Lunch Talk: Dorie Clark: "Stand Out" | Talks at Google

Dorie Clark visited Google's office in Cambridge, MA to discuss her book "Stand Out: How to Find Your Breakthrough Idea and Build a Following Around It".

In the book, she explains how to identify the ideas that set you apart and promote them successfully. The key is to recognize your own value, cultivate your expertise, and put yourself out there.

Featuring vivid examples and drawing on interviews with thought leaders, Clark aims to teach readers how to develop a big idea, leverage existing affiliations, and build a community of followers.

Dorie Clark is a marketing strategy consultant, professional speaker, and frequent contributor to the Harvard Business Review, TIME, Entrepreneur, and the World Economic Forum blog. She is a corporate consultant and an adjunct professor of business administration at Duke University’s Fuqua School of Business and a Visiting Professor for IE Business School in Madrid, Spain.


tags: lunchtalk, market, advertisment

Invention of the Day: the Integrated Circuit

During the Nobel Prize week it's only appropriate to remember Nobel-worthy inventions that changed the world. Today it's almost impossible to imagine our lives without some kind of use of the Integrated Circuit (IC) because the technology has become a fundamental building block in modern computing, communications, data storage, power supply, sensor, and many other applications. (see the Wiki article linked above).

In 2000, Jack S. Kilby received 1/2 of the Nobel Prize in Physics for his 1958 invention of the IC. Here's a picture and diagram of his original invention:

When I read Kilby's Nobel Prize lecture, several of his passages strike me as remarkable because they show how difficult it is for contemporaries to recognize a great innovation:

Note that one of the core objections was that the new system doesn't use the best individual elements (resistors and transistors). Similarly, many years later — in the early 1990s — people doubted that video was ever going to be streamed over the Web because the Internet Protocol was poorly suited for synchronous data transmission. As innovators, we often have to remind people that the system is greater than a simple sum of its parts.

Kilby's speech also gives us a new perspective on the Moore's law. Here's what Kilby says:

Just one year later, Gordon Moore published his now famous article where he formulated his "law", stating that the density of elements in ICs would double every 18 months:

The chart from that article promised exponential performance riches to the "few adventurous companies" that were willing to bet on the new technology. Perhaps it is not a coincidence that tiny, unknown Silicon Valley startups, rather than large established companies, took full advantage of the opportunity and eventually created a new reality that we all live in today.

tags: invention, innovation, technology, market, 10X, cinderella

Is China the new United States? Maybe

Over a hundred years ago (1902), the British witnessed the "made in the US" tsunami:

The average citizen wakes in the morning at the sound of an American alarum clock; rises from his New England sheets, and shaves with his New York soap, and Yankee safety razor. He pulls on a pair of Boston boots over his socks from West Carolina, fastens his Connecticut braces, slips his Waterbury watch into his pocket and sits down to breakfast . . . Rising from his breakfast table the citizen rushes out, catches an electric tram made in New York, to Shepherds Bush, where he gets into a Yankee elevator, which takes him on to the American-fitted railway to the city. At his office of course everything is American. He sits on a Nebraska swivel chair, before a Michigan roll-top desk, writes his letter on a Syracuse typewriter, signing them with a New York fountain pen, and drying them with a blotting sheet from New England. The letter copies are put away in files manufactured in Grand Rapids. (Source: The Grand Pursuit, by Silvia Nasar.)

And that was even before Ford's invention of the mass-production method!

The similarity with today's Chinese products in the US is uncanny. Except for the infrastructure, services,  and experiences, most of the stuff we use in our everyday lives is made outside of the US. Despite this production-consumption pattern, there's no Chinese brands among the top 100. Since branding is based on recognition, I bet, if they changed their alphabet or started using westernized name brands they would dominate markets for consumer products and services much sooner. (American and British names are very close and the psychological barrier to consumer adoption is extremely low).

tags: psychology, market, distribution, experience

Failure rates in startups with funding above $1M

According to the Wall Street Journal (Sept 20, 2012):

...findings are based on data from more than 2,000 companies that received venture funding, generally at least $1 million, from 2004 through 2010.

About three-quarters of venture-backed firms in the U.S. don't return investors' capital, according to recent research by Shikhar Ghosh, a senior lecturer at Harvard Business School.

There are also different definitions of failure. If failure means liquidating all assets, with investors losing all their money, an estimated 30% to 40% of high potential U.S. start-ups fail, he says. If failure is defined as failing to see the projected return on investment—say, a specific revenue growth rate or date to break even on cash flow—then more than 95% of start-ups fail, based on Mr. Ghosh's research.

In part, startup incubators allow companies fail fast without getting a lot of VC money.

tags: business, technology, market, entrepreneurship, startup

Winner-takes-all market: Internet video.

Pew Research Center released its report on Youtube and news. According to the report, Youtube now dominates Internet news and even beats TV in the current events category.

(July 16, 2012) Seven years after it was developed by three former employees of PayPal, the reach of YouTube is enormous. The video sharing site is now the third most visited destination online, behind only Google (which owns YouTube) and Facebook, based on data compiled by Netcraft, a British research service. According to the company's own statistics, more than 72 hours of video are uploaded to YouTube every minute. The site gets over 4 billion video views a day. Slightly under a third of those, 30%, come from the United States.

Fully 71% of adults have used sites like YouTube or Vimeo at some time, according to a 2011 survey by the Pew Research Center's Internet & American Life Project. That is up from 66% in 2010. And 28% visit them daily.

Same technology, different S-curves, different results.

Using solar power in areas where there's no power grid, e.g. in Asia and Africa, looks a lot more promising and cost-effective than introducing the same solar power technology in mature energy systems in the US or Europe.

(MIT Tech Review, June 8, 2012). Diesel is a major source of power in south Asia and Africa, where many areas lack access to the grid and frequent blackouts prompt those who can afford it to install backup generators. These markets could help a solar industry that’s struggling with low profit margins due to an oversupply of panels. In turn, the lower prices for solar power could speed up deployment in poor countries by providing a more economical alternative to diesel-powered pumps and generators, and a much faster path to electrification than waiting for grid infrastructure.

One of the first economical applications for solar is replacing diesel-powered irrigation pumps, Gopalan says. These pumps don’t have to run at night, so batteries aren’t needed, keeping costs down. “The total available market in India alone is 15 to 20 gigawatts, and irrigation pumping is a massive application in all of Asia and Africa,” he says. For perspective, the current total installed capacity for solar power is 65 gigawatts, according to the management consulting firm McKinsey.

In Asia and Africa, introduction of the technology does not depend on infrastructure investment. Furthermore, as recent power outages in the US show, the bottleneck in the energy system is not power generation, but power distribution.  Also, Germany's introduction of "green" energy involves massive investment into new distribution lines. As a result, adoption of the same technology in different areas produces dramatically different economic outcomes.

This difference is obvious to me on the personal level as well. Every day I walk my dog by our local high school. Two years ago it used a government subsidy and a local bond to install solar panels to cover its parking lot. Paradoxically, during the summer months when the largest amount of solar power is generated, the school is not in session. Therefore, the power cannot be used locally and has to be distributed through the grid - with losses - to remote users. In other words, there's a fundamental mismatch between the power generation and the power use patterns.

In contrast, the MIT article cited above talks about a solar panel installation in Asia that feeds irrigation pumps. Because the pumps have to work the hardest when there's a lot of sunshine, solar-based power generation and power consumption by the pumps are almost perfectly synchronized. Therefore, there's no need to store or distribute the power - with inevitable losses - to other users.

As we can see, economic efficiency of the same technology is quite different in these two cases. Here in California, we face a trade-off: the "greener" the energy, the more expensive it is. Opposite to that, in Asia the trade-off is broken: the "greener" the energy, the cheaper it is. Clearly, the technology's upside is much greater there.

tags: s-curve, synthesis, growth, distribution, infrastructure, niche construction, 4q diagram, market

Winer-takes-all market: mobile search.

(Chart of the Day via Business Insider). Google totally dominates mobile search.

tags: market, search, google, business, internet, control

Winner-takes-all market in tablets (so far)

CNet reports on web traffic data originating from tablets. Because Apple is such a dominant force, the chart they refer to looks like this:

Note that Apple's iPad is not in the picture at all. When you add the iPad the chart looks like this:

Data Source: Chitika.

tags: market, domination, tool, synthesis, 4q diagram, business, model

Social heartbeat.

The chart below shows relative frequency of the word "present" in Google searches in the United States (category = shopping.) Since Google is an advertising, not technology, company, its marginal financial results depend on people searching for buyable items.

tags: pattern, finance, market, social

Vodka vs Champagne

Bloomberg reports that a high-end NY restaurant now offers the all time favorite drink-and-chaser of Russian alcoholics.

... he serves a Caviar Martini made with a cube of pressed caviar in a glass of very, very cold Russian vodka with cucumber. “Men first order it and when the women taste it, they order one too.”

Of course, the good old treat - водка с огурцом - now has a new fancy name Caviar Martini. Folk drinks seem to follow the path of folk songs into the highest levels of society.

На здоровье!

Steve Jobs: a 10X change for an infinite market.

It's hard to write about Steve Jobs' approach to innovation just one day after his death. Let him speak for himself. In this video, he introduces first iPod. Remember, this is years before Apple became a household name in consumer electronic devices. At the time of the speech, the company is a minor player in the IT industry dominated by PC. But Steve Jobs sees an infinite opportunity and he brings an order of magnitude change to take advantage of it:

Just to emphasize several points:

1. A major technology transition under way. [from CD to MP3]
2. A market with an infinite potential. [Everybody loves music]
3. No winning solution. [No competition in a potentially infinite market]
4. At least one order of magnitude improvement over current solutions. [ a) thousands of songs instead of hundreds; b) fast transfer of the whole library].
5. Cool design.

It's a tough set of criteria to satisfy. Out of today's devices only Amazon's Kindle/Fire fits it.

tags: 10x, apple, information, entertainment, market, 4q diagram,

Why building cars is not fun?

NY Times recently pointed out the vast difference in jobs and market value between information and manufacturing companies

Facebook has about 2,000 employees worldwide. Google has about 29,000. Even in its new, slimmed-down state, General Motors, a decidedly less valuable company, has about 200,000 employees.

What escapes this analysis is that hundreds of millions of people work for Facebook and Google for free. That is, Facebook is built around users creating its content; Google is built around people searching free content created by others. Gaming is another area where millions of users spend innumerable hours on building free stuff: virtual farms, cities, worlds. Sometimes they even pay their own money for doing that. But nobody wants to design or build cars for General Motors for free. The next breakthrough in social networking will probably come when we get the online community to produce sellable electronic stuff beyond virtual gold. Just 1% of the total effort could produce huge value.

VBeat: :

Game publishing company Electronic Arts‘ newest social game, The Sims Social, has passed social gaming supergiant Zynga’s Farmville and now has 36 million monthly active users just under a month after its launch,

Electronic Arts is now the second top Facebook app developer with 77.8 million monthly active users. Its well behind Zynga’s 273 million monthly active users, but it’s much further than the next closest social game maker Wooga, which has nearly 40 million monthly active users across all its games.  Before The Sims Social launched, Electronic Arts had around 29 million monthly active users, according to AppData.

tags: games, social, networking, commerce, economics, market, technology

Mobile stalemate: Apple vs Google vs RIM.

Half a year ago I wrote about data on smartphone market share, which looked like that:

Google Android - 43.6%
Apple iOS - 26.2%
RIM - 24.2%
Microsoft - 3%

9 months later, market share distribution didn't change much, except Google lost few points to Microsoft:

Google Android - 40.1%
Apple iOS - 26.6%
RIM - 23.4%
Microsoft - 5.8%

Google's growth of 5.4% over last quarter seems like a seasonal variation caused by different release schedule from hardware OEMs. It would be interesting to see revenue margins for those phones/subscribers. Google is not making any money on the OS itself, only on app sales, ads, and subscriptions. Apple is making money on phones, apps, ads, subscriptions, media - songs & video, and accessory licensing - cables, connectors, car interfaces, etc. In addition to that, Apple sells iPods and iPads, which are not included in the market share data.
Putting it all together, I think in the mobile space Apple is a much more dominant force than Google. I also wonder how the whole enterprise market is going to work out. Microsoft will probably make a big push for it, trying to grab a share from RIM.

tags: mobile, business, information, apple, google, microsoft, evolution, market, control point, software

A review of The Mystery of Consciousness

Philosopher John R. Searle writes in The New York Review of Books:

Ripping off. Take 2.

Dan commented on my post "Ripping-off for fun and profit":

The original Mac was partly a rip off from Xerox Park and the iPod was definitely not the first digital music player. Then again, Apple made significant improvements to the product rather than just straight copying.

I think it's important to address Dan's point in a separate post because his is a very common attitude, stemming from the difficulty to see the difference between invention and innovation. And it's not only about making improvements.

The slide below is from my lectures at "Principles of Invention and Innovation". It shows a chart with dimensions Nobody - Everybody (horizontal) and Idea - "It works" (horizontal). Invention is marked by the blue dot in the left bottom corner. It occurs when one person or a small group of people comes up with an idea. Opposite to Invention, in the upper right corner, is Innovation, marked by the red dot. The path between Invention and Innovation involves turning ideas into working products/ services and having a lot of people use them in real life.

This simple chart allows us to map companies' entry points into a particular market. For example, when Google ripped off Facebook's design and entered social networking with Goolge+, it was way to the right. That is, not only the idea was not new, but it was already implemented by Facebook on a massive scale – hundreds of millions of users. The same can be said about Microsoft when it entered advanced GUI PC market with Windows 95, or its Office and XBox products. All markets with working products built according to the same Invention had already existed and had millions of users. The goal for the company was to take these users away from existing competing implementations, either by offering a price/feature advantage and/or simply applying the marketing muscle.

In contrast, Apple's entry into the GUI PC space happened much earlier. At the time Wozniak and Jobs debuted their machine, the market for such PCs simply did not exist. Xerox machine was basically a lab demo, with no market traction whatsoever. Apple's goal was to create a market, with software, additional hardware, distribution channels, and etc. The same was largely true for Apple's iPod I and iPod Touch introductions. Google had a similar entry into the text ads/search market. The risks in those two types of entry, one to the left and another to the right on the chart, are totally different.

Even Facebook, with all the hoopla about Mr. Z stealing somebody else's idea, entered the market closer to Apple's or Google circa 2000 path. If they, Facebook, were smart enough and filed for patents at the right time, Google would be in the same legal trouble their Android customers are right now with regard to Apple's patent suits. Different market entry strategy entail totally different business risks, that is why it's important to understand at least the basic difference between Invention and Innovation.

tags: invention, innovation, market, patent, synthesis, s-curve, system, business, competition, apple, google, microsoft

Everyting's under control, Captain!

Growth in the number and variety of portable devices spurs growth in content demand and, as a result, increases the stakes in the battle for owning the marketplace for content-related transactions. So far, Apple has been a dominant player in this space and it seems like neither Google, nor HP can seriously challenge Apple's position. In February of this year, Apple announced a new in-application sales policy for iOS–compliant devices that forbade external payment and subscriptions links. In short, all transactions have to happen within the application itself.

From a CNN report:

Apple's goal is to steer more of the revenue for content purchases through its own in-app payment system, which typically nets Apple a 30% cut of the sales.

On Monday [July 25, 2011], Amazon updated its Kindle apps for Apple devices to remove the "shop" button that sent consumers to Amazon's site to buy digital books.

Hulu changed its iPad app last month to remove a link to its website.

..the Google Books app disappeared from the App Store last week. Sony's Reader app has been unavailable since February, when Apple booted it because of an external link.

For Stanford CSP BUS74-75 students: You can see how Apple successfully shifted its business model axis from Source-Tool to Distribution-Control. Owning iTunes, first as a free PC application, then as a cloud service that includes AppStore and other marketplace entities, is an essential part of this strategy. Note that Microsoft (xbox) and Facebook have implemented similar in-game purchasing policies earlier.

tags :business, model, control, distribution, system, evolution, apple, google, information, market, transition, games

Online Dating: the business of unhappiness.

The New Yorker has a big article on the state of affairs in $1B/year business of online dating. With what we know about the psychology of choice and happiness, the current model is bound to generate regrets about imperfect choices. And the more regrets, the more "inventory" turnover. That is, unhappy people come back for a dip into potential happiness. In some ways, the business model with a flat-rate pre-paid fee is bound to create more "purchases." We've seen this effect at work at all-you-can-eat buffets or, more recently, with Amazon introducing free or flat-fee shipping plan for their customers. That is, when the total price is fixed, people try to maximize the number of transactions, which, in turn, leads to a higher turnover, and as a result to low happiness.

Furthermore, the reward structure for service providers is not tied to happiness:

There is, as yet, a disconnect between success and profit. “The way these companies make money is not directly correlated to the utility that users get from the product,” Harj Taggar, a partner at the Silicon Valley seed fund Y Combinator, told me. “What they really should be doing is making money if they match you with people you like.”

tags: business, model, innovation, problem, psychology, control, information, market, communications, internet

Reporting live from the underworld of customer support.

From HAL's sublime mood swings in Odyssey 2001, the domain of Artificial Intelligence is quickly becoming limited to robotic vacuum cleaners and customer service chatbots helping underwater homeowners buy and troubleshoot the cleaners:

The company’s [VirtuOZ] virtual agents, or chatbots, are programmed to automate sales support for large and mid-sized businesses. By helping online shoppers resolve issues or make purchase decisions, VirtuOz helps web sites cut labor costs. The company claims that its agents, equipped with natural language processing (NLP) capabilities, can provide customer service to clients for one-tenth the cost of a traditional human support team.

If we could automate shopping, nobody would need people in this world.

*chart via marginalrevolution.com

tags: technology, information, commerce, market, 10x

A glass 5% full

In 2008, US companies spent $2.5 billion out of their total $219.6 billion R&D investment at US colleges, universities, representing 5% of university R&D spending.

Source: Managing University Intellectual Property in the Public Interest (2010), The National Academy of Sciences.

So much for the Open Innovation concept. On the other hand, there's huge total R&D available market that universities or university-affiliated organizations could tap in.

tags: research, innovation, education,  market

Channeling free money

Another sign that virtual goods are becoming as important as real goods and services:

Visa has agreed to buy virtual goods company PlaySpan for $190 million in a big move into the market for digital goods.

PlaySpan enables game companies and video publishers to make money through the buying and selling of virtual goods. It’s a key part of the food chain in the free-to-play business model.

Also related, according to NYT, Apple wants to channel all in-application sales through its AppStore:

Apple is now saying the app makers must allow those purchases to happen within the app, not in a separate browser window, with Apple getting its standard 30 percent cut of the transaction. At the moment this applies only to e-book purchases.

tags: money, virtual, games, social, market, communications, 4q diagram, control