Archive | economics

Where the new things come from

It’s worth asking in a world full of copying, where do the new things come from?

They’re extremely rare for a start. We know that most new things will fail. Is this due to their inherent newness, or that they’re not really new, or that they’re not useful?

It feels like most so-called new things fail because they’re not really new. It’s yet-another wallet on kickstarter or instagram clone in San Francisco. Second, it’s because they’re not useful. It’s a social network just for squirrels, or a three-wheeled bicycle (or, tricycle, of course).

Only last do things fail because they’re new. That would be pets.com or webvan. New and just before their time. They’re all coming back in new disguises today.

Therefore when you do something new, it’s likely you should try to really be new and not just a copy of something else or useless.

Which is not to say copying or useless is the same as profitless. Clearly doing another fountain pen on kickstarter is profitable and the pet rock was genius in its uselessness. So, of course, many counter-examples exist.

In England, my default experience observing anyone trying something new was that they were ridiculed and dragged down. In the US, my experience is, on average, the opposite. It certainly feels like the majority of the new things come from the United States, and are then just copied in other places. Everything from the Boeing 737 (Airbus A320) to open.gov (open.gov.uk).

This isn’t universally true, of course. The jet engine would be a counter example. But, that and the Dyson vacuum cleaner are held up as if they represent the pinnacle of British achievement, over and above English or the Westminster system of Government (copied all over the world). Whereas in America similar innovations happen all the time and are just part of the natural background noise of the place.

A random example, the conference I ran, is thought of positively by the attendees (mostly American) whereas all the negative people, the vocal negative people, are on the other side of the planet in England. It’s hard to conceive of running a follow-up in the UK and receiving hate mail from people in the United States about it.

Interestingly, it doesn’t feel like British ex-pats living in the US suffer from this disease. Therefore, if correct, the best people to try new things are the very same people leaving Britain, making it (Britain) an even worse environment to try new things.

Without new things, we remain in the state we are today, with the same problems. Therefore it’s critical we have new things. So it should be shocking that there are so few new things and we readily drag down those who try to build them.

What can you do to try and right this, wherever you are? Try to find a positive way to react to new things and ideas. New things are scary and we don’t like change. We’re quick to find the negatives when presented with anything new. Try to find the positives instead, whether discussing a new idea at a pub or reading a controversial (e.g. new) book.

Ubuntu Edge: Case Study

Ubuntu (or, some division of Canonical) is trying to raise $32 million to produce a phone. This is a wonderfully audacious goal, and yet makes a number of classic mistakes in fund raising. As we’ve seen, to sell me something you need a plausible story about how your product or service is going to get me laid or make me money.

I want the Edge to succeed, it looks like a cool product. It’s just such a shame that, time and again, crowdfunding pitches are so wrapped up in their product they don’t even tell you what it is. Canonical probably has a great team of people building this thing, they’re 99% of the way there. But the last 1%, arguably the most important, is the sales pitch. With more spit and polish this thing could sell itself.

The campaign begins with these bullet points. When reading these, remember, this is the very first thing a random Joe will read. You have about 10-20 seconds to get me interested:

Exclusive to Indiegogo backers. The Edge will NOT be available to buy at launch.

Okay, exclusivity is something lots of people will care about, this is interesting. Exclusivity will get me laid. Would be nice to know what this Edge thing is though. Note, again, we have no idea what an Edge is yet.

Specs to be finalised as late as possible to ensure the best available components.

This is neutral to bad. I either don’t care about the specs (nobody buys an iPhone knowing the speed of the processor) or this looks like it’s too early and the product isn’t near finalized. Still, I don’t know what an Edge is.

Dual-boots into Ubuntu mobile OS and Android; converts into a full desktop PC.

As an average consumer, I have no idea what Ubuntu is. We can put that aside and pretend we are only targeting Ubuntu users. You know, Ubuntu users, those spendy, trendy and highly monetizable Freedom ideologists. I’ve heard of Android, my friends use it so that sounds good. This desktop PC thing is kind of confusing but potentially interesting. I already have a laptop or iPad though. Ok, starting to get a hint about this Edge thing.

Works with LTE and GSM networks, including Verizon and Sprint.

Consumer doesn’t care. Still playing the “guess what Edge is” game.

Perks include all charges for US and UK, including VAT and delivery.

I’m getting what I pay for, no additional fees. I’d hope most reputable businesses do that anyway. What is Edge?

Standard manufacturer warranty will apply once manufacturer is selected.

As above. Why even mention this?

Zero cost to backers if the campaign is unsuccessful.

I have no idea what this even means. And I still don’t know what Edge is.

So, that’s it. My 10+ seconds to get me hooked is gone and you lost me, Mr. Average Consumer.

Now, their opening paragraph:

What is Ubuntu Edge?

In the car industry, Formula 1 provides a commercial testbed for cutting-edge technologies. The Ubuntu Edge project aims to do the same for the mobile phone industry — to provide a low-volume, high-technology platform, crowdfunded by enthusiasts and mobile computing professionals. A pioneering project that accelerates the adoption of new technologies and drives them down into the mainstream.

Instead of taking that apart right now, let’s rewrite it in to something that would sell to a consumer, noting that we’d push this paragraph to the top and remove the bullet points above.

What is Ubuntu Edge?

Edge is the best phone money can buy, crowdfunded by people like you. Edge is the sleekest, most powerful and best designed Android phone and it’s only available for a limited time here to our early backers. More than Android, Edge also runs the cutting-edge Ubuntu operating system and when plugged in to a monitor turns in to a fully-fledged PC.

Okay, step-by-step:

Edge is the best phone money can buy, crowdfunded by people like you.

We start by answering the title question, what the fuck is this thing? It’s a phone! Note their paragraph has some strange analogy about Formula 1 (who knows what that is, maybe it’s like the Indy 500?) and doesn’t even come out and say it’s a phone. We make a big claim, followed by some basic psychology of influence. Tell me it’s bought by people like me, and I’m much more likely to buy it.

Edge is the sleekest, most powerful and best designed Android phone and it’s only available for a limited time here to our early backers.

Next we make some grand claims about how this thing is the best on every metric possible. Then we spice it up by noting this deal is going away (buy soon!) while hinting again at how exclusive and amazing you are, as an early backer. We anchor the device on Android. Consumers know what Android is, they don’t have a clue about Ubuntu or magical phones-that-turn-in-to-PCs. Hardcore Ubuntu fans can be placated later in the page with tech specs and Ubuntu screenshots.

More than Android, Edge also runs the cutting-edge Ubuntu operating system and when plugged in to a monitor turns in to a fully-fledged PC.

Now we use that Android anchor to hint at all the other cool shit this phone can do. The hypothetical Ubuntu OS and PC stuff, which might be usable, to someone, one day in the future. Maybe, we don’t have data to support that yet. We turn around these strange features from the core of the product, to “it’s better than your friends’ Android, plus it does this other stuff“.

The economics of this are kind of painful. For $830 (maybe a little less) I might get a phone next year. Compare that to walking in to any store and buying a phone today which does everything I think I need for maybe a quarter of the price. Thus, three-quarters of the price of the Edge has to represent the value I get from exclusivity, Ubuntu OS, transforms-in-to-PC, pretty design… and all the other features. That’s a tough sell, and the indiegogo landing page doesn’t do it the justice it deserves.

tl; dr; hire some sales guys and copy writers.

Cultural Perspectives

Having lived in at least two different countries, I have a number of perspectives on the differences between them. I think there are enough to write a book about it.

In England, where I was born, you cannot use a cell (mobile!) phone at a gas (petrol!) station. This is in case the planet explodes. In the United States I use my phone all the time at gas stations and – get this – they don’t explode.

A gas station valiantly not exploding due to cell phone usage

A gas station valiantly not exploding due to cell phone usage

In London the parks are littered with monuments to long-forgotten wars. You can’t walk five minutes in Hyde Park without learning about the heroic actions of Lt. Colonel. Montgommery Somethingorother and the war of 1846. There’s even a gigantic monument to dead animals in wars. I’m not joking, it’s 58 ft. across with life-size horses. In the US parks feel like SimCity or legoland. It’s as if someone clicked a button and – poof – a square acre of grass appears. Like a front garden, the grass is just to be looked at and not actually used.

In Britain you’re forced to take your car to special government-approved mechanics every year, this doesn’t depend on anything being actually wrong with the car. Here in the US, you fix things when they go wrong.

When I land in a commercial plane in the United States I can immediately turn on my phone and use it. In England you cannot, in case the aircraft explodes. This has only very recently begun to change.

In America it feels like I have to stop. At. Every. Intersection. This wastes fuel, wears the brakes on the car and more. In England there are roundabouts which I can slow down at, but keep moving.

In Britain there is a notion of “the special relationship” whereby it somehow enjoys referential diplomatic status with the United States. In the United States, this is approximately fantasy.

There’s an interesting bias in British and other ex-pats living in the US. Very few of us want to go back. By definition, the ones that leave aren’t likely to want to return. It’s probably true in the inverse, US citizens living in England.

BDNT Event Review

I went to a tech meetup, BDNT, last night in Boulder. I used to go often when I lived in Denver a couple of years ago. Six or so startup-alikes get five minutes to pitch then five minutes for questions. These are the three that I remember:

 

ambientbox

AmbientBox pitched an analytics platform for restaurants, bars and shops. You buy a magical box ($250) and plug it in. It records various things like noise level, CO2 (to detect how many people are in the room), lighting levels and so on. It uploads this and then you use an app to figure out when the ambiance is “good.” A pretty ipad app or website will theoretically let you use this data to figure out how to improve your space, get more customers and so on. You pay $100/month or something. Sort of Nest for restaurants, maybe.

My thoughts:

  • Basic idea is kind of interesting.
  • A magical box sounds painful. Why can’t this just be an smart phone app to start? It has a camera and microphone on it minimum.
  • CO2 sensor sounds interesting, but I’m willing to bet it correlates with noise level and is irrelevant.
  • Low end restaurants won’t give a crap about this. High end restaurants will pay someone. The middle ground sounds like a smaller market?
  • The great part about this is that it gives your restauranteur the feeling of being in control and making progress. Even if it’s bullshit, there are lots of people who’re happy to pay for pretty graphs and to pay for the feeling of control. Another way of putting it; it’s enough data to hang yourself with.
  • Visualizations were pretty.

 

chatlingual

ChatLingual is magical IM chat on the web with seamless translation between languages. So, we each chat in our language and it’s translated on the fly. Monetization is a little unclear, pay per chat, tokens or something. Secret plan is to build the best translation engine possible.

Thoughts:

  • Super pretty and clean UI.
  • If I’m cheap, I’ll go use Google translate or something. If I have money and I have some nuanced conversation with reserved Japanese executives, then I need a professional translator?
  • The data collection secret plan is good, but super long range. Sounds like free basic usage plus additional services (e.g. freemium) would work well. Computer translation for free, real bilingual people for $20/hour or whatever.
  • Would be a useful feature for odesk / elance so I can communicate better with freelancers
  • The flip side, is that it might just be a feature. Don’t IM clients do this already?

 

fittrip

FitTrip is (will be) an iPad app which makes working out more fun. You connect a heart rate monitor and your iPad magically shows you a video of you, say, running the grand canyon. If your heart rate speeds up then the video speeds up, like you’re really there. Content is paid for; so you get one free virtual run then you pay to run other places. There are competitors out there for this idea.

Thoughts:

  • The guys asked the audience if they’d pay $5 for a trip. This is an awful way to ask about pricing. You need to ask “what is a cheap price”, “what is an expensive price” and so on.
  • Most of the audience, 100+ people, put their hands up to the $5 question. This is wacky. What they should have asked is how many people have iPads, heart rate monitors, a running machine and work out. And want to pay for this app content. It’ll be a much smaller percentage.
  • If I’m going to pay for an iPad, a heart rate monitor and the app, and a gym membership or running machine, couldn’t I just fly to the grand canyon for less money and run for real? (Answer is yes, you can).
  • The guys mentioned 60% of gym memberships are paid for but unused. That is, people don’t show up to the gym. They said this like it’s a bad thing. Gyms love that, it’s free cash flow. The last thing in the world a gym wants is customers to show up, the same way a bank doesn’t want us all showing up to withdraw money at the same time.
  • All that said, the app was very pretty.
  • It’s a large, irrational market, just look at that 60% of gym members who don’t show up, but still pay. So even crazy stupid ideas can work.

Is Sugar Toxic?

You know how public health has centered around low-fat diets for the last thirty years? It turns out there’s no actual evidence to suggest that’s a good thing. The move to carbohydrates has actually made the problem (heart disease et. al.) worse.

Apparently, fructose (part of sucrose) is metabolized similarly to alcohol, and causes all kinds of problems for you. Enough problems that you shouldn’t touch it, but it’s in everything. A neat way to think about a can of coke is that it’s the same as a can of beer, just without the buzz. It’s that damaging.

There’s a great NYT article over here by Gary Taubes, who you can listen to in podcast form on EconTalk over here. Gary wrote Why We Get Fat: And What to Do About It.

For the full, terrifying, experience, here’s a video for you. It’s 90 minutes long but the whole thing is worth your time.

What I learnt trading coffee for feedback

Coffee for Opinions

Coffee for Opinions

So you have a Thing and you want to get feedback from Real People. Buy them a coffee in exchange for a little time, right?

First, don’t expect busy cafe owner guy to agree. Or care. The first one didn’t. It turns out that offering free coffee sends all kinds of mixed signals for a cafe even if they’re still making money. The question is, are they making additional revenue? In other words, they’ll sell the coffee anyway so why add the complication of putting you in the middle?

Don’t pick a busy coffee shop. They don’t have time to deal with your stupid feedback idea. Find a coffee shop where they have enough time to listen to your stupid feedback idea, but also have customers occasionally so you can actually, you know, get feedback.

Don’t go to a coffee shop with 20-something hipsters. The wifi will be saturated and you want a more representative sample of the population.

Get a sign. Mine was simple; “ask me for free coffee”. I printed it on a piece of paper. The plastic stand, you won’t believe. Staples sells them for $11. $11. And that’s the low end model. There are all types of deluxe super platinum crystal edition stands.

I evolved my idea in to just paying the barista. I kicked it off with a flat $25 tip and $25 behind the counter to buy coffee. About half the customers agreed to free coffee, the other half were too busy. The flat tip gets the barista on your side. To the point of evangelism since it would otherwise take 25 sales to get the same tip. It also vastly simplifies the whole “money changing hands” thing. No awkward cash for every other coffee getting in the way of that valuable feedback time.

Now throw away the sign since barista person is doing the PR for you.

You’re showing them the Thing on a laptop, phone or a tablet right? Make sure you don’t mind crumbs and coffee being spilt all over it. Make sure it doesn’t have all your secret passwords on it. Make sure you don’t mind if it gets dropped or stolen. Basically, buy a cheap android thing.

Show the barista how the Thing works. Now, they’re the ones showing customers and asking for the feedback. Yay! Division of labor!

Next, prepare for feedback.

Whatever you thought you were going to get feedback on, it will be on something else that you actually hear. Getting out of the building and talking to Real People is extremely valuable. Things you thought were obvious will be incredibly complicated for Joe User. Complicated things will be simple.

Write everything down. Everything. I avoided audio or video recording since it would complicate things and might be creepy.

A few hours later, richer for conversations and feedback, poorer $50, you have your data to go iterate on.

Oh and the barista is your new best friend.

Powered by WordPress. Designed by WooThemes