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taking a slow approach to brands

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Will VC backed startups create new mass brands?

27 January, 2014 (19:25) | branding, business design, technology | By: Shannon Clark

In the past few years there has been a rise in the number of VC backed firms that are building businesses designed to compete with some of the largest consumer packaged goods companies in the world. From VC backed shaving companies, diapers, soaps, eyeglasses and more there is a new wave of ventured backed consumer products companies that have arisen to prominence in the past few years. Many of these firms are raising vast amounts and seem to be doing quite well.

However reading the press about these companies I think many, perhaps including some of the entrepreneurs and investors, are missing key  opportunities.

See an article from TechCrunch on Jan 27th – which talks about venture backed companies such as Madison Reed, The Honest Company competing with Procter & Gamble, Harry’s and Dollar Shave Club that compete with Gillette (and though the article doesn’t mention them Schick) and a bunch of other firms. As the article notes venture backed consumer goods companies have raised over $1.1B in recent years with many companies that were distributors of products from other businesses moving into direct manufacturing. Harry’s recently raised over $125M to purchase their 90+ year old German manufacturing partner and Fab which has raised a lot of money recently purchased a supplier of custom furniture to bring that manufacturing capabilities in house.

What the article misses and what most startups in the space seem at least publicly to be missing is that great consumer products companies actually serve TWO (at least) customers.

Their marketing and brands are built to sell to individual consumers – with marketing and branding frequently being among the largest expenses of many consumer products companies (for at least some products likely being a larger component of the prices those goods sell to consumers at than the actual costs of to make say the soap). These are companies that have had a rich, often 100+ year history of building up their brands on a national and international scale.

But  all that work to build brands that consumers seek out are done, for the most part, to sell the goods once they are available in retail stores (or these days available online via ecommerce sites). While consumers see the individual brands and marketing efforts the big retailers see distribution integrations, inventory and order management, payments for shelf space and in-store marketing/promotions, volume discounts, special packaging or product variations and more. All designed to help retailers make more money selling the consumer products business’ products (and in the case of goods sold in grocery stores to attempt in many cases to be as attractive or more attractive for retailers than those retailer’s house or generic alternatives).

Few VC backed startups building consumer goods are focusing on distribution of those products into the larger retail marketplace. Harry’s via their recent acquisition is somewhat of an exception – the company they just bought makes private label razors for many retailers across Europe (primarily). A recent CNBC article about the deal also notes that they have a distribution deal with J Crew and Standard hotels.

Integrating with large retailers is a very different business than selling to individual consumers one at a time via a website (or mobile application). It involves integration into ERP systems. Capabilities to take orders from retailers with potentially 1000′s of locations, distribution warehouses and many other complex logistics and payment processes. All while selling at a wholesale price that allows for an attractive retail price point (with pressure from many retailers like Walmart to drive down the retail prices – often by driving margins to be as slim as possible). All while also expecting that partners will build global brands as well as targeted marketing to drive in-store (or online) sales of the brand via the retail partners.

Very tricky stuff – but if companies like Harry’s or The Honest Company really want to scale to take on the consumer goods giants they probably have to master the art of relationships with large retail channels. It is possible that one or more startups will find a way to reach mass scale via a digital only direct channel – but most likely they will require leveraging the investments in time (and brand) of mass retailers to reach truly mass scale of sales.

An alternative approach may be for some startups to take on the mass retailers with some new approaches that will help drive mass sales without the drawbacks of the big box model. Whether this is via crafting a network of retail channels from smaller stores (an approach that many smaller coffee roasters are starting to take as a national network of small cafes has started growing that buy beans from national smaller roasters) or whether it is via building up a startup into a mass scale, likely online first business. Amazon.com for example but there are 100′s of other large scale online retailers.

Some of the newer same-day delivery businesses may offer yet another opportunity – potentially a startup brand might find a way to bypass physical retail stores via offering inventory to such same day delivery services directly. (Ebay, Amazon, even Google all might be open to this). Though it would have to products that compliment those business’ existing retail partners and such an approach may have complications around local taxes and costs of warehousing/inventory management.

Business idea – feed of actual marketing messages

28 June, 2013 (19:54) | branding, business design, social media, technology | By: Shannon Clark

Discontinuation_notice_displayed_on_Google_ReaderGoogle Reader dies in a few days

I have been an avid user of Google Reader for years, at one time I had probably 500 or more RSS feeds I was subscribed to inside of Google Reader, at present i have culled this down to only 217. These include many customized feeds I created for specific purposes – monitoring Craigslist in my local area for specific items for sale for example.

But while individual posts have sometimes shown ads (depending on the relationship between the publisher and their advertisers) clearly Google Reader as a product has had an issue with how to monetize it. There are a bunch of companies creating alternatives at the moment many of which I will be testing out – however I haven’t yet settled on a perfect replacement (I like a lot of Digg Reader’s features but their iOS app isn’t working for me – it fails when trying to import my Google Reader feeds). A few feeds I subscribe to have a great model – they have a sponsored post once a week that goes into their permanent feed and is clearly shown as a sponsored post – here is this week’s sponsored post from Collaborate for Daring Fireball

Here is my big idea – what if you could get a customized for you feed of sponsored messages, that you could read how and when you want, and as you do so supported the apps and blogs you value??

The way this would work is that advertisers whether big or small, local or national, would publish a rich media post or series of posts containing the marketing message(s) that they want to share. These posts could be far richer than current banner ads, video ads or search ads. They could embed video, images or even attachments in the same way that any RSS post could (so could contain media ala a podcast or files of any form). But you wouldn’t subscribe to these raw feeds (unless you were a huge fan of a given brand – and yup, these could also be feeds to/from a group on a site like Google+ or Facebook) instead you would subscribe to a customized feed.

The advertisers would PAY to be on these feeds – paying on a per subscriber basis (potentially split into a baseline amount for being in such feeds and a further amount when selected actions are taken by users – such as reading/staring/sharing/viewing the content in a given post). This revenue stream could then be shared with the apps that incorporate it into their user experience – and could further share this revenue back to sites that provide other content to those apps (i.e. content publishers) potentially following a user-driven model ala Humble Bundle.

Sounds a bit complex and there is a lot of scaling issues to overcome – but as a user the effect would be that I could see highly targeted, rich content from advertisers that paid to reach me (but whose content I see when and how I want to see it) and which I could then interact with like I do with any other content – i.e. share it, star it to find it quickly later, email it to my wife etc. And if via doing so there is a viable business model that evolves for the apps that build services I use daily and content creators that actually create original, valuable and interesting content this would be a big win for everyone (and far better for me as a user than the current ad overloaded slideshows that masquerade as news on all to many websites – or the long form articles split into ten pages with interstitial ads that break on my mobile browsers.

Does something like this exist already?

If not, why not?

And how could we get started on building it?

What is a Network?

14 May, 2013 (16:58) | meshforum, social media, technology | By: Shannon Clark

new_meshforum_logoIn 2004 I began to organize a conference on the study of Networks, MeshForum to answer this seemingly simple yet surprisingly complex question.

“What is a Network?”

Everyone I asked to speak or invited to attend had a different answer – each person drew upon the perspectives of their field of study and their life’s work and each arrived at a unique and different set of answers. The mathematicians answered from a technical perspective citing Graph Theory to arrive at mathematical models that represented networks in the abstract. Yet even the math differed depending on the “things” you choose to measure and define when modeling a specific network.

Transportation experts focused on the Flow - in lay man’s terms they were less interested in the structure of the networks they modeled (since roads, bridges and even buildings change slowly) and more interested in the movement across that network – and how that movement varied over time (i.e. how cars and people “flowed” across the transportation grid of a given area.

Social Network experts were, generally, more interested in the structure of the network and to a degree how that network structure changed over time. They would model people as nodes (typically though some focused on larger groupings of people – i.e. organizations), arrive at some definition of “link” for a given population (couples that had dated, co-workers that exchanged emails, people who claimed each other as friends – remember that in 2004/2005 this was before the rise of Facebook, etc) and then seem to show snapshots of the network structure at points in time. They would typically be interested what the network structured revealed – how it might show groupings within the larger network or how it could reveal key people to the organization based on their network structure.

But at MeshForum in 2005 and 2006 we had many other experts on Networks across many other fields. We had speakers who focused on Logistics (in one case for the Pentagon – among the largest most complex logistics challenges on the planet). Their interests in understanding networks were on a very different scale than social scientists studying dating patterns in a high school or social network experts mapping the political divide in the US based on relationships between books via data from Amazon (that link from a past MeshForum speaker, Valdis Krebs is his updated study from 2008).

Besides consultants, logistics experts and academics Networks matter to nearly everyone – we are all embedded within many different networks and we are all dependent upon many unrelated but often dependent networks in our professional and personal lives. From the financial networks that enable global credit to flow (and currencies to trade) to supply networks that connect global companies to global markets to the true social networks we are deeply apart of both families and those networks we choose for ourselves.

Not to mention the technical networks we increasingly rely upon for our professional and personal daily lives – the networks that connect our cellphones and that run the Internet and enable you to read this post, to share it on Facebook or send out a link to it via Twitter.

NetworkmovieIn the media a Network has long had yet another meaning – a complex business that delivers entertainment – but which does so by combining the creation of new content (“shows”) with the actual running of broadcast signals across the country (or in many cases increasingly to a global audience). This form of a “Network” encompasses many of these other meanings yet also carves out it’s own unique meaning.

What are the Networks that matter to you?

What Networks do you participate in every day? (or every week/month/year)?

How do Networks matter to you professionally? 

I will be conducting a series of video interviews about Networks over the next few months – if you are interested in being interviewed leave your name and contact links below (or send them to me privately). I’m interested in people in all industries and fields of study – whether you are a published author, a university professor, or a student, intern or parent.

These interviews will be shared publicly – and will help shape the next MeshForum conference perhaps as soon as this Fall. Watch this blog for more information about that conference and the video interviews.

Revisiting my thoughts on what Apple should do with cash hoard – Feb 2013

7 February, 2013 (17:32) | business design, technology | By: Shannon Clark

A bit over a year ago I posted my thoughts on what Apple should with their cash hoard, at that time it was nearly $70B. While I stand by most of my thoughts then, now they have over $130B in cash, even after planning to disburse over $45B in dividends over the next 3 years.

Earlier today my friend Ben Parr was on CNBC to discuss his thoughts about what Apple should do with their cash hoard now – his suggestions echo many of mine. Instead of trying to issue more stock or pay even higher dividends he suggests that Apple should be using (and probably are) their cash hoard to reinvest in the components they current use and plan on using the future like Flash Memory.

I still stand by my core suggestions from a few years ago with some updates:

  1. Apple should invest in the Enterprise. Apple’s Enterprise successes are not as well known as their consumer successes. But they have made significant traction in getting iOS adoption within enterprise companies and the willingness of Enterprises to support Macs has been growing. However Apple’s Enterprise offerings in terms of servers and large scale enterprise purchasing and deployment of computing devices is not as well known or well managed. There are many opportunities for Apple inside of the Enterprise to build on the popularity of the iPad and the iPhone to expand upon their successes. Innovative firms and startups as well as independent consultants have for many years now be early adopters of the MacBook line, especially the MacBook air and more recent Retina Display models.
  2. Apple should consider buying Foxconn (if possible) and buying more of their supply chain in general. Apple since their switch off of Intel processors and onto their own processors has seen their biggest years ever. Buying Foxconn may not be possible due to Chinese laws (and the costs) but they should be looking closely at ways to continue to own much of their core components and their full supply chain as they have shown the very big value they can extract when they do so.
  3. There is a growing window for an Apple gaming console not (just) an Apple Television. I still think that Apple has a major opportunity to dominant the living room if they were to seriously explore a new gaming console (which also embeds all of the functionality of the latest generations of the AppleTV devices) and which might be paired (though would not require) any new screen that Apple offers as an Apple Television. In 2013 we almost certainly will see the announcement of new consoles from Sony and Microsoft, though whether those will arrive in time for the holiday season in 2013 or won’t show up until 2014 is still open to debate. In either case Apple has an opportunity to explore a new platform to compete with the WiiU, Playstation and next gen Xbox. I said this could happen years ago, I stand by that – in particular the growing power of iOS for immersive games suggests that Apple could do something interesting with a game console. And imagine if instead of a proprietary controller w/screen (ala WiiU) if Apple could allow iPads and/or iOS devices like the iTouch or iPhone to pair with the games console and be used for navigation, data entry and at times as a second (secret) screen. Apple could look at buying a new firm like Ouya (for their controller designs more than their device) or swinging even bigger and far more costly look at trying to buy Valve (and get Steam in the process). There were rumors to this effect in April of 2012 after a visit to Valve by Apple’s CEO but I think it should be given serious consideration. I would, however, guess that the cost might be in the multiple billions.
  4. Apple should consider buying PayPal from Ebay. Okay this is a wild speculation and new (not part of my previous speculation) but I think that Apple should look at buying PayPal from Ebay. The intersection of a global payment processor with the iOS device global ecosystem (and the new Passbook offering) could be quite significant. Apple could potentially help PayPal find a route into use by millions (hundreds of millions actually) consumers and integration with thousands of developers building upon the iOS and Mac platform. PayPal however suffers from a UI and UX problem (for consumers, merchants and developers) which Apple could potentially help through allocation of Apple designers and developers (and management). What Apple could get is a further extension upon their massive payment processing – i.e. the millions of payment cards linked to iTunes accounts. And among payment processors and applications PayPal is among the most global and Apple is very much a global company today.
  5. Apple should expand even more globally. Apple is very global already with stores globally and manufacturing on a global scale, but this suggestion is that Apple should also be looking to aggressively hire staff at all capacities globally. This suggestion isn’t, I should note, that Apple should be looking to do this as a cost saving method. In fact I would argue that this should be done whether or not the staff hired globally is cheaper than US alternatives. Instead I’m suggesting that to keep up with a global demand for Apple products Apple should be looking to hire the smartest technologists, designers and business people wherever they live and whatever languages they speak. And I would bet that if they do this aggressively it will be an idea sparked by one of these non-US employees that will lead to their next $1B+ (many times plus) product line. LIkely a type of very Apple product that might never occur to their US based staff (either in type or in the business potential)
  6. I still think Apple should attempt a national (at least) Wifi network. Legal issues and barriers may make this functionally impossible (liability for open Wifi hotspots in particular) but if Apple could find a way to help support the richer spread of municipal wifi networks as well as the overall expansion of actually good broadband throughout the US that can only help their ongoing sales (in all categories). However there may be too many issues around this for them to consider.

What are your suggestions for how Apple should spend their billions? 

TechCrunch Disrupt San Francisco 2012 – initial thoughts on day one

11 September, 2012 (01:54) | branding, social media, technology | By: Shannon Clark

I have just returned from the first day of a packed day at TechCrunch Disrupt San Francisco and while I am exhausted I am also exhilarated at the quality and breadth of the startups onstage and offstage at this year’s show. I have attended nearly every TechCrunch Disrupt conference – almost every one since the first in San Francisco and many though not all of the conferences in New York City. This year’s conference is by far the biggest yet and if Day 1 is any sign it is also one of the highest quality shows done by TechCrunch yet – I saw many companies on stage today which I think will prove to be successful businesses whether or not they win the Disrupt Cup.

This is just a quick and short post highlighting of few of my observations from the day via my Tweets, I will add photos and more detailed thoughts in upcoming days as well as more details about the project I worked on this past weekend at the TechCrunch Disrupt Hackathon – that project, Track Deadlines is one that I plan on continuing to work on after TechCrunch Disrupt concludes. In fact you can go and sign up to be part of my eventual beta when it is fully ready. And go read my earlier blog post (on my personal blog) about what I was planning to work on at the Hackathon.

[tweet https://twitter.com/rycaut/status/245211614729617408]

and

[tweet https://twitter.com/rycaut/status/245215206362456066]

and

[tweet https://twitter.com/rycaut/status/245271950522449920]

and

[tweet https://twitter.com/rycaut/status/245279150196277249]

and

[tweet http://twitter.com/rycaut/status/245327322788540417]

(the last one was my most retweeted and replied to tweet of the day)

and

[tweet https://twitter.com/rycaut/status/245331734558830592]

 

The two base business models and what they mean for your business

6 August, 2012 (17:16) | business design | By: Shannon Clark

There are only two basic business models.

Two.

Yes, only two.

Every business falls into one of these two models (and many non-businesses such as organizations, non-profits and others also fit here). I would even claim that most people’s jobs fit into one of these two business models (though primarily most people who work for a company fall into the first model almost entirely). Both of these models can be fantastic businesses and they each offer advantages as well as disadvantages. Many businesses use a mix of the two models, though often without fully realizing it.

So, what are these two business models.

Model One – Sell something non-discretionary

Put simply this model is to sell a good or service to someone who uses that good or service to accomplish their business objectives. This sounds simple but it has a few key and important facts to remember.

  1. Price is constrained by the value your goods or service offer to your buyers. If they cannot buy your goods or services and use them to generate more income than they spend with you they will not be repeat customers. This means that if you want to sell at a higher price level you have to find a way to generate a great return for your buyers either by improving the value of your product (again either goods or services) or you have to find new buyers who can obtain a greater value from your products than your current buyers.
  2. Scale is dependent on the scale of your buyers. On the positive side this means that as your buyers are able to grow their businesses your business can grow at nearly the same rate. On the negative side this means that if your customers’ businesses are not growing your sales will also slow until you find new buyers (think sellers of horse carriage parts as the automobile industry grew, some were able to adjust and sell products to the automobile companies but many were not able to adjust).
  3. Competition is limited to products that can deliver the same value needed by your buyers. This is usually a good thing for businesses as while you can face a lot of competition it is limited to competitors that can fit into the business of your buyers in the same way your products fit. However this means that when the business of your buyers changes or when you try to grow by selling to a new category of buyers that you can face a very large pool of competitors who were working with those buyers already.

Or your business can be

Model Two – sell a discretionary product

This is a very broad category of businesses most of whom today don’t fully realize that they are competing with each other. What do I mean by a “discretionary product”? Simply put this is any product whether a good or a service which is not purchased as a component of another business. i.e. goods and services which are purchased out of personal preference or desire over being a necessary part of another business’ process.

This is a very broad category it includes a large swatch of local businesses – from restaurants, cafes, bars, hair salons and bookstores. All these businesses primarily sell a service or physical good that isn’t bought as part of a business process but out of a personal need. However they all may have aspects of their business which serve other businesses (remembering that you can think of yourself as a business of one). A restaurant can be used for a business meeting or event to take just one example. But while that event may be a necessary part of a business process the decision about where to hold it, what to serve at it and how much to spend on it is a discretionary decision for most buyers.

Advantages and disadvantages of discretionary businesses:

  1. Price is potentially unlimited. Discretionary businesses have the advantage, though it can be a challenging one, that pricing is potentially unlimited. Since the products these businesses offer are discretionary purchases they can potentially be sold at any price since the buyers are choosing to buy for reasons other than as part of a business process. The disadvantage of this unlimited pricing option is that frequently leads to pricing of discretionary businesses being an artform not a science. You have to figure out a pricing model that will accomodate your costs of business while also selling to the right mix of buyers. For some businesses this may be selling a large amount to a very small number of buyers. This is partially why many discretionary businesses have a history of selling at flexible and negotiated prices. Local monopolies may also shift what people are willing to spend (think the concession stand at a local movie theater – purchases there are fully discretionary and since there are constraints on the competition via “don’t bring in outside food” policies the prices are typically marked up from what the identical good may be for sale just outside of the theater.
  2. Competition is essentially unlimited. This is a big challenge and one that many businesses in a discretionary business don’t fully grasp. The competition of a new restaurant is not just the other restaurants in that neighborhood but all of the other discretionary purchases available to potential customers – the movies available to be seen, the newest video game, the latest bestselling book, the new sneakers and more. The competition that any new social game company faces is not just other social game companies but all games, in all genres as well as all other discretionary ways people could spend their limited time and funds.

Businesses that operate in both models face some unique challenges, especially around thinking carefully about their pricing as well as definition of the goods and services that they offer. The needs of their non-discretionary buyers may conflict with the interest and potential business from discretionary buyers. The airline industry perhaps is a key example of this conflict. “Business travelers” are traveling because they have made a calculated decision that the costs of that travel are less than the opportunity they gain from traveling. What the value is travel arrangements that increase the value they can generate – from getting on and off the plane faster to having the flexibility to reschedule their travel. Discretionary travelers however value a different set of elements when choosing to travel. In many cases they want to spend as little as possible on their travel costs – to allow them to spend more on other discretionary elements of their vacations – but there are also travelers who may choose to spend more than even a business traveler because they value certain elements of the travel experience highly. 1st class cabins are one attempt to capture this part of the business.

The variable pricing of airline tickets is in no small part a result of these competing forces on airlines as well as their own highly variable non-discretionary purchases to operate their business (fuel, plane financing, gate fees, flight crews etc).

Which of these business models does your business (or business idea) fall into?

The Intention Economy and thoughts on VRM

22 June, 2012 (15:07) | social media, technology | By: Shannon Clark

Earlier this week I attended a talk by Doc Searls for his new book, The Intention Economy: When Customers Take Charge [and yes semi-ironically that link is to Amazon w/my tracking details - feel free to buy your copies anywhere you like]. I haven’t yet finished reading the book (full disclosure all attendees were given a Kindle copy of the book by Weber Shandwick the PR firm that organized the event) but I have been following the VRM space for year and Doc Searls is an old friend.

At the talk I observed the following and Doc requested that I share my observation publicly to the Project VRM mailing list so here it is:

There are TWO important parts to what the VRM movement is talking about.

Part one is about individual intentions being shared and routed via some means to the entities that could fulfill those intentions with the goal of connecting the two parties to enable transactions to occur. Done well this can reshape business at the local, national and international level.

Part two is the discussion around Internet privacy and security of individual data. This is the part that geeks geek out about, the stuff that involves observing the volume of tracking cookies and technologies on many websites, the privacy concerns of the policies of many companies and the sheer volume of data being created around every individual’s activities online (and offline for that matter). This stuff is important to be sure but it is also of only vague interest to most individuals and the connection between “personal data stores” and the broader ideas of “share your intentions and get help fulfilling them” is tenuous at best.

To move forward I would encourage the VRM community to think about how to split the focus between the technology challenges of personal data capture and sharing and the business challenges of thinking about how intentions can be expressed (and documented in some means), shared broadly, filtered and routed to the entities that could potentially fulfill the intentions and then those parties connected via some means to enable transaction(s) to occur. All of which could, in fact, take place without any technology.

For example imagine the non-technology enabled version of the Intention Economy. A group of us walk around a large crowd – say of 100 people and captured everyone’s Intentions for lunch today. Some folks have very broad goals (“spend less than $10 for something tasty – but could be any type of cuisine with no restrictions” while others have very precise Intentions – “spend less than $10 for a gluten-free, vegetarian lunch w/o red peppers and with something spicy”.

These intentions could then be clustered into similar categories and we could go call up a bunch of local restaurants and compare menues and current deals and offers to find and connect people to restaurants that could fulfill their Intentions for lunch today. How this last bit happens could be any number of means (we could place a number of delivery orders, we could send folks out to each local restaurant to place orders and pick up food, each individual could decide whether to call for delivery, send a friend or leave the building to go get lunch in person etc).

Nothing about this imaginary intention-driven set of transactions would require personal privacy focused technology. Yes, it could leverage such systems if they were in place – perhaps to transparently and securely collect payments from everyone for what they order plus delivery charges all without exposing each person’s personal data to the restaurants – who just need payment. But equally such a system could just rely on non-technology means such as collecting cash from each person individually.

The point is that the power of the narrative of large pools of people sharing their Intentions and getting them fulfilled is lost when the conversation is only about complex to grasp technical points. Shared intentions leading to actions can inspire business people to build new businesses and reshape old businesses.

 

End of the month and quarter seven worthy projects to support

30 September, 2011 (15:25) | branding, games, social media | By: Shannon Clark

Today is the end of the month. Here are a few projects which are ending today that are worth supporting.

One, the first, is perhaps the most important (and don’t worry you can support this one later and it won’t be until next year that your support will be the most critical). This is, however, limited to just folks in the US (citizens in particular). Namely the reelection campaign of Barack Obama. I am an independent (registered as such in the state of CA) but I am also a very firm supporter of President Obama. Tonight is the deadline for this financial reporting period (tonight being Friday Sept 30th) and everyone who contributes will get a chance to potentially have dinner with President Obama and three others.

But don’t support him just for that chance, support him because he is and has been the most effect president in my lifetime. In the face of an obstructionist opposition party he has achieved more than most past Democratic presidents (or Republican Presidents) both domestically and internationally. He faces a tough reelection campaign due to the horrible economic climate and tough federal financial situation both due in large part to the failures of the last administration (and to some degree the administrations before as well). If you disagree with my politics I at least urge you to be deeply involved and informed this election cycle and be open to President Obama’s arguments.

Getting away from Politics there are many other great projects which end tonight as well.

One of my favorite musicians and one of the best examples of how the Internet has enabled musicians to carve out a new form of successful career is Jonathan Coulton. He has a new album, Artificial Heart, coming out and tonight is the last day to get one of the bundles he is offering. These range from $10 for just the album in digital form to $100 for three t-shirts, signed CD’s, posters and much much more. Go buy a bundle today.

I have mixed feelings about Slow Food USA but overall do support them and their mission, though I may disagree from time to time about their focus on specific projects and the underlying attitude they present to the world. I think that great, locally sourced food is something that should be celebrated by people of all socioeconomic statuses and races, Slow Food USA all to often comes across as more than a bit elitist. But that aside, tonight is the last day to participate in a promotion they are offering – donate any amount and get membership in Slow Food USA for the full year. If you love heirloom foods, local food providers and paying attention to what you eat and how you eat then Slow Food is a movement worth some support, now is a great time to show that support.

And not ending tonight but in 12 days the Humble Bundle is back this time with the Frozen Synapse bundle. If you donate more than the average amount you will get a bunch of great games for every platform, support independent game developers as well as worthy charities and hopefully have a lot of fun with the games you have bought (for a bargain price most likely). A true win-win-win-win (the fourth win being the folks behind humblebundle who I hope do well from organizing these bundles for others).

Besides my friend Mary Anne’s great erotic SF book project Demi-Monde there are many other great ongoing Kickstarter campaigns which are worth supporting before they end. In particular I’m eyeing the boardgame projects from Clever Mojo Games. They have the possibly unique distinction of having THREE successful Kickstarter campaigns so they are clearly doing something right. I’m tempted to get the Aliens invade sunrise city pack myself. Their current projects Sunrise City (ends in 20 hours as I type this) and Alien Frontiers: Factions (ends in 44 hours) are about to end and both offer some unique and compelling (if you like their type of games) offers only available if you join the 100′s (actually nearly 2000 in the case of Alien Frontiers: Factions) backing each project.

As a business designer and advisor I think that the ability of folks with a great idea to use Kickstarter to fund that idea directly from actual interested customers is an amazing innovation. In the case of boardgames this has been taken to a new level with Springboard from GameSalute which extends the Kickstarter model to also support distribution and sales to retailers.

A friend’s book and a great conference – two cool projects for today

19 September, 2011 (15:10) | branding | By: Shannon Clark

I am going to try an experiment, as often as possible over the next few weeks I am going to post links to projects and events I think are great, worth supporting and potentially of interest to readers of this blog. Some will be directly related to branding (see the Dieline conference below) but many will just a cool, worthy project. These are far from unbiased opinions, I’m making no pretense of objectivity and I’m sure there are many other worthy projects (in fact if you know of one leave a comment or send me an email with why you think I should feature that project next). I’m starting with a Kickstarter campaign for a new book by a very good and old friend of mine (NSFW entirely at least – she’s writing a book of erotic SF stories) and an upcoming conference here in SF which I wish I had the time to attend.

Demi-monde

Demi-Monde – an erotic science-fiction novel-in stories is a Kickstarter project by my very good friend from college Mary Anne Mohanraj. Very worth supporting and I hope a successful example of how a book which a traditional publisher might not be able to publish in today’s market can be funded. Writers today have to be creative in funding their pursuits and as a reader I want Mary Anne to succeed not just to get to read a new novel by her, but as an example for many other writers whose topics of interest are not what most publishers (today) are looking to support.

I’ve been a big fan of the design blog The Dieline for a long time now. While I don’t read every post they may, I scan many of them and enjoy their highlighting of great and interesting design . This small conference here in San Francisco looks to be a fantastic event. I don’t think I’ll be able to attend personally but if you have the time it is worth considering.

What Apple could do with $70B – my alternatives to Jason Calacanis’ LAUNCH suggestions

13 September, 2011 (17:58) | branding, games, social media, technology | By: Shannon Clark

Earlier today Jason Calacanis sent out his latest edition of his Launch email newsletter with a bunch of alternative suggestions for what Apple should do with their $70B+ warchest. Apparently earlier this week a Wall Street analyst made the stupid suggestion that Apple should pay a dividend (which in my opinion as well as Jason’s would be a massive mistake by Apple and a negative signal to the market).

While some of Jason’s suggestions are good ones, a few are, I think, mistakes as well. Jason also misses the biggest and most valuable moves Apple could (and is) making with their warchest – namely ongoing investments into their supply chain efficiency and scale as well as the highly profitable investments they have been making in opening up additional Apple stores (which have the highest per sq. ft sales of nearly any retailer anywhere in the world).

To be specific I think Jason’s suggestion of offering a massive discount on the iPad for the educational market is a mistake (and based on a bunch of faulty ideas). Any discount beyond what Apple already offers if big enough will be gamed and used to fuel resellers (i.e. students and others buying at 60% and selling at 30% off on eBay). Apple is relatively unique amongst all consumer electronics businesses in rarely offering any sizable discounts and likewise they are unique in being amongst the most profitable of consumer electronics companies. I don’t think this is coincidental. Apple maintains strict price controls on their small set of goods for sale and in place of deep discounts offers new, better products on a regular schedule as well as bundles of goods for the educational market (notably this year they offered $100 iTunes credit in place of their more traditional offer of a free iPod to students). Apple has massive volume without massive discounts – and they already do have millions of tablet users (if not quite yet 100M they are selling iPads nearly as fast as they can make them) and they do have well over 100M iOS devices (a lot more).

I also don’t fully agree that Apple should pay 100% out to developers. Apple’s 30% does more than just pay Apple. It covers credit card payment fees, it pays (small) affiliate fees and it means that the App store (and iTunes) are viable, more than self-sustaining businesses. This rigor is good for Apple. It also helps curb, a bit, the general downward pressure on prices (since most businesses are bad at setting prices Apple’s floor of $0.99 for apps which aren’t free is a good thing). I think that the Mac App store as well as the iPad have started to slowly shift sales off of the $0.99 price point to higher prices which is better for developers. In-App purchases also have been very successful for many developers. Apple could, perhaps, waive fees on certain CLASSES of sales – for example perhaps paying out a higher percentage on in-app purchases of CONTENT (magazine subscriptions, music, videos) while retaining the 30% on the sale of apps and app functionality. Sure the line between content and app can be blurry but I think this could help grow the app market even further (and let Amazon as well as many music companies turn back on sales of content inside of apps). Apple could also waive or eliminate any requirement to clear content sales (with a process to ensure that if an app claims to be for all ages it doesn’t offer adult content – if it does the app could face a penalty)

Apple is about to “pull a gmail” with the pending launch of iCloud, though the actual figures for size are a bit more complicated than Jason’s proposed 50GB. Apple will be offering 5GB for free with additional space available. However since Apple has stated that music and photos don’t count (if you sync them to the cloud) it is a bit hard to compare directly to Dropbox etc. See The Next Web’s coverage in August for some more details on the pricing.

I like Jason’s suggestion for buying Boingo Wireless and for investing widely in a nationwide (and ideally global) network of free (for Apple devices at a minimum) hotspots. This make sense though Apple would likely need to invest more than Jason estimates to buy wireless hotspots Internationally. Also there is a valid argument for paid hotspots in meeting the business needs of the venues where those hotspots are located – but perhaps Apple could find creative alternatives to compensate venues and minimize freeloading (or overloading of a hotspot from neighbors). This is less of a concern in locations such as airports where most people are passing through, but it is an issue in urban venues where people may live upstairs or next door. It is also a case that wifi hotspots get used for less-than-legal purposes or just for uses that tie up significant bandwidth – such as large downloads. Apple, however, does have a business need to promote high bandwidth use cases (such as downloading large OS updates, downloading purchased apps and movies, streaming content from iCloud etc) so Apple might have a business reason to upgrade the wifi networks. If Apple does this purchase they might also face carrier pushback (though since Boingo likely purchases bandwidth from some of those carriers this may be muted).

While I see the argument for Apple investing $10B in building their own search engine to compete with Google (Jason suggests offering this without ads – I don’t see why that would be so compelling however as ads against search is now a clear and interesting business). But that isn’t, actually, hitting Google where they are strongest.

What Apple SHOULD do if they really want to all out compete with Google is invest $10B (or more) in building out their iADs platform into a valid competitor for Doubleclick. This would be hard but the profits in building up a valuable ad serving business on a massive Internet (and mobile Internet) wide scale could be immense. This would require likely some highly creative purchases as well as deep investments into core technology and into a massive salesforce and agency outreach. Apple might start by looking to buy parts of Yahoo and AOL (but likely not all of both companies) though there is an equally strong argument that the industry needs new approaches not the same old approaches.

My personal suggestion beyond the billions in supply chain investments which Apple is already making – buying up capacity and funding the building of new plants and manufacturing capacity for the components that go into Apple’s devices would be to look at the following additional investment options.

  1. Consider, if Chinese law permits it, the full purchase of Foxconn. Yes this would mean adding 1M+ employees to Apple’s books and yes this would mean that Apple would “own” the working conditions. But it would further ensure that Apple fully owns their supply chain and manufacturing process in a manner that few other companies do at the moment. This might, however, have downsides. Not least of which is that it could limit their ability to use new suppliers in the future and it could have major legal hurdles (as Chinese law may not permit the foreign ownership of big Chinese firms). Baring this Apple should continue to invest in improvements in the working conditions of their manufacturing processes and look at ways to diversify their manufacturing into other countries than just China (to minimize future supply chain disruption risks). If any company in the world could figure out how to profitably manufacture in the US (or other “Western” countries once again it is likely Apple).
  2. Many pundits have suggested that the next logical move for Apple is to offer an Apple TV. I don’t think this is bold enough. I think Apple should look at investments in a home gaming console - one that builds on the Apple TV (and iOS) but which is a full fledged competitor to the XBox, Playstation and Wii (including the next generations of each of those consoles when they come out). One possible approach which would be “different” would be for Apple to buy OnLive which would likely cost $2B or more especially if they also purchased the related Reardon Companies whose Shannon’s Law breaking wireless technology if it works and can be deployed could go far beyond Onlive (or Boingo) in applications and value to Apple. Onlive isn’t riskless in the least but if Apple purchased them and made a massive investment in growing them as well as in adding Apple TV capabilities to the Onlive box (and leveraging Onlive’s successes in being integrated into other devices) it could be a really really big shift in the gaming landscape. And if, as has been rumored, OnLive becomes more than just a PC (as in Windows) gaming platform this shift could be even larger. The potential in the Onlive model exists for games that run on hardware that dwarfs that of any modern (or even future) console system – while displaying on today’s laptops and TV’s.
  3. Apple should invest in “getting” Social. For all that Apple is design focused the one area of modern design they haven’t cracked is Social. The deep Twitter integration into the Apple platform that is coming is a good starting point but it shouldn’t be the end game. Apple should invest in ways to leverage their massive brand value as well as deep consumer relationships and touchpoints into a real, engaged and valuable social experience. Already iTunes (and the credit cards and credits in iTunes) represents a massive network of users – albeit one that hasn’t been socially engaged – yet. Ping doesn’t count. Apple could and I think should make some bold moves to get Social. They could buy some social assets on the cheap (MySpace for example) and work on migrating those social experiences to better run and better designed Apple experiences. However a counter argument could be made that Apple’s lack of “Social” has left room for massive innovation by iOS developers leveraging Apple platforms as well as the web in building new social experiences and that any move by Apple might disturb this valuable ecosystem.
  4. Apple should invest in the Enterprise. Apple’s Enterprise story is far larger than most pundits understand – the iOS and iPad platform is seeing massive corporate deployments all the time and I suspect IT departments everywhere are seeing greater demand for Apple devices as alternatives to PC platforms (and as the price competitiveness and performance of Apple devices keep growing the IT arguments against Apple computers in the Enterprise diminish rapidly). The shift of many corporate software platforms from internal networks to SAAS (software-as-a-service) also minimizes the need for a uniform enterprise platform. That said, Apple’s Enterprise story could be far larger – they could offer more from their server offerings and they could invest in SAAS offerings themselves (Salesforce however might not be a great fit though it might be worth exploring).
I think as Apple continues to grow they will also, soon, be competing with some companies few pundits expect them to be competing with. Game companies for example (though the iOS devices already are seen as winning against dedicated portable game consoles) but also more Enterprise and niche companies such as Salesforce, Cisco and others. I could see Apple, perhaps via an investment in/purchase of a company such as Boingo and/or Rearden Companies suddenly being a competitor of many networking companies. Apple might also purchase additional chip companies to further control the supply chain for their devices – a company that makes radios and other networking chips for devices from the iPhone to the iPad to the Macbook Air might be a very logical (and relatively small) purchase for Apple to make in the near future. If Apple also purchases an IP shop such as Reardon Companies they might further compete via offering better devices for a better price than a company such as Cisco can offer today.
These are my suggestions – what are yours?