Wednesday, May 23, 2007
In the past 10 years, the iBreakfast has hosted thousands of new business idea presentations and we have developed our own classification system for handicapping the investiblity of entrepreneurs by age group.
(Note that true serial entrepreneurs, especially ones that succeeded early are in a class of their own to be discussed separately.)
THE YOUNG ONES: START-UPS 27 and UNDER
Moonshots: Big on concept but usually lacking in key details. Young entrepreneurs, unencumbered by mortgages and howling bambinos are free and hungry enough to go for broke. Too often though, bean counters get in their way. Their young egos are unpredictable and investors, seeking bargains, tend to offer low valuations or onerous term sheets. The young ‘uns tend to be strong-headed and yet.....they start Google, Paypal, YouTube, Federal Express, Yahoo, Virgin Records, Microsoft, Apple…..
The bubble years may have opened up the purses of many a stingy investor but that has changed and investors have largely reverted to type. That is why, in the long run, New York tends to lose the best ideas Silicon Valley because they are either more nurturing over there or because, a hot head who rejects a tough termsheet in NY turns to jelly when an even tougher one comes from an industry rock star in the Valley.
THE MIDDLE YEARS 27-50
These are the most investible. Fewer home runs but a lot of triples and of course, base hits. But there is an almost mathematical certainty that an industry pro with 10 years experience in a growth industry and a plan based on an actual market need or a genuine domain innovation, a briefcase full of warm leads and a bit of skin in the game is going to get funded. These are consistently the most investible entrepreneurs in the game – entrepreneurship’s true middle to upper-middle class. If you, as an entrepreneur fit this profile…..the check’s in the mail.
These are the kinds of people who start Salesforce.com, eBay, eTrade and other businesses with actual substance (but also Craiglist and Wikipedia, whose business models mystifies most investors). While a lot of middling, unknown companies come out of this field - your base hits that never quite progress - these people do really well when their idea coincides with a dramatic growth in their sector. They tend to know what they are doing and are less likely to drop the ball.
THE GRAYBEARDS 50-75
Like an old wine, when it comes to the geezer group, the bottle is usually in better shape than the content. The tannins may have softened but so has their oomph and they may not be ready for a 24/7 lifestyle with madcap deadlines. On the other hand, if they have had entrepreneurial experience or bring a good team with them they could do it.
They are best if they are an evolved version of the Middle Players but with more experience, a better team, more potent connections and a better understanding of the need they’re filling.
The Dubious but Always Interesting Graybeards Are:
1. The Immortality Seeker. Like a graying Indiana Jones they are on a quest to make meaning of their careers. Usually, it’s the Temple of Doom and, like the Pharoah’s attendants who built it, you, the investor will probably get buried with him.
2. May-December Team
You tend to see these at big money events for the same reason that you see old lotharios with young babes. The old manager finds a smart kid and backs him with resources, contacts and of course, adult supervision. But generally, the geezer’s ego gets in the way. The kid bridles or just gets diaper rash and shops his even bigger idea at a business hangout on line or at the iBreakfast (sure, why not?). Unless there’s a special dynamic, like these two really worked together in a previous life or the kid married the geezer’s daughter and has 7 years to work off his debt, watch out!
3. The Geezer just has to Do it.
While this looks like a quest for immortality the main difference is the motivation is tied to a genuinely good idea, the entrepreneur is prepared to do what it takes and the business flows from his past experience. Plus he may have a really experienced team (hopefully, with just enough tannins to keep the wine flowing) and extra skin in the game. This could be a thumbs up! Just don’t expect a home run, but ya never know! Plus, you won't have worry about them being lost to nightclubbing.
SOME THOUGHTS ABOUT SERIAL ENTREPRENEURS
If yo are lucky enough to have an idea take off while you’re still at college (think Bo Peabody of Tripod, Dean Kamen of Segway or Kevin O’Connell of DoubleClick), you truly are the landed gentry of the community. However, things can go wrong. Even Spielberg produced 1941, Edison’s talking dolls (the ones with little phonographs in their bellies) were all returned and so on. Generally though, as long as they stop reading their PR, they rule!
Tuesday, May 22, 2007
Madison Ave 2.0: Conquering Madison Ave. (Part 2)
EXPLAINING THE REALLY BIG CHANGE – ZULU MARKETING
There is another, more historically - and for you war buffs, more militarily - explicable way to understand the changes afoot: we’ll call this The New Way for Media Companies to take Over the World. I could also have called this Nazi Marketing but Shaka was more charming and probably more creatively responsible for building his empire than his evil European counterpart.
STEP 1: NEW TOOLS FOR OLD PROBLEMS
In each case these leaders devastated their enemies by leapfrogging the gradual changes already taking place. They did this by understanding how new developments are initially used to solve old problems (often referred to as paving the cowpath) and then looking at the picture in a whole new way. They put the tools to do the work in ways more true to the new tools than ones they replace and the results can be devastating – until the rest catch up (think Google and link-based rankings, think the Civil War and new rifles whose reach put entire regiments in the line of fire).
Hitler saw tanks as more than protection for soldiers stuck in trenches (which is why they were developed) but rather as a way to quickly strike at the heart of the enemy with a motorized assault. When coordinated with the other assets of the wehrmacht - airplanes, mobile artillery and only then, followed by the infantry – it was unstoppable and got around silly little things like the maginot line the French spent years developing.
The doctrine we know of as blitzkreig was actually developed by Heinz Guderian and probably a few others including some Brits. But Heinz wrote the book, “Achtung...Panzer!” Hitler read it, took power, used it and, for a moment, ruled the world.
THE TIPPING POINT AT THE END OF A SPEAR
Shaka Zulu, had less science to work with but he saw that tribal warfare had become a ritual of sorts because, like TV advertising, their throwing spears were inaccurate. So the neighboring tribes had settled into a kind of Sunday sports warfare. The two sides would gather at opposite hills, families would come out with picnics and the young warriors would line up behind their small, round shields and hurl spears at each other. Eventually, someone would get hurt, the elders would meet and decide who won. The loser would give up some cattle and a bride or two and they would all go home for dinner.
Shaka was young, hungry and desperate to recover his family’s lost status as royal outcasts. He realized that if you really want to win you have to get really close to your target. So forget throwing spears. You need a new kind of up-close stabbing spear. He developed the iklwa, (often referred to as the assegai since who can pronounce it.)
By early 19th Century Africa standards, that put him on a par with the tank developers - or the pay-per-click guys. The real change came when he realized that by changing his tactics, strategies and rules of war, he could conquer just about everything around him
So when he realized people weren’t going to let him get that close, he figured he needed to run fast enough to surprise them. So goodbye huarache sandles and, in the absence of Nikes, he developed the original running sole, the human foot hardened by dancing on thorns. (Pretty much how I feel about watching Dancing With the Stars.) Then he realized his blitzkrieg needed a tank of its own to stave off the spears which began to get accurate just as he got closer. So he developed a man-sized shield with a hardier coat of cowhide.
Now comes the hook shot. The enemy could still hide behind their shields, just like today’s advertising gatekeepers. So Shaka added a little do-hickey to his shield that, with training, would enable his warriors to hook on to the other guy's shield and just whip it out of the way. Then came the final problem, kind of like how do you get people to click, or should we say open up for business? Since spinning the opponent's shields revealed their sides and not their front torsos where you want to plunge the spear. Shaka came to realize you could reach the heart from other directions like from the underarm instead of the front. (In case you’re wondering, all testing was done on real people).
Today, the Internet guys have learned that beating people over the head is not always necessary. Indirect marketing works: putting paid results next to organic ones pays BIG. Affiliate marketing, cross-linking,a little word of mouth, the right endorsement, behavioral targeting - all of these get you to the heart without necessarily going through the front. And all are still worth more than the declining media placement fees
Finally, Shaka, like the generals of the 3rd Reich understood there were no set battle lines and so they embraced the concept of total warfare or in Zulu, mfecane. Expect Microsoft, Google and Yahoo to exercise something similar and refuse to accept the normal boundaries.
We can talk ad infinitum about all the possible responses – and we will – both online at Madison Ave 2.0 on June 14. We suggest you do what Shaka and Hitlers opponents did most effectively – create alliances and develop new strategies. That’s why
Making AdSense of it All
The definition, which came from Nick Grouf, co-founder of Spot Runner, puts into focus all the significant changes portended by these acquisitions on Madison Ave: the Google, Yahoo, Microsoft and WPP acquisitions and the way the advertising will get done is the no. 1 topic of discussion at our June 14, Madison Ave 2.0 Summit, the sister conference to our Web 2.0 NY Summit (and new version of our very successful Local Ad World.)
The concept, as Nick put it, also explains why he started Spot Runner - he liked Adsense so much, he thought all the advertising world should look like that. So, what we are looking at is an under-automated, underpaid industry (expect for a few creative stars) ripe for the picking.
With that in mind, here’s how we look at the changes on Madison Ave, which will come up at the Madison Ave 2.0 Summit on June 14.
THE NEW RAIDERS OF THE PAY-PER-CLICK PAGE
1. Cash-laden, mature tech/internet companies that have learned to prosper from highly measurable online marketing are buying up the relatively poorly paid gatekeepers to massive ad budgets. These budgets were once closed to online. Now they are ripe. It follows then, as any good lobbyist will tell you, “why woo when you can buy.”
2. Automating Media Placement.
Does every newspaper, magazine, radio and TV station need their own salesforce? Maybe, for the premium placements but not for the run-of-the-mill spots. Likewise, does every agency need scads of lit grads doing media planning on an entry-level paycheck?
3. Open Creative Market: Goodbye Donny Deutsch
Does every business need a custom ad? Can your agency be counted on to come up with a good idea every time? Why not trade in tested ideas from around the world that you can customize? Donny can still sell his ideas on the open market and keep his TV show instead of showing up to the office every day.
THE BIG PICTURE IDEAS
Now for some Big Ideas - the kind of thing that careers and great fortunes are made of:
(You’ll see more if these as our www.bigideajournal.com takes shape)
1. ADVERTISING IS MANUFACTURING
Advertising is no longer the sales lubricant of the Industrial Age. It IS the Industrial Age of our time. We have long gone from figuring how to sell what we already manufacture to finding what the customer really wants and then figuring out how to manufacture it.
This is just-in-time manufacturing and the factory now is really the commodity.(Remember fab-less chip companies etc. - similar idea.)
Since we will continue moving to Research and Development while outsourcing manufacturing, our ability to reach consumers, detect their tastes and meet their expectations is more valuable than the product itself. That’s really what Madison Ave is all about, except that it doesn’t really understand that or, more to the point, allow that. That’s because they were organized to serve the guy with the factory who says “go figure how to sell my junk.”
Internet companies on the other hand, not only understand this issue but they own the vehicle of idea manufacture and distribution so they actually fuse these two properties that has kept Madison Ave. in the support business - and they are moving in. The Internet guys just need gatekeeper access to corporate budgets and marketing creativity to move this up to the next level. They have piles of cash and more interestingly, will invest in the ideas they like, not just take a fee from a client.
To be fair, every ad guy I ever met has fantasized about advertising as incubator of new business ideas but manufacturing and distribution was their barrier. Now that the internet has made manufacturing a commodity and turned the UPS/FedEx into your distribution system, much is possible.
Bottom line: tech companies are NOT just buying themselves ad networks and ways to deliver ad dollars to their properties, they are buying the future of the economy.
2. TECH/INTERNET CO.’s – THE NEW ECONOMY CARPETBAGGERS?
Could this principle apply elsewhere? High tech companies taking on other industries stuck with declining growth that high tech could reverse. Energy, Autos, Transportation, Entertainment Studios, Real Estate, Banking, Rocketry. Actually, in each case, they already have or they are energizing a movement that’s already taking place. After all, who thought of Apple as a music company or Microsoft as an advertising company…eTrade as a bank, Paypal as a fund transfer system or their founders as racketeers. Then there’s Google’s quest for a new internal combustion engine and the Tesla, that battery powered sports car half of Silicon Valley seems to be betting on.
If you can dabble in HTML, Ajax, RSS, MySQL or sell the product thereof……or if you understand the use of social engines and “Collaboratition” (our admittedly unwieldy phrase to describe the state of competing while collaborating with just about everyone – customers, suppliers and actual competitors) - you have a future. Otherwise, Madison Ave. (and a few other industries we’ll discuss in the Big Idea Journal) will undergo dramatic change. 5 years from now, the ad world will not be recognizable to anyone in the business today..
You can see the Future at Madison Ave 2.0 on June 14 in NYC.
Not only that, but if you buy one online you can pay extra and buy one for the gipper in Gambia or somewhere nearby, thereby getting light and spreading it.
This is good and someone gets to go for heaven for this. But in the long run it’s really, really bad. Here’s why.
The Talmud said it is not enough to give a man a fish, you have teach him how to fish. My Talmud - and you only have to go to the iBreakfast temple to get this - says that you really have to create a fishing economy. That way, they learn to fish, people learn to eat all kinds of seafood (not just kosher), others get to sell, distribute, store, prepare and maybe export the good stuff.
Sophisticated African leaders talk about this all the time as “sustainable development.” Instead of taking a World Bank loan, paying off a bunch of indunas and building a smelting plant that no one can really sustain while the country winds up saddled with debt, you develop things the locals can fully engage with and develop. The same seems to apply to education, many are educated for Western professions that barely exist out there.
So, back to the flashlight. With LEDs and free solar energy the product is pretty sustainable, so what’s wrong with this picture. The answer is there is not a solar economy. They should be making these flashlights in
Bottom line: unless the receivers of our largesse - those local villagers - are engaged, this is just the old paternalism dressed up in new technology. Good ideas must sing and dance with the villagers in order to sustain change. That’s why the microloaners are so much to be admired - they actually require the villagers to engage with each other in all kinds of community-sustaining ways.
Tuesday, May 15, 2007
It Is hard to believe that Wikipedia, the no. 9 most visited website in the world began with just 7 articles or that its founder, Jimmy Wales, actually believed that he would encapsulate the sum of all human knowledge on his site. But that is more or less what he did. And we're truly honored that hecame to share that story with us at the iBreakfast.
So how did this unlikely success story take place other than that he offered the right software and an idea that the world wanted to help him make so?
Wikipedia is now supported by donations and volunteers all over the world. It has listings in 66 languages 67 if you count Klingon - and is vastly more comprehensive than its former competitor, Encyclopedia Britannica.
Now Jimmy has developed Wikia, a kind of open Wiki which allows all kinds of collaboration efforts ranging from sports news to travel guides and even a Muppet site. The total content is intended to be bigger than Wikipedia, in the way that a library is bigger than an encyclopedia and the efforts will be supported by ads.
The big story is that Wikia is also providing an infrastructure for a new collaborative Search Engine effort, dubbed by Fast Company magazine as"Google's Worst Nightmare." (Who says hype is only for tabloids!) In this case, Wikia will provide a server infrastructure, the collaborative software and Jeremie Miller, a heavyweight techie who authored Jabber, an intersystem Instant Messaging standard.
Much of the follow-up Q&A focused on the viability and security of open systems content production and the business side of collaboration. Our take is that wikis and "Collaboratition" (our word) will challenge some old styles of doing business and is just getting started. More, much more to come on this!
See the highlights of Jimmy Wales' speech at:
"iBreakfast helped me launch MarketingSherpa successfully in three significant ways. First, as an attendee watching my peers present I learned an extraordinary amount about what works (and what doesn't) when giving a compelling elevator pitch to a crowd of strangers. Then by networking with fellow-attendees, I wound up making connections with critical business partners who understood and appreciated our unique business needs as a start-up venture versus a "normal" potential client. Lastly -- and perhaps most importantly -- despite the fact that, caffeinated to the gills, I talked waaaay too quickly during my presentation, when I sat back down the gentleman next to me introduced himself and wound up becoming our very first angel investor.
Without his investment, his enthusiasm, and ongoing mentoring for several years after that, MarketingSherpa would have been much harder to launch successfully. Now seven years later after my iBreakfast presentation, MarketingSherpa is a research firm with a quarter of a million business customers around the world and six years of healthy, growing, profits. Every good idea needs a solid kickstart -- iBreakfast was a big part of ours."
Video Highlights: Yahoo! & Mobile Breaks Out
Elizabeth Harz of Yahoo joined Harry Kargman of Kargo.com, Chris Phenner of Thumbplay and Michael Salit of Free411, to show how websites are staking their claim in the fasting growing digital medium. Driven by under-30 year old's, by 2010 4 out of 5 adults will be on mobile. Do you have a strategy?
Click to View
The news media may be filled with multi-billion dollar glitzy payouts, but the vast majority of deals are much more modest. While tech still carries upwards of three times the multiples of non-tech, especially in the $500 million plus space, the fact is, most of the newsmaking deals are special cases with valuations based on projections and earnouts.
For the entrepreneur, revenue or in the case of digital media companies, valued eyeballs, matter.
The real news is the M&A starts almost form the beginning when companies structure themselves for measurable revenue and raise money, not from VCs or family, but from their customers, suppliers and even their competitors – each of whom in many cases may also become their acquirer.
It certainly is a different approach from the VC money trail, but fortunately, we will still be offering that on April 26 at our Start-Up event. (Roger’s presentation will soon be available on the iBreakfast website www.ibreakfast.com)
Word of Mouth Marketing has been the holy grail of marketers for generations. Sometimes they get it, mostly they don't. But with the Internet, a science has emerged that makes it possible to control and measure the process. With it, we can now learn the rules, best practices and case studies that have taken many companies from zero to billions in a stunningly short amount of time.
How this works and what you can do are the subject of this eye-opening iBreakfast.
Andy Sernovitz,Co-Founder & Author, Word of Mouth Marketing Association
Jon Berry, SVP & Author, Keller Fay
ABOUT THE SPEAKERS
Andy Sernovitz, Co-Founder & Author, Word of Mouth Marketing, is a fourteen-year veteran of the interactive marketing business and author of Association
Jon Berry, SVP & Author, Keller Fay, is one of the nation’s leading experts on word of mouth and consumer trends and co-author of the seminal book, "The Influentials."
View the 6 minute highlight reel with Andy Sernovitz of the Word of Mouth Marketing Association and Jon Berry of Keller Faye, to understand how companies are using WOM and Viral Marketing to build great businesses.
Click to View
AMERICAN INVENTOR AND THE APPRENTICE
There’s a lot to be learned from these BizTainment Shows.
By Alan Brody
When a VC panelist used the Apprentice to describe his ideal management team, we realized these shows have the power to shape our thinking about business life. Even the execs who poo-poo these shows may well be overlooking the way they influence their world and especially, the next generation coming into the business.
Since we focus so much on Start-Ups and Entrepreneurs, and even have our own local TV program, The Start-Up Show, the new American Inventor program is of great interest to us because it shows that inventive thinking is necessary for survival in life, business and in this, entertainment.
While American Inventor focuses on people with new gizmo ideas and we focus on new business ideas, there is a lot in common with what makes a judge pick an invention or a VC a business plan. Sure, you could argue that what we do is both harder to understand due to its abstraction. Or that American Inventor is not really about invention in the Edison mold, but silly ideas (like an adult comfort doll), transpositions (applying say, an absorbent pad for other previously unimagined uses), niche solutions (a training device for football catching), or reasonably obvious improvements. Despite even their biggest criticism, that they favor personality over actual ideas, it is still a very compelling and instructive show.
The best of this series is the recent episode in which 3 of the qualifying inventors get a $50,000 check to develop their idea into a viable product. Here we see the product being exposed to a focus group, design experts that have these marvelous fabricating devices to build realistic prototypes. Most of all, we see the inventor/entrepreneur at work, making decisions and showing their real stuff , which is often the kind of thing that keeps VCs sleepless at night. One withers without their "life Partner", the other becomes monomaniacal while another becomes heartrendingly empathetic
The 3 Finalists and their Inventions
The contenders were a struggling black football trainer with an odd, swan-shaped device that straps to the chests of footballers that helps perfect their catching skills. Next was a woman with an umbrella that folds inwardly so you can move from a car without getting wet. Finally there was a janitor with a giant plastic French Fry scoop that is used for filling sandbags in a hurry. The footballer and the janitor have heartbreaking bankruptcy stories due to their product developments and the woman can only function with her life partner.
The Improvement strategies
The Un-Brella is quickly renamed the In-Brella (why have a negative says the judge – but why not focus on the benefit I say, and call it the Car-Brella?) and looks like the favorite since it addresses the biggest possible market: drivers who use umbrellas. But Sheryl McDonald crumples without her partner, loses focus, falls prey to incompetent prototypers whose effort is bulky and faulty even though, in dramatic tests it does function as promised.
Ed Martinez brooks little design input on his Sackmaster, sacking his design team, putting his money in packaging and a shoulder holster. His amazing transformation into a minor dictator, which he considers justified because his sandbagger "saves lives" is topped off with a trip to the hairdresser and the purchase of a fancy suit. Clothes may make the man, but you’d wonder how an EMS worker or a Home Depot buyer would feel about staring at Mr. Armani with a plastic shovel. There were practical errors too: the Scoop may be great for Sandbagging, as the tests prove, but leaf bagging is more common than levee-plugging, or at least we hope so. In that case, it’s bulk is a negative in a retail store where it commands a lot of shelf space for say, $30. He should have developed a stackable version with a collapsible funnel. Instead, he stuck it in a box that made it even bigger. UPS will probably assess an oversize charge if he went into mail-order. The shoulder strap was probably unnecessary but it sure came in handy when he got his marching orders!
Erik Thompson, the football coach, has, at least on paper, the smallest marketplace: football catchers who want to look ridiculous, and possibly catch a ball. But he has a humble, winning way and a sob story. So judge Ed Evangelista, a J. Walter Thompson creative director gives him the nod. It may be a classic game of betting the jockey over the horse, but Ed, a boxing fan, might envision a line of sports training devices led by Erik. Or perhaps he sees more uses for this thing (our favorite: the datecatcher, a device that keeps teenagers’ dating nice and clean.)
The Symbolic Message
Whether the outcome was fair, it does show that investors apply great symbolic value to behavior, key gestures and attitude and may well bet accordingly. After all, if people do strange things in the courtship stage, they will probably get a lot stranger when the checks cash and the pressures mount. In my opinion, if the Car-Brella is truly patentable, then Sheryl should find a great designer who can make it compact and easily stored under a car seat, license it to an umbrella company, take her royalty and staying dry. Likewise, the Sackmaster, now that it has had some publicity, might actually sell well to firehouses and relief workers, landscapers and so on. If all else fails, Macdonald’s might take it on just as soon as they begin supersizing fries again.
Donald’s show has been slipping in ratings now that it picks contestants for looks over personality and it has been a while since the finalist have comprised the sort of winning ream our VC so prized: a manager, an operations guy, a visionary and most of all, a salesman. Worse, they have become a shill for corporations whose product placement somehow doubles as one of their tasks. The low water mark was the episode where Yahoo, supposedly backing a child cancer fundraiser forbade the contender from showcasing the charity or asking for money. For good reason, the candidate who should have stood them down, lost. So did Yahoo, and so did the show which has seen its ratings decline ever since.
Where we are different
The Start-Up Show and the iBreakfast puts real entrepreneurs in front of real VCs where real multimillion dollars enterprises are made. But that is only half the story, the entrepreneurial spirit is more than chasing a dream or making a mint, it is about fostering a state of mind that enables people to reinvent themselves in an economy of constant changes and long separated from the basics of manufacturing and agriculture.
About the iBreakfast.com
[This is a story about the PC, an American invention that is about to die on a distant shore. But all endings are also beginnings…. if we just knew it at the time…..]
The last hours of the IBM PCs life were spent in frantic negotiations. Few could accept that a stodgy company which surprised the world with the PC and becoming a household name with Charlie Chaplin commercials could wind up like this. But it had been slipping for a long time and it was hard to let go. No one in management could foresee an afterlife.
Luckily an old ThinkPad on our network, long given up for dead, had flickered back to life….bringing us this story.
As we mourned on earth, in another place, the PC was being warmly greeted by a young man in a red shirt. He was standing in a quiet area with shelves and shelves of computer equipment and said "Hello."
"I recognize you," said the PC. "You used to wear a suit. Now you look like a fast food salesman."
"At COMPUSA with think of this as brain food. Like all food, no one asks where it was raised……My role in your life was to teach you about resting on your brand. Commoditization can kill you," said the man in the red shirt," if your brand is not innovative." Then he added cheerily, "We don’t mind if it’s not made here. My suits weren’t, nor is my red shirt."
"Innovation? That’s risky," said the PC thinking about all the things they did trying to save the PC after the dotcom crash of 2000, price-dropping, offshoring, acting like youngsters – and all to no avail.
Next the PC saw a vast network with huge, humming computers. Telephones rang, routers buzzed, power lines hissed. It was the Internet. It seemed to ignore the PC.
"Weren’t you my friend?" asked the PC.
"For a while," said the network. "But any computer would work with us. So you weren‘t that special, and you weren’t even fun. People even used us to get the best price from other PC makers. So they didn’t need you. Sorry."
"But we made Business excited about the Internet with our eBusiness commercials! Don’t you remember?"
"My role," said the Internet, "is to tell you that if the commercial was such a big deal you should have called it iBusiness. You’re iBM not eBM. And thanks for making it sound like you invented the Internet."
As the PC was drafting a quick email to his ad manager, a man on a boat appeared to take him up a giant river. "Watch out!" said the cherubic looking man, "there are flesh-eating fish in the water."
"Like piranha!" said the PC.
"In a way," said the boatman. "You see, we all feed off you. We sell everything here. Even your computers."
"I always meant to ask, why Brazil, what was wrong with ‘Mississippi’…and why am I here?’
"Well, we learned we can make as much money selling used as new. So even if someone bought a new computer once we could make money when the nest two people resold it.
"OK, but didn’t we get the first sale."
"Not really. Everyone else offered more or sold for less..."
"Stop it," said the PC, "you’re killing me."
Soon they pulled into a bay. The PC thought he would get some relief but he quickly found himself listening to the same story. "You mean anyone can sell anything at anytime? No license, no storefront. No brand….Gotta go!"
Next, a man came wading toward him, asking: "Can you hear me now? Can you hear me now?"
"Stop yelling," said the PC, "of course I can hear you."
"No you really can’t," said the man, "and besides, I’m not talking to you. My purpose is tell you that missed out on the cellular market."
"Well, WE certainly wouldn’t have paid you to go around asking that inane question," said the PC.
"That’s the point," said the man, "you wouldn’t have to. The customers do. Unlike you, we give away the hardware and then people pay us to make phone calls all day long. Soon all life will be like that……. someone will give you a car that you will pay to drive….."
"We used to that, it’s called leasing. We even pioneered time-sharing."
"No," said phone man, "this goes beyond that and its for everyman…..it could be like cars in the congested areas of Paris where they just sit around on the street until you need them in. The same will happen to all hardware. Maybe even your home….."
"That’s called renting…….."
"My role is to tell you not to get hung up on owning hardware. It’s the service that counts."
The PC shuddered, and asked the big question. "If we are all renting, and no one here is manufacturing, how will we pay for it all?"
"I’m glad you asked that question," said the phone man, "let Google take us to heaven."
"Now that’s search. I knew we should have put more into it……" the PC said, as an engine drove them to a cloudy place where everyone was busy, but quietly content.
"So this is heaven." Said the PC, "everyone works……on laptops! Who makes them?"
"Brands aren’t that important up here," a voice boomed. "Its what you do with them that matters…….that’s what we’re here to teach you……"
"Look we did a great job designing and selling them……but the truth is, they were just a necessity to keep our corporate customers satisfied so they’d keep on buying the big machines where we’d make real money."
"Hmmm," came the voice, "I’m going to introduce you to your final guide who will show you the real meaning of life…."
A man with large square-ish glasses appeared, he looked strangely old and young, like an aging teen. He pushed his glasses up the bridge of his nose a lot and gave away millions to AIDS charities in Africa. But to his competitors, he was merciless.
"I told you to own the chip, like Intel did. Or to buy my operating system when you could still afford it," he smirked. "But you wouldn’t listen. You only cared about hardware….now look at you."
"Look Bill," said the PC rearing up. "You got yourself a bad name in the industry and those antitrust lawyers put you in your place."
"Really, and weren’t they using Windows throughout the lawsuit?…..still using it today," he said. "It’s not about a brand, it’s about having a monopoly."
"Well look at you," said the PC, "You’re so hated, you’re neither in heaven nor that other place…..where they manufacture things."
"When you’re a monopoly,"said Bill, "you can be wherever you want. The best ideas come to you- and you can pull the plug on the competition at any time."
"I think I’ll be going now…….." said the PC.
"Not to heaven…..! If you want to keep making things, this is where you go," Bill said, pointing to a landscape of dank, smoky warrens. They were crowded with sad-eyed people in faded bunny suits. People were coughing and rushing about..
"We don’t belong there!" said the PC.
"You do, if you can’t innovate……if you don’t add value."
"Look," said the PC with a bead of sweat forming, "our mission was to service really big machines. Along the way, we got executives to love PCs, fire their secretaries and type their own memos. We even got them out of suits and into starched golf shirts. We may have started casual Fridays…."
"You don’t get it, do you?"said Bill. "Anyone can make big iron today and my people can service your accounts as well as you do. I’m here to tell you that your real purpose in life is to take those big services you offer to the Fortune 500 and make them available to the little guy. Logistics. Sales & Transaction Management. Inventory Control, Customer Relationship Management ….everything."
"Oh we can’t do that."
"What you don’t understand," said Bill, looking Yoda-like, "is that it won’t chase away your big customers. It will make them clamor for more features and more services. It will drive innovation."
"We definitely can’t do that," said the PC with the sweat streaking down his cheeks.
"Well what do you want to do in the afterlife?" asked Bill impatiently.
"Other billionaires have gone broke, and come back. Look at that fellow in real estate. Maybe there’s a TV show in it…..?"
"Only," sighed Bill, "if you had a personality. That’s better than a brand"
[Prologue. The PC died a natural death. Computers wound up being traded on the commodity exchange along with sugar and pork barrels.New homebuyers got them free with the electricity or attached to their phones. Lucky former PC sales execs were hired as extras for Men In Black II and now, if you buy the series on DVD you get the computer free.]
Can Ford, or Detroit generally, really make a better car for Americans? I have owned my share and they all tend to break down after 4 or 5 years and they have close to zero status on the East or West coast. So why should Ford try to reinvent a wheel that foreign car companies have improved or commodotized. They can’t afford what it really takes to change our minds…..
Besides, what is more unique, Ford’s relationship to Cars or to the American consumer. They certainly have iconic value and I’d rather give them my money than some guy in a remote country, but the truth is I have come to want my engineering Japanese and my prestige German-British with a dash of Italian.
That’s more or less how our computer and technology universe works, so why not cars? Or to put it this way, is it any wonder that the person who mastered this concept is also the world’s richest man? That would be Bill Gates, who outsmarted IBM by owning the software operating system and not the computer. 20 years later, even IBM stopped owning the PC and now owns the data processing systems and support at most large enterprises.
It is a bit unrealistic to suggest that Ford start offering the Windows of automobiles and become Autosoft, but with a few conceptual refractions there might be some lessons for them.
Seth Godin, the web marketing guru once suggested that car companies stop selling cars but rather a lifetime subscription that guarantees a working car in their driveway at all times. But that is really just the beginning and perhaps a little simplistic. Seth was a Miata enthusiast at the time and may have objected to a replacement Mustang. But there are many variants that could accommodate individuality. The key to understanding this from a business perspective is, as GM once proved, financing cars was often more profitable than actually making them.
Young people probably want a lot more individuality in their car than their parents. But may not be able to afford it. Let them iTune it - buy a basic unit and download or add new components to it that make it unique. Factories may close down just as big record stores did, but modularized assembly could be done by local dealers, carshops and mechanics. Ford only has to certify these cars as roadworthy, finance them and sell a guarantee of continuity.
That could mean that Ford gets you a deal on trains and taxis if you need them. Some plans may give you use of cars only when you need them. This is the SOAS (software as a service concept rippling through the IT world) and it would mean getting into the ZipCar business, guaranteeing to their paying customers a car waiting in a garage somewhere if they need it.
My dream is they get into the schlepping-my-kids-to-after-school activity business, a logistical feat that will liberate millions of overeducated mom and pop chauffeurs everywhere.
At the end of the day, the car become less important than the car carrier, the company that lets you decide whether to switch your car every 2 years, 4 years or 6 months and change your mind again, simply by adjusting the premiums. Does your health insurance company care which doctor you choose, so long as he or she is on a list. Do you not have a car carrier, then buy an orphaned vehicle and take your chances……..
I suppose one way of describing this is to say Ford or GM should get into the personal transportation management business. They should still manufacture what makes sense, outsource what doesn’t and finance anything else that you dream of to make it all part of a seamless transportation relationship.
Over time, the world of transportation will favor them. A known, committed car owner will earn certain flying privileges that an unknown straphanger might not. Or lanes will open up on highways that enable cars with the right technology to slip into autodrive. Perhaps smart cars will not only have their GPS and phone communications with OnStar support and satellite radio but they will be routed. Lanes reserved for their travel, parking spots kept for their exact midtown ETA. Maybe kids late for class can listen in on their lectures, even miss them as they head for drivethrough-less banking and food order and even live transmissions of religious sermons as they drive, thanks to the Car company’s Internet Broadcast Transmission Center.
As cars get smarter it will become more about their software, their smarts and their relationship to the transport universe than it will about the specifics of their plastic and steel. The more US auto companies profit from the intangibles, the more likely they are to survive.
Alan Brody is a technology marketing author and head of the national Digital Media Forum for Entrepreneurs, iBreakfast.com
© 2006 Alan Brody
Shawn Gold, SVP, MySpace; Shelly Palmer, IATA; David
Teten, Nitron Advisors
(See articles in BusiinessWeek & USA Today after report)
Shawn Gold did a great job of explaining why MySpace
has been so successful with young people (over 80
million users) and why it is a compelling tool for
marketers to reach them (see USA Today and over 100
other news outlets that picked up the story.). It
really comes down to self-expression, kids thrive on
it and MySpace allows it in spades. More the to the
point, it allows you promote yourself to your
friends, peers and colleagues.
That is really the way to understand the phenomenon
of User Generated Media. It is not about everyone
trying to outdo Hollywood, although it happens form
time to time, its about "us "getting to feel like
Hollywood. If sites cater to "us," we’ll reward you
by paying attention to wares.
Adults don’t feel like taking on the media (although
they did with the desktop publishing revolution of
the 80’s) but kids do. The fact is, they don’t know
any different. So they have seen every brand and
celebrity promote themselves, so why not them too.
That’s why, as one pundit put it, everyone is famous
for 15 people. Blogging and older web page community
sites took advantage of it too. What MySpace and the
new generation sites do that is so attractive, is
give you ways to go out and find the 16th, 17th,
18th and so, person to be famous for. So they have
become an eCommerce for a lot of entertainment acts.
That will increase rapidly across the board.
MySpace began as a response to the uniformity
imposed by the then, very popular Friendster, and
the rest is history. (For complete notes on this
event we refer you to David Teten’s blog and the USA
Today story.) Despite the occasional outcry, they
consider this a safe haven from the perceived
dangers of hanging out at malls. One other aside, at
a conference the iBreakfast promoted on Monday, the
CFO of Viacom explained why they had passed on
MySpace and let Fox buy it for $500+ million. "We
asked our salespeople and they said they wouldn’t
know how to sell it." There is a certain amount of
common sense in that but even so, it says that
Viacom ties its future to the imagination of its
salespeople. Hope they have a left brain!
Shelly, Palmer, the popular producer and pundit of
the next generation TV described the big buzzwords
and the reality of the next wave of TV. Ultimately,
he believes, as his book TV Disrupted, posts, that
content creators will be able to bypass the current
network of gatekeepers in various ways leading up to
the great coming "WiFi Broadband Cloud" enabling
devices to pluck IP-based content form the skies in
a mesh network that no one can disrupt.
David Teten talked about he rules and practices of
social networking and how it creates better
relationships for business, professionals and your
kids. Most important, when properly aggregated,
usually by the provision of free tools from the
websites, they enable marketers to target and get
very close to specific audiences. One intriguing
idea is that millions of people today own optical
readers and very small printing presses in the form
of digital cameras, camera phones and so on. Some
applications like ticketing and bar code reading etc
and even depth sensitive gates are starting to
appear but many more surprises are yet to appear.
A Review of the Town Hall meeting with Razorfish, Bolt, MTVi etc.
By Alan Brody
The Producers Guild and National Academy of TV's New/Advanced Media groups had the bright idea of bringing back some of the Silicon Alley "stars" of the bubble years for a Town Hall type chat.What do you say, after all we’ve been through, to see familiar figures like Razorfish founder, Jeff Dachis, Bolt’s Dan Pelson, MTVi’s Nick Butterworth and Silicon Alley Reporter’s Jason Calacanis in a respectable but less-than-filled auditorium, 5 years past their heyday?Like the rest of us, they looked a tad paunchier, a little thinner on top. But most of all, they didn’t have their game faces on. Without that bubble attitude, the swagger, they were just 5 guys you might see on the subway.Still, if you could deal with the anti-climax, and some couldn’t, there were lessons to be gleaned.As the conversation moved from insider banter, which sounded like a Silicon Alley High School reunion to an analysis of lessons learned, the mood turned to a refrain of "oh, how we miss being a revolutionary."
Lesson no. 1: Being part of a revolution makes you feel special and it shows.
It may happen only once in a lifetime but it defines life for you – being a player in a big movement. On the other hand, dealing with the post-revolution blues, is another story. Most of the panelists admitted to experiencing some kind of depression and you can understand why: You were also struck how the early movers, the ones that got it right at the beginning, made a lot of money. Razorfish’s principals were already millionaires by 1996, thanks to a capital infusion by Omnicom. By 2000 the company had thousands of employees with office in dozens of countries and had a market cap of over $6 billion. Very head stuff for a 20-somethings.Naturally, they all longed for day, but the canny ones still get to dine out on it and it will be their calling card for years to come as the internet continues its path to becoming mainstream. Broadband is now standard, which means so much of what they anticipated is finally real.The group still believes great fortunes can be made but few were brimming with the possibilities of yore. Today, a new generation of kids has arrived that are totally net-savvy. 18 year olds can make and cut movies, 12 year olds are online and IM’ing as if it were the air they breathed. Yet the group seemed to speak as if they might have become too old for much of this…..Like science fiction writers, they seemed to lose enthusiasm as fiction become fact…..
Lesson no. 2: When you are no longer the erupting volcano, find someone else's and charge an entrance fee.
Of the four original dotcom players. Only Calacanis is in the dotcom business - aggregating other peoples’ blogs. Butterworth is distributing other peoples’ content on DVDs, Dachis is buying up old-fashioned cash-positive businesses and Pelson is walking his dog and doing some investing.The Entrepreneurial spirit is by no means dead but is now looking to others for guidance. As we’ll see form lesson no. 3, it is not who think.
Lesson No. 3: No one loves VCs after the fact.
Except for Calacanis, who took money from TV’s "The Benefactor," Mark Cuban, no one had a kind word to say about VCs and all encouraged the audience to avoid them. The fact is, Wall Street, lawyers and VC are accused of having made "the money" and also for hyping the industry in such a way that it lead to the crash. Perhaps. But it is worth noting that experienced entrepreneurs encourage you to stay away from investors for as long as possible. Forever, if you can. Apparently, owning your own thing is worth more than becoming a billionaire because you tend to stay on, you’re in charge and you feel good about it and you’re more likely to keep what you made.There is also an underlying resentment of corporate culture. Most panelists spoke glowingly about open source computing and the beehive model of work - a kind of libertarian environment where everyone is bound by enlightened self-interest to take on tasks for a common cause, providing their work, resources and skills in return for ways of making their own money.Pro or con, this may be a true phenomenon because it ties into the decentralization of cities, the universal connectedness and the rugged individualist-beatnick-hippie-libertarian ethos of the Internet.While most of the panelists agreed there is no reason for the business to be in New York from a technology or content point of view - what with real estate prices and all – New York remains a lifestyle choice. It is also the place to be when you want to sell something, especially if you are going after corporate America
Lesson No. 4: Its not about the money, its about the ride.
This flies in the face of everything you learn in business school (which no one went to or if they did, they claimed helped them not at all, as entrepreneurs). But it’s true. Even Donald Trump says, if you don’t like a business, don’t do it. You won’t succeed and if you do you’ll hate it and act in some way to undermine it.The entrepreneurs claim they were driven by the fun, the discovery and the chance to take on the big media, especially broadcast. There is some classic Freud here (as in, "every son want so kill his father") but it is also the truth. On the other hand, if they weren’t concerned with money, you wouldn’t have Dachis giving advice like: "make sure you make money every day." It may be a complex dynamic….. but most investors agree that first there is passion and then business savvy. The business guys tend to jump ship when times get tough (it’s just about the money, right?) but the guys with passion are willing to go underwater even if they might wind up with the bends.Jeff Dachis put up one million of his own money to shore up his falling stock. He also believed that his mission in life was to keep his staff, his family, earning a living so imagine his shock when he found out they were badmouthing him on F***d Company. Passion has its limits and apparently, good VCs know how to weigh this.
Lesson No. 5: The smart person is the one who gets sober before the party is over.
The entrepreneurs always have a hard time believe that others don’t share the love of company that they do. That’s because it isn’t their company, and entrepreneurs tend to forget that. On the other hand, their passion is inspiring and the first question from the audience made that clear. A dotcom veteran of a big name company, unabashedly declared herself reinspired and desirous of getting going again.
Lesson No. 6: Trust Your gut and find other you can learn from
The panel was pretty much unanimous about trusting their instincts but also in finding good mentors and experienced people who could advise. Apparently, even when you’re on top of the world, asking others for advice works - is either it humbling you enough or flatters them enough that mentors will give it.
Lesson No 7: Publicity is great until it is used against you.
While no one said how great it was being invited on to 60 minutes or the Charlie Rose show to talk about the revolution, everyone complained about being blamed for the hype after the bubble-burst. ("Hey I wrote columns saying how bad it was," quoth one.) Surely, they protest too much. Of course they were part of the hype, and part of the downfall. Since they are unlikely to be sued by anyone, why not stand tough and say "we did what we believed was right. We can’t be blamed for a perfect storm or investor hysteria." What matters is they survived and basically they were right. Being the poster boy is only market crash away from being a dart board. Get used to it. Or as the Brits say, "its better to be a has-been than a bloody never was."Interestingly, a number of the panelists had recently been to China and were not quite inspired: smoggy, no eCommerce (no credit cards) and you need a general in your pocket to do business since the military runs the show. On the other hand, the Internet cafes are full and people love to play games all day long. Once upon a time these people would have seized upon that as an opportunity – eyeballs, addicted gamers, worldwide phenomenon. But they didn’t.That’s why you have to respect these guys – and yes, they were almost all guys – but the next revolution is coming from another place. Apparently they are caused by passionate people with something to prove…..and this group has proven it already.
It is fascinating to meet the man behind a site that grew from a new-to-town programmer’s social advancement tool to a 6 billion page view worldwide listing phenomenon.
Attendees Applauded: "The lunch event on Friday was wonderful. I felt like I'd been dipped in a fountain of fresh water." - Sharon Anstey, ClickandBuy
THE KEY IDEAS
What emerged from this event are the sincere humanism of Craig himself, the site’s intent on serving the community and its very gentle view of capitalism.
There are some great lessons to be learned here, especially for high-profit, investor-pressured organizations that have to compete against a Craigslist. Clearly, the issue is one of adding more value and sharpening the marketing tools.
Highlights from the Craig Newmark iBreakfast Video
Highlights of the Lunch:
1. Who’s Zooming Who.
Craigslist isn’t putting classifieds out of business as much as specialized, focused classified sources with aggressive salesmanship are eating the newspapers’ lunch. (At one point the site is said to have taken $64 million out of the Bay Area newspaper economy.)
2. International Growth
Craigslist is in 450 cities worldwide but growth overseas is slow. Apparently, even giving something away overseas takes work. (White House, take note!)
3. Net Neutrality & The Telcos.
This is a big deal that few people understand. It is filled with disinformation and pseudo public interest ads by telcos who see an opportunity to bring in big bucks. Problem seems to be that average users will be hurt even if big business is free to buy premium services.
4. User Ratings.
eBay may have a piece of Craigslist but so far they are not venturing in a reputation system. Prediction – that will change within a couple of years. The site has become too much of a target for scammers: Including the day’s story about an apartment con artist who took New Yorkers deposits for a fictitious listing.
5. Wikis and other forms of Immortality.
If there was one wistful note it is that Craigslist is filled with ephemera and Craig seemed to admire Wikipedia and other forms of durable data. This is particularly in light of his interests in non-profit social issues liberal politics and so on. Expect to see more from Craig on these issues.
The Event covered in Yahoo & Associated Press News
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