kottke.org posts about business
Chris Dixon has posted, with permission, a letter that Jonah Peretti recently wrote to the employees of and investors in Buzzfeed outlining the company’s strategy. If you’re at all curious about the future of media on the web, it is an interesting read.
Most publishers build their site by stapling together products made by other companies. They get their CMS from one company, their analytics package from another, their ad tech from another, their related content widgets are powered by another, sometimes even their writers are contractors who don’t work for the company. This is why so many publisher sites look the same and also why they can be so amazingly complex and hard to navigate. They are Frankenstein products bolted together by a tech team that integrates other people’s products instead of building their own.
At BuzzFeed we take the exact opposite approach. We manage our own servers, we built our CMS from scratch, we created our own realtime stats system, we have our own data science team, we invented own ad products and our own post formats, and all these products are brought to life by our own editorial team and our own creative services team. We are what you call a “vertically integrated product” which is rare in web publishing. We take responsibility for the technology, the advertising, and the content and that allows us to make a much better product where everything works together.
It is hard to build vertically integrated products because you have to get good at several things instead of just one. This is why for years Microsoft was seen as the smart company for focusing on just one layer and Apple was seen as dumb for trying to do everything. But now Apple is more than twice (!) as valuable as Microsoft and the industry is starting to accept that you need to control every layer to make a really excellent product. Even Microsoft and Google has started to make their own hardware after years of insisting that software is what matters.
BuzzFeed is one of the very few publishers with the resources, talent, and focus to build the whole enchilada. And nothing is tastier than a homemade enchilada.
Jonah also recently offered some unsolicited advice to Marissa Meyer about how to think about media at Yahoo.
It is amazing how having a huge homepage can be a curse. People start fighting over existing traffic instead of trying to make awesome new things that are exciting enough to attract their own audience. Marissa Mayer should exclude homepage traffic from all metrics used to evaluate performance - that would be the single biggest thing she could do to turn around the company.
Taking that a step further, good performance should result in homepage placement, not the other way around.
A note of disclosure: I was/sorta still am an advisor to Buzzfeed (and work from the BF office), although nothing I ever offered in the way of advice has contributed significantly to Buzzfeed’s current success. I also enjoy enchiladas.
But can she turn the company around? This is a super interesting move.
Marissa Mayer, one of the top executives at Google, will be the next C.E.O. of Yahoo, making her one of the most prominent women in Silicon Valley and corporate America.
The appointment of Ms. Mayer, who was employee No. 20 at Google and was one of the few public faces of the company, is considered a surprising coup for Yahoo, which has struggled in recent years to attract top flight talent in its battle with competitors like Google and Facebook.
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 Sinaloa drug cartel is headed by a man who goes by El Chapo. That Chapo is 55 years old and still around tells you something about well he runs his business.
The drug war in Mexico has claimed more than 50,000 lives since 2006. But what tends to get lost amid coverage of this epic bloodletting is just how effective the drug business has become. A close study of the Sinaloa cartel, based on thousands of pages of trial records and dozens of interviews with convicted drug traffickers and current and former officials in Mexico and the United States, reveals an operation that is global (it is active in more than a dozen countries) yet also very nimble and, above all, staggeringly complex. Sinaloa didn’t merely survive the recession — it has thrived in recent years. And after prevailing in some recent mass-casualty clashes, it now controls more territory along the border than ever.
“Chapo always talks about the drug business, wherever he is,” one erstwhile confidant told a jury several years ago, describing a driven, even obsessive entrepreneur with a proclivity for micromanagement. From the remote mountain redoubt where he is believed to be hiding, surrounded at all times by a battery of gunmen, Chapo oversees a logistical network that is as sophisticated, in some ways, as that of Amazon or U.P.S. — doubly sophisticated, when you think about it, because traffickers must move both their product and their profits in secret, and constantly maneuver to avoid death or arrest. As a mirror image of a legal commodities business, the Sinaloa cartel brings to mind that old line about Ginger Rogers doing all the same moves as Fred Astaire, only backward and in heels. In its longevity, profitability and scope, it might be the most successful criminal enterprise in history.
In a clever bit of salesmanship, Apple angles the screens on the laptops in the Apple Store just enough that you can see the screen but not enough for comfortable viewing. Here’s why:
The point, explains Carmine Gallo, who is writing a book on the inside workings of the Apple Store, is to get people to touch the devices. “The main reason notebook computers screens are slightly angled is to encourage customers to adjust the screen to their ideal viewing angle,” he says — “in other words, to touch the computer.”
A tactile experience with an Apple product begets loyalty to Apple products, the thinking goes — which means that the store exists to imprint a brand impression on visitors even more than it exists to extract money from them. “The ownership experience is more important than a sale,” Gallo notes. Which means that the store — and every single detail creating the experience of it — are optimized for customers’ personal indulgence. Apple wants you to touch stuff, to play with it, to make it your own.
It’s a genius touch. I went in to the Apple Store last week just after it opened to see the new MacBook Airs and retina MacBook Pros and I’ll be damned if I didn’t have to adjust the screen in both cases. Get out of my head, man! (via @alexismadrigal)
Here’s an interesting little tidbit from the Economist about Uber…drivers rate their passengers.
At the completion of a trip, a passenger is asked to rate the driver; the driver, in turn, rates the passenger. Drivers who have poor ratings do not last long, Mr Kalanick says, while poorly-behaved passengers may have trouble securing a ride, since a driver can decline a fare if the hailer has a bad reputation.
I’d expect more of this credit scoring in the future…you might have trouble getting a reservation, a hotel room, or seat on a plane if you’re an asshole.
From Mat Honan at Gizmodo, an account of how Yahoo bought Flickr and then frittered away all its potential.
Because Flickr wasn’t as profitable as some of the other bigger properties, like Yahoo Mail or Yahoo Sports, it wasn’t given the resources that were dedicated to other products. That meant it had to spend its resources on integration, rather than innovation. Which made it harder to attract new users, which meant it couldn’t make as much money, which meant (full circle) it didn’t get more resources. And so it goes.
As a result of being resource-starved, Flickr quit planting the anchors it needed to climb ever higher. It missed the boat on local, on real time, on mobile, and even ultimately on social-the field it pioneered. And so, it never became the Flickr of video; YouTube snagged that ring. It never became the Flickr of people, which was of course Facebook. It remained the Flickr of photos. At least, until Instagram came along.
A profile of Yvon Chouinard, the founder of Patagonia and an unlikely business guru.
Then he looked at everything Patagonia made, shipped or processed, and resolved to do it all more responsibly. He changed materials, switching in 1996 from conventional to organic cotton-despite the fact that it initially tripled his supply costs-because it was less harmful to the environment. He created fleece jackets made entirely from recycled soda bottles. He vowed to create products durable enough and timeless enough that people could replace them less often, reducing waste. He put “The Footprint Chronicles” up on Patagonia’s website, exhaustively cataloging the environmental damage done by his own company. He now takes responsibility for every item Patagonia has ever made — promising either to replace it if the customer is dissatisfied, repair it (for a reasonable fee), help resell it (Patagonia facilitates exchanges of used clothes on its website), or recycle it when at last it’s no longer wearable.
Posting this partially for my wife, who is a life-long Patagonia customer.
Writing for New York magazine, Henry Blodget explains how a young startup founder and college dropout became the CEO of a soon-to-be $100 billion company.
When talking about Zuckerberg’s most valuable personality trait, a colleague jokingly invokes the famous Stanford marshmallow tests, in which researchers found a correlation between a young child’s ability to delay gratification — devour one treat right away, or wait and be rewarded with two — with high achievement later in life. If Zuckerberg had been one of the Stanford scientists’ subjects, the colleague jokes, Facebook would never have been created: He’d still be sitting in a room somewhere, not eating marshmallows.
Huh, this is an interesting idea: Apple should acquire both Foursquare and Square.
To summarize: after the deal, Apple will immediately become a giant payments company, with an installation base that is expected to encompass half of all mobile devices sold. The company will have the best local search abilities, far exceeding any existing recommendation engine. And due to its enormous reach, it will possess a payment system that merchants will line up to support.
Remember this New Yorker profile of Lenny Dykstra’s “improbable post-career success story”?
Dykstra ordered a Coke and French fries with ketchup: “And I’m actually going to have that as my meal-might be the oddest order of the day.” (Healthy living was never his specialty.) When the Coke arrived, he sent it back, believing it to be Diet. After the fries were delivered, he made a show of extracting a “You’re welcome” from the waiter, who had since moved on to another table. “I pay a thousand bucks a night — actually, three thousand bucks a night — and people are discourteous,” he said, shaking his head. “There’s some point in life when you have to grow up.”
For many ballplayers, the growing-up point does not arrive until after retirement, when all the freebies vanish and equipment managers and hotel maids can no longer be relied upon for regular laundry service. Dykstra last played in the majors in 1996, at age thirty-three. Improbably, he has since become a successful day trader, and he let me know that he owns both a Maybach (“the best car”) and a Gulfstream (“the best jet”). The occasion for our lunch, however, was a new venture: Dykstra is launching a magazine, intended specifically for pro athletes, called The Players Club. An unfortunate number of his former teammates have ended up broke, or divorced, or worse. The week before we met, the ex-Yankee Jim Leyritz, himself twice divorced and underemployed, had hit a woman while driving home from a bar. He never grew up.
“You’ve got the ten per cent who are going to find their way no matter what,” Dykstra said of the athlete population. “And you get the ten per cent that are fuckheads no matter what— we’ll paste an ‘L’ to ‘em.” The rest need guidance, and Dykstra, who will write a regular column called “The Game of Life,” is prepared to give it. “This will be the world’s best magazine,” he said.
Since then, Dykstra has declared bankruptcy, divorced from his wife, was sentenced to three years in state prison for grand theft auto (and several other charges), and most recently was sentenced to nine months in jail for assault and indecent exposure. He’s also awaiting trial on federal bankruptcy fraud charges.
Brent Schlender interviewed Steve Jobs many times over the past 25 years and recently rediscovered the audio tapes of those interviews. What he found was in those years between his departure from Apple in 1985 to his return in 1996, Jobs learned how to become a better businessman and arguably a better person.
The lessons are powerful: Jobs matured as a manager and a boss; learned how to make the most of partnerships; found a way to turn his native stubbornness into a productive perseverance. He became a corporate architect, coming to appreciate the scaffolding of a business just as much as the skeletons of real buildings, which always fascinated him. He mastered the art of negotiation by immersing himself in Hollywood, and learned how to successfully manage creative talent, namely the artists at Pixar. Perhaps most important, he developed an astonishing adaptability that was critical to the hit-after-hit-after-hit climb of Apple’s last decade. All this, during a time many remember as his most disappointing.
The discussion of the lessons he took from Pixar and put into Apple was especially interesting.
And just as he had at Pixar, he aligned the company behind those projects. In a way that had never been done before at a technology company—but that looked a lot like an animation studio bent on delivering one great movie a year—Jobs created the organizational strength to deliver one hit after another, each an extension of Apple’s position as the consumer’s digital hub, each as strong as its predecessor. If there’s anything that parallels Apple’s decade-long string of hits—iMac, PowerBook, iPod, iTunes, iPhone, iPad, to list just the blockbusters—it’s Pixar’s string of winners, including Toy Story, Monsters, Inc., Finding Nemo, The Incredibles, WALL-E, and Up. These insanely great products could have come only from insanely great companies, and that’s what Jobs had learned to build.
Michael Abrash discusses how he came to work for Valve Software (he coauthored Quake with John Carmack back in the day) and, more interestingly, what Valve is like as a company.
The idea that a 10-person company of 20-somethings in Mesquite, Texas, could get its software on more computers than the largest software company in the world told him that something fundamental had changed about the nature of productivity. When he looked into the history of the organization, he found that hierarchical management had been invented for military purposes, where it was perfectly suited to getting 1,000 men to march over a hill to get shot at. When the Industrial Revolution came along, hierarchical management was again a good fit, since the objective was to treat each person as a component, doing exactly the same thing over and over.
The success of Doom made it obvious that this was no longer the case. There was now little value in doing the same thing even twice; almost all the value was in performing a valuable creative act for the first time. Once Doom had been released, any of thousands of programmers and artists could create something similar (and many did), but none of those had anywhere near the same impact. Similarly, if you’re a programmer, you’re probably perfectly capable of writing Facebook or the Google search engine or Twitter or a browser, and you certainly could churn out Tetris or Angry Birds or Words with Friends or Farmville or any of hundreds of enormously successful programs. There’s little value in doing so, though, and that’s the point - in the Internet age, software has close to zero cost of replication and massive network effects, so there’s a positive feedback spiral that means that the first mover dominates.
If most of the value is now in the initial creative act, there’s little benefit to traditional hierarchical organization that’s designed to deliver the same thing over and over, making only incremental changes over time. What matters is being first and bootstrapping your product into a positive feedback spiral with a constant stream of creative innovation. Hierarchical management doesn’t help with that, because it bottlenecks innovation through the people at the top of the hierarchy, and there’s no reason to expect that those people would be particularly creative about coming up with new products that are dramatically different from existing ones - quite the opposite, in fact. So Valve was designed as a company that would attract the sort of people capable of taking the initial creative step, leave them free to do creative work, and make them want to stay. Consequently, Valve has no formal management or hierarchy at all.
I wonder if Tim Cook’s recent visit to Valve is less about collaboration on specific products and more about Apple’s curiosity about their process. (Probably not, but fun to think about.)
Out today: Mike Monteiro’s Design is a Job. The book is an important reminder that how effective you are as a designer depends on many things aside from what you can do in Photoshop or InDesign. You need to build a stable environment for yourself (and your employees) to do your best work: you need to get clients, know how to talk to them, set up a stable and sustainable business, collaborate with others, etc. etc. For a taste of what the book has to offer, A List Apart has an excerpt of the second chapter, Getting Clients.
The biggest lie in this book would be if I told you I don’t worry about where the next client is coming from. I could tell you that once you build up enough of a portfolio, or garner enough experience, or achieve a certain level of notoriety in the industry, this won’t be a concern anymore. I could tell you I sleep soundly, not bolting out of bed at 4 a.m. to run laps around the local high school track. I could tell you that I never worry about enough presents under the tree. I could tell you these things, but I’d be lying. And I don’t want to lie to you. Getting clients is the most petrifying and scary thing I can think of in the world. I’d rather wrestle lady Bengal tigers in heat with meat strapped to my genitals than look for new clients.
If putting in the work to get the kind of work you want to do sounds too daunting, then close this book right now. Walk away. Rethink your life choices and take up a less stressful craft, like cleaning out cobra pits. Do it. No one will think less of you. Cover yourself in sackcloth and pray to your god for penance.
Go!
Uniqlo, Costco, and Trader Joe’s are among the large retailers that are making more money by hiring more retail employees, which runs counter to the conventional wisdom.
The big challenge for any retailer is to make sure that the people coming into the store actually buy stuff, and research suggests that not scrimping on payroll is crucial. In a study published at the Wharton School, Marshall Fisher, Jayanth Krishnan, and Serguei Netessine looked at detailed sales data from a retailer with more than five hundred stores, and found that every dollar in additional payroll led to somewhere between four and twenty-eight dollars in new sales. Stores that were understaffed to begin with benefitted more, stores that were close to fully staffed benefitted less, but, in all cases, spending more on workers led to higher sales. A study last year of a big apparel chain found that increasing the number of people working in stores led to a significant increase in sales at those stores.
(thx, david)
There seems to be something in the air. Within the last day or so, three ex-employees have written about why their feelings have changed about three formerly beloved companies. James Whittaker recently left Google:
The Google I was passionate about was a technology company that empowered its employees to innovate. The Google I left was an advertising company with a single corporate-mandated focus. […] Suddenly, 20% meant half-assed. Google Labs was shut down. App Engine fees were raised. APIs that had been free for years were deprecated or provided for a fee. As the trappings of entrepreneurship were dismantled, derisive talk of the “old Google” and its feeble attempts at competing with Facebook surfaced to justify a “new Google” that promised “more wood behind fewer arrows.”
The days of old Google hiring smart people and empowering them to invent the future was gone. The new Google knew beyond doubt what the future should look like. Employees had gotten it wrong and corporate intervention would set it right again.
The whole thing is worth a read, what with damning phrases like “social isn’t a product, social is people and the people are on Facebook” sprinkled liberally about.
In the NY Times this morning, Greg Smith writes that it’s his last day at Goldman Sachs after almost 12 years at the firm.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
There’s that saying: “If you’re not paying for something, you’re not the customer; you’re the product being sold.” Google’s product has always been the people using their products and it sounds like Goldman has made a sizable shift in that direction.
Andy Baio hasn’t worked for Yahoo for several years, but after the company announced they were filing a patent-infringement lawsuit against Facebook, Baio wrote of his displeasure about the move at Wired.
Yahoo’s lawsuit against Facebook is an insult to the talented engineers who filed patents with the understanding they wouldn’t be used for evil. Betraying that trust won’t be forgotten, but I doubt it matters anymore. Nobody I know wants to work for a company like that.
I’m embarrassed by the patents I filed, but I’ve learned from my mistake. I’ll never file a software patent again, and I urge you to do the same.
For years, Yahoo was mostly harmless. Management foibles and executive shuffles only hurt shareholders and employee morale. But in the last few years, the company’s incompetence has begun to hurt the rest of us. First, with the wholesale destruction of internet history, and now by attacking younger, smarter companies.
Yahoo tried and failed, over and over again, to build a social network that people would love and use. Unable to innovate, Yahoo is falling back to the last resort of a desperate, dying company: litigation as a business model.
Yahoo seems to be in a different stage in its lifecycle than Google or Goldman. In the mid-to-late 2000s, they tried what Google is trying now and failed and now, as Baio notes, they are trying everything they can to survive, like the T-1000 writhing in the molten steel at the end of Terminator 2. Perhaps a harbinger of things to come for Google and Goldman?
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.
Silicon Valley venture capitalist Ben Horowitz frequently turns to rap music for business wisdom.
Much of rap is about business, whether the drug business, the music industry or work ethic, said Adam Bradley, an associate professor specializing in African-American literature at the University of Colorado at Boulder who wrote “Book of Rhymes: The Poetics of Hip Hop” and co-edited “The Anthology of Rap.”
“It comes out of the fact that rap is such a direct mode of expression, maybe more so than any other music lyric, because of the emphasis on language, of words above melody or harmony,” Mr. Bradley said.
People think of rap lyrics as being only about money, women, status and cocaine, he said, but more pervasive themes are leadership, collaboration and the vulnerability beneath the swagger — all relevant in business.
Reminds me of this line by Jonah Peretti:
“Remember, you’re not selling out,” Jonah Peretti, a co-founder of the Huffington Post, told Denton. “You’re blowing up. Think in terms of hip-hop, not indie rock.”
Wendy Woloson on pawn shops, which are currently getting the reality TV treatment.
According to the National Pawnbrokers Association, a trade group, there are now more than 30 million pawnshop customers per year. The value of the average loan in 2009 was $100, up 20 percent from the previous year. About 80 percent of pawners pay off their loans and redeem their collateral, though redemptions are on the decline.
(via ★whitneymcn)
Well some of them are. The plain old American Oreo didn’t sell so well in China, so Kraft had to rethink everything about the cookie.
It turns out that if you didn’t grow up with Oreos and develop an emotional attachment to the cookie, it can be a weird-tasting little thing. And this started a whole process in the Chinese division of Kraft of rethinking what the essence of an Oreo really is.
Key terms in this article include “the essence of Oreoness” and “Twist, Lick, Dunk”.
Matt Haughey shares a bad experience he had backing a Kickstarter project and what the project creators could have done to avoid it.
This is the story of the worst project I’ve funded on Kickstarter. I am posting this not to single out the creators behind it, or bad mouth their business, but to go over my disappointment in the hopes that future Kickstarter project creators can learn from it. It’s all about communication with your funders, setting up and delivering on expectations for funders, and doing the right thing when things go wrong.
Shipping a product or app is hard. It requires experience, hard work, and a little luck. But providing effective and genuine customer service might be even harder because you just have sit there, take it, and react well under pressure over and over and over. The entrepreneur side of your brain is saying “this is a great product and I am proud of it and anyone who says otherwise is wrong and I will show them and succeed” and sometimes customer service is acknowledging publicly and repeatedly the exact opposite thing…that the product isn’t meeting needs, you are right, we will fix it, and thank you sir may I have another? That’s a lot of potential cognitive dissonance! The best teams and companies deflect that dissonance and turn customer service problems into opportunities to improve their products, their teams, and their relationships with their customers (current and potential). That’s when the magic happens.
Susan Cain argues that the lack of privacy and freedom from interruption in modern offices might not be the best way for those office employees to be creative…particularly for introverts.
The New Groupthink has overtaken our workplaces, our schools and our religious institutions. Anyone who has ever needed noise-canceling headphones in her own office or marked an online calendar with a fake meeting in order to escape yet another real one knows what I’m talking about. Virtually all American workers now spend time on teams and some 70 percent inhabit open plan offices, in which no one has “a room of one’s own.” During the last decades, the average amount of space allotted to each employee shrank 300 square feet, from 500 square feet in the 1970s to 200 square feet in 2010.
The new offices of Foursquare and Buzzfeed (where I work from) are a perfect example of the New Groupthink Cain refers to….rows and rows of people sitting next to each other in open spaces. Much of this is because of NYC’s insane rental market, but Fog Creek’s offices are a nice counterexample:
Every developer, tester, and program manager is in a private office; all except two have direct windows to the outside (the two that don’t get plenty of daylight through two glass walls).
An entrepreneur shares the business lessons imparted to him by a organized crime boss.
Interesting things happen when we cut out the middleman. In addition to reducing cost, we often end up creating an internal byproduct that can be productized and sold to a completely new customer. (Amazon Web Services is an example of this.) Sometimes the middleman’s market is so huge, that a freaking enormous business can be built simply by providing their customers a lower cost and more efficient option.
Roger Ebert takes a crack at explaining why fewer and fewer people are going to see movies in theaters.
The message I get is that Americans love the movies as much as ever. It’s the theaters that are losing their charm. Proof: theaters thrive that police their audiences, show a variety of titles and emphasize value-added features. The rest of the industry can’t depend forever on blockbusters to bail it out.
This and the maximizing shareholder value thing seem to be related.
Steve Denning, writing in Forbes:
In today’s paradoxical world of maximizing shareholder value, which Jack Welch himself has called “the dumbest idea in the world”, the situation is the reverse. CEOs and their top managers have massive incentives to focus most of their attentions on the expectations market, rather than the real job of running the company producing real products and services.
Denning is summarizing the ideas contained in Roger Martin’s new book, Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL.
In Fixing the Game, Roger Martin reveals the culprit behind the sorry state of American capitalism: our deep and abiding commitment to the idea that the purpose of the firm is to maximize shareholder value. This theory has led to a massive growth in stock-based compensation for executives and, through this, to a naive and wrongheaded linking of the real market — the business of designing, making, and selling products and services — with the expectations market — the business of trading stocks, options, and complex derivatives. Martin shows how this tight coupling has been engineered and lays out its results: a single-minded focus on the expectations market that will continue driving us from crisis to crisis — unless we act now.
(thx, david)
Louis C.K. recently put out a self-produced comedy album that he sold exclusively from his web site for only $5. The album has sold 200,000 copies, grossing him $1,000,000. He’s keeping a bit less than a quarter of that, a quarter is going towards recouping production costs, but the rest is going to charity and for bonuses for his employees.
I’ve never had a million dollars all of a sudden. and since we’re all sharing this experience and since it’s really your money, I wanted to let you know what I’m doing with it. People are paying attention to what’s going on with this thing. So I guess I want to set an example of what you can do if you all of a sudden have a million dollars that people just gave to you directly because you told jokes.
What a wonderful thing.
Amazon is somewhat of an unusual company for American investors because it focuses on the long-term (10- 20-year timelines) instead of the short-term (quarterly earnings).
“If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people,” Mr. Bezos told reporter Steve Levy last month in an interview in Wired. “But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow-and we’re very stubborn.”
Like Apple, Amazon is one of those large market cap growth stocks that investors don’t really know what to do with. Both stocks are still undervalued compared to much of the rest of the market, IMO.
This is likely the best piece you’ll read about the economics of the McRib and McDonald’s motivation in its periodic reintroduction.
At this volume, and with the impermanence of the sandwich, it only makes sense for McDonald’s to treat the sandwich as a sort of arbitrage strategy: at both ends of the product pipeline, you have a good being traded at such large volume that we might as well forget that one end of the pipeline is hogs and corn and the other end is a sandwich. McDonald’s likely doesn’t think in these terms, and neither should you.
Oh and speaking of pipelines:
And for its part, the McRib makes a mockery of this whole terribly labor-intensive system of barbecue, turning it into a capital-intensive one. The patty is assembled by machinery probably babysat by some lone sadsack, and it is shipped to distribution centers by black-beauty-addicted truckers, to be shipped again to franchises by different truckers, to be assembled at the point of sale by someone who McDonald’s corporate hopes can soon be replaced by a robot, and paid for using some form of electronic payment that will eventually render the cashier obsolete.
There is no skilled labor involved anywhere along the McRib’s Dickensian journey from hog to tray, and certainly no regional variety, except for the binary sort — Yes, the McRib is available/No, it is not — that McDonald’s uses to promote the product. And while it hasn’t replaced barbecue, it does make a mockery of it.
(via @joeljohnson)
Newer posts
Older posts
Stay Connected