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)
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.
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)
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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!
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.
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.
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.
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.
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.
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.
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."
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.
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, 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.
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.
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.
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.
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)
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.
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.
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.
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.
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.
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 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.
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.)
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.
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.
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.
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.
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?
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.
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.
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.
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.
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".
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.
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).
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.
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.
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.
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.
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.
"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.
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.
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.
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.
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.
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.
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.
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.
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.'
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.
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.
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.
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.
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)
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.
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.
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?
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.
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.
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)
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.
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.
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.
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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.
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 threetweets, 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
@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.
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.
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.
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."
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.
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.
- 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
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.
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 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.
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."
"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."
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.
The problem -- in Blockbuster's case, at least -- was that the very features that people thought were strengths turned out to be weaknesses. Blockbuster's huge investment, both literally and psychologically, in traditional stores made it slow to recognize the Web's importance: in 2002, it was still calling the Net a "niche" market. And it wasn't just the Net. Blockbuster was late on everything -- online rentals, Redbox-style kiosks, streaming video. There was a time when customers had few alternatives, so they tolerated the chain's limited stock, exorbitant late fees (Blockbuster collected about half a billion dollars a year in late fees), and absence of good advice about what to watch. But, once Netflix came along, it became clear that you could have tremendous variety, keep movies as long as you liked, and, thanks to the Netflix recommendation engine, actually get some serviceable advice. (Places like Netflix and Amazon have demonstrated the great irony that computer algorithms can provide a more personalized and engaging customer experience than many physical stores.) Then Redbox delivered the coup de grace, offering new Hollywood releases for just a dollar.
"Can I trust you with this?" I said, handing him a $50 card and telling him to buy what he needs, but that I need it back when he was done. He nodded and scrambled to his feet. He said he would be back in a half-hour.
He came back right on time, slurping from a large McDonald's soft drink cup -- root beer -- and with sweat on his brow. He wanted to have pork and rice from a Vietnamese noodle joint on Spadina but they wouldn't take the card. So, he scrambled to McDonald's. Lunch was a double quarter-pounder with cheese.
The reporter's offer was frequently declined, which seems surprising at first. But panhandlers are savvy businesspeople. They didn't want a short-term and potentially risky venture interfering with their main panhandling income stream. Eyes on the prize. (via the browser)
Privately held Trader Joe's is highly secretive and doesn't do interviews, so Fortune did some digging around to see what makes the retail chain such a success.
A ringing bell instead of an intercom signals that more help is needed at the registers. Registers don't have conveyor belts or scales, and perishables are sold by unit instead of weight, speeding up checkout. Crew members aren't told the margins on products, so placement decisions are made based not on profits but on what's best for the shopper. Every employee works all aspects of the store, and if you ask where the roasted chestnuts are he'll walk you over instead of just saying "aisle five." Want to know what they taste like? He can probably tell you, and he might even open the bag on the spot for you to try.
Customer service, pay people well, and trust them to do good work. That and be clever about what you sell and to whom.
Mr. Ling, one of the partners from the injection molding factory, picked up Henry and me at our hotel. Henry was quick to inform Mr. Ling that he did not speak Cantonese, the local language. This deception positioned Henry as a spy for me, pretending to not understand the conversations between my agent, Lenny, the molder, Mr. Ling, and the tool maker. After a short while, Henry pulled me aside and advised me to get my business out of Swift Tread as swiftly as possible. He overheard the toolmaker tell Mr. Ling that there was nothing else he could do to adjust the mold. Henry also learned that my agent, Vinnie -- who was supposed to have my interests at heart -- was really protecting the interests of the molder.
My three-year-old son has four Automoblox cars. He loves them and plays with them as much as all his other toys and books combined. (via hello typepad)
I left Seattle pretty sure that Amazon would be a better partner for Zappos than our current board of directors or any other outside investor. Our board wanted an immediate exit; we wanted to build an enduring company that would spread happiness. With Amazon, it seemed that Zappos could continue to build its culture, brand, and business. We would be free to be ourselves.
One friend, an American who works in film, was paid to represent a Canadian company and give a speech espousing a low-carbon future. Another was flown to Shanghai to act as a seasonal-gifts buyer. Recruiting fake businessmen is one way to create the image -- particularly, the image of connection -- that Chinese companies crave. My Chinese-language tutor, at first aghast about how much we were getting paid, put it this way: "Having foreigners in nice suits gives the company face."
Charles Munger, who works with Warren Buffett as Vice-Chairman of Berkshire Hathaway, gave a talk at USC Business School in 1994 that is very much worth reading. Although the main point of Munger's talk is how to pick stocks, he spends much of the time talking about "the art of worldly wisdom"...basically what you need to know to be a functional human being who can make informed decisions.
I have a name for people who went to the extreme efficient market theory-which is "bonkers". It was an intellectually consistent theory that enabled them to do pretty mathematics. So I understand its seductiveness to people with large mathematical gifts. It just had a difficulty in that the fundamental assumption did not tie properly to reality. [...]
The model I like -- to sort of simplify the notion of what goes on in a market for common stocks -- is the pari-mutuel system at the racetrack. If you stop to think about it, a pari-mutuel system is a market. Everybody goes there and bets and the odds change based on what's bet. That's what happens in the stock market.
Any damn fool can see that a horse carrying a light weight with a wonderful win rate and a good post position etc., etc. is way more likely to win than a horse with a terrible record and extra weight and so on and so on. But if you look at the odds, the bad horse pays 100 to 1, whereas the good horse pays 3 to 2. Then it's not clear which is statistically the best bet using the mathematics of Fermat and Pascal. The prices have changed in such a way that it's very hard to beat the system.
O'Reilly says he sometimes wonders what would have happened if he had raised venture capital and given his company a chance to get really big. But he sounds more amused by this question than truly troubled by it. "Money is like gasoline during a road trip," he says. "You don't want to run out of gas on your trip, but you're not doing a tour of gas stations. You have to pay attention to money, but it shouldn't be about the money."
Management is the ideal technology if you're seeking compliance -- getting people to do what you want them to do, the way you want them to do it. But in today's workforce, which demands much more in the way of creative and conceptual capabilities, we don't want compliance. We want engagement. And self-direction is a far better technology for engagement.
Twitter announced their long-awaited advertising model last night: Promoted Tweets. Companies and people will be able to purchase tweets that will show up first in certain search results or right in people's tweet streams. Which, if you rewind the clock a few years, is exactly the sort of thing that used to get people all upset with search engine results...and is one of the (many) reasons that Google won the search wars: they kept their sponsored results and organic results separate. It will be interesting to see if the world has changed in that time.
The magic to our hamburgers is quality control. We toast our buns on a grill -- a bun toaster is faster, cheaper, and toasts more evenly, but it doesn't give you that caramelized taste. Our beef is 80 percent lean, never frozen, and our plants are so clean, you could eat off the floor. The burgers are made to order -- you can choose from 17 toppings. That's why we can't do drive-throughs -- it takes too long. We had a sign: "If you're in a hurry, there are a lot of really good hamburger places within a short distance from here." People thought I was nuts. But the customers appreciated it.
Good name too. My son frequently asks if we're "going to go visit the five guys" to get "hangleburgers and peanuts".
To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this 'contribution', he receives a 'class A' share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.
In defending itself against a copyright lawsuit brought by Viacom, YouTube notes that the media company has been surreptitiously uploading its copyrighted content to YouTube for years.
For years, Viacom continuously and secretly uploaded its content to YouTube, even while publicly complaining about its presence there. It hired no fewer than 18 different marketing agencies to upload its content to the site. It deliberately "roughed up" the videos to make them look stolen or leaked. It opened YouTube accounts using phony email addresses. It even sent employees to Kinko's to upload clips from computers that couldn't be traced to Viacom. And in an effort to promote its own shows, as a matter of company policy Viacom routinely left up clips from shows that had been uploaded to YouTube by ordinary users. Executives as high up as the president of Comedy Central and the head of MTV Networks felt "very strongly" that clips from shows like The Daily Show and The Colbert Report should remain on YouTube.
I heard that the staff of the Daily Show and Colbert Report upload the shows to YouTube as soon as they can after the shows air and then the next day, lawyers from Comedy Central hit YouTube with takedown requests for the uploaded shows.
Companies who target the middle of the market (Sony, Dell, General Motors) are losing customers to companies like Apple & Hermes at the high end and Ikea & H&M at the low end. From James Surowiecki:
The products made by midrange companies are neither exceptional enough to justify premium prices nor cheap enough to win over value-conscious consumers. Furthermore, the squeeze is getting tighter every day. Thanks to economies of scale, products that start out mediocre often get better without getting much more expensive -- the newest Flip, for instance, shoots in high-def and has four times as much memory as the original -- so consumers can trade down without a significant drop in quality. Conversely, economies of scale also allow makers of high-end products to reduce prices without skimping on quality. A top-of-the-line iPod now features video and four times as much storage as it did six years ago, but costs a hundred and fifty dollars less. At the same time, the global market has become so huge that you can occupy a high-end niche and still sell a lot of units. Apple has just 2.2 per cent of the world cell-phone market, but that means it sold twenty-five million iPhones last year.
I work in the film business, where schmoozing is an art form, lunch hour lasts from 12:30 until 3, and every meeting takes an hour whether there's an hour's worth of business or not. Not so at Vogue, where meetings are long if they go more than seven minutes and everyone knows to show up on time, prepared and ready to dive in. In Anna's world, meetings often start a few minutes before they're scheduled. If you arrive five minutes late, chances are you'll have missed it entirely. Imagine the hours of time that are saved every day by not wasting so much of it in meetings.
Three out of the top 40 Hollywood earners for 2009 are the 20-something stars of the Harry Potter films...Daniel Radcliffe is sixth on the list, below James Cameron but above Jerry Bruckheimer. Robert Pattinson makes the list at #35 (Kristen Stewart is at #37)...I expect those totals will go up if the Twilight films continue to do well.
John Mackey, the co-founder and chief executive of Whole Foods Market, refers to the company as his child-not just his creation but the thing on earth whose difficulties or downfall it pains him most to contemplate. He also sees himself as a "daddy" to his fifty-four thousand employees, who are known as "team members," but they may occasionally consider him to be more like a crazy uncle. To the extent that a child inherits or adopts a parent's traits, Whole Foods is an embodiment of many of Mackey's. A Whole Foods store, in some respects, is like Mackey's mind turned inside out. Certainly, the evolution of the corporation has often traced his own as a man; it has been an incarnation of his dreams and quirks, his contradictions and trespasses, and whatever he happened to be reading and eating, or not eating.
Money in your PayPal account will be held for 180 days. After 180 days, we'll email you information on how to receive your funds. We regret any inconvenience this may cause.
Nice. PayPal can unilaterally decide you're being fraudulent and keep your money for six months while they collect the interest on it. Holy fucking conflict of interest, Batman! Are banks just naturally customer hostile?
Update: Feedback from several people: PayPal is not a bank and therefore they can do (and do do) anything they want.
Jared Diamond has come to believe that some large multinational companies (like Chevron, Wal-Mart, and Coca-Cola) are "among the world's strongest positive forces for environmental sustainability".
The embrace of environmental concerns by chief executives has accelerated recently for several reasons. Lower consumption of environmental resources saves money in the short run. Maintaining sustainable resource levels and not polluting saves money in the long run. And a clean image -- one attained by, say, avoiding oil spills and other environmental disasters -- reduces criticism from employees, consumers and government.
Discontent has steadily grown among formerly stalwart DWR supporters. New York-based textile designer Sandy Chilewich, whose rugs and mats are stocked by DWR ($280 to $600), says she's considering pulling her business and has been talking with other DWR designers about banding together to "tell them we don't approve." Eames Demetrios, grandson of Charles and Ray Eames and the guardian of their legacy, says, "DWR has been a great ambassador for the Eames story and DWR hasn't carried knockoff Eames product, but I think one needs to look beyond that. In the long run, we don't see our authentic product being sold next to knockoff products of any kind."
There is much about the restaurant that is inefficient, as MBAs are quick to note: Adrià should lower his staff numbers, use cheaper ingredients, improve his supply chain, and increase the restaurant's hours of operation. But "fixing" elBulli turns it into just another restaurant, says Norton: "The things that make it inefficient are part of what makes it so valuable to people."
After four years, I've finally figured the show out. The Office is not a random series of cynical gags aimed at momentarily alleviating the existential despair of low-level grunts. It is a fully-realized theory of management that falsifies 83.8% of the business section of the bookstore.
Even if you're only an occasional viewer of the show, this is worth reading through, especially if you work in an office environment. (thx, zach)
I thought about his rant this week as the nation's largest carriers reported first-quarter earnings. Or, more accurately, first-quarter losses. Except for AirTran and JetBlue, they all lost money. The legacy airlines -- Delta/Northwest, American, United, Continental and US Airways -- lost a lot of money. Collectively about $1.9 billion, in fact. Their revenue plummeted, too.
And do you know what most of them wanted to talk about? You guessed it. The baskets of ancillary revenue they're harvesting by charging us fees for checking bags, choosing coach seats or whatever. Forget that their houses are burning down. They found a tap in the bathtub with some water leaking out, so they're thrilled.
We agreed that a lot of what we then considered "working hard" was actually "freaking out". Freaking out included panicking, working on things just to be working on something, not knowing what we were doing, fearing failure, worrying about things we needn't have worried about, thinking about fund raising rather than product building, building too many features, getting distracted by competitors, being at the office since just being there seemed productive even if it wasn't -- and other time-consuming activities. This time around we have eliminated a lot of freaking out time. We seem to be working less hard this time, even making it home in time for dinner.
I would likely give the same advice, but I wonder if it's actually true. Perhaps working hard/freaking out was exactly what was needed at the time, whether or not it seems efficient or correct in retrospect. You need to travel that road so you can find a better way the second time around.
We catch back up with the people we met in 2008, to see how they've fared over the last 18 months. We talk to Clarence Nathan, who in 2008 received a half million dollar loan that he said he wouldn't have given himself; Jim Finkel, a Wall Street finance guy, who put together and managed complicated mortgage-based financial securities; Richard Campbell, the Marine who was facing foreclosure; and Glen Pizzolorusso, the mortgage company sales manager who led the life of a b-list celebrity.
Few technology and device-making companies probably realize it, but they are in direct competition with Apple (or soon will be). How did this happen? Well, the iPhone1 does a lot of useful things pretty well, well enough that it is replacing several specialized devices that do one or two things really well. Space in backpacks, pockets, and purses is a finite resource, as is money (obviously). As a result, many are opting to carry only the iPhone with them when they might have toted several devices around. Here is a short list of devices with capabilities duplicated to some degree by the iPhone:
Mobile phone - All the stuff any mobile phone does: phone calls, texting, voicemail.
PDA - The iPhone meets all of the basic PDA needs: address book, calendar, to-dos, notes, and easy data syncing.
iPod - The iPhone is a full-featured music-playing device. And with 32 GB of storage, the 3GS can handle a huge chunk of even the largest music collection.
Point and shoot camera - While not as full-featured as something like a PowerShot, the camera on the iPhone 3GS has a 3-megapxiel lens with both auto and manual focus, shoots in low-light, does macro, and can shoot video. Plus, it's easy to instantly publish your photos online using the iPhone's networking capabilities and automatically tag your photos with your location.
Personal computer - With the increased speed of the iPhone 3GS, the 3G and wifi networking, a real web browser, and the wide array of available apps at the App Store, many people find themselves leaving the laptops at home and using the iPhone as their main computer when they are out and about.
Nintendo DS or PSP - There are thousands of games available at the App Store and if the folks in my office and on the NYC subway are any indication, people are using their iPhones as serious on-the-go gaming machines.
GPS - With geolocation by GPS, wifi, or cell tower, the Google Maps app, and the built-in compass, the iPhone is a powerful wayfinding device. Apps can provide turn by turn directions, current traffic conditions, satellite and photographic street views, transit information, and you can search for addresses and businesses.
Flip video camera - The iPhone 3GS doesn't shoot in HD (yet), but the video capabilities on the phone are quite good, especially the on-phone editing and easy sharing.
Compass - Serious hikers and campers wouldn't want to rely on a battery-powered device as their only compass, but the built-in compass on the iPhone 3GS is perfect for casual wayfinding.
Watch - I use the clock on my iPhone more often than any other function. By far.
Portable DVD player - Widescreen video looks great on the iPhone, you can d/l videos and TV shows from the iTunes Store, and with apps like Handbrake, it's easy to rip DVDs for viewing on the iPhone.
Kindle - Amazon's Kindle app for the iPhone is surprisingly usable. And unlike Amazon's hardware, the iPhone can run many ebook readers that handle several different formats.
With all the apps available at the App Store, the list goes on: pedometer, tape recorder, heart monitor, calculator, remote control, USB key, and on and on. Electronic devices aren't even the whole story. I used to carry a folding map of Manhattan (and the subway) with me wherever I went but not anymore. With Safari, Instapaper, and Amazon's Kindle app, books and magazines aren't necessary to provide on-the-go reading material.
Once someone has an iPhone, it is going to be tough to persuade them that they also need to spend money on and carry around a dedicated GPS device, point-and-shoot camera, or tape recorder unless they have an unusual need. But the real problem for other device manufacturers is that all of these iPhone features -- particularly the always-on internet connectivity; the email, HTTP, and SMS capabilities; and the GPS/location features -- can work in concert with each other to actually make better versions of the devices listed above. Like a GPS that automatically takes photos of where you are and posts them to a Flickr gallery or a video camera that'll email videos to your mom or a portable gaming machine with access to thousands of free games over your mobile's phone network. We tend to forget that the iPhone is still from the future in a way that most of the other devices on the list above aren't. It will take time for device makers to make up that difference.
If these manufacturers don't know they are in competition with the iPhone, Apple sure does. At their Rock & Roll event last week, MacWorld quotes Phil Schiller as saying:
iPod touch is also a great game machine. No multi-touch interface on other devices, games are expensive, there's no app store, and there's no iPod built in. Plus it's easier to buy stuff because of the App Store on the device. Chart of game and entertainment titles available on PSP, Nintendo DS, and iPhone OS. PSP: 607. Nintendo DS: 3680. iPhone: 21,178.
The same applies to the iPhone. At the same event, Steve Jobs commented that with the new iPod nano, you essentially get a $149 Flip video camera thrown in for free:
We're going to start off with an 8GB unit, and we're going to lower the price from $149 to free. This is the new Apple, isn't it? (laughter) How are we going to do that. We're going to build a video camera into the new iPod nano. On the back of each unit is a video camera and a microphone, and there's a speaker inside as well. Built into every iPod nano is now an awesome video camera. And yet we've still retained its incredibly small size.
"I'm sure there will always be dedicated devices, and they may have a few advantages in doing just one thing," he said. "But I think the general-purpose devices will win the day. Because I think people just probably aren't willing to pay for a dedicated device."
In terms of this competition, the iPhone at this point in its lifetime2 is analogous to the internet in the late 1990s. The internet was pretty obviously in competition with a few obvious industries at that point -- like meatspace book stores -- but caught (and is still catching) others off guard: cable TV, movie companies, music companies, FedEx/USPS/UPS, movie theaters, desktop software makers, book publishers, magazine publishers, shoe/apparel stores, newspaper publishers, video game console makers, libraries, grocery stores, real estate agents, etc. etc....basically any organization offering entertainment or information. The internet is still the ultimate "there's an app for that" engine; it duplicated some of the capabilities of and drew attention away from so many products and services that these businesses offered. Some of these companies are dying -- slowly or otherwise -- while others were able to adapt and adopt quickly enough to survive and even thrive. It'll be interesting to see which of the iPhone's competitors will be able to do the same.
 In this essay, I'm using "the iPhone" as a convenient shorthand for "any of a number of devices and smartphones that offer similar functionality to the iPhone, including but not limited to the Palm Pre, Android phones, Blackberry Storm, and iPod Touch". Similar arguments apply, to varying degrees, to these devices and their manufacturers but are especially relevant to the iPhone and Apple; hence, the shorthand. If you don't read this footnote, adequately absorb its message, and send me email to the effect of "the iPhone sux because Apple and AT&T are monopolistic robber barons", I reserve the right to punch you in the face while yelling I WASN'T JUST TALKING ABOUT THE IPHONE YOU JACKASS. ↩
 You've got to wonder when Apple is going to change the name of the iPhone. The phone part of the device increasingly seems like an afterthought, not the main attraction. The main benefit of the device is that it does everything. How do you choose a name for the device that has everything? Hell if I know. But as far as the timing goes, I'd guess that the name change will happen with next year's introduction of the new model. The current progression of names -- iPhone, iPhone 3G, iPhone 3GS -- has nowhere else to go (iPhone 3GS Plus isn't Apple's style). ↩
Among the questions voiced by video game executives: How can Nintendo, Sony and Microsoft keep consumers hooked on game-only consoles, like the Wii or even the PlayStation Portable, when Apple offers games on popular, everyday devices that double as cellphones and music players?
And how can game developers and the makers of big consoles persuade consumers to buy the latest shoot'em-ups for $30 or more, when Apple's App store is full of games, created by developers around the world and approved by Apple, that cost as little as 99 cents -- or even are free?
Sometimes I'm looking for a word to describe a certain kind of company. One that's small and cares about quality and is trying to do something great for a few customers instead of trying to mass produce crap in order to maximize profit. A company like Coudal Partners or Zingerman's.
Boutique was deemed too pretentious...small, indie, and QOQ didn't cut it either. Readers offered up craftsman, artisan, bespoke, cloudless, studio, atelier, long tail, agile, bonsai company, mom and pop, small scale, specialty, anatomic, big heart, GTD business, dojo, haus, temple, coterie, and disco business, but none of those seems quite right.
I've had this question rolling around in the back of my mind since Matt posted it and this morning, a potential answer came to me: small batch. As in: "37signals is a small batch business." The term is most commonly applied to bourbon whiskey:
A small batch bourbon is made for the true connoisseur, every sip a testament to the work and love that has gone into each handcrafted bottle.
but can also be used to describe small quantities of high quality products such as other spirits, baked goods, coffee, beer, and wine. When starting a small company that makes high quality web sites (Wikirank) and apps (Typekit), some friends of mine in San Francisco even picked the phrase for their company's name: Small Batch, Inc.
I sat down and sent out a few emails -- filling friends in on my visit to the Fiji Water bottling plant, forwarding a story about foreign journalists being kicked off the island. Then my connection died. "It will just be a few minutes," one of the clerks said. Moments later, a pair of police officers walked in. They headed for a woman at another terminal; I turned to my screen to compose a note about how cops were even showing up in the Internet cafes. Then I saw them coming toward me. "We're going to take you in for questioning about the emails you've been writing," they said.
Then the cops threatened the reporter with prison rape. The rest of the story isn't much better.