kottke.org posts about business
French drone company Parrot recently announced significant layoffs and will shift focus away from their recreational drone business.
French company Parrot has had a rough year and missed its sales expectations. That’s why the company will lay off 290 employees who were working on drones. In total, Parrot currently has 840 employees on the drone team and more than a thousand employees in total.
While the company isn’t just selling drones, it represents a good chunk of the business. But it looks like other companies, such as DJI, are doing better in this market. Parrot expected to report $105.9 million in sales for 2016. It reported $90 million instead (€85 million vs. €100 million expected).
Even though the company is still selling quite a few drones, Parrot says that it doesn’t generate healthy margins. So here’s the new plan: focusing on commercial drones.
Well, this explains my holiday shopping difficulties with Parrot. Ollie asked for a drone for Christmas and after doing some research, I decided on the Parrot Swing. Amazon was out of stock, so I decided to buy directly from Parrot. They had stock and the site said they’d ship in plenty of time for Xmas. So I ordered one. The next day, I get a call from Parrot saying I need to “verify my order”. So, I call them back, give them some info about my order and where it’s being shipped and the very nice woman on the phone tells me that I’m all set and they’re shipping it out.
Two days go by, no shipping confirmation email in sight. I get another voicemail: you need to call us to verify your order. I call back, give them the same info and tell them, oh by the way I’ve already done this once. Profuse apologies were offered, that was a mistake, and the very nice woman on the phone tells me she’s going to tell the shipping people to send out my order “right away”. It will still arrive in time for Xmas. The next day I get an email from Parrot:
Hello! We have refunded your order No. XXXXX-XXXXX placed 12/15/2016. We are sorry that your order did not meet your expectations and hope that you will visit us again.
Obviously, I am done with them at this point but still need that drone. Amazon is still out of stock, but Walmart has them. I order one, it arrives two days later (with free shipping), and on Christmas morning, after some reflection, Ollie says it was the best present Santa has ever gotten him.
I did quite a bit of holiday shopping this year…went a bit nuts making up for some not-so-great efforts the past two years. The kids and I shopped for Toys for Tots (twice), I bought gifts for them from me and from Santa, I bought non-holiday stuff like clothes for myself,1 and I shopped virtually for the gift guide. I shopped every which way: small, locally, at big box stores, and online at 4-5 different retailers. My main takeaway from that experience? Amazon is miles and miles and miles ahead of everyone else. It is not even close.
Sure, Walmart had the drone in stock, but when I’d tried shopping with them earlier in the month, the product page threw a 404 error. I switched to Safari and was able to put the item into my cart, but then a form in the ordering flow wouldn’t work, so I had to get that item elsewhere. (When I did finally create an account while ordering the drone, Walmart thought my name was “Ashley”?!)
Target’s site was so slow that it was nearly unusable (like 30-40 seconds for a product page to start loading). But I persevered because they had an item I really wanted that no one else had in stock. I got an email two days before Xmas saying they were out of stock and couldn’t ship until Jan 4 at the earliest, but that if I still wanted the item, I would have to log in to my account to verify the new shipping date. I didn’t want the item later, so I did nothing. Guess what arrived on my doorstep last week?
My troubles with Parrot I shared above. The local toy stores are expensive (Lego sets are $5-10 more than if you buy online) and ran out of popular items 2-3 weeks before Xmas. Very few online stores outside Amazon, Walmart, etc. had clear holiday shipping policies, so relying on them more than a week or two out was risky. Zappos was great (Amazon owns them) and Patagonia was pretty good, although their shipping estimates aren’t that great and returns aren’t free.
And Amazon? The site is always fast, I have never seen a 404’d product page, the URLs for their products haven’t changed in almost 20 years,1 each product page was clearly marked with holiday shipping information, they showed the number of items in stock if they were running low, shipping was free (b/c I’m a Prime member), returns are often free, and the items arrived on time as promised. More than 20 years after the invention of online retailing, how is it that Amazon seems to be the only one that’s figured all this out? How come massive companies like Walmart and Target, whose very businesses are under immense pressure from Amazon, can’t get this stuff right despite having spent hundreds of millions on it? I’m not a financial analyst, but unless something changes drastically, Amazon is just going to continue to eat more and more of the US retail pie and at this point, with all these advantages they’ve accrued and their razor-sharp focus on low pricing, it’s difficult to see how anyone is going to compete.1
From this piece by Evan Williams, it sounds like Medium is still trying to figure out what it wants to be when it grows up.
So, we are shifting our resources and attention to defining a new model for writers and creators to be rewarded, based on the value they’re creating for people. And toward building a transformational product for curious humans who want to get smarter about the world every day.
It is too soon to say exactly what this will look like. This strategy is more focused but also less proven. It will require time to get it right, as well as some different skills. Which is why we are taking these steps today and saying goodbye to many talented people.
I like Medium and read thoughtful & engaging stuff on there daily, including articles by the many publications that moved their entire publishing operations to Medium and who were caught off-guard by Williams’ announcement:
As part of the strategic pivot, Medium will lay off 50 staffers and close its satellite offices in New York and Washington. It will also stop selling “Promoted Stories,” its native ad unit, and distributing revenue from those sales to publishers.
Medium’s exit from the online ad business was news to some of its publishing partners, many of whom have come to depend on the publishing platform as a key source of revenue. More than two dozen publications are members of Medium’s revenue beta program, which allows them to sell paid subscriptions to readers and to receive a cut of Medium’s native advertising revenue.
Five members of the revenue beta program told POLITICO that they did not receive any advance notice of Medium’s change in strategy before Williams’ public announcement. One publishing partner only learned about the pivot after reading an article about it on the tech news site Recode.
Over the past year, when I was thinking about how best to steward kottke.org into a financially stable future, moving to Medium was definitely an option. But never, in my mind, a very serious option. It was just too many eggs in one basket for a small publisher like me, especially when Medium is still obviously trying to figure out if they’re even in the egg-carrying business. New businesses are unstable…that’s just the way it is.1 In Silicon Valley (and in other startup-rich areas), these unstable businesses have lots of someone else’s money to throw around — which makes them appear more stable in the short term — but they cannot escape the reality of the extreme risk involved in building a new business, particularly a business that needs to grow quickly (as almost all VC-backed startups are required to do). All of which can make it difficult to enter into a business arrangement with a startup…just ask publishers working with Facebook or businesses dependent on Twitter’s API or Vine or Tumblr, not to mention the thousands of startups that have ceased to exist over the years.
With kottke.org, even though it hasn’t been easy, I’ve opted for independence and control over a potential rocketship ride. Instead of moving the site to Medium or Tumblr or focusing my activities on one social network or another, I use third-party services like The Deck, Amazon Associates, Stripe, and Memberful that plug in to the site. Small pieces loosely joined, not a monolithic solution. If necessary, I can switch any of them out for a comparable service and am therefore not as subject to any potential change in business goals by these companies. Given the news out of Medium, I’m increasingly happy that I’ve decided to do it this way (with your very kind assistance).
Some interesting speculation from Evan Puschak on what Amazon is up to with Amazon Go. Basically, Puschak thinks Amazon Go is Amazon Web Services but for retail stores. In the same way that AWS provides hosting for sites like Netflix and Reddit, Amazon Go will provide patent-protected technology infrastructure for “self-shopping” supermarkets and retail stores. But it remains to be seen whether it’s more like their one-click patent, which was licensed by a few others (notably Apple) but everyone else was able to do without it.
Amazon Go grocery stores will let you walk in by swiping an app, grab whatever you need, and just walk right out the door again.
Our checkout-free shopping experience is made possible by the same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning. Our Just Walk Out technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When you’re done shopping, you can just leave the store. Shortly after, we’ll charge your Amazon account and send you a receipt.
I guess that makes these self-shopping stores? Lame jokes aside, this is a pretty cool idea. Not entirely revolutionary though…Apple’s EasyPay service has allowed shoppers to self-checkout with the Apple Store app since 2011. I used the self-checkout at an Apple Store once and it felt *really* weird, like I was shoplifting. New commercial transactions are always tricky. Things like one-click ordering, contactless payments (e.g. Apple Pay), and Uber-style payments feel strange at first, but you get used to them after awhile. Something like Square’s odd “put it on Jack” system — where instead of swiping a card or scanning a QR code on an app, you need to negotiate with a person about who you are — don’t catch on. It’ll be interesting to see where something like Amazon Go falls on that spectrum.
Update: This is an IBM commercial from the 90s that showed Just Walk Out shopping.
The Whitechapel Bell Foundry is the oldest manufacturing company in Britain. It was officially founded in 1570, but there’s an unbroken line of master bellfounders dating back to 1420. The company cast the bell for Big Ben…you may have heard of it. They also made the Liberty Bell…you may have heard of that one too.
The Whitechapel Foundry’s connection with the Liberty Bell was reestablished in 1976, the year of the US Bicentennial. First, there was a group of about thirty or so ‘demonstrators’ from the Procrastinators Society of America who mounted a mock protest over the bell’s defects and who marched up and down outside the Foundry with placards proclaiming WE GOT A LEMON and WHAT ABOUT THE WARRANTY?. We told them we would be happy to replace the bell — as long as it was returned to us in its original packaging.
Alan Hughes, the current master bellfounder, is retiring soon and the business shall have to move — it’s been in the current location for 250 years — but hopes are that the company will be sold and the new owners will carry on with the business of making bells. Spitalfields Life recently sat down with Hughes for an interview and tour.
“Our business runs counter to the national economy,” he continued, “If the economy goes down and unemployment rises, we start to get busy. Last year was our busiest in thirty years, an increase of 27% on the previous year. Similarly, the nineteen twenties were very busy.” I was mystified by this equation, but Alan has a plausible theory.
“Bell projects take a long time, so churches commit to new bells when the economy is strong and then there is no turning back. We are just commencing work on a new peal of bells for St Albans after forty-three years of negotiation. That’s an example of the time scale we are working on — at least ten years between order and delivery is normal. My great-grandfather visited the church in Langley in the eighteen nineties and told them the bells needed rehanging in a new frame. They patched them. My grandfather said the same thing in the nineteen twenties. They patched them. My father told them again in the nineteen fifties and I quoted for the job in the nineteen seventies. We completed the order in 1998.”
The Telegraph did a piece on the foundry as well. (via @richardwestenra)
Carrie Banks has owned and operated Isis Hair Salon in LA for more than 20 years. But because of recent events in the Middle East and jokers on social media, the name has become a liability in recent years. Banks has even had difficulty finding someone to replace the sign outside the salon in the event of a name change.
From a new Kickstarter publication called The Creative Independent, Philip Glass was interviewed about the importance of artists owning their work and getting paid for it.
My personal position was that I had wonderful parents. Really wonderful people. But my mother was a school teacher. My father had a small record shop in Baltimore. They had no money to support my career. I began working early. You’re too young to know this, but when you get your first Social Security check, you get a list of every place you’ve worked since you began working. It’s fantastic! I discovered that I was working from the time I was 15 and putting money into the Social Security system from that age onward. I thought it was much later. No, I was actually paying money that early.
The point is that I spent most of my life supporting myself. And I own the music. I never gave it away. I am the publisher of everything I’ve written except for a handful of film scores that the big studios paid. I said, “Yeah, you can own it. You can have it, but you have to pay for it.” They did pay for it. They were not gifts.
A lot in this interview resonates, including this:
It’s never been easy for painters, or writers, or poets to make a living. One of the reasons is that we, I mean a big “We,” deny them an income for their work. As a society we do. Yet, these are the same people who supposedly we can’t live without. It’s curious, isn’t it?
And this bit about making work vs performing (italics mine):
What happens, is that the artists are in a position where they can no longer live on their work. They have to worry about that. They need to become performers. That’s another kind of work we do. I go out and play music. The big boom in performances is partly because of streaming, isn’t it? We know, for example, that there are big rock and roll bands that will give their records away free. You just have to buy the ticket to the concert. The cost of the record is rather small compared to the price of the ticket. It’s shifted around a little bit; they’re still paying, but they’re paying at the box office rather than at the record store. The money still will find its way.
Then you have to be the kind of person who goes out and plays, and some people don’t.
I’ve been thinking a lot about the economics of writing online. Making a comfortable living only by writing is tough and very few independents are able to do it. More successful are those who are able to get away from writing online by speaking at conferences, writing books, starting podcasts, selling merchandise,1 post sponsored tweets and Instagram photos, building apps, consulting for big companies, etc. This stuff is the equivalent of the band that tours, sells merch, composes music for TV commercials, etc. But as Glass said, what about those who just want to write? (And I count myself among that number.) How can we support those people? Anyway, more on this very soon (I hope).
Photo is of a Chuck Close painting of Philip Glass taken by me at The Whitney.
Tonight, Elon Musk shared part two of Tesla’s “Master Plan” (here’s part one, from 2006). The company is going all-in on sustainable energy, building out their fleet of available vehicle types (including semi trucks and buses), and pushing towards fully self-driving cars that can be leased out to people in need of a ride.
When true self-driving is approved by regulators, it will mean that you will be able to summon your Tesla from pretty much anywhere. Once it picks you up, you will be able to sleep, read or do anything else enroute to your destination.
You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you’re at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost. This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla. Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.
In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are.
Summing up: Telsa, Uber, and probably Apple all want to replace human drivers with robot chauffeurs. It’s a race between the Jetson’s future and the Terminator’s future. Fun!
LittleSis is a freely available database that documents personal and business connections in the worlds of government and business. For instance, here’s George Soros. And Dick Cheney. Love the Lombardi-esque influence maps. (via @kellianderson)
(P.S. Does anyone remember the name of a similar project done in Flash many years ago by one of the hotshot Flash developers? Can’t find it…)
Update: The Flash site was They Rule by Josh On “with the indispensable assistance of LittleSis.org”. Well, how about that. (via @ajayskapoor)
Radiohead compartmentalizes various parts of its overall business dealings into several smaller companies. Here are some of them as detailed in this Guardian article.
Random Rubbish LTD
Over Normal LTD
Ticker Tape LTD
_Xurbia_ Xendless LTD
You could whip up a really good Radiohead Business Name or Radiohead Song Title? quiz with these.
In his 1975 song Jungleland, Bruce Springsteen laments, “the poets down here don’t write nothing at all, they just stand back and let it all be.” I was reminded of that line when Springsteen canceled his North Carolina concert to protest the state’s recently passed bathroom law. In this case, the poet wrote. While it’s not unusual for musicians and other artists to use their public podiums for protest, it’s less common for corporations to do the same. At least, that used to be the case. But recently, many top CEOs are using their corporate muscle to influence social and political decisions across the country. When you wondered who would stand up for individual and equal rights in America, it’s unlikely that you thought of the The Boss and The Man. Here’s The New Yorker’s James Surowiecki with more on these unlikely alliances.
Amazon is now offering the ability to subscribe to Prime and Prime Video monthly rather than just yearly. Prime Video is $8.99/mo (Netflix is going up to $9.99/mo soon) and the full Prime offering is $10.99/mo. A year of Prime is still $99.
In Prime Video, Amazon has built a worthy competitor to Netflix. And it actually might be better at this point. The stable of impressive Netflix originals aside (which Amazon is also doing *cough* Transparent *cough* best show in years), Amazon allows you to rent/buy digital movies not available for free streaming1, provides discounts for subscriptions to Showtime and Starz, and (if you opt for the full Prime) offers free shipping on most stuff in the store (as well as other benefits.) I sub to both services, but if I had to make a choice right now, I’d probably stick with Amazon.
Sam Hinkie recently resigned as general manager of the NBA’s Philadelphia 76ers. His resignation letter took the form of an investor letter, a la Warren Buffett’s annual letters. Before he gets down to basketball specifics, Hinkie spends several pages explaining his philosophy. Along with Buffett and his business partner Charlie Munger, Hinkie mentions in this introductory section Atul Gawande, Elon Musk, Bill James, James Clerk Maxwell, Bill Belichick, Jeff Bezos, Tim Urban (whom he suggests the Sixers owners should meet for coffee), AlphaGo, and Slack (the Sixers’ front office uses it). He even quotes Steven Johnson about the adjacent possible:
A yearning for innovation requires real exploration. It requires a persistent search to try (and fail) to move your understanding forward with a new tool, a new technique, a new insight. Sadly, the first innovation often isn’t even all that helpful, but may well provide a path to ones that are. This is an idea that Steven Johnson of Where Good Ideas Come From popularized called the “adjacent possible.” Where finding your way through a labyrinth of ignorance requires you to first open a door into a room of understanding, one that by its very existence has new doors to new rooms with deeper insights lurking behind them.
If I didn’t know any better, I’d guess that Hinkie is a regular kottke.org reader. (via farnum street)
Captain America: Sam Wilson #4—written by Nick Spencer with art by Paul Renaud, Romulo Fjardo, and Joe Caramagna—finds its lead character looking a lot different than he usually does. This is the second issue where Sam has been trapped in a werewolf form, the results of a run-in with old Cap villain Karl Malus. Malus’ experiments with splicing human and animal DNA weren’t just garden-variety mad scientist shenanigans; they were R&D for the newest iteration of an old supervillain cadre called the Serpent Society. They’re calling themselves Serpent Solutions now and they’re serving as a metaphor for all the horrible things that happen in the name of turning a profit. Kidnapping people and turning them into giant iguanas? Just another regrettable but necessary fact-of-life decision in today’s business landscape, according to exec leader Viper.”
A quick but fascinating look at the fast fashion retailer Zara.
Fashion used to be sold in four seasons. Zara wants you to buy for one-hundred-and-four. New clothes arrive in every store twice a week — days known by fans as “Z Days” — and fuel the need to turn over your wardrobe.
The brand’s global distribution centre, also in Spain, moves 2.5 million items per week. Nothing remains warehoused longer than 72 hours.
The integration and feedback incorporated into their system is impressive. The knockoffs, not so much. Lots of parallels to Facebook here, not the least of which is both companies’ founders are among the richest people in the world.
In 1997, shortly after Apple’s purchase of NeXT, Steve Jobs took the stage at Apple’s annual developer conference to answer questions from the audience for at least 50 minutes. It was a different time for sure. Apple was reeling, Jobs had just returned as an advisor and then interim CEO, his last company, NeXT, had not succeeded on its own, and the iPod & Apple Stores were years off.
When he arrived at Apple after the NeXT acquisition, Jobs moved swiftly to pare down the number of projects that the company was working on. In this first video, Jobs responds to a question about Apple killing a promising technology called OpenDoc.
Jobs talks about how “focus means saying ‘no’” and how Apple’s loss of focus has made the company less than the sum of its parts and not more. Even at this early stage in Apple’s comeback, you can see the seeds of how it was going to happen.
In the second video, a later questioner tells Jobs “it’s sad and clear that on several accounts you’ve discussed, you don’t know what you’re talking about”, asks him to comment on OpenDoc again, and also tell the audience what “he’s personally been doing for the last seven years”, a reference to his answer to the earlier question in the video above and the failure of NeXT.
Instead of laying into the guy, as a caricature of Steve Jobs might, he responds thoughtfully and almost humbly about how Apple needs to focus on its “larger, cohesive vision” of selling products to people, starting with customer experience rather than technology, and most importantly, making decisions.
Of course, in hindsight, it is obvious how overwhelmingly right Jobs was in his assertions. Since then, Apple has focused relentlessly on what worked and has succeeded brilliantly, beyond anything anyone, save perhaps Jobs, would have ever imagined. I wonder what that cheeky engineer is up to now? (via alphr)
(Also, can we talk about the patches on Jobs’ jeans? That’s not a fashion thing, right? Like, those aren’t $450 jeans made to look worn out. To me, those are obviously Steve’s favorite pair of jeans — probably Levi’s, I can’t tell for sure — patched up because he wants to keep wearing them. No one in technology has been picked apart like Steve Jobs by people looking for clues to who he was as a person and how that informed his business activities.1 Was he an asshole? Was he an artist? Was he just all smoke and mirrors? If we can stoop to the level of assessing a man’s character by the clothes he wears, it seems to me that whatever else he did, Jobs was at once pragmatic and dreamy when it came to products, to objects. What a potent combination that turned out to be.)
Update: The man who takes a swipe at Jobs in the later video was possibly identified on Quora last year by an anonymous person who said they worked on the WWDC event and spoke to the man in question.
The audience member is named Robert Hamisch. Mr. Hamisch was a consultant at a security firm in the 1990’s that did consultant services for Sun Microsystems (their billing and payroll department) for a short period of time. As far as I know, he left the company (the consulting firm, he never worked for Sun directly) and has since retired. He attended the 1997 WWDC sponsored by his security consulting firm, although never had any stake in Sun Microsystems as a whole besides general system security for their billing and payroll department. I don’t know why he specifically asked about Java, but he may have just been frustrated with Jobs and his performance as a whole.
A short web search turned up no information on Hamisch. (thx, charles)
When reports came out last month about declining ebook sales, many reasons were offered up, from higher pricing to the resurgence of bookstores to more efficient distribution of paper books to increased competition from TV’s continued renaissance, Facebook, Snapchat, and an embarrassment of #longread riches. What I didn’t hear a whole lot about was how the experience of reading ebooks and paper books compared, particularly in regard to the Kindle’s frustrating reading experience not living up to its promise. What if people are reading fewer ebooks because the user experience of ebook reading isn’t great?
Luckily, Craig Mod has stepped into this gap with a piece asking why digital books have stopped evolving. As Mod notes, paper books still beat out digital ones in many ways and the industry (i.e. Amazon) hasn’t made much progress in addressing them.
The object — a dense, felled tree, wrapped in royal blue cloth — requires two hands to hold. The inner volume swooshes from its slipcase. And then the thing opens like some blessed walking path into intricate endpages, heavystock half-titles, and multi-page die-cuts, shepherding you towards the table of contents. Behbehani utilitises all the qualities of print to create a procession. By the time you arrive at chapter one, you are entranced.
Contrast this with opening a Kindle book — there is no procession, and often no cover. You are sometimes thrown into the first chapter, sometimes into the middle of the front matter. Wherein every step of opening The Conference of the Birds fills one with delight — delight at what one is seeing and what one anticipates to come — opening a Kindle book frustrates. Often, you have to swipe or tap back a dozen pages to be sure you haven’t missed anything.
The Kindle is a book reading machine, but it’s also a portable book store. 1 Which is of great benefit to Amazon but also of some small benefit to readers…if I want to read, say, To Kill A Mockingbird right now, the Kindle would have it to me in less than a minute. But what if, instead, the Kindle was more of a book club than a store? Or a reading buddy? I bet something like that done well would encourage reading even more than instantaneous book delivery.
To me, Amazon seems exactly the wrong sort of company to make an ebook reader 2 with a really great reading experience. They don’t have the right culture and they don’t have the design-oriented mindset. They’re a low-margin business focused on products and customers, not books and readers. There’s no one with any real influence at Amazon who is passionately advocating for the reader. Amazon is leaving an incredible opportunity on the table here, which is a real bummer for the millions of people who don’t think of themselves as customers and turn to books for delight, escape, enrichment, transformation, and many other things. No wonder they’re turning back to paper books, which have a 500-year track record for providing such experiences.
PS. Make sure you read Mod’s whole piece…you don’t want to miss the bit about future MacArthur Genius Bret Victor’s magic bookshelf. <3
Michael Lopp, Head of Engineering at Pinterest, recently gave a talk at the Cultivate conference in which he talks about different merit badges that a leader might earn if there were such a thing. Check the video for the whole list, but here are a few of them:
Influence without management authority
Delegate something you care about
Ship a thing
Ask for help from an enemy
Part of the list made me think of parenting, which reminded me of Stella Bugbee’s recommendation of the book Siblings Without Rivalry on Cup of Jo.
I have a VERY, VERY unlikely book that I often reference as a boss: Siblings Without Rivalry. It’s not about money or business per se, but I’ve found since reading it that I put so many of its lessons into practice managing my team at work. I love the way it teaches you to listen, repeat the issues without taking sides, empathize and then teach the parties involved to solve their own disputes. It also helps at home. (Duh.)
Amazon has garnered an enormous share of the book market, and their “activities tend to reduce book prices, which is considered good for consumers.” But hundreds of writers (including Philip Roth and V. S. Naipaul) are trying to convince the Department of Justice that — regardless of the lower prices — Amazon’s monopoly is hurting consumers. From The New Yorker’s Vauhini Vara: Is Amazon creating a cultural monopoly?
Google announced earlier in the week that they were creating a new company, Alphabet, to house a collection of companies, including Google.
What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity).
Google has been focused on diversifying their business for a long time, even before their IPO. In August of 2003, they posted a job listing on Craigslist looking for a manager to run their collection of Googlettes, which were essentially startups within Google:
What is a Googlette? It’s a new business inside of Google that is just getting started — the start-up within the start-up. We’re looking for an experienced, entrepreneurial manager capable of offering direction to a team of PMs working on a wide array of Googlettes. You will define Google’s innovation engine and grow the leaders of our next generation of businesses.
Georges Harik, who is now an advisor for Google Ventures, was a former director of the Googlettes:
As director of Googlettes, his team was responsible for the product management and strategy efforts surrounding many nascent Google initiatives including Gmail, Google Talk, Google Video, Picasa, Orkut, Google Groups and Google Mobile.
At the time, I riffed on this idea a little and imagined Google spinning out these businesses as a confederation of stand-alone companies:
Instead of generating ideas and people for internal use, what if they’re incubating start-ups to spin off into companies of their own? Fast forward five years and instead of being a big huge company, Google is a big huge company at the center of a network of 10-20 large to medium-sized companies with similar goals, values, and business practices. Most of these spin-offs would be engaged in businesses similar (and probably complementary) to each other and the Google Mother Ship, some of them maybe even directly competing with each other.
In hindsight, Alphabet is a much better name than Google Mother Ship.
From 1957, this is a drawing of the synergistic strategy of Walt Disney Productions, or what Todd Zenger of Harvard Business Review calls “a corporate theory of sustained growth”.
The boxes on the chart have changed, but since the appointment of Bob Iger as CEO, Disney has seemingly doubled down on Walt’s old strategy with their increased focus on franchises.
Disney’s dominance can be boiled down very simply to one word: franchises. Or rather, an “incessant focus on franchises” in the words of former Disney CFO Jay Rasulo.
“Everything we do is about brands and franchises,” Rasulo told a group of financial analysts last September. “Ten years ago we were more like other media companies, more broad-based, big movie slate, 20 something pictures, some franchise, some not franchise. If you look at our slate strategy now, our television strategy, almost every aspect of the company, we are oriented around brands and franchises.”
Franchises are well suited to extend across multiple parts of a big business like Disney, particularly because it’s a repeating virtuous cycle: movies drive merchandise sales and theme park visits, which in turn drives interest for sequels and spin-offs, rinse, repeat, reboot.
I wonder if more tech companies could be using this strategy more effectively. Apple does pretty well; their various hardware (iPhone, iPad, Mac), software (iOS, OS X), and services (iCloud, App Store, iTunes Store) work together effectively. Microsoft rode Office & Windows for quite awhile. Google seems a bit more all over the place — for instance, it’s unclear how their self-driving car helps their search business and Google+ largely failed to connect various offerings. Facebook seems to be headed in the right direction. Twitter? Not so much, but we’ll see how they do with new leadership. Or old leadership…I discovered Walt’s chart via interim Twitter CEO Jack Dorsey.
The Misfit Economy looks intriguing; the subtitle is “Lessons in Creativity from Pirates, Hackers, Gangsters and Other Informal Entrepreneurs”.
Who are the greatest innovators in the world? You’re probably thinking Steve Jobs, Thomas Edison, Henry Ford. The usual suspects.
This book isn’t about them. It’s about people you’ve never heard of. It’s about people who are just as innovative, entrepreneurial, and visionary as the Jobses, Edisons, and Fords of the world, except they’re not in Silicon Valley. They’re in the street markets of Sao Paulo and Guangzhou, the rubbish dumps of Lagos, the flooded coastal towns of Thailand. They are pirates, slum dwellers, computer hackers, dissidents, and inner city gang members.
Across the globe, diverse innovators operating in the black, grey, and informal economies are developing solutions to a myriad of challenges. Far from being “deviant entrepreneurs” that pose threats to our social and economic stability, these innovators display remarkable ingenuity, pioneering original methods and practices that we can learn from and apply to move formal markets.
I’ve never had the desire to go to business school or get an MBA, but I found this post by Ellen Chisa about what she learned during her first year at Harvard Business School fascinating. It almost nearly sort of makes me want to think about maybe applying to business school.
People often know what they’re good at (it got them where they are!) Unfortunately, things won’t always go well in your career. How you react and recover impacts everyone around you.
One of the best things I did this year was answering these two questions honestly, for myself:
What is my worst self?
When does my worst self come out?
My worst self: critical, impatient, stubborn, cynical, and sarcastic. It comes out when I feel like I’m not in a position to make an impact, and when I feel undervalued in a situation. It also happens if I think I’m fundamentally “right” and someone disagrees. If it goes on for too long I become incredibly apathetic and don’t do anything.
I have a hard time avoiding this, but I am better at catching it now. When I do catch it, I attempt to apologize to the group, move on, and catch it faster the next time.
Knowing yourself wasn’t really something I was taught in school, nor was it emphasized at home, so I was slow to learn my strengths and weaknesses and how to properly apply them to situations in my life. That struggle continues even today.
From Sarah Nir at the NY Times, an investigation into the world of NYC nail salons, where workers need to pay a fee to get a job, are underpaid, subjected to abuse, and are crammed into one-bedroom apartments with several other workers.
Qing Lin, 47, a manicurist who has worked on the Upper East Side for the last 10 years, still gets emotional when recounting the time a splash of nail polish remover marred a customer’s patent Prada sandals. When the woman demanded compensation, the $270 her boss pressed into the woman’s hand came out of the manicurist’s pay. Ms. Lin was asked not to return.
“I am worth less than a shoe,” she said.
Prepare to be infuriated over and over as you read this.
The typical cost of a manicure in the city helps explain the abysmal pay. A survey of more than 105 Manhattan salons by The Times found an average price of about $10.50. The countrywide average is almost double that, according to a 2014 survey by Nails Magazine, an industry publication.
With fees so low, someone must inevitably pay the price.
“You can be assured, if you go to a place with rock-bottom prices, that chances are the workers wages’ are being stolen,” said Nicole Hallett, a lecturer at Yale Law School who has worked on wage theft cases in salons. “The costs are borne by the low-wage workers who are doing your nails.”
In a Q&A about the investigation, Nir shares how she became interested in nail salons:
About four years ago, I was at a 24-hour spa in Koreatown. It’s one of the Vogue top-secret best-bet salons — a really unusual place. It was my birthday, and I treated myself to a pedicure at 10 AM. And I said to the woman, “It’s so crazy that this is a 24-hour salon. Who works the night shift?” And she says, “I work the night shift.” And I said, “Well, it’s daytime. Who works the day shift? What do you mean?”
And she said, “I work six days a week, 24 hours a day, I live in a barracks above the salon, and on the seventh day, I go home to sleep in my bedroom in Flushing, and then I come right back to work.”
And I was like, This woman’s in prison. People had to shake her to keep her awake. And then she would do a treatment. I just thought it was crazy.
I don’t see how you can go to a NYC nail salon after reading this article. Even Nir’s tips about being a socially conscious nail salon customer aren’t much help.
Update: Part 2 of Nir’s series on nail salons is out. It’s about the health hazards faced by nail salon workers, including lung disease, miscarriages, and cancer. One woman even lost her fingerprints.
Similar stories of illness and tragedy abound at nail salons across the country, of children born slow or “special,” of miscarriages and cancers, of coughs that will not go away and painful skin afflictions. The stories have become so common that older manicurists warn women of child-bearing age away from the business, with its potent brew of polishes, solvents, hardeners and glues that nail workers handle daily.
A growing body of medical research shows a link between the chemicals that make nail and beauty products useful — the ingredients that make them chip-resistant and pliable, quick to dry and brightly colored, for example — and serious health problems.
Whatever the threat the typical customer enjoying her weekly French tips might face, it is a different order of magnitude, advocates say, for manicurists who handle the chemicals and breathe their fumes for hours on end, day after day.
The prevalence of respiratory and skin ailments among nail salon workers is widely acknowledged. More uncertain, however, is their risk for direr medical issues. Some of the chemicals in nail products are known to cause cancer; others have been linked to abnormal fetal development, miscarriages and other harm to reproductive health.
Update: Governor Cuomo has set up a task force to conduct investigations into the city’s nail salons.
Gov. Andrew M. Cuomo ordered emergency measures on Sunday to combat the wage theft and health hazards faced by the thousands of people who work in New York State’s nail salon industry.
Effective immediately, he said in a statement, a new, multiagency task force will conduct salon-by-salon investigations, institute new rules that salons must follow to protect manicurists from the potentially dangerous chemicals found in nail products, and begin a six-language education campaign to inform them of their rights.
Nail salons that do not comply with orders to pay workers back wages, or are unlicensed, will be shut down. The new rules come in response to a New York Times investigation of nail salons — first published online last week — that detailed the widespread exploitation of manicurists, many of whom have illnesses that some scientists and health advocates say are caused by the chemicals with which they work.
This is good news…as long as it results in real positive changes and doesn’t just get a bunch of salon workers deported.
Update: The Times continues its nail salon coverage with an interview with Sister Feng, a Chinese social media star who worked as a manicurist in NYC for four years.
Q. The Times reported that some immigrant manicurists said their bosses would withhold tips and verbally or physically abuse them. Did you ever experience this?
A. There were times when my tips were withheld. But as long as I thought my wages weren’t out of line with my labor, I wouldn’t go to my boss and ask for the tips. In nail salons run by Chinese, being verbally abused was commonplace, so I changed workplaces often. But it never happened in salons run by Koreans. I was never physically beaten.
If you’ve bought a ticket to an event in the past, oh, 15-20 years, chances are you got it from Ticketmaster. Chances are also pretty good that you think Ticketmaster completely sucks, mostly because of the unavoidable and exorbitant convenience fee they charge. And that probably has you wondering: if everyone who uses the service hates Ticketmaster so much, how are they still in business? Because ticket buyers are not Ticketmaster’s customers. Artists and venues are Ticketmaster’s real customers and they provide plenty of value to them.
Ticketmaster sells more tickets than anybody else and they’re the biggest company in the ticket selling game. That gives them certain financial resources that smaller companies don’t have. TM has used this to their advantage by moving the industry toward very aggressive ticketing deals between ticketing companies and their venue clients. This comes in the form of giving more of the service charge per ticket back to the venue (rebates), and in cash to the venue in the form of a signing bonus or advance against future rebates. Venues are businesses too and, thus, they like “free” money in general (signing bonuses), as well as money now (advances) versus the same money later (rebates).
Read that whole Quora answer again…there’s nothing in there about TM being helpful for ticket buyers. It turns out asking “who’s the customer?” is a great way of thinking about when certain companies or industries do things that aren’t aligned with good customer service or user experience.1
Take Apple and Google for instance. Apple sells software and hardware directly to people; that’s where the majority of their revenue comes from. Apple’s customers are the people who use Apple products. Google gets most of their revenue from putting advertising into the products & services they provide. The people who use Google’s products and services are not Google’s customers, the advertisers are Google’s customers. Google does a better job than Ticketmaster at providing a good user experience, but the dissonance that results between who’s paying and who’s using gets the company in trouble sometimes. See also Facebook and Twitter, among many others.
Newspapers, magazines, and television networks have dealt with this same issue for decades now.2 They derive large portions of their revenue from advertisers and, in the case of the TV networks, from the cable companies who pay to carry their channels. That results in all sorts of user hostile behavior, from hiding a magazine’s table of contents in 20 pages of ads to shrieking online advertising to commercials that are louder than the shows to clunky product placement to trimming scenes from syndicated shows to cram in more commercials. From ABC to Vogue to the New York Times, you’re not the customer and it shows.
This might be off-topic (or else the best example of all), but “who’s the customer?” got me thinking about who the customers of large public corporations really are: shareholders and potential shareholders. The accepted wisdom of maximizing shareholder value has become an almost moral imperative for large corporations. The needs of their customers, employees, the environment, and the communities in which they’re located often take a backseat to keeping happy the big investment banks, mutual funds, and hedge funds who buy their stock. When providing good customer service and experience is viewed by companies as opposite to maximizing shareholder value, that’s a big problem for consumers.
Update: I somehow neglected to include the pithy business saying “if you’re not paying for the product, you are the product”, which originated in a slightly different phrasing on MetaFilter.
Update: One example of how maximizing shareholder value can work against good customer service comes from a paper by a trio of economists. In it, they argue that co-ownership of two or more airlines by the same investor results in higher prices.
In a new paper, Azar and co-authors Martin C. Schmalz and Isabel Tecu have uncovered a smoking gun. To test the hypothesis that institutional investors gain market power that results in higher prices, they examine airline routes. Although we think of airlines as independent companies, they are actually mostly owned by a small group of institutional investors. For example, United’s top five shareholders — all institutional investors — own 49.5 percent of the firm. Most of United’s largest shareholders also are the largest shareholders of Southwest, Delta, and other airlines. The authors show that airline prices are 3 percent to 11 percent higher than they would be if common ownership did not exist. That is money that goes from the pockets of consumers to the pockets of investors.
How exactly might this work? It may be that managers of institutional investors put pressure on the managers of the companies that they own, demanding that they don’t try to undercut the prices of their competitors. If a mutual fund owns shares of United and Delta, and United and Delta are the only competitors on certain routes, then the mutual fund benefits if United and Delta refrain from price competition. The managers of United and Delta have no reason to resist such demands, as they, too, as shareholders of their own companies, benefit from the higher profits from price-squeezed passengers. Indeed, it is possible that managers of corporations don’t need to be told explicitly to overcharge passengers because they already know that it’s in their bosses’ interest, and hence their own. Institutional investors can also get the outcomes they want by structuring the compensation of managers in subtle ways. For example, they can reward managers based on the stock price of their own firms — rather than benchmarking pay against how well they perform compared with industry rivals — which discourages managers from competing with the rivals.
Here’s a good explanation of what the One Ring from Lord of the Rings actually is and what it can do:
I transcribed a short passage from the video:
First, the ring tempts everyone (well, almost everyone) with promises that yes, this little ring can be a mighty weapon or a tool to reshape the world and gosh don’t you just look like the best guy to use it. Let’s go vanquish the powerful demigod who lives over there to get started, shall we? This is why the hobbits made great ring bearers, because they’re pretty happy with the way things are and don’t aspire to greatness. Of course, there’s Gollum, who started out as a hobbit, but all things considered, he held out pretty well for a couple hundred years. Set the ring on the desk of most men and they wouldn’t be able to finish their coffee before heading to Mordor to rule the world and do it right this time.
What’s interesting about hearing of The Ring in this focused way is how it becomes a part of Tolkien’s criticism of technology. The Ring does what every mighty bit of tech can do to its owner/user: makes them feel powerful and righteous. Look what we can do with this thing! So much! So much good! We are good therefore whatever we do with this will be good!
The contemporary idea of the tech startup is arguably the most seductive and powerful technology of the present moment, the One Ring of our times. It’s not difficult to modify a few words in the passage above to make it more current:
First, the startup tempts everyone (well, almost everyone) with promises that yes, this little company can be a mighty weapon or a tool to reshape the world and gosh don’t you just look like the best guy to use it. Let’s go disrupt the powerful middleman who lives over there to get started, shall we? This is why the nerds made great ring bearers, because they’re pretty happy with the way things are and don’t aspire to greatness. Of course, there’s Sergey and Larry, who started out as nerds, but all things considered, they held out pretty well for a decade. Set the ring on the desk of most men and they wouldn’t be able to finish their mail-order espresso before heading to Silicon Valley to rule the world and do it right this time.
Ok, haha, LOL, and all that, but it’s curious that nerds (and everyone else) shelled out billions of dollars to watch Peter Jackson’s LOTR movies in the early 2000s in the aftermath of the dot com bust. Those were dark times…the power of the startup had just been lost after Kozmo’s CEO Dave Isildur was slain by economists while delivering a single pint of Ben & Jerry’s Chubby Hubby to far reaches of the Outer Sunset and had not yet been rediscovered by Schachter, Butterfield, and Zuckerberg.
And these nerds, whose spines all tingled when Aragorn charged into the hordes of Mordor — for Frodo! — and whose eyes filled with tears when Frodo parted with Sam at the Grey Havens, came away from that movie experience siding with Boromir, Saruman, and Denethor, determined to seize that startup magic for themselves to disrupt all of the things, defeat the evil corporate middlemen, and reshape the world to be a better and more efficient place. And gosh don’t you just look like the best guy to use it?
Leo Gerard, president of the United Steelworkers International union, writes about a Institute for Policy Studies report called Fleecing Uncle Sam. One of the most eyebrow-raising details is this:
Of America’s 100 top-paid CEOs, 29 worked schemes that enabled them to collect more in compensation than their corporations paid in income taxes. The average pay for these 29: $32 million. For one year.
And from the report:
All seven of these firms were highly profitable, collectively reporting more than $74 billion in U.S. pre-tax profits. However, they received a combined total of $1.9 billion in refunds from the IRS, giving them an effective tax rate of negative 2.5 percent.
The seven CEOs leading these tax-dodging corporations were paid $17.3 million on average in 2013. Boeing and Ford Motors both paid their CEOs more than $23 million last year while receiving large tax refunds.
Are you ready for a new level of discomfort in air travel? A major US airline is considering a seating class called Economy Minus, which would offer smaller seats at a lower price.
Now a major airline may be considering another breakthrough idea: “Economy Minus,” a seat that offers less legroom at a discount price.
Before you scoff, consider that a new survey found that 42% of airline travelers said they would be very likely or somewhat likely to book a seat with less legroom if it means getting a cheap fare.
See also Why Airlines Want to Make You Suffer. (A: maximizing shareholder value)
My kids and I went to the new Lego Store in the Flatiron this weekend, and I again noticed how freaking expensive Lego sets are. The Death Star set is $400 + tax and even small sets are $30-40. Afterward I wondered if renting Lego sets would be an economically viable business and sure enough, someone is giving it a go: Pley. It works a bit like Netflix’s DVD service: you pay a flat subscription fee each month and can check out as many sets as you want, one at a time. Doesn’t look like they rent out Lego Stephen Hawking or Lego Mona Lisa though.
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.