If you teach entrepreneurship, Dropbox is a great case because it illustrates the startup concept that some ideas are features, some ideas are products and some ideas can be companies. The Brooks Review re-opens this question with a recent article, "Dropbox is a Feature".
The article mentions Steve Jobs' comment during his attempt for Apple to acquire Dropbox:
"Jobs smiled warmly as he told them he was going after their market. “He said we were a feature, not a product,” says Houston."
Jobs post-acquisition integration of Dropbox clearly saw it as a feature, similar to iCloud on steroids. If Microsoft had bought Dropbox they would have seen it as a product, similar to SharePoint. However, products or features do not make companies and Dropbox, to date, has become a successful company with a multi-billion dollar valuation.
Dropbox now faces much intense competition from Google, Amazon and Microsoft. This competition has encouraged Dropbox to offer new lower prices for certain services. Always concerning when a company is forced to lower prices due to competitive pricing. Such reaction suggests that the product has become an undifferentiated commodity.
If I was at Dropbox I would be thinking about how they built a company and did not get trapped as a feature or a product. The vision that overcame feature or product should be restored. Just competing on price is insufficient to keep building a company.
Also, I think I signed up for Dropbox the very day it launched and have now used it for all my file storage for years. Effectively my digital life is on Dropbox. I sure hope Dropbox can figure out its path to continue as a company and not get caught up in "feature" or "product" or competitive pricing.
Previous stories on Dropbox are in the Related Articles below.
It has been awhile since I did a summary post of the most popular recent articles here at Sophisticated Finance. Please see below.
This list is fairly representative of the major themes here at SF. I am thinking a lot about market opportunity and considering a book on the subject, so we might see more on the subject in the future.
The all time most popular posts at SF are the series, "Excel models and tips".
If you lost count, this is the 1127 post since SF began in 2007.
I spend quite a bit of time considering the future. This practice started in Indonesia where I had to consider the future in order to mitigate risk. Since Indonesia I have tried to predict the future in order to better understand technology. This thinking has led me as well to take a serious interest in the nature of the customer experience and how it will evolve. All of this thinking about the future hopefully also has some positive impact on my teaching of entrepreneurship.
Steve Jobs once asked his former boss, Nolan Bushnell, “How in the world do you figure out what the next big thing is?" Bushnell answered:
"You’ve got to figure out how to put yourself into the future and ask what you want your computers to be able to do"
I rarely think about the future of technology this way but the technique looks imminently reasonable after Bushnell points it out. Excellent advice for an aspiring entrepreneur.
Lately I have been reading Our Mathematical Universe: My Quest for the Ultimate Nature of Reality by Max Tegmark. While the book largely deals with cosmology, the origin and development of the universe, the part I find more fascinating is the scientific methods used by the scientists. Given that the universe began around 14 billion years ago, many of the problems are very complex. One technique is the reverse of Bushnell's approach. The scientists know the status of the universe today from observations. Therefore, they assume what had to happen 14 billion years ago according to quantum mechanics to explain today's universe. Then they look for empirical eveidence to support their assumptions about the start of the universe. A lot of math later, if the empirical observation matches the assumption about the beginning of the universe, then the assumption is correct. If the assumption is proven wrong, it may actually mean that the question asked in making the assumption was wrong. Another example of the importance of asking the right question.
Bushnell says to assume the future you want. The cosmologists assume the past to prove their theories. No guessing about the future or the past. Assume what you need and then develop it.
I have used Evernote for years, first as a web app and now as an application on all three of my Apple devices. I also use the web clipper on every browser. About a year ago I increased my use of Evernote when I started to use it to organize my teaching and book writing. A very good decision. I am a very happy user....but here is my problem.
I get advertising type pitches from Evernote on Google+, Feedly and the Evernote apps. More impressions than I probably want, but I could tolerate it if the pitches had some value. For the last 12-18 months Evernote has been using a headline similar to "10 tips to get more out of Evernote". For the last 18 months they have not added a new tip that was not obvious to a 3-year old. Evernote..provide some value or stop boring me. Hint: think about the emotional value of the product rather than the feature set. At least the ads would be interesting.
Another peeve. On Google+ the comments in response to the postings all sound like PR department comments. 1 PR comment out of 100 is OK but not 99. Again no value in the comments and it is boring.
Evernote, you have learned how to use social media to increase sales. Now you have to learn how to provide valuable information to existing users. Remember marketing is customer acquisition and customer retention.
My last posting to improve corporate marketing, "Publix Marketing Strategy Changes for the Worse", focused on price positioning in advertising.
It always irks me when a good company with good products makes a marketing mistake.
Courtesy of the fine thinkers at Marginal Revolution, I came across this article--"Machines v. Lawyer". The article documents the decline in the number and earning power of lawyers over the last few years. Applications to law schools have declined 40% since 2004 and small law firms are particularly hard hit.
About two years ago I visited a friend in NYC who was part of a team doing a mobile shopping app. He gave me a link to download the beta app to my iPhone. To login to the app I had to use either my Facebook or Twitter account, both of which I had at that time. I asked him why I had to use either of those accounts to login and he told me that the company did not want users who did not have social media accounts. I said I thought that was a bit presumptuous, especially for a startup, but he assured me that the special login requirement would not affect customer adoption of the app. An historical note, the app never caught on and my friend moved to a different startup.
Yesterday I read a story, "Users Are Growling About Apps That Require Facebook", where they describe a dog app where you have to login with Facebook. Given that dogs are not allowed to have Facebook pages and friends (which I personally think is very unfair), the writer points out that requiring a Facebook login for a dog app is illogical. This story made me think of my friend in NYC.
If the login does not facilitate ease of use or increase the value of the app to the user, keep it as simple as possible.
Image credit: thebarkpost.com
What does a hotel chain do well?
Everything else in hotel management is not a core competency or outsourced.
What does Airbnb do well?
What would happen if Airbnb bought a hotel?
Following this strategy, Airbnb would strip out much of the "overhead" in hotel operations. This additional cash flow could flow to the investor and/or to the guest in reduced room rates. Such a strategy would also give Airbnb better control over its available room inventory and the ability to predictably grow that "asset".
Selling services to consumers using under utilized assets (rooms, cars, etc.) may just be in its early stages. But selling off all those hotel rooms to investors suggests that investment bankers may become the driving force in this trend.
Also, the investment bankers need a new class of real estate asset--hotel rooms--to play with.
I just found a link to Alan Kay's reading list. He is one of those legendary people at MIT and is credited with inventing the graphical user interface for computers (while at Xerox).
The subjects covered in his reading list include:
What is interesting to me is that so many genius level people start in either mathematics (Kay, Minsky) or economics (Simon, Hayek), move into computer science or AI and end up in cognitive learning or psychology. Note that Kay reads in all those subjects except economics but I suspect that the reading in "political" involves some economics.
I believe the evolutionary path is mathematics--computer science--artificial intelligence--cognitive learning. If you have not progressed to reading and thinking about cognitive learning or psychology, perhaps you still have a ways to go in your study of economics or computer science. Both Herbert Simon and Marvin Minsky, generally credited as the founders of artificial intellligence, spent the end of their careers in psychology/cognitive learning. Simon, who won a Nobel Prize in economics ended his career at Carnegie Mellon as a professor in the psychology department.
Obviously there are other paths. For example, Hayek started in economics, probably founded behavioral economics and finished his career in psychology.
My sample data is small but everyone mentioned is at least a Nobel Prize winner, a genius or both.
For a few years now I have been saying that the big market opportunity is in curating data to make it more usable and accessible. This quote from Stephen Wolfram, Founder of Wolfram Alpha, describes the opportunity well.
"One of the objectives is we’re dealing with curating the world. Curating the world involves knowing all the chemicals that exist and things like that. It also involves knowing all the programming languages that exist and being able to interface with those things, and knowing all the connected devices that exist and being able to interface with those kinds of things as well. It’s really using the same meta methodology but applied to all these different areas."
This quote comes from a very interesting article in Venture Beat, "How Stephen Wolfram plans to reinvent data science & make wearables useful (interview)". Well worth reading in its entirety.
I have been on LinkedIn almost from day 1. I used to go to the site just to answer questions from other users. After LinkedIn read my post, "A Strategy for LinkedIn", they began offering user generated content and the number of users started to grow even faster. (I do not know if any executive at LinkedIn ever read my post, but they did what I recommended.)
The user generated content on LinkedIn is the reason I use the website. The quality is not as good as Google+ but vastly superior to Facebook. Recently,in addition to re-posting SF blog posts there I have started putting up status updates. Whether an update or blog post I notice that if I get one "like" I get 30 additional views. For you mathematicians, 9 likes produces about 270 additional views.
Just wondered if anyone has quantified the value of a "like" on LinkedIn or anywhere else. Any info would be suitable for the comments.
Crowd funding and Kickstarter in particular are becoming increasingly popular. With this popularity, the success of a Kickstarter campaign has become quite "competitive". Now Fallon, a worldwide advertising agency based in Minneapolis, is offering Fallon StarterKit. The StarterKit is described beautifully in the image below and designed to increase the likelihood a Kickstarter project reaches its funding goal.
This post is a synopsis of this story on Fast Company.
This Fast Company post,"Startup Failing? You Might Be Asking The Wrong Questions" is an excellent article on thinking, learning and mentoring. Today I will just discuss working with a mentor.
Last week I did two mentoring events. The first event was the Women's Success Summit, produced by Miamian Michelle Villalobos. 300 women and me. What could be more fun? In a 30 minute session anyone in the audience had 30 seconds to describe their business and their problem and then I was supposed to give advice. Out of 7 questions, three people asked for specific solutions to problems. The other four had ideas and wanted to know how to turn them into a business. The three with specific questions could benefit from a mentor. The other four souls should probably come to one of my workshops on how to develop a business concept. They were pre-mentor.
The second mentoring event was the monthly session hosted by the FIU Pino Entrepreneurship Center. This group was all male except for my good friends Lauren and Karyne from Pino Center who organize this event. Four thirty minute mentoring sessions. 1 person had a specific question (his second startup). One person had a fully developed business concept and he wanted to stress test it before he talked to investors. That's fair and I think he got some good advice. 1 person without a business concept (workshop candidate) and one wacky person idea that will never, ever get done. . Doable, but one in a billion. Not suitable from mentoring.
As Fast Company said:
"There are plenty of people who'd love to help you with your business; you just have to ask, but they don't have time to waste helping you figure out what your actual problems are. Get the most out of a potential mentor by approaching them with specific questions you've already identified and they've probably answered for themselves."
I struck out the point about "time wasting". Mentoring is not a billable hours business, but you get more benefit from the mentor the more well thought out the question. If you are not sure whether you have a business concept, you probably don't and you are a workshop candidate.
I would like to do a radio show where people call in with questions about how to grow their business. Weekly co-hosts with specialties. Sponsor/advertising inquiries welcome.
The Miami Herald blog, The Starting Gate, written by Nancy Dahlberg provides the best coverage of the Miami tech scene. The Starting Gate has excellent coverage of events, company fundings and infrastructure development. Infrastructure would include new incubators, new venture capital funds and the other types of organizations required to support entrepreneurship.
Yesterday's article in The Starting Gate, "A closer look at four organizations nurturing the ecosystem", highlights four infrastructure projects:
Lab Miami (an incubator) and Endeavor (a venture capital fund) have backing from the Knight Foundation. The Knight Foundation also has a program to provide seed funding to early stage companies. The program, Knight Prototype Fund, provides grants up to $35,000 for companies to develop demos. In a perfect scenario, a company could be awarded a grant from the Knight Protype Fund, move into Lab Miami to work on its demo and then be funded by Endeavor. Effectively,the Knight Foundation has funded all the key parts of the startup ecosystem in Miami. Particularly insightful on their part is that each piece of the ecosystem is a private sector type initiative, which is the same way that Israel successfully launched itself as a high tech hub.
I commend the Knight Foundation.
The Jobs Act legislation that permits equity crowd funding was approved by the SEC in July 2013 and went effective this week. This legislation allows companies to publicly solicit equity investment from accredited investors. The key legal change permits "public solicitation" of investors without the need to use registered securities brokers and their big brothers the investment banks.
Crowd funding was perhaps first popularized by Kickstarter, which prior to the SEC approval used the model to raise donations for projects. It has quickly been copied to raise money for charities, scholarships and other worthy causes. (I believe that Vittana was the first organization to use crowd funding, to provide student loans outside the U.S.)
Two noteworthy equity crowd funding platforms are AngelList and CircleUp. AngelList focuses on tech startups and investment opportunities are organized by syndicates, backers and accelerators. A sample backer at AngelList is Jason Calcanis and a sample accelerator is Techstars Austin 2013. In either example, an investor would participate in all the investments made by Jason or Techstars Austin. Such diversified investment is critical in early stage investing given the risk (and in any other investment portfolio).
CircleUp focuses on consumer products and investors select individual companies to invest in. One interesting feature of CircleUp is that it promises "access" to partners such as P&G and General Mills.
The evolution of equity crowd funding will be interesting to watch and I see several trends developing:
There will also be many new spinoff opportunities such as rating agencies for crowd funded equity funds, "mutual funds" for equity crowd funding so investors can invest in 10-20 funds and, of course, the new consultants, marketing experts and newsletter offerings. (There is always an opportunity for more pundits and "experts" :)) An opportunity that I find interesting is to build the software infrastructure and website support for the equity crowd funding organizations. A Red Hat, open source, "best of class" model might have a real future if this funding model becomes as popular as I think it might.
The issue that equity crowd funding needs to handle well is the due diligence process for each investment. While a site like AngelList has very experienced investors behind it such as Jason Calcanis and Techstars, most sites should document a rigorous due diligence process to reduce the risk of fraud. Personally, I never thought that the SEC would see past this risk and approve the necessary regulation, but apparently the Obama White House gained meaningful securities law experience sorting out the financial crisis of 2008. (The other issue of some importance may be "conflict of interest". How does a celebrity or lead investor decide which investments they offer to the "crowd" and which ones they keep for just themselves.)
As I understand the new regulations I may no longer be required to post a warning, but....I do not provide investment advice and this post is not a solicitation for investment in any organization mentioned here.
Additional articles on equity crowd funding:
Today's post was inspired by an article I found on Google+. If you have a bit of the geek in you, you should use Google+. The Math Group is particularly good.
All the business/tech news recently is about Apple's new 5S phone. For a gazillion dollars you can have a better processor, a better screen, a better camera and a few other new features. If we look at the real benefits of the new phone, the new processor maybe cost $15, the new screen about $25 and the camera let's generously say $10. Adding a generous 40% gross margin, the total value of the three new features was around $80. However, a purchaser will actually pay a gazillion, which is a lot more $80.
Why can't we just buy the new components and plug them into an existing iPhone? Two reasons:
(If you are wondering why you never asked yourself this question, read this article on functional fixedness.)
Less you think I am crazy, a new project is being launched to addreess repairability and individual component sales in mobile devices--PhoneBloks. Think of lego blocks embedded with the major components of a mobile device. Want to buy a new screen, just buy that Lego block. Want the latest wi-fi antennae, just buy that block. See the picture below.
Now the phone may not be pretty enough for celebrities and those who go clubbing on South Beach, but for those of us who only upgrade our devices when the old one dies or a new version of the operating system has terrific new features (which in my case has never happened with a phone), a Lego block phone might actually get me to upgrade....a component. Follow PhoneBloks. It's a very cool idea.
Note: If Microsoft wanted to gain share in phones and tablets, this is a bold strategy that might work. Talk about disruptive!!
Jeff Bezos, the CEO of Amazon, will soon be the owner of the Washington Post. Bezos is arguably the best tech CEO in the world today and probably does not need my help. However, my experience with the New York Times might prove useful.
I subscribed to the NYT for 37 years and then dropped my subscription in favor of other online news sources about three years ago. About two years ago I discovered the NYT Skimmer, a beautifully designed, ad free (in the copy) version of the NYT. The design was so well done that I did not think it was a NYT offering. I have been reading the Skimmer faithfully for two years and the design has even encouraged me to read sections I never read before (e.g. obituaries). First point for Jeff Bezos, please offer a skimmer version of the online WP with a clean, modern design.
Recently, the NYT Skimmer changed its policies. Now to view a second story in a section (e.g. business, technology), you are presented with an ad to subscribe to the NYT. If you do not subscribe you are limited to one free story per section. The idea for Jeff Bezos to consider is rather than selling subscriptions, just sell individual articles in the Skimmer. Five or ten cents per article charged to a credit card works for me. I would pay that if it was automatically charged to the card. To avoid having to log in every day or every article to use the credit card, he could offer the WP Skimmer in a Kindle version (which is available for almost every computing device).
Just a thought.
Image credit: Guardian.com.uk
I ordered my first Kindle e-book reader the week it became available. I switched to Kindle on iPad only to reduce the number of devices I traveled with. However, I continue to follow developments in e-book readers as part of my interest in educational technology and there is much innovation in the space.
Yesterday Fast Company had an interesting story on a new e-book reader from Readmill. The Fast Company story highlights a feature of Readmill which allows you to share your comments and highlights of a book with other readers (and perhaps the author) to enrich the reader's understanding through dialogue, thereby creating a social community for the book and the readers.
That's a nice idea but what really caught my attention were three key points which exemplify excellent entrepreneurship:
I do not know if Readmill will be a commercial success. For example, Inkling and Oxford University Press have really good e-book readers with a strong feature set. However, I think that if Readmill can continue to enhance the quality of the curation of the reader commentary to become the definite source on books, then I think that they have the potential for a sustainable differential advantage in the e-book reader space.
Thought I would mention four apps for Mac and iOS devices I started using recently. So far they are working well.
I absolutely hate Mail on Mac PCs. Everytime I get a new Mac I try it again and about sixty days later I find an alternative. (Mail works fine on iPad and iPhone.) My latest alternative is MailTab. It is a small app that appears in the upper icon tray (next to the Dropbox icon below second from left). If you use Gmail, MailTab is viable alternative to Mail with near full functionality. Also, MailTab has a very nice design that Google should copy.
I am addicted to calendar apps. I have always disliked the calendar app for Mac partly because the icon is so ugly. I used Agenda but it did nothing to address any of my issues, although the design is first class. Now I am using Tempo. This is a terrific app with a beautiful design but what makes it valuable is the contextual information it provides for an event: email address for attendees, profile of each attendee (LinkedIn, etc.) map of location for event, website of company where event is and more. It only works on iPhone but that is where I need the contextual information. Screen shot below.
Eventbrite is an app for event tickets. No big deal. What is very nice is the event calendar of all events in your city using Eventbrite. For Miami it is one of the best event calendars I have seen. If you are a big networker, the event calendar alone is worthwhile.
Paybyphone is a great app if you park on the street in Miami or Coral Gables. Nice design and simple to use. Only way I see to make it better is if it told you where the empty parking spaces were. Also works in many other U.S. and Canadian cities and at certain universities including the University of Miami.
Most of these apps are also available on Android and all are free.
Seems to be the week for good articles from Forbes.
Today's story,"This Guy Left Google To Put The Power Of Big Data Into Small Classrooms", actually covers the much more important subject of personalized learning. Personalized learning uses data from a child's computer usage to determine how a child learns best--videos, books, lectures, projects, etc.--based on their test results and then uses this analysis to provide more course material in the preferred format to the child in all subjects. At a more "advanced" stage personalized learning determines the preferred formats of the best students and provides this format by subject to all students.
"to find the best online learning resources, to collect metadata and analyze your learning habits in order to use predictive technology to suggest the best resource for the future" [learning]
The Forbes writer incorrectly states that this approach is the only example of applying computer technology to personalized learning. There are several examples although some of the projects are not publicly disclosed. Where Gooru is interesting in their approach is that they let the classroom teacher filter the proposed content to presumably better match the student (than the results of the analytics). The approach has the benefit of garnering support from teachers, teacher unions and government. This approach is less threatening than a more student centric approach where the analytics alone determine the student content. Hopefully Gooru will do some evaluation early on to determine if the students do better with or without the teacher filtering. Such an evaluation might also be valuable to fine tune the predictive analytics.
Anyone interested in the future of education, learning and computer applications in these areas should be following "personalized learning". The Forbes story was sent to me by @john_menezes.