southeast Ohio, and most of West Virginia. North Dakota in the upper Midwest also is developing into a major supplier of both oil and natural gas.

So basically, energy in the US is cheap right now and will likely remain cheap for years to come because hydraulic fracturing (aka fracking aka that thing that people say makes their water taste bad, among other issues) has unlocked vast and previously unavailable reserves of oil and natural gas that will take years to fully exploit. A recent report by the International Energy Agency suggests that the US is on track to become the world's biggest oil producer by 2020 (passing both Saudi Arabia and Russia) and could be "all but self-sufficient" in energy by 2030.

By about 2020, the United States will overtake Saudi Arabia as the world's largest oil producer and put North America as a whole on track to become a net exporter of oil as soon as 2030, according to a report from the International Energy Agency.

The change would dramatically alter the face of global oil markets, placing the U.S., which currently imports about 45 percent of the oil it uses and about 20 percent of its total energy needs, in a position of unexpected power. The nation likely will become "all but self-sufficient" in energy by 2030, representing "a dramatic reversal of the trend seen in most other energy-importing countries," the IEA survey says.

So yay for "Made in the USA" but all this cheap energy could wreak havoc on the environment, hinder development of greener alternatives to fossil fuels (the only way green will win is to compete on price), and "artificially" prop up a US economy that otherwise might be stagnating. (thx, @rfburton, @JordanRVance, @technorav)

Apple to make computers in USA againDec 06 2012

According to CEO Tim Cook, Apple will start making some of its computers entirely in the US.

Apple CEO Tim Cook announced one of the existing Mac lines will be manufactured exclusively in the United States next year. Mac fans will have to wait to see which Mac line it will be because Apple, widely known for its secrecy, left it vague. Cook's announcement may or may not confirm recent rumors in the blogosphere sparked by iMacs inscribed in the back with "Assembled in USA."

Well, those iMac pretty clearly state they are assembled in the US. And look for this "made in the USA" thing to turn into a trend...I think companies are finding that making stuff in the US is not as expensive as everyone thinks it is.

Update: BusinessWeek has a long interview with Cook about US manufacturing, among many other topics.

It's not known well that the engine for the iPhone and iPad is made in the U.S., and many of these are also exported-the engine, the processor. The glass is made in Kentucky. And next year we are going to bring some production to the U.S. on the Mac. We've been working on this for a long time, and we were getting closer to it. It will happen in 2013. We're really proud of it. We could have quickly maybe done just assembly, but it's broader because we wanted to do something more substantial. So we'll literally invest over $100 million. This doesn't mean that Apple will do it ourselves, but we'll be working with people, and we'll be investing our money.

The autism advantageNov 29 2012

In the NY Times, Gareth Cook writes about the advantages some companies have found in employing people with autism.

To his father, Lars seemed less defined by deficits than by his unusual skills. And those skills, like intense focus and careful execution, were exactly the ones that Sonne, who was the technical director at a spinoff of TDC, Denmark's largest telecommunications company, often looked for in his own employees. Sonne did not consider himself an entrepreneurial type, but watching Lars -- and hearing similar stories from parents he met volunteering with an autism organization -- he slowly conceived a business plan: many companies struggle to find workers who can perform specific, often tedious tasks, like data entry or software testing; some autistic people would be exceptionally good at those tasks. So in 2003, Sonne quit his job, mortgaged the family's home, took a two-day accounting course and started a company called Specialisterne, Danish for "the specialists," on the theory that, given the right environment, an autistic adult could not just hold down a job but also be the best person for it.

I particularly liked Tyler Cowen's observations:

Tyler Cowen, an economist at George Mason University (and a regular contributor to The Times), published a much-discussed paper last year that addressed the ways that autistic workers are being drawn into the modern economy. The autistic worker, Cowen wrote, has an unusually wide variation in his or her skills, with higher highs and lower lows. Yet today, he argued, it is increasingly a worker's greatest skill, not his average skill level, that matters. As capitalism has grown more adept at disaggregating tasks, workers can focus on what they do best, and managers are challenged to make room for brilliant, if difficult, outliers. This march toward greater specialization, combined with the pressing need for expertise in science, technology, engineering and mathematics, so-called STEM workers, suggests that the prospects for autistic workers will be on the rise in the coming decades. If the market can forgive people's weaknesses, then they will rise to the level of their natural gifts.

Time for some new economic rules?Nov 15 2012

From before the election, which seems like it was several months ago already, a piece from Clayton Christensen about how investors and companies should shift their thinking about allocating capital. Christensen's gist is that efficiency is creating pools of excess capital which is not being reinvested into the types of industry that create jobs.

The Fed has been injecting more and more capital into the economy because -- at least in theory -- capital fuels capitalism. And yet cash hoards in the billions are sitting unused on the pristine balance sheets of Fortune 500 corporations. Billions in capital is also sitting inert and uninvested at private equity funds.

Capitalists seem almost uninterested in capitalism, even as entrepreneurs eager to start companies find that they can't get financing. Businesses and investors sound like the Ancient Mariner, who complained of "Water, water everywhere -- nor any drop to drink."

It's a paradox, and at its nexus is what I'll call the Doctrine of New Finance, which is taught with increasingly religious zeal by economists, and at times even by business professors like me who have failed to challenge it. This doctrine embraces measures of profitability that guide capitalists away from investments that can create real economic growth.

Read all the way to end; Christensen offers some suggestions for shifting capital allocation.

Stay small or go big?Nov 09 2012

Emeril Lagasse made an appearance on Treme on Sunday. I watched a clip of his scene a few days ago and have been thinking about it on and off ever since. In the scene written by Anthony Bourdain, Emeril takes a fellow chef to the building that used to house Uglesich's, a small-but-beloved New Orleans restaurant that closed back in 2005. The chef is having misgivings about expanding her business, particularly about all the non-cooking things you have to do, and Emeril explains that the way the owners of Uglesich's did it was one way forward:

You see, they kept it small, just one spot, just a few tables. There'd be a line around the corner by 10 am. You see, they made a choice. Anthony and Gail made a choice to stay on Baronne Street and keep their hands on what they were serving. They cooked, everyday they cooked, until they could cook no more.

But there's also another way to approach your business:

The other choice is that you can build something big but keep it the way that you wanna keep it. Take those ideas and try to execute them to the highest level. You got a lotta people around you, right? You're the captain of the ship. Or what I should say is that you're the ship. And all these people that look up to you and wanna be around you, they're living in the ship. And they're saying, "Oh, the ship is doing good. Oh, the ship is going to some interesting places. Oh, this ship isn't going down just like all the other fucking ships I've been on." [...] You've got a chance to do your restaurant and to take care of these people. Just do it.

kottke.org has always been a one-person thing. Sure, Aaron posts here regularly now and I have guest editors on occasion, but for the most part, I keep my ass in the chair and my hands on what I am serving. I've always resisted attempts at expanding the site because, I have reasoned, that would mean that the site wouldn't be exactly what I wanted it to be. And people come here for exactly what I want it to be. Doing the site with other people involved has always seemed unnatural. It would be selling out...that's how I've thought about it, as opposed to blowing up.

But Emeril's "until they could cook no more" and "you're the ship"...that got to me. I am a ship. I don't have employees but I have a family that relies on the income from my business and someday, when I am unable to do this work or people stop reading blogs or all online advertising moves to Facebook or Twitter, what happens then? Don't I owe it to myself and to them to build something that's going to last beyond my interest and ability to sit in a chair finding interesting things for people to look at? Or is it enough to just work by yourself and produce the best work you can?

Or can you do both? John Gruber's Daring Fireball remains a one-man operation...as far as I know, he's never even had an intern. I don't have any inside knowledge of DF's finances, but from the RSS sponsorship rate and the rate for sponsoring Gruber's podcast, my conservative estimate is that DF grosses around $650,000 per year. And with a single employee/owner and relatively low expenses, a large amount of that is profit. So maybe that route is possible?

I don't have any answers to these questions, but man, it's got me thinking. Emeril got me thinking...who saw that coming? Bam!

The People's Bailout: Occupy is forgiving personal debtNov 09 2012

Occupy Wall Street continues to show that it's more than just a simple protest movement. They have been doing amazing work with Hurricane Sandy relief and now there's Rolling Jubilee. Here's how Rolling Jubilee works:

OWS is going to start buying distressed debt (medical bills, student loans, etc.) in order to forgive it. As a test run, we spent $500, which bought $14,000 of distressed debt. We then ERASED THAT DEBT. (If you're a debt broker, once you own someone's debt you can do whatever you want with it - traditionally, you hound debtors to their grave trying to collect. We're playing a different game. A MORE AWESOME GAME.)

This is a simple, powerful way to help folks in need -- to free them from heavy debt loads so they can focus on being productive, happy and healthy. As you can see from our test run, the return on investment approaches 30:1. That's a crazy bargain!

This has my vote for idea of the year. Well, until the debt sellers catch on and either raise the price due to demand or refuse to sell to untrusted brokers.

Super-rich private equity crybabies vs. ObamaOct 01 2012

In this week's New Yorker, Chrystia Freeland writes about how the ultra-rich have taken a dislike to President Obama and his anti-business policy and rhetoric, even though the President "has served the rich quite well". This article is infuriating, a bunch of very powerful men (and they are all men) sitting around crying about their powerlessness. A few choice quotes:

Cooperman regarded the comments as a declaration of class warfare, and began to criticize Obama publicly. In September, at a CNBC conference in New York, he compared Hitler's rise to power with Obama's ascent to the Presidency, citing disaffected majorities in both countries who elected inexperienced leaders.

Strong argument there. Per Godwin, that should have been the end of it.

Evident throughout the letter is a sense of victimization prevalent among so many of America's wealthiest people. In an extreme version of this, the rich feel that they have become the new, vilified underclass.

Underclass! Boo hoo! Do you want some cheese with that 2005 Petrus?

T. J. Rodgers, a libertarian and a Silicon Valley entrepreneur, has taken to comparing Barack Obama's treatment of the rich to the oppression of ethnic minorities -- an approach, he says, that the President, as an African-American, should be particularly sensitive to.

Yes, I can imagine the President nodding, upset at missing the obvious parallel here. The police chasing hedge fund managers through the streets of lower Manhattan with firehoses is a scene that I will never forget.

[Founding partner of the hedge fund AQR Capital Management Clifford S. Asness] suggested that "hedge funds really need a community organizer," and accused the White House of "bullying" the financial sector.

Clifford S. Asness swinging from the bathroom door knob by his underwear. Clifford S. Asness called "Assness" in trigonometry class. Nude photos taken of Clifford S. Asness in the locker room and distributed to the freshman girls. Clifford S. Asness teased so mercilessly about his acne that he has to stay home from school throwing up from the emotional pain of being so thoroughly and callously rejected by one's peers.

In 2010, the private-equity billionaire Stephen Schwarzman, of the Blackstone Group, compared the President's as yet unsuccessful effort to eliminate some of the preferential tax treatment his sector receives to Hitler's invasion of Poland.

Hitler again! Obama is obviously a fascist communist.

"You know, the largest and greatest country in the free world put a forty-seven-year-old guy that never worked a day in his life and made him in charge of the free world," Cooperman said. "Not totally different from taking Adolf Hitler in Germany and making him in charge of Germany because people were economically dissatisfied.

Hitler, take three. Stick with what you know.

He was a seventy-two-year-old world-renowned cardiologist; his wife was one of the country's experts in women's medicine. Together, they had a net worth of around ten million dollars. "It was shocking how tight he was going to be in retirement," Cooperman said. "He needed four hundred thousand dollars a year to live on. He had a home in Florida, a home in New Jersey. He had certain habits he wanted to continue to pursue.

Shocking. Needed. Certain habits.

People don't realize how wealthy people self-tax. If you have a certain cause, an art museum or a symphony, and you want to support it, it would be nice if you had the choice.

We didn't realize that. And it's such an either-or thing too...can't pay your taxes *and* help the Met buy a Vermeer.

"A startup is a company designed to grow fast"Sep 24 2012

Paul Graham explains what a startup is and how it differs from other types of businesses.

That difference is why there's a distinct word, "startup," for companies designed to grow fast. If all companies were essentially similar, but some through luck or the efforts of their founders ended up growing very fast, we wouldn't need a separate word. We could just talk about super-successful companies and less successful ones. But in fact startups do have a different sort of DNA from other businesses. Google is not just a barbershop whose founders were unusually lucky and hard-working. Google was different from the beginning.

To grow rapidly, you need to make something you can sell to a big market. That's the difference between Google and a barbershop. A barbershop doesn't scale.

For a company to grow really big, it must (a) make something lots of people want, and (b) reach and serve all those people. Barbershops are doing fine in the (a) department. Almost everyone needs their hair cut. The problem for a barbershop, as for any retail establishment, is (b). A barbershop serves customers in person, and few will travel far for a haircut. And even if they did the barbershop couldn't accomodate them.

Writing software is a great way to solve (b), but you can still end up constrained in (a). If you write software to teach Tibetan to Hungarian speakers, you'll be able to reach most of the people who want it, but there won't be many of them. If you make software to teach English to Chinese speakers, however, you're in startup territory.

Most businesses are tightly constrained in (a) or (b). The distinctive feature of successful startups is that they're not.

The scale of startup ambitionSep 13 2012

Over at Hacker News, npguy asked Y Combinator co-founder Paul Graham about "the most frighteningly ambitious idea" he'd ever been pitched. Graham declined to answer, citing confidentiality, but Eliezer Yudkowsky responded with what another commenter called the Yudkowsky Ambition scale:

1) We're going to build the next Facebook!

2) We're going to found the next Apple!

3) Our product will create sweeping political change! This will produce a major economic revolution in at least one country! (Seasteading would be change on this level if it worked; creating a new country successfully is around the same level of change as this.)

4) Our product is the next nuclear weapon. You wouldn't want that in the wrong hands, would you?

5) This is going to be the equivalent of the invention of electricity if it works out.

6) We're going to make an IQ-enhancing drug and produce basic change in the human condition.

7) We're going to build serious Drexler-class molecular nanotechnology.

8) We're going to upload a human brain into a computer.

9) We're going to build a recursively self-improving Artificial Intelligence.

10) We think we've figured out how to hack into the computer our universe is running on.

Companies behaving badlyAug 14 2012

1. United recently lost a 10-year-old girl (flying as an unaccompanied minor) and didn't care and didn't do much of anything to remedy the situation.

Annie and Perry only discovered that something was wrong a few hours later when the camp called to say that Phoebe was not on the expected plane in Grand Rapids. At the point, both Annie and Perry got on the phone. Annie got someone in India who wouldn't help beyond telling her:

'When I asked how she could have missed it given everything was 100% on time she said, "it does not matter" she is still in Chicago and "I am sure she is fine".'

Annie was then put on hold for 40 minutes when she asked to speak to the supervisor.

2. Matt Fisher's sister was killed in a car accident and not only did her insurance company, Progressive, refuse to pay the value of her insurance policy, their legal team defended the guy who killed his sister in court.

In Maryland, you may not sue an insurance company when they refuse to fork over your money. Instead, what they had to do was sue the guy who killed my sister, establish his negligence in court, and then leverage that decision to force Progressive to pay the policy.

Now my parents don't harbor much venom for the guy who killed my sister. It was an accident, and kicking that guy around won't bring Katie back. But kicking that guy around was the only way to get Progressive to pay. So they filed a civil suit against the other driver in hopes that, rather than going to court, Progressive would settle. Progressive did not. Progressive made a series of offers (never higher than 1/3 the amount they owe) and then let it go to a trial.

At the trial, the guy who killed my sister was defended by Progressive's legal team.

If you are insured by Progressive, and they owe you money, they will defend your killer in court in order to not pay you your policy.

(via @cshirky & @hchamp)

Companies perform better with women on boardAug 01 2012

A report from the Credit Suisse Research Institute shows that companies that have women on their boards of directors out perform companies with all male boards in a number of different metrics. The report looked at 2300 companies with a market cap of over $10 billion, and found that stocks of companies with women on the board outpaced companies without by 26%. These companies also had net income growth of 14% vs 10%.

"Companies with women on boards really outperformed when the downturn came through in 2008," Mary Curtis, director of thematic equity research at Credit Suisse in Johannesburg and an author of the report, said in a telephone interview. "Stocks of companies with women on boards tend to be a little more risk averse and have on average a little less debt, which seems to be one of the key reasons why they've outperformed so strongly in this particular period."

(via @alexmleo)

What is Buzzfeed up to anyway?Jul 25 2012

Chris Dixon has posted, with permission, a letter that Jonah Peretti recently wrote to the employees of and investors in Buzzfeed outlining the company's strategy. If you're at all curious about the future of media on the web, it is an interesting read.

Most publishers build their site by stapling together products made by other companies. They get their CMS from one company, their analytics package from another, their ad tech from another, their related content widgets are powered by another, sometimes even their writers are contractors who don't work for the company. This is why so many publisher sites look the same and also why they can be so amazingly complex and hard to navigate. They are Frankenstein products bolted together by a tech team that integrates other people's products instead of building their own.

At BuzzFeed we take the exact opposite approach. We manage our own servers, we built our CMS from scratch, we created our own realtime stats system, we have our own data science team, we invented own ad products and our own post formats, and all these products are brought to life by our own editorial team and our own creative services team. We are what you call a "vertically integrated product" which is rare in web publishing. We take responsibility for the technology, the advertising, and the content and that allows us to make a much better product where everything works together.

It is hard to build vertically integrated products because you have to get good at several things instead of just one. This is why for years Microsoft was seen as the smart company for focusing on just one layer and Apple was seen as dumb for trying to do everything. But now Apple is more than twice (!) as valuable as Microsoft and the industry is starting to accept that you need to control every layer to make a really excellent product. Even Microsoft and Google has started to make their own hardware after years of insisting that software is what matters.

BuzzFeed is one of the very few publishers with the resources, talent, and focus to build the whole enchilada. And nothing is tastier than a homemade enchilada.

Jonah also recently offered some unsolicited advice to Marissa Meyer about how to think about media at Yahoo.

It is amazing how having a huge homepage can be a curse. People start fighting over existing traffic instead of trying to make awesome new things that are exciting enough to attract their own audience. Marissa Mayer should exclude homepage traffic from all metrics used to evaluate performance - that would be the single biggest thing she could do to turn around the company.

Taking that a step further, good performance should result in homepage placement, not the other way around.

A note of disclosure: I was/sorta still am an advisor to Buzzfeed (and work from the BF office), although nothing I ever offered in the way of advice has contributed significantly to Buzzfeed's current success. I also enjoy enchiladas.

Marissa Mayer is Yahoo's new CEOJul 16 2012

But can she turn the company around? This is a super interesting move.

Marissa Mayer, one of the top executives at Google, will be the next C.E.O. of Yahoo, making her one of the most prominent women in Silicon Valley and corporate America.

The appointment of Ms. Mayer, who was employee No. 20 at Google and was one of the few public faces of the company, is considered a surprising coup for Yahoo, which has struggled in recent years to attract top flight talent in its battle with competitors like Google and Facebook.

Profile of Uniqlo and its CEO, Tadashi YanaiJun 26 2012

For the most recent issue of Fast Company, Jeff Chu profiled Tadashi Yanai, the CEO of Uniqlo, one of the hottest retail companies in the world. The piece is full of interesting business & design wisdom throughout.

Yanai, though, cannot resist the American market. Around the corner from his Tokyo office, there's a large map of Manhattan. There are push pins marking Abercrombie & Fitch, American Eagle, Forever 21, Gap, Hollister, and a half-dozen other brands that could be considered immediate competitors. Significantly, there's one outlier marked: the Apple Store. When I ask Yanai about this, he replies simply, "People have only one wallet."

More notably, Apple is perhaps the best example of a company whose products have become ubiquitous without losing cachet. "Specialness is nice to have," Yanai says, "but what's more important is being made for all."

One of my favorite things about shopping at Uniqlo is how they hand you your credit card back:

All associates are trained, for instance, to return your credit card and receipt with both hands, as a sign of respect.

The risk management strategies of bee hivesJun 21 2012

Michael O'Malley is a "human capital consultant" (whatever that is) but has also been a beekeeper for the past ten years. Here's what he's learned about how bees organize themselves and manage risk.

Take, for example, their approach toward the "too-big-to-fail" risk our financial sector famously took on. Honeybees have a failsafe preventive for that. It's: "Don't get too big." Hives grow through successive divestures or spin-offs: They swarm. When a colony gets too large, it becomes operationally unwieldy and grossly inefficient and the hive splits. Eventually, risk is spread across many hives and revenue sources in contrast to relying on one big, vulnerable "super-hive" for sustenance.

Here's another lesson by analogy: No queen bee is under pressure for quarterly pollen and nectar targets. The hive is only beholden to the long term. Indeed, beehives appear to underperform at times because they could collect more. But they are not designed to maximize current returns; they are designed to prevent cycles of feast and famine (a death sentence in the natural world). They concentrate their foraging on the most lucrative patches but keep an exploratory force in the field that will ensure future revenue sources when the current ones run dry. This exploratory force (call it an R&D expenditure) increases as conditions worsen.

Business lessons from a Mexican drug cartelJun 18 2012

The Sinaloa drug cartel is headed by a man who goes by El Chapo. That Chapo is 55 years old and still around tells you something about well he runs his business.

The drug war in Mexico has claimed more than 50,000 lives since 2006. But what tends to get lost amid coverage of this epic bloodletting is just how effective the drug business has become. A close study of the Sinaloa cartel, based on thousands of pages of trial records and dozens of interviews with convicted drug traffickers and current and former officials in Mexico and the United States, reveals an operation that is global (it is active in more than a dozen countries) yet also very nimble and, above all, staggeringly complex. Sinaloa didn't merely survive the recession -- it has thrived in recent years. And after prevailing in some recent mass-casualty clashes, it now controls more territory along the border than ever.

"Chapo always talks about the drug business, wherever he is," one erstwhile confidant told a jury several years ago, describing a driven, even obsessive entrepreneur with a proclivity for micromanagement. From the remote mountain redoubt where he is believed to be hiding, surrounded at all times by a battery of gunmen, Chapo oversees a logistical network that is as sophisticated, in some ways, as that of Amazon or U.P.S. -- doubly sophisticated, when you think about it, because traffickers must move both their product and their profits in secret, and constantly maneuver to avoid death or arrest. As a mirror image of a legal commodities business, the Sinaloa cartel brings to mind that old line about Ginger Rogers doing all the same moves as Fred Astaire, only backward and in heels. In its longevity, profitability and scope, it might be the most successful criminal enterprise in history.

How Apple gets you to touch their computersJun 18 2012

In a clever bit of salesmanship, Apple angles the screens on the laptops in the Apple Store just enough that you can see the screen but not enough for comfortable viewing. Here's why:

The point, explains Carmine Gallo, who is writing a book on the inside workings of the Apple Store, is to get people to touch the devices. "The main reason notebook computers screens are slightly angled is to encourage customers to adjust the screen to their ideal viewing angle," he says -- "in other words, to touch the computer."

A tactile experience with an Apple product begets loyalty to Apple products, the thinking goes -- which means that the store exists to imprint a brand impression on visitors even more than it exists to extract money from them. "The ownership experience is more important than a sale," Gallo notes. Which means that the store -- and every single detail creating the experience of it -- are optimized for customers' personal indulgence. Apple wants you to touch stuff, to play with it, to make it your own.

It's a genius touch. I went in to the Apple Store last week just after it opened to see the new MacBook Airs and retina MacBook Pros and I'll be damned if I didn't have to adjust the screen in both cases. Get out of my head, man! (via @alexismadrigal)

Rate not ye driver poorly lest ye also be rated poorlyJun 14 2012

Here's an interesting little tidbit from the Economist about Uber...drivers rate their passengers.

At the completion of a trip, a passenger is asked to rate the driver; the driver, in turn, rates the passenger. Drivers who have poor ratings do not last long, Mr Kalanick says, while poorly-behaved passengers may have trouble securing a ride, since a driver can decline a fare if the hailer has a bad reputation.

I'd expect more of this credit scoring in the future...you might have trouble getting a reservation, a hotel room, or seat on a plane if you're an asshole.

How Yahoo killed FlickrMay 15 2012

From Mat Honan at Gizmodo, an account of how Yahoo bought Flickr and then frittered away all its potential.

Because Flickr wasn't as profitable as some of the other bigger properties, like Yahoo Mail or Yahoo Sports, it wasn't given the resources that were dedicated to other products. That meant it had to spend its resources on integration, rather than innovation. Which made it harder to attract new users, which meant it couldn't make as much money, which meant (full circle) it didn't get more resources. And so it goes.

As a result of being resource-starved, Flickr quit planting the anchors it needed to climb ever higher. It missed the boat on local, on real time, on mobile, and even ultimately on social-the field it pioneered. And so, it never became the Flickr of video; YouTube snagged that ring. It never became the Flickr of people, which was of course Facebook. It remained the Flickr of photos. At least, until Instagram came along.

The business lessons of PatagoniaMay 10 2012

A profile of Yvon Chouinard, the founder of Patagonia and an unlikely business guru.

Then he looked at everything Patagonia made, shipped or processed, and resolved to do it all more responsibly. He changed materials, switching in 1996 from conventional to organic cotton-despite the fact that it initially tripled his supply costs-because it was less harmful to the environment. He created fleece jackets made entirely from recycled soda bottles. He vowed to create products durable enough and timeless enough that people could replace them less often, reducing waste. He put "The Footprint Chronicles" up on Patagonia's website, exhaustively cataloging the environmental damage done by his own company. He now takes responsibility for every item Patagonia has ever made -- promising either to replace it if the customer is dissatisfied, repair it (for a reasonable fee), help resell it (Patagonia facilitates exchanges of used clothes on its website), or recycle it when at last it's no longer wearable.

Posting this partially for my wife, who is a life-long Patagonia customer.

How Mark Zuckerberg became a good CEOMay 09 2012

Writing for New York magazine, Henry Blodget explains how a young startup founder and college dropout became the CEO of a soon-to-be $100 billion company.

When talking about Zuckerberg's most valuable personality trait, a colleague jokingly invokes the famous Stanford marshmallow tests, in which researchers found a correlation between a young child's ability to delay gratification -- devour one treat right away, or wait and be rewarded with two -- with high achievement later in life. If Zuckerberg had been one of the Stanford scientists' subjects, the colleague jokes, Facebook would never have been created: He'd still be sitting in a room somewhere, not eating marshmallows.

Apple should buy Square and FoursquareApr 30 2012

Huh, this is an interesting idea: Apple should acquire both Foursquare and Square.

To summarize: after the deal, Apple will immediately become a giant payments company, with an installation base that is expected to encompass half of all mobile devices sold. The company will have the best local search abilities, far exceeding any existing recommendation engine. And due to its enormous reach, it will possess a payment system that merchants will line up to support.

Lenny Dykstra never grew upApr 23 2012

Remember this New Yorker profile of Lenny Dykstra's "improbable post-career success story"?

Dykstra ordered a Coke and French fries with ketchup: "And I'm actually going to have that as my meal-might be the oddest order of the day." (Healthy living was never his specialty.) When the Coke arrived, he sent it back, believing it to be Diet. After the fries were delivered, he made a show of extracting a "You're welcome" from the waiter, who had since moved on to another table. "I pay a thousand bucks a night -- actually, three thousand bucks a night -- and people are discourteous," he said, shaking his head. "There's some point in life when you have to grow up."

For many ballplayers, the growing-up point does not arrive until after retirement, when all the freebies vanish and equipment managers and hotel maids can no longer be relied upon for regular laundry service. Dykstra last played in the majors in 1996, at age thirty-three. Improbably, he has since become a successful day trader, and he let me know that he owns both a Maybach ("the best car") and a Gulfstream ("the best jet"). The occasion for our lunch, however, was a new venture: Dykstra is launching a magazine, intended specifically for pro athletes, called The Players Club. An unfortunate number of his former teammates have ended up broke, or divorced, or worse. The week before we met, the ex-Yankee Jim Leyritz, himself twice divorced and underemployed, had hit a woman while driving home from a bar. He never grew up.

"You've got the ten per cent who are going to find their way no matter what," Dykstra said of the athlete population. "And you get the ten per cent that are fuckheads no matter what-- we'll paste an 'L' to 'em." The rest need guidance, and Dykstra, who will write a regular column called "The Game of Life," is prepared to give it. "This will be the world's best magazine," he said.

Since then, Dykstra has declared bankruptcy, divorced from his wife, was sentenced to three years in state prison for grand theft auto (and several other charges), and most recently was sentenced to nine months in jail for assault and indecent exposure. He's also awaiting trial on federal bankruptcy fraud charges.

The lost years of Steve JobsApr 18 2012

Brent Schlender interviewed Steve Jobs many times over the past 25 years and recently rediscovered the audio tapes of those interviews. What he found was in those years between his departure from Apple in 1985 to his return in 1996, Jobs learned how to become a better businessman and arguably a better person.

The lessons are powerful: Jobs matured as a manager and a boss; learned how to make the most of partnerships; found a way to turn his native stubbornness into a productive perseverance. He became a corporate architect, coming to appreciate the scaffolding of a business just as much as the skeletons of real buildings, which always fascinated him. He mastered the art of negotiation by immersing himself in Hollywood, and learned how to successfully manage creative talent, namely the artists at Pixar. Perhaps most important, he developed an astonishing adaptability that was critical to the hit-after-hit-after-hit climb of Apple's last decade. All this, during a time many remember as his most disappointing.

The discussion of the lessons he took from Pixar and put into Apple was especially interesting.

And just as he had at Pixar, he aligned the company behind those projects. In a way that had never been done before at a technology company--but that looked a lot like an animation studio bent on delivering one great movie a year--Jobs created the organizational strength to deliver one hit after another, each an extension of Apple's position as the consumer's digital hub, each as strong as its predecessor. If there's anything that parallels Apple's decade-long string of hits--iMac, PowerBook, iPod, iTunes, iPhone, iPad, to list just the blockbusters--it's Pixar's string of winners, including Toy Story, Monsters, Inc., Finding Nemo, The Incredibles, WALL-E, and Up. These insanely great products could have come only from insanely great companies, and that's what Jobs had learned to build.

Valve Software's usual approach to building a creative businessApr 16 2012

Michael Abrash discusses how he came to work for Valve Software (he coauthored Quake with John Carmack back in the day) and, more interestingly, what Valve is like as a company.

The idea that a 10-person company of 20-somethings in Mesquite, Texas, could get its software on more computers than the largest software company in the world told him that something fundamental had changed about the nature of productivity. When he looked into the history of the organization, he found that hierarchical management had been invented for military purposes, where it was perfectly suited to getting 1,000 men to march over a hill to get shot at. When the Industrial Revolution came along, hierarchical management was again a good fit, since the objective was to treat each person as a component, doing exactly the same thing over and over.

The success of Doom made it obvious that this was no longer the case. There was now little value in doing the same thing even twice; almost all the value was in performing a valuable creative act for the first time. Once Doom had been released, any of thousands of programmers and artists could create something similar (and many did), but none of those had anywhere near the same impact. Similarly, if you're a programmer, you're probably perfectly capable of writing Facebook or the Google search engine or Twitter or a browser, and you certainly could churn out Tetris or Angry Birds or Words with Friends or Farmville or any of hundreds of enormously successful programs. There's little value in doing so, though, and that's the point - in the Internet age, software has close to zero cost of replication and massive network effects, so there's a positive feedback spiral that means that the first mover dominates.

If most of the value is now in the initial creative act, there's little benefit to traditional hierarchical organization that's designed to deliver the same thing over and over, making only incremental changes over time. What matters is being first and bootstrapping your product into a positive feedback spiral with a constant stream of creative innovation. Hierarchical management doesn't help with that, because it bottlenecks innovation through the people at the top of the hierarchy, and there's no reason to expect that those people would be particularly creative about coming up with new products that are dramatically different from existing ones - quite the opposite, in fact. So Valve was designed as a company that would attract the sort of people capable of taking the initial creative step, leave them free to do creative work, and make them want to stay. Consequently, Valve has no formal management or hierarchy at all.

I wonder if Tim Cook's recent visit to Valve is less about collaboration on specific products and more about Apple's curiosity about their process. (Probably not, but fun to think about.)

Design is a JobApr 10 2012

Out today: Mike Monteiro's Design is a Job. The book is an important reminder that how effective you are as a designer depends on many things aside from what you can do in Photoshop or InDesign. You need to build a stable environment for yourself (and your employees) to do your best work: you need to get clients, know how to talk to them, set up a stable and sustainable business, collaborate with others, etc. etc. For a taste of what the book has to offer, A List Apart has an excerpt of the second chapter, Getting Clients.

The biggest lie in this book would be if I told you I don't worry about where the next client is coming from. I could tell you that once you build up enough of a portfolio, or garner enough experience, or achieve a certain level of notoriety in the industry, this won't be a concern anymore. I could tell you I sleep soundly, not bolting out of bed at 4 a.m. to run laps around the local high school track. I could tell you that I never worry about enough presents under the tree. I could tell you these things, but I'd be lying. And I don't want to lie to you. Getting clients is the most petrifying and scary thing I can think of in the world. I'd rather wrestle lady Bengal tigers in heat with meat strapped to my genitals than look for new clients.

If putting in the work to get the kind of work you want to do sounds too daunting, then close this book right now. Walk away. Rethink your life choices and take up a less stressful craft, like cleaning out cobra pits. Do it. No one will think less of you. Cover yourself in sackcloth and pray to your god for penance.

Go!

Gotta spend money to make moneyApr 05 2012

Uniqlo, Costco, and Trader Joe's are among the large retailers that are making more money by hiring more retail employees, which runs counter to the conventional wisdom.

The big challenge for any retailer is to make sure that the people coming into the store actually buy stuff, and research suggests that not scrimping on payroll is crucial. In a study published at the Wharton School, Marshall Fisher, Jayanth Krishnan, and Serguei Netessine looked at detailed sales data from a retailer with more than five hundred stores, and found that every dollar in additional payroll led to somewhere between four and twenty-eight dollars in new sales. Stores that were understaffed to begin with benefitted more, stores that were close to fully staffed benefitted less, but, in all cases, spending more on workers led to higher sales. A study last year of a big apparel chain found that increasing the number of people working in stores led to a significant increase in sales at those stores.

(thx, david)

Ex-employees of Google, Goldman Sachs, and Yahoo have their sayMar 14 2012

There seems to be something in the air. Within the last day or so, three ex-employees have written about why their feelings have changed about three formerly beloved companies. James Whittaker recently left Google:

The Google I was passionate about was a technology company that empowered its employees to innovate. The Google I left was an advertising company with a single corporate-mandated focus. [...] Suddenly, 20% meant half-assed. Google Labs was shut down. App Engine fees were raised. APIs that had been free for years were deprecated or provided for a fee. As the trappings of entrepreneurship were dismantled, derisive talk of the "old Google" and its feeble attempts at competing with Facebook surfaced to justify a "new Google" that promised "more wood behind fewer arrows."

The days of old Google hiring smart people and empowering them to invent the future was gone. The new Google knew beyond doubt what the future should look like. Employees had gotten it wrong and corporate intervention would set it right again.

The whole thing is worth a read, what with damning phrases like "social isn't a product, social is people and the people are on Facebook" sprinkled liberally about.

In the NY Times this morning, Greg Smith writes that it's his last day at Goldman Sachs after almost 12 years at the firm.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world's largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs's success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients' trust for 143 years. It wasn't just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

There's that saying: "If you're not paying for something, you're not the customer; you're the product being sold." Google's product has always been the people using their products and it sounds like Goldman has made a sizable shift in that direction.

Andy Baio hasn't worked for Yahoo for several years, but after the company announced they were filing a patent-infringement lawsuit against Facebook, Baio wrote of his displeasure about the move at Wired.

Yahoo's lawsuit against Facebook is an insult to the talented engineers who filed patents with the understanding they wouldn't be used for evil. Betraying that trust won't be forgotten, but I doubt it matters anymore. Nobody I know wants to work for a company like that.

I'm embarrassed by the patents I filed, but I've learned from my mistake. I'll never file a software patent again, and I urge you to do the same.

For years, Yahoo was mostly harmless. Management foibles and executive shuffles only hurt shareholders and employee morale. But in the last few years, the company's incompetence has begun to hurt the rest of us. First, with the wholesale destruction of internet history, and now by attacking younger, smarter companies.

Yahoo tried and failed, over and over again, to build a social network that people would love and use. Unable to innovate, Yahoo is falling back to the last resort of a desperate, dying company: litigation as a business model.

Yahoo seems to be in a different stage in its lifecycle than Google or Goldman. In the mid-to-late 2000s, they tried what Google is trying now and failed and now, as Baio notes, they are trying everything they can to survive, like the T-1000 writhing in the molten steel at the end of Terminator 2. Perhaps a harbinger of things to come for Google and Goldman?

The Spanx billionaireMar 09 2012

Sara Blakely is one of the few women who has joined the Forbes Billionaires list without help from a spouse or an inheritance. She came up with the idea for Spanx and spent two years and $5000 developing it and the $1 billion company it would become.

Blakely, then 27, moved to Atlanta, set aside her entire $5,000 savings and spent the next two years meticulously planning the launch of her product while working nine to five at Danka. She spent seven nights straight at the Georgia Tech library researching every hosiery patent ever filed. She visited craft stores like Michaels to find the right fabrics. She sought out hosiery mills in the Yellow Pages and started cold calling, only to be told no repeatedly. Immune to rejection thanks to years selling door-to-door, she decided just to show up. At the Acme-McCrary hosiery factory in Asheboro, N.C., she was turned away, only to receive a call from the manager two weeks later. He had daughters, he told her, who wouldn't let him pass up her invention.

In the future, everything will be a coffee shopFeb 28 2012

Over at The Speculist, Stephen Gordon argues that with the ever increasing availability of online goods and services, universities, book stores, retail shops, and offices will all shrink to the size of coffee shops.

My Christmas shopping this year was 90% through Amazon Prime. Not having to fight the crowds and having it delivered free of charge to my home is a big plus, but as with the Kindle store, the online retail selection is much better that even the largest retail outlet.

Which is more enjoyable: Starbucks or Walmart? For the sane: Starbucks. So if you can accomplish your Walmart shopping at Starbucks, why do it any other way?

Also, imagine the 3D print shop of the future. You put in your order, probably from your smart phone, and then go pick it up. What does the lobby of such a business look like? Again: a coffee shop.

Rap music business lessonsFeb 21 2012

Silicon Valley venture capitalist Ben Horowitz frequently turns to rap music for business wisdom.

Much of rap is about business, whether the drug business, the music industry or work ethic, said Adam Bradley, an associate professor specializing in African-American literature at the University of Colorado at Boulder who wrote "Book of Rhymes: The Poetics of Hip Hop" and co-edited "The Anthology of Rap."

"It comes out of the fact that rap is such a direct mode of expression, maybe more so than any other music lyric, because of the emphasis on language, of words above melody or harmony," Mr. Bradley said.

People think of rap lyrics as being only about money, women, status and cocaine, he said, but more pervasive themes are leadership, collaboration and the vulnerability beneath the swagger -- all relevant in business.

Reminds me of this line by Jonah Peretti:

"Remember, you're not selling out," Jonah Peretti, a co-founder of the Huffington Post, told Denton. "You're blowing up. Think in terms of hip-hop, not indie rock."

A brief history of the American pawn shopFeb 13 2012

Wendy Woloson on pawn shops, which are currently getting the reality TV treatment.

According to the National Pawnbrokers Association, a trade group, there are now more than 30 million pawnshop customers per year. The value of the average loan in 2009 was $100, up 20 percent from the previous year. About 80 percent of pawners pay off their loans and redeem their collateral, though redemptions are on the decline.

(via ★whitneymcn)

Chinese Oreos are tube-shapedJan 30 2012

Well some of them are. The plain old American Oreo didn't sell so well in China, so Kraft had to rethink everything about the cookie.

It turns out that if you didn't grow up with Oreos and develop an emotional attachment to the cookie, it can be a weird-tasting little thing. And this started a whole process in the Chinese division of Kraft of rethinking what the essence of an Oreo really is.

Key terms in this article include "the essence of Oreoness" and "Twist, Lick, Dunk".

When Kickstarter goes wrongJan 17 2012

Matt Haughey shares a bad experience he had backing a Kickstarter project and what the project creators could have done to avoid it.

This is the story of the worst project I've funded on Kickstarter. I am posting this not to single out the creators behind it, or bad mouth their business, but to go over my disappointment in the hopes that future Kickstarter project creators can learn from it. It's all about communication with your funders, setting up and delivering on expectations for funders, and doing the right thing when things go wrong.

Shipping a product or app is hard. It requires experience, hard work, and a little luck. But providing effective and genuine customer service might be even harder because you just have sit there, take it, and react well under pressure over and over and over. The entrepreneur side of your brain is saying "this is a great product and I am proud of it and anyone who says otherwise is wrong and I will show them and succeed" and sometimes customer service is acknowledging publicly and repeatedly the exact opposite thing...that the product isn't meeting needs, you are right, we will fix it, and thank you sir may I have another? That's a lot of potential cognitive dissonance! The best teams and companies deflect that dissonance and turn customer service problems into opportunities to improve their products, their teams, and their relationships with their customers (current and potential). That's when the magic happens.

Working in solitude on the declineJan 17 2012

Susan Cain argues that the lack of privacy and freedom from interruption in modern offices might not be the best way for those office employees to be creative...particularly for introverts.

The New Groupthink has overtaken our workplaces, our schools and our religious institutions. Anyone who has ever needed noise-canceling headphones in her own office or marked an online calendar with a fake meeting in order to escape yet another real one knows what I'm talking about. Virtually all American workers now spend time on teams and some 70 percent inhabit open plan offices, in which no one has "a room of one's own." During the last decades, the average amount of space allotted to each employee shrank 300 square feet, from 500 square feet in the 1970s to 200 square feet in 2010.

The new offices of Foursquare and Buzzfeed (where I work from) are a perfect example of the New Groupthink Cain refers to....rows and rows of people sitting next to each other in open spaces. Much of this is because of NYC's insane rental market, but Fog Creek's offices are a nice counterexample:

Every developer, tester, and program manager is in a private office; all except two have direct windows to the outside (the two that don't get plenty of daylight through two glass walls).

Startup lessons from a crime bossJan 09 2012

An entrepreneur shares the business lessons imparted to him by a organized crime boss.

Interesting things happen when we cut out the middleman. In addition to reducing cost, we often end up creating an internal byproduct that can be productized and sold to a completely new customer. (Amazon Web Services is an example of this.) Sometimes the middleman's market is so huge, that a freaking enormous business can be built simply by providing their customers a lower cost and more efficient option.

Why are movie revenues dropping?Dec 29 2011

Roger Ebert takes a crack at explaining why fewer and fewer people are going to see movies in theaters.

The message I get is that Americans love the movies as much as ever. It's the theaters that are losing their charm. Proof: theaters thrive that police their audiences, show a variety of titles and emphasize value-added features. The rest of the industry can't depend forever on blockbusters to bail it out.

This and the maximizing shareholder value thing seem to be related.

Maximizing shareholder value is "the dumbest idea in the world"Dec 29 2011

Steve Denning, writing in Forbes:

In today's paradoxical world of maximizing shareholder value, which Jack Welch himself has called "the dumbest idea in the world", the situation is the reverse. CEOs and their top managers have massive incentives to focus most of their attentions on the expectations market, rather than the real job of running the company producing real products and services.

Denning is summarizing the ideas contained in Roger Martin's new book, Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL.

In Fixing the Game, Roger Martin reveals the culprit behind the sorry state of American capitalism: our deep and abiding commitment to the idea that the purpose of the firm is to maximize shareholder value. This theory has led to a massive growth in stock-based compensation for executives and, through this, to a naive and wrongheaded linking of the real market -- the business of designing, making, and selling products and services -- with the expectations market -- the business of trading stocks, options, and complex derivatives. Martin shows how this tight coupling has been engineered and lays out its results: a single-minded focus on the expectations market that will continue driving us from crisis to crisis -- unless we act now.

(thx, david)

Louis C.K.'s giant pool of moneyDec 22 2011

Louis C.K. recently put out a self-produced comedy album that he sold exclusively from his web site for only $5. The album has sold 200,000 copies, grossing him $1,000,000. He's keeping a bit less than a quarter of that, a quarter is going towards recouping production costs, but the rest is going to charity and for bonuses for his employees.

I've never had a million dollars all of a sudden. and since we're all sharing this experience and since it's really your money, I wanted to let you know what I'm doing with it. People are paying attention to what's going on with this thing. So I guess I want to set an example of what you can do if you all of a sudden have a million dollars that people just gave to you directly because you told jokes.

What a wonderful thing.

Amazon's long-term thinkingDec 21 2011

Amazon is somewhat of an unusual company for American investors because it focuses on the long-term (10- 20-year timelines) instead of the short-term (quarterly earnings).

"If everything you do needs to work on a three-year time horizon, then you're competing against a lot of people," Mr. Bezos told reporter Steve Levy last month in an interview in Wired. "But if you're willing to invest on a seven-year time horizon, you're now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We're willing to plant seeds, let them grow-and we're very stubborn."

Like Apple, Amazon is one of those large market cap growth stocks that investors don't really know what to do with. Both stocks are still undervalued compared to much of the rest of the market, IMO.

McRibonomicsNov 09 2011

This is likely the best piece you'll read about the economics of the McRib and McDonald's motivation in its periodic reintroduction.

At this volume, and with the impermanence of the sandwich, it only makes sense for McDonald's to treat the sandwich as a sort of arbitrage strategy: at both ends of the product pipeline, you have a good being traded at such large volume that we might as well forget that one end of the pipeline is hogs and corn and the other end is a sandwich. McDonald's likely doesn't think in these terms, and neither should you.

Oh and speaking of pipelines:

And for its part, the McRib makes a mockery of this whole terribly labor-intensive system of barbecue, turning it into a capital-intensive one. The patty is assembled by machinery probably babysat by some lone sadsack, and it is shipped to distribution centers by black-beauty-addicted truckers, to be shipped again to franchises by different truckers, to be assembled at the point of sale by someone who McDonald's corporate hopes can soon be replaced by a robot, and paid for using some form of electronic payment that will eventually render the cashier obsolete.

There is no skilled labor involved anywhere along the McRib's Dickensian journey from hog to tray, and certainly no regional variety, except for the binary sort -- Yes, the McRib is available/No, it is not -- that McDonald's uses to promote the product. And while it hasn't replaced barbecue, it does make a mockery of it.

(via @joeljohnson)

Working with ZuckOct 26 2011

More than a year ago, Facebook engineer Andrew Bosworth wrote a post about how best to work with Facebook CEO Mark Zuckerberg.

I think one of the biggest mistakes people make when first working with Zuck is feeling that they can't push back. As long as I have been at Facebook, I have been impressed with how much he prefers to be part of an ongoing discussion about the product as opposed to being its dictator. There are a number of exceptions to this, of course, but that comes with the territory. In those instances where he is quite sure what he wants, I find he is quite good at making his decisions clear and curtailing unneeded debate.

Barring that, you should feel comfortable noting potential problems with a proposal of his or, even better, suggesting alternative solutions. You shouldn't necessarily expect to change his mind on the spot, but I find it is common for discussions to affect his thinking over a longer time period. Don't necessarily expect acknowledgment for your role in moving the discussion forward; getting the product right should be its own reward. If you do that, you'll find you are invited back more and more to the debate.

Facebook is certainly an interesting company...they're a large company that appears to operate much like a small company. Will be interesting to see if they can keep that up as they get larger, go public, etc.

The genesis of Virgin AtlanticOct 24 2011

I'd never heard the story of how Richard Branson started Virgin Atlantic...interesting story.

In '79, when Joan, my fiancee and I were on a holiday in the British Virgin Islands, we were trying to catch a flight to Puerto Rico; but the local Puerto Rican scheduled flight was cancelled. The airport terminal was full of stranded passengers. I made a few calls to charter companies and agreed to charter a plane for $2000 to Puerto Rico. Cheekily leaving out Joan's and my name, I divided the price by the remaining number of passengers, borrowed a blackboard and wrote: VIRGIN AIRWAYS: $39 for a single flight to Puerto Rico.

(via bryce dot vc)

The capitalist cabalOct 21 2011

An analysis by complex systems theorists at the Swiss Federal Institute of Technology reveals that a "super-entity" of just 147 companies that controls 40% of the wealth among the world's transnational corporations. And even worse is how tightly integrated these companies are...large pieces tightly coupled is a recipe for economic disaster.

John Driffill of the University of London, a macroeconomics expert, says the value of the analysis is not just to see if a small number of people controls the global economy, but rather its insights into economic stability.

Concentration of power is not good or bad in itself, says the Zurich team, but the core's tight interconnections could be. As the world learned in 2008, such networks are unstable. "If one [company] suffers distress," says Glattfelder, "this propagates."

"It's disconcerting to see how connected things really are," agrees George Sugihara of the Scripps Institution of Oceanography in La Jolla, California, a complex systems expert who has advised Deutsche Bank.

The Bank of StarbucksOct 20 2011

I read this the other day and didn't link to it because I thought it would get a lot of attention elsewhere...but it didn't, so here you go. Starbucks is starting a program to help their customers lend money to small businesses.

Here's the idea they came up with: Americans themselves would start lending to small businesses, with Starbucks serving as the middleman. Starbucks would find financial institutions willing to loan to small businesses. Starbucks customers would be able to donate money to the effort when they bought their coffee. Those who gave $5 or more would get a red-white-and-blue wristband, which Schultz labeled "Indivisible." "We are hoping it will bring back pride in the American dream," he says. The tag line will read: "Americans Helping Americans."

This should be a bigger story, shouldn't it? Banks seem less and less interested in lending money to people as their primary business and things like Kickstarter and this Starbucks initiative are taking their place.

Unicorns and wheels: Apple's two types of productsOct 05 2011

A common reaction to Apple's announcement of the iPhone 4S yesterday was disappointment...Mat Honan's post at Gizmodo for instance.

I was hoping for something bold and interesting looking. The iPhone 4 was just that when it shipped. So too were the original iPhone and the iPhone 3G. If I'm going to buy a new phone, of course I want it to look new. Because of course we care about having novel designs. If we didn't we'd all be lugging around some 10-inch thick brick with a 12 day battery life.

Mat's is an understandable reaction. After I upgraded my iPhone, Macbook Pro, and OS X all at once two years ago, I wrote about Apple's upgrade problem:

From a superficial perspective, my old MBP and new MBP felt exactly the same...same OS, same desktop wallpaper, same Dock, all my same files in their same folders, etc. Same deal with the iPhone except moreso...the iPhone is almost entirely software and that was nearly identical. And re: Snow Leopard, I haven't noticed any changes at all aside from the aforementioned absent plug-ins.

So, just having paid thousands of dollars for new hardware and software, I have what feels like my same old stuff.

Deep down, when I stop to think about it, I know (or have otherwise convinced myself) that these purchases were worth it and that Apple's ease of upgrade works almost exactly how it should. But my gut tells me that I've been ripped off. The "newness" cognitive jolt humans get is almost entirely absent.

For me, yesterday's event, Apple's continued success in innovation *and* business, and the recent CEO change provided a different perspective: that Apple makes two very complementary types of products and we should be excited about both types.

The first type of product is the most familiar and is exemplified by Steve Jobs: Apple makes magical products that shape entire industries and modify social structures in significant ways. These are the bold strokes that combine technology with design in a way that's almost artistic: Apple II, Macintosh, iPod, iPhone, and iPad. When they were introduced, these products were new and exciting and no one quite knew where those products were going to take us (Apple included). That's what people want to see when they go to Apple events: Steve Jobs holding up a rainbow-hued unicorn that you can purchase for your very own.

The second type of product is less noticed and perhaps is best exemplified by Apple's new CEO, Tim Cook: identify products and services that work, continually refine them, innovate at the margins (the addition of Siri to the iPhone 4S is a good example of this), build interconnecting ecosystems around them, and put processes and infrastructure in place to produce ever more of these items at lower cost and higher profit. The wheel has been invented; now we'll perfect it. This is where Apple is at with the iPhone now, a conceptually solved problem: people know what they are, what they're used for, and Apple's gonna knuckle down and crank out ever better/faster/smarter versions of them in the future. Many of Apple's current products are like this, better than they have ever been, more popular than they have ever been, but there's nothing magical about them anymore: iPhone 4S, iPod, OS X, iMacs, Macbooks, etc.

The exciting thing about this second type of product, for investors and consumers alike, is Apple is now expert at capturing their lightning in a bottle. 'Twas not always so...Apple wasn't able to properly capitalize on the success of the Macintosh and it almost killed the company. What Tim Cook ultimately held up at Apple's event yesterday is a promise: there won't be a return to the Apple of the 1990s, when the mighty Macintosh devolved into a flaky, slow, and (adding insult to injury) expensive klunker and they couldn't decide on a future direction for their operating system (remember Copland?). There will be an iPhone 5 in the future and it will be better than the iPhone 4S in significant & meaningful ways but it will also *just work*. And while that might be a bit boring to Apple event watchers, this interconnected web of products is the thing that makes the continued development of the new and magical products possible.

Things that Apple is worth more thanSep 21 2011

New Tumblr: Things Apple is Worth More Than. Such as: the GDP of Singapore, every single home in Atlanta, Georgia, and all the illegal drugs in the world.

Netflix explodes into two companiesSep 19 2011

Qwikster will rent you DVDs and Netflix will rent you streaming movies. Two separate sites/companies, no interop, you have to sub to both separately, etc. Here's the explanation from Netflix CEO Reed Hastings. This seems amazingly dumb at first blush. (ps. Qwikster?!!)

Update: This is an excellent level-headed analysis of the deal from Dan Frommer.

Netflix's holy grail is to get each person, not each household, to have a separate streaming subscription, the way everyone also has a separate Facebook account. Separating a per-household service like DVD rentals-by-mail helps simplify that eventual transition.

Primed to shopSep 16 2011

Using Whole Foods as an example, Martin Lindstrom shows how retail stores use subtle tactics to get people to buy more than they might have otherwise.

Speaking of fruit, you may think a banana is just a banana, but it's not. Dole and other banana growers have turned the creation of a banana into a science, in part to manipulate perceptions of freshness. In fact, they've issued a banana guide to greengrocers, illustrating the various color stages a banana can attain during its life cycle. Each color represents the sales potential for the banana in question. For example, sales records show that bananas with Pantone color 13-0858 (otherwise known as Vibrant Yellow) are less likely to sell than bananas with Pantone color 12-0752 (also called Buttercup), which is one grade warmer, visually, and seems to imply a riper, fresher fruit. Companies like Dole have analyzed the sales effects of all varieties of color and, as a result, plant their crops under conditions most ideal to creating the right 'color.'

(via @daveg)

As the book business changes, so do the bookshelvesSep 09 2011

Ikea is modifying their popular Billy bookcase to hold more than just books.

TO SEE how profoundly the book business is changing, watch the shelves. Next month IKEA will introduce a new, deeper version of its ubiquitous "BILLY" bookcase. The flat-pack furniture giant is already promoting glass doors for its bookshelves. The firm reckons customers will increasingly use them for ornaments, tchotchkes and the odd coffee-table tome-anything, that is, except books that are actually read.

In the first five months of this year sales of consumer e-books in America overtook those from adult hardback books. Just a year earlier hardbacks had been worth more than three times as much as e-books, according to the Association of American Publishers. Amazon now sells more copies of e-books than paper books. The drift to digits will speed up as bookshops close. Borders, once a retail behemoth, is liquidating all of its American stores.

As the bookshelf industry scrambles to retool, a Kindle cozy industry rises. (via @austinkleon)

Have you ever tried to sell a diamond?Aug 30 2011

From the Feb 1982 issue of Atlantic Monthly, an article by Edward Jay Epstein on how diamonds became so popular and so valuable.

By 1941, The advertising agency reported to [De Beers] that it had already achieved impressive results in its campaign. The sale of diamonds had increased by 55 percent in the United States since 1938, reversing the previous downward trend in retail sales. N. W. Ayer noted also that its campaign had required "the conception of a new form of advertising which has been widely imitated ever since. There was no direct sale to be made. There was no brand name to be impressed on the public mind. There was simply an idea -- the eternal emotional value surrounding the diamond." It further claimed that "a new type of art was devised ... and a new color, diamond blue, was created and used in these campaigns.... "

In its 1947 strategy plan, the advertising agency strongly emphasized a psychological approach. "We are dealing with a problem in mass psychology. We seek to ... strengthen the tradition of the diamond engagement ring -- to make it a psychological necessity capable of competing successfully at the retail level with utility goods and services...." It defined as its target audience "some 70 million people 15 years and over whose opinion we hope to influence in support of our objectives." N. W. Ayer outlined a subtle program that included arranging for lecturers to visit high schools across the country. "All of these lectures revolve around the diamond engagement ring, and are reaching thousands of girls in their assemblies, classes and informal meetings in our leading educational institutions," the agency explained in a memorandum to De Beers. The agency had organized, in 1946, a weekly service called "Hollywood Personalities," which provided 125 leading newspapers with descriptions of the diamonds worn by movie stars. And it continued its efforts to encourage news coverage of celebrities displaying diamond rings as symbols of romantic involvement. In 1947, the agency commissioned a series of portraits of "engaged socialites." The idea was to create prestigious "role models" for the poorer middle-class wage-earners. The advertising agency explained, in its 1948 strategy paper, "We spread the word of diamonds worn by stars of screen and stage, by wives and daughters of political leaders, by any woman who can make the grocer's wife and the mechanic's sweetheart say 'I wish I had what she has.'"

It's fascinating to watch the advertising beast change its tactics as the diamond monopoly's needs shift with new supply, new markets, and unexpected success.

Steve Jobs and Norman FosterAug 29 2011

There's been a lot written about Steve Jobs in the past week, a lot of it worthy of reading, but one piece you probably didn't see is David Galbraith's piece on Jobs' similarity to architect Norman Foster. The essay is a bit all over the place, which replicates the experience of talking to David in person, but it's littered with insight and goodness (ditto).

The answer is what might be called the sand pile model and it operated at Apple and Fosters, the boss sits independently from the structural hierarchy, to some extent, and can descend at random on a specific element at will. The boss maintains control of the overall house style by cleaning up the edges at the same time as having a vision for the whole, like trying to maintain a sand pile by scooping up the bits that fall off as it erodes in the wind. This is the hidden secret of design firms or prolific artists, the ones where journalists or historians agonize whether a change in design means some new direction when it just means that there was a slip up in maintaining the sand pile.

And I love this paragraph, which integrates Foster, Jobs, the Soviet Union, Porsche, Andy Warhol, Lady Gaga, and even an unspoken Coca-Cola into an extended analogy:

Perfecting the model of selling design that is compatible with big business, Foster simultaneously grew one of the largest architecture practices in the world while still winning awards for design excellence. The secret was to design buildings like the limited edition, invite only Porsches that Foster drove and fellow Porsche drivers would commission them. Jobs went further, however, he managed to create products that were designed like Porsches and made them available to everyone, via High Tech that transcended stylistic elements. An Apple product really was high technology and its form followed function, it went beyond the Porsche analogy by being truly fit for purpose in a way that a Porsche couldn't, being a car designed for a speed that you weren't allowed to drive. Silicon Valley capitalism had arguably delivered what the Soviets had dreamed of and failed, modernism for the masses. An iPhone really is the best phone you can buy at any price. To paraphrase Andy Warhol: Lady Gaga uses an iPhone, and just think, you can have an iPhone too. An iPhone is an iPhone and no amount of money can get you a better phone. This was what American modernism was about.

OS X Lion is outJul 20 2011

And as usual, the definitive review of any new version of OS X is John Siracusa's for Ars Technica. This time around, it runs 19 pages. If that's not to your liking, you can just download Lion right now from the Mac App Store for $30.

Two other misc Apple thoughts: 1) They appear to have discontinued the MacBook. There are Airs and Pros but no plain-old MacBooks. 2) Apple Inc, already among the largest companies in the world in terms of market cap, announced yesterday that the company's "revenue [is] up 82 percent and profits [are] up 125 percent" over the same quarter last year. That level of growth in such a big company...that's just astounding. And much of the revenue and profit are from products that didn't exist even five years ago...the iPad alone was a ~$5 billion business in Q3 (for comparison, Google had $9 billion in total revenues in Q2). If that's not unprecedented, it's damn close.

In Next, the seeds of AppleJul 06 2011

From 1990, a NY Times article on a new factory built by Next, the company Steve Jobs started after he left Apple. The more you learn about Next, the more you realize just how much Next DNA there is in the current incarnation of Apple. The story of Apple's second coming could easily be written as the triumph of Next. This section from the middle of the article articulates perfectly Apple's current approach to manufacturing:

Indeed, critics of Mr. Jobs, who is 35 years old, say he is wasting his money by building a factory at this point. With the small number of machines he is building today, it would have been cheaper simply to contract with other companies to assemble the computers, they say.

But Dr. Piszczalski said the initial high investment in an automated factory may permit Next more control of its expenses while volumes are low.

And backers of Mr. Jobs note that he has a long-term strategy in which manufacturing makes sense. "Steve will be in business for the long pull," said H. Ross Perot, one of Next's investors. "He's not in business for six months."

Next's products have yet to gain a significant share of the marketplace, but Mr. Jobs, who has a reputation for painstaking attention to detail and a passion for the importance of manufacturing, argues that by linking this flexible factory more closely than ever to Next's research and development process, his company can gain a strategic advantage in the industry that will eventually pay off in larger sales.

In Mr. Jobs's view, the factory testifies to the fact that the United States can still compete as both a low-cost and a world-class manufacturer when it sets its mind to the task.

Mr. Jobs said he modeled the factory after those of Japanese corporations like the Sony Corporation that have perfected a design-for-manufacturing strategy that transforms the factory floor into an extension of the company research and development center.

Update: Next made a documentary on how computers are made at the new factory.

That's got to be a Hans Zimmer soundtrack, yes? (via @mgrdcm)

Crazy job interview questionsJun 24 2011

CBS MoneyWatch recently posted a list of unusual questions asked in job interview at companies like Google, Facebook, and Pottery Barn. Over at The Morning News, Giles Turnbull decided to answer them all.

UBS: If we were playing Russian roulette and had one bullet, I randomly spun the chamber and fired but nothing was fired. Would you rather fire the gun again or respin the chamber and then fire on your turn?

I'd rather get the fuck out of your office and run away very fast. What the hell are you people on? Haven't you heard of email? Or official dispute procedures? Jesus.

Based on his answer to P&G's "sell me an invisible pen", I'd hire Turnbull in a second if I were selling invisible pens.

A Brief History of the Corporation: 1600 to 2100Jun 17 2011

Venkat Rao has written a fascinating post on the history of the corporation and, in his estimation, the end of the Golden Age of corporations. From Fareed Zakaria, here's a small taste of what the corporations helped do in the West:

We get a much clearer picture of the real standing of countries if we consider economic growth and GDP per capita. Western Europe GDP per capita was higher than that of both China and India by 1500; by 1600 it was 50% higher than China's. From there, the gap kept growing. Between 1350 and 1950 -- six hundred years -- GDP per capita remained roughly constant in India and China (hovering around $600 for China and $550 for India). In the same period, Western European GDP per capita went from $662 to $4,594, a 594 percent increase.

But in the future, corporations will find it more difficult to achieve such easy growth:

Attention behaves the same way. Take an average housewife, the target of much time mining early in the 20th century. It was clear where her attention was directed. Laundry, cooking, walking to the well for water, cleaning, were all obvious attention sinks. Washing machines, kitchen appliances, plumbing and vacuum cleaners helped free up a lot of that attention, which was then immediately directed (as corporate-captive attention) to magazines and television.

But as you find and capture most of the wild attention, new pockets of attention become harder to find. Worse, you now have to cannibalize your own previous uses of captive attention. Time for TV must be stolen from magazines and newspapers. Time for specialized entertainment must be stolen from time devoted to generalized entertainment.

[...]

Each new pocket of attention is harder to find: maybe your product needs to steal attention from that one TV obscure show watched by just 3% of the population between 11:30 and 12:30 AM. The next displacement will fragment the attention even more. When found, each new pocket is less valuable. There is a lot more money to be made in replacing hand-washing time with washing-machine plus magazine time, than there is to be found in replacing one hour of TV with a different hour of TV.

The Groupon IPOJun 03 2011

I don't really have an opinion about it, but David Heinemeier Hansson does:

Groupon has filed its S-1 and hopes to raise $750M in its initial public offering. Given they're currently losing a staggering $117M per quarter, despite revenues of $644M, they'll be burning through that cash almost as soon as it hits their account.

At the moment, it's costing them $1.43 to make $1, and it doesn't look like it's getting any cheaper. They're already projected to make close to three billion dollars in revenues this year. If you can't figure out how to make money on three billion in revenue, when exactly will the profit magic be found? Ten billion? Fifty billion?

To which John Gruber adds:

I feel like the Groupon IPO is an elaborate practical joke.

It was a different time and (as DHH notes) a different company, but when Amazon IPOed in 1997, they lost $27.6 million that year on net sales of $147.8 million. That's an 18% loss for Amazon compared to Groupon's, hey, 18% loss. Amazon didn't report their first profit until Q4 2001. No guarantee whether Groupon will ever turn a profit but something to consider anyway. Oh, and probably not relevant but interesting nonetheless: Amazon CEO Jeff Bezos is an investor in DHH's company, 37signals...and until recently, 37signals co-founder Jason Fried was on Groupon's board of directors.

Tech startup CEO has no idea what he's doingMay 20 2011

Ben Pieratt is the CEO of Svpply, a social shopping startup. He recently wrote a great post subtitled "I have no idea what I'm doing" that reveals the rarely seen flipside to the macho show-no-weakness tech startup scene.

My situation is blessed and I rarely let a day go by that I don't say a silent prayer in thanks for the position in which I've found myself, but good gracious is this hard.

The most frustrating part is that it is difficult to get into a rhythm in your work when you have no real understanding of the next steps you need to take. There's no opportunity for flow if both outcome and process are foreign experiences. There's just a lot of poking around and mystery and inadvertent negligence.

Svpply has been open to the public for six months now. Our progress has been slow for a variety of reasons. We have not launched as many new features as I would expect, or even drastically improved the ones we launched with. I own these problems, they can be traced directly back to my inabilities and inexperience, sometimes directly, other times in the form of my not having anticipated or recognized situations for what they were as soon as I could have.

Winning at the game of moneyMay 10 2011

James Somers noticed that his equity derivative-trading roommate was the only one of his young professional friends who comes home from work "buoyant and satisfied", so he accompanied him to work one day to see what his job entailed. Turns out he basically plays video games all day.

A trader's job is to be smarter than the market. He converts a mess of analysis and intuition into simple bets. He makes moves. If his predictions are better than everyone else's, he wins money; if not, he loses it. At every moment he has a crystalline picture of his bottom line, the "P and L" (profit and loss) that determines how much of a bonus he'll get and, more importantly, where he stands among his peers. As my friend put it, traders are "very, very, very competitive." At the end of the day they ask each other "how did you do today?" Trading is one of the few jobs with an actual leaderboard, which, if you've ever been on one, or strived to get there, you'll recognize as being perhaps the single most powerful driver of a gamer's engagement.

That seems to be the core of it, but no doubt there are other game-like features in play here: the importance of timing and tactile dexterity; the clear presence of two abstract levels of attention and activity, one long-term and strategic, the other fiercely tactical, localized in bursts a minute or two long; the need for teams and ceaseless chatter; and so on.

Athleticism and competitiveness are often downplayed when we talk about white collar careers but are essential in many disciplines. Doctors (surgeons in particular) have both those traits, founding a startup company is definitely competitive and can be as physically demanding as running, teachers are standing or walking all day long, and even something like programming requires manual dexterity with the mouse & keyboard and the stamina to sit in a chair paying single-minded attention to a task for 10-12 hours a day. (via @tcarmody)

The benefits of a different perspectiveApr 28 2011

Hedge funds managed by women outperformed those managed by men over the past nine years.

YouTube founders acquire DeliciousApr 27 2011

AVOS, a new internet company founded by YouTube founders Chad Hurley and Steve Chen, has acquired the social bookmarking service Delicious from Yahoo!

Why has Yahoo! chosen to transition Delicious to AVOS?
While we love Delicious (and our users love Delicious), we wanted to find a home for the product where it can receive more love and attention. We think AVOS is that place.

When will AVOS officially start running Delicious?
We anticipate Delicious in its current form will be available until approximately July 2011. By agreeing to AVOS's terms of service upfront, you will allow us to move your data when the time comes to transfer control to AVOS.

Delicious founder Josh Schachter reacted to the news on Twitter, saying:

inbox asplode!

How to beat AppleApr 26 2011

In the near term, companies making iPhone and iPad competitors are never going to beat Apple at their own game. Apple has supply chain advantages, a massive number of their customers' credit card numbers (why do you think Jobs brings this up at every single Apple event...it's important!), key patents, one-in-lifetime personnel like Steve Jobs and Jony Ive, solid relationships with key media companies, and an integrated ecosystem of stores, apps, applications, and hardware. They are an imposing competitor.

But Apple also has some weak spots which a canny competitor should be able to exploit to make compelling products that Apple won't be able to duplicate or directly compete with.

1. Apple doesn't do social well on a large scale. Ping? Game Center? Please. Social applications don't seem to be in Apple's DNA...their best applications are still single-player or 2/3/4-player. Someone should figure out how to leverage Facebook's social graph to make the phone/app/gaming/music/video experience significantly better than on the iPhone/iPad and then partner exclusively with Facebook to make it happen. The Facebook Fone would be a massive hit if done right.

2. Apple can't do the cloud either. Mobile Me has been around since January 2000 (when it was called iTools) and the service is still not as compelling as newcomer Dropbox. iPods, iPhones, and iPads are still very much tethered to plain-old desktop/laptop computers and iTunes...there's an opportunity here for a better way.

3. iTunes is getting long in the tooth. The cloud and social are the two Apple weaknesses, but iTunes is showing its age and over the years has become a bloated collection of functionalities...music store, video store, app store, mobile device manager, "social" network, and, oh, by the way, you can also use it to play your music. Spotify, Pandora, and Rd.io point the way to a different approach.

4. I can't remember if this is my own theory or I read about this on Daring Fireball or something, but the Apple products & services that Apple does well are the ones that Steve Jobs uses (or cares about) and the ones he doesn't use/care about are less good (or just plain bad). Jobs uses Keynote and it's very good...but I'm pretty sure Jobs never has had to schedule his own appointments with iCal so that program is less good. Cloud apps and social apps are at the top of this list for a reason...I just don't think Jobs cares about those things. I mean, he cares, but there's not a lot of passion there...they aren't a priority for him so he doesn't really know how to think about them and attack those problems.

And then there are a couple of Apple weaknesses that actually aren't weaknesses at all:

1. Price. Everyone still thinks that Apple products are expensive, or, more to the point, overpriced. But no one else has made a compelling tablet for under $500 yet. And if you attack Apple on price, potential gothchas lurk: Apple is absurdly profitable and cash-rich; if they feel the need to compete with anyone on price in order to protect their business interests, they can do so with price cuts deep enough and long enough to drive most potential competitors out of business.

2. Openness and secrecy. Competitors should take a page from Apple's playbook here and be open about stuff that will give you a competitive advantage and shut the hell up about everything else. Open is not always better.

The real Twitter story?Apr 14 2011

Business Insider has a pair of articles about what they say is the real story about the founding of Twitter. The first is a general outline of the unofficial history of the company versus what you generally hear from the company and its founders.

Glass insists that he is not Twitter's sole founder or anything like it. But he feels betrayed that his role has basically been expunged from Twitter history. He says Florian Webber doesn't get enough credit, either.

"Some people have gotten credit, some people haven't. The reality is it was a group effort. I didn't create Twitter on my own. It came out of conversations."

"I do know that without me, Twitter wouldn't exist. In a huge way."

The second is an interview with Noah Glass, who many people who were there at the beginning of the service consider one of the true cofounders of Twitter.

Jack [Dorsey] was someone who was one of the stars of the company and I got the impression he was unhappy with what he was working on. He was doing a lot of cleanup work on Odeo. He and I had become pretty close friends and were spending time together.

He started talking to me about this idea of status and how he was really interested in status. He developed this bicycle messenger status system in the past. I was trying to figure out what it was he found compelling about it. At the same time, we were looking at 'groups' models and how groups were formed and put a couple things together to look at this idea of status and to look at this idea of grouping and it sort of hit me - the idea for this product. This thing that would be called Twitter, what it would look like. This ad hoc grouping mechanism with non-realtime status updates all based on mobile phones.

There was a moment when I was sitting with Jack and I said, "Oh, I do see how this could really come together to make something really compelling." We were sitting on Mission St. in the car in the rain. We were going out and I was dropping him off and having this conversation. There was a moment where it all fit together for me.

We went back to Odeo and put together a team. A very separate working team, mostly it was myself, Jack, and Florian [Webber], a contractor. [Florian] was working from Germany at the time.

See also Trouble @Twitter. (via @anildash)

NY Times paywall is hereMar 17 2011

Or will be soon...they announced some of the details today.

On NYTimes.com, you can view 20 articles each month at no charge (including slide shows, videos and other features). After 20 articles, we will ask you to become a digital subscriber, with full access to our site.

Cheapest plan is about $180/year and the most expensive is $420/yr. Access is free to paper subscribers.

How to make money: practiceMar 04 2011

Jason Fried reveals how he got good at making money. I am not a full-fledged member of the Church of 37signals, but one of my favorite lessons from them is that a business needs to practice how to make money in order to get good at it...it's not something that you just turn on when monetizing mode strikes.

So here's a great way to practice making money: Buy and sell the same thing over and over on Craigslist or eBay. Seriously.

Go buy something on Craigslist or eBay. Find something that's a bit of a commodity, so you know there's always plenty of supply and demand. An iPod is a good test. Buy it, and then immediately resell it. Then buy it again. Each time, try selling it for more than you paid for it. See how far you can push it. See how much profit you can make off 10 transactions.

Start tweaking the headline. Then start fiddling with the product description. Vary the photographs. Take some pictures of the thing for sale; use other photos with other items, or people, in them. Shoot really high-quality shots, and also post crappy ones from your cell-phone camera. Try every variation you can think of.

Customer service on TwitterMar 02 2011

Here's how you do it well, courtesy of Zappos (of course). Yesterday I tweeted:

I think my wife is having an affair with someone named "Zappos". He sends her a package at least every third day. I am on to you, Mr Zappos!

Almost immediately, Zappos' customer service Twitter account replied:

@jkottke I'm sorry sir, but our relationship with your wife is strictly professional.

Great, right? A company that gets the joke and participates meaningfully in an actual conversation with a full awareness of the context.

Here's how not to do it, courtesy of United Airlines. Mena Trott, a co-founder of Six Apart, had her flight to NYC randomly cancelled on Monday night by "a robot". (They actually blamed it on a robot!) In a series of three tweets, Mena voiced her displeasure:

Thanks @unitedairlines for randomly canceling my miles booked ticket for tonight, taking the miles & not letting me rebook for lack of miles

And then hanging up on me after I waited for an hour! I hate you @unitedairlines

Apparently the automated voice recognition system can't tell what I'm saying through my tears @unitedairlines #IhateYouSoMuch

Reply from @unitedairlines? Nothing. But then while on her rebooked flight the next morning, Mena tweets sarcastically:

Thanks to @unitedairlines I can finally watch that Frasier episode I missed in 1994.

And unbelievably, @unitedairlines replied, pouring burning acid into Mena's obviously still-tender wound:

@dollarshort "...I hear the blues a-callin', Tossed salad and scrambled eggs.."

That is some serious customer service tone deafness right there. It would be easy to blame whatever social media jockey they've got manning the Twitter account for the faux pas, but obviously United customer communication problems run deeper (and originate higher up the pay scale) than that.

Why movies suckMar 01 2011

Totally depressing article about how Hollywood movies suck worse than ever and "the potential death of the great American art form".

For the studios, a good new idea has become just too scary a road to travel. Inception, they will tell you, is an exceptional movie. And movies that need to be exceptional to succeed are bad business. "The scab you're picking at is called execution," says legendary producer Scott Rudin (The Social Network, True Grit). "Studios are hardwired not to bet on execution, and the terrible thing is, they're right. Because in terms of execution, most movies disappoint."

With that in mind, let's look ahead to what's on the menu for this year: four adaptations of comic books. One prequel to an adaptation of a comic book. One sequel to a sequel to a movie based on a toy. One sequel to a sequel to a sequel to a movie based on an amusement-park ride. One prequel to a remake. Two sequels to cartoons. One sequel to a comedy. An adaptation of a children's book. An adaptation of a Saturday-morning cartoon. One sequel with a 4 in the title. Two sequels with a 5 in the title. One sequel that, if it were inclined to use numbers, would have to have a 7 1/2 in the title.

Who said art has to cost money?Jan 28 2011

Francis Ford Coppola on how filmmakers might make go about making a living in the future.

We have to be very clever about those things. You have to remember that it's only a few hundred years, if that much, that artists are working with money. Artists never got money. Artists had a patron, either the leader of the state or the duke of Weimar or somewhere, or the church, the pope. Or they had another job. I have another job. I make films. No one tells me what to do. But I make the money in the wine industry. You work another job and get up at five in the morning and write your script.

This idea of Metallica or some rock n' roll singer being rich, that's not necessarily going to happen anymore. Because, as we enter into a new age, maybe art will be free. Maybe the students are right. They should be able to download music and movies. I'm going to be shot for saying this. But who said art has to cost money? And therefore, who says artists have to make money?

In the old days, 200 years ago, if you were a composer, the only way you could make money was to travel with the orchestra and be the conductor, because then you'd be paid as a musician. There was no recording. There were no record royalties. So I would say, "Try to disconnect the idea of cinema with the idea of making a living and money." Because there are ways around it.

The goal of businessJan 28 2011

I've probably written about this somewhere and somewhen before, but here it is again because I want to make sure I have it in case the original source is lost. Back when Stewart Butterfield & co. started Ludicorp (which was sold to Yahoo! along with Flickr), their about page listed a corporate philosophy so fantastic that it's the only such philosophy I've pumped my fist at. It takes the form of a passage from Disclosing New Worlds: Entrepreneurship, Democratic Action and the Cultivation of Solidarity by Charles Spinosa, Fernando Flores & Hubert Dreyfus:

Business owners do not normally work for money either. They work for the enjoyment of their competitive skill, in the context of a life where competing skillfully makes sense. The money they earn supports this way of life. The same is true of their businesses. One might think that they view their businesses as nothing more than machines to produce profits, since they do closely monitor their accounts to keep tabs on those profits.

But this way of thinking replaces the point of the machine's activity with a diagnostic test of how well it is performing. Normally, one senses whether one is performing skillfully. A basketball player does not need to count baskets to know whether the team as a whole is in flow. Saying that the point of business is to produce profit is like saying that the whole point of playing basketball is to make as many baskets as possible. One could make many more baskets by having no opponent.

The game and styles of playing the game are what matter because they produce identities people care about. Likewise, a business develops an identity by providing a product or a service to people. To do that it needs capital, and it needs to make a profit, but no more than it needs to have competent employees or customers or any other thing that enables production to take place. None of this is the goal of the activity.

To which the Ludicorporate added: "The goal is to kick ass."

Meet a former professional liarJan 03 2011

Clancy Martin is a tenured philosophy professor who used to sell luxury jewelry... and he wasn't very honest about it.

The jewelry business -- like many other businesses, especially those that depend on selling -- lends itself to lies. It's hard to make money selling used Rolexes as what they are, but if you clean one up and make it look new, suddenly there's a little profit in the deal. Grading diamonds is a subjective business, and the better a diamond looks to you when you're grading it, the more money it's worth -- as long as you can convince your customer that it's the grade you're selling it as. Here's an easy, effective way to do that: First lie to yourself about what grade the diamond is; then you can sincerely tell your customer "the truth" about what it's worth.

As I would tell my salespeople: If you want to be an expert deceiver, master the art of self-deception. People will believe you when they see that you yourself are deeply convinced. It sounds difficult to do, but in fact it's easy -- we are already experts at lying to ourselves. We believe just what we want to believe. And the customer will help in this process, because she or he wants the diamond -- where else can I get such a good deal on such a high-quality stone? -- to be of a certain size and quality. At the same time, he or she does not want to pay the price that the actual diamond, were it what you claimed it to be, would cost. The transaction is a collaboration of lies and self-deceptions.

How to give design feedbackDec 16 2010

Mule Design's Mike Monteiro wrote a cracking guide on how clients can give better feedback to designers.

Let the design team be the design experts. Your job is to be the business expert. Ask them how their design solutions meet your business goals. If you trust your design team, and they can explain how their recommendations map to those goals, you're fine. If you neither trust them, nor can they defend their choices it's time to get a new design team.

This should be printed out and nailed into the forehead of every designer and their clients a la Luther's Ninety-Five Theses, you know, for easy reference.

Pimp business planDec 10 2010

Items on this pimp's handwritten business plan -- aka "Keep It Pimpin'" -- include:

- my word is my bond
- take my game to the next level (from the concrete streets to executive suites)
- take care my bitches more better
- minimize my budget (cash cars, houses, etc.)
- keep a good photographer

Threaten customers for SEO? Go directly to jail.Dec 07 2010

The dickwad who threatened his customers as an SEO tactic (detailed here in the NY Times) was arrested on Monday by federal agents.

The merchant, Vitaly Borker, 34, who operates a Web site called decormyeyes.com, was charged with one count each of mail fraud, wire fraud, making interstate threats and cyberstalking. The mail fraud and wire fraud charges each carry a maximum sentence of 20 years in prison. The stalking and interstate threats charges carry a maximum sentence of five years.

He was arrested early Monday by agents of the United States Postal Inspection Service. In an arraignment in the late afternoon in United States District Court in Lower Manhattan, Judge Michael H. Dolinger denied Mr. Borker's request for bail, stating that the defendant was either "verging on psychotic" or had "an explosive personality." Mr. Borker will be detained until a preliminary hearing, scheduled for Dec. 20.

"Much of what investment bankers do is socially worthless"Dec 03 2010

From the New Yorker a week or two ago, John Cassidy has an article about the social value of what Wall Street and investment banking. It's not a pretty picture.

Lord Adair Turner, the chairman of Britain's top financial watchdog, the Financial Services Authority, has described much of what happens on Wall Street and in other financial centers as "socially useless activity" -- a comment that suggests it could be eliminated without doing any damage to the economy. In a recent article titled "What Do Banks Do?," which appeared in a collection of essays devoted to the future of finance, Turner pointed out that although certain financial activities were genuinely valuable, others generated revenues and profits without delivering anything of real worth -- payments that economists refer to as rents. "It is possible for financial activity to extract rents from the real economy rather than to deliver economic value," Turner wrote. "Financial innovation...may in some ways and under some circumstances foster economic value creation, but that needs to be illustrated at the level of specific effects: it cannot be asserted a priori."

Turner's viewpoint caused consternation in the City of London, the world's largest financial market. A clear implication of his argument is that many people in the City and on Wall Street are the financial equivalent of slumlords or toll collectors in pin-striped suits. If they retired to their beach houses en masse, the rest of the economy would be fine, or perhaps even healthier.

I particularly enjoyed the characterization of banking as a utility:

Most people on Wall Street, not surprisingly, believe that they earn their keep, but at least one influential financier vehemently disagrees: Paul Woolley, a seventy-one-year-old Englishman who has set up an institute at the London School of Economics called the Woolley Centre for the Study of Capital Market Dysfunctionality. "Why on earth should finance be the biggest and most highly paid industry when it's just a utility, like sewage or gas?" Woolley said to me when I met with him in London. "It is like a cancer that is growing to infinite size, until it takes over the entire body."

p.s. Thanks to Typekit, the New Yorker's web site now uses the same familiar typefaces that you find in the magazine. Looks great.

The OpenTable monopolyNov 16 2010

Incanto owner Mark Pastore explains why his restaurant isn't on Opentable. His analysis is that Opentable is too expensive and monopolistic to offer much in the way of value to restaurants.

The recurring themes were the opinion that OpenTable took home a disproportionate (relative to other vendors) chunk of the restaurants' revenues each month and the feeling of being trapped in the service, it was too expensive to keep, but letting it go could be harmful. The GM of one very well known New York restaurant group, which spends thousands of dollars on OpenTable each month, put it to me this way, "OpenTable is out for itself, the worst business partner I have ever worked with in all my years in restaurants. If I could find a way to eliminate it from my restaurants I would." Another high-profile, 3.5-star San Francisco restaurateur told me he feels held hostage by OpenTable. For the past several years, his payments to them have been substantially more than he has himself earned from 80-hour workweeks at his restaurant. But he believes that if he stops offering it, his customers will revolt and many would stop coming to his restaurant. So he keeps paying, but carries a grudge and wishes for something better.

Startup opportunity? (via @amandahesser)

Jay-Z's empireOct 26 2010

If this profile of Jay-Z in the WSJ is any indication, the guy doesn't seem to have any problems anymore.

In his office, by a coffee table stacked with art books (Damien Hirst, Ed Ruscha), his Forbes magazine and a humidor, he perches on the edge of a chair with his fingers tucked into his pockets. He says he'll always rap about variations on the same themes: drug hustling, business boasts, luxury hopscotching from Gucci to Louis Vuitton to the new Dior suit he says is a perfect fit. They're all narrative devices:

"I'm just describing a scene, but the crux of the story is the message. Almost like a movie. Setting: South of France. This is what's happening. This guy from out the projects who didn't graduate from high school is now living this sort of life. And this is how he got here."

Sicha and pals are Awl in (and other puns)Oct 25 2010

Nice little piece by David Carr in the NY Times about The Awl, a small batch blogging concern owned and operated by Choire Sicha, Alex Balk, and David Cho.

"My friends keep talking to me about how they want to start a Web site, but they need to get some backing, and I look at them and ask them what they are waiting for," Mr. Sicha said. "All it takes is some WordPress and a lot of typing. Sure, I went broke trying to start it, it trashed my life and I work all the time, but other than that, it wasn't that hard to figure out."

Steve Jobs and "the bicycle for the mind"Oct 15 2010

I enjoyed this extensive interview with John Sculley about his time at Apple (he was CEO from 83-93) because of 1) his insight into Steve Jobs' way of thinking, 2) his willingness to talk about his mistakes, and 3) his insights about business in general...he gives Jobs a lot of credit but Sculley is clearly no slouch. Some high points:

[Jobs] felt that the computer was going to change the world and it was going to become what he called "the bicycle for the mind."

On the small size of teams actually building products:

Normally you will only see a handful of software engineers who are building an operating system. People think that it must be hundreds and hundreds working on an operating system. It really isn't. It's really just a small team of people. Think of it like the atelier of an artist.

Sculley was president of Pepsi before coming to Apple:

We did some research and we discovered that when people were going to serve soft drinks to a friend in their home, if they had Coca Cola in the fridge, they would go out to the kitchen, open the fridge, take out the Coke bottle, bring it out, put it on the table and pour a glass in front of their guests.

If it was a Pepsi, they would go out in to the kitchen, take it out of the fridge, open it, and pour it in a glass in the kitchen, and only bring the glass out. The point was people were embarrassed to have someone know that they were serving Pepsi. Maybe they would think it was Coke because Coke had a better perception. It was a better necktie. Steve was fascinated by that.

On why he should not have been hired as Apple's CEO:

The reason why I said it was a mistake to have hired me as CEO was Steve always wanted to be CEO. It would have been much more honest if the board had said, "Let's figure out a way for him to be CEO. You could focus on the stuff that you bring and he focuses on the stuff he brings."

Remember, he was the chairman of the board, the largest shareholder and he ran the Macintosh division, so he was above me and below me.

After Jobs left, Sculley tried to run the company as Jobs would have:

All the design ideas were clearly Steve's. The one who should really be given credit for all that stuff while I was there is really Steve. [...] Unfortunately, I wasn't as good at it as he was.

And finally, Sculley and Jobs probably haven't spoken since Jobs left the company:

He won't talk to me, so I don't know.

Jobs is pulling a page from the Don Draper playbook here. In season two, Don tells mental hospital patient Peggy:

Peggy listen to me, get out of here and move forward. This never happened. It will shock you how much it never happened.

Maybe Jobs is still pissed at Sculley and holds a grudge or whatever, but it seems more likely that looking backwards is something that Jobs simply doesn't do. Move forward, Steve.

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