Things I want to work on…. Where to start????

here is some blathering about things I think about….. there is not structure or analysis… just ideas to play with… insights I think I have seen… now what do I do with them???

1. a new community design – one designed around sharing…

Problem… people want access to a lot of varied experiences… but they don’t want to or can’t own and maintain all the resources to pursue their varied interests… e.g. sail boats, motor boats, fishing boats, airplanes, jet ski’s, paddle boards,

I live in a community in the summer where there are dozens of boats that sit idle all summer… maybe 20% go out at anyone time. They are poorly maintained and take up a lot of room. It’s a lot of wasted resource just sitting there depreciating and cluttering up the environment…

What if the community owned the boats, maintained them and they were there for the residents to use… either on a subscription basis (e.g. club dues) or a pay per use???? It would clean up the community… give everyone a broader selection of boats to use… and they would be much better maintained… and it would cost less for everyone… while creating a summer job for our young people to maintain the fleet and manage the operation.

Further examples of this are already appearing… e.g. car sharing through Uber and zipcar… house sharing through AirBnB… now let’s apply this further…

how many colonials in america have rooms that are almost never used e.g. formal dining room and living room. why do we have those rooms… because for a few days a year… you might use them… we clearly have an over supply. Wouldn’t it be far more efficient to have a flexible space that was available for when you need it?

how many upscale communities have many houses with pools in the back yard??? when I fly, i look down and all I see is a landscape littered with pools in these sprawling communities… why do we have this? they are mostly empty, most of the time… and by having separate pools we are further isolating ourselves and disengaging with community.

And what about the elderly…. why don’t we design communities where the elderly are included. Where they aren’t shipped off to a home where all old people go… why don’t we have a place for them in our community… so we can benefit from their wisdom…and we can take care of them as they took care of us growing up.

2. better matching solutions for couples, jobs, houses, etc.

I have spent my career in fields dominated by matching algorithms… and I consistently find that math only goes so far… then the judgement of individuals can provide insight that the algorithms can’t learn. An example is credit underwriting. We have the most amazing mathematicians working on algorithms to predict who is good credit and who is bad. These are great for identifying the quick kills and the quick passes. Those that are clearly qualified are simple decisions. Likewise, those that are clearly unqualified are similarly easily determined by the algorithms. If your FICO score is less than 530, you suck. you have shown yourself to a bad payer. You don’t deserve unsecured credit. Likewise, if you are over 760 FICO, you are going to pay your bills unless something catastrophic happens. The type 1 and 2 errors in these populations are extremely low and unlikely. however, the real opportunity is in the shades of grey. The winners and losers in the business of unsecured consumer credit are those that can parse the goods and bads in the FICO ranges between 660 and 720… everyone is always trying to get new data and build even more complex models to dissect this population and identify a good population that others can’t.

I have seen that a judgmental review by a credit analyst is very effective at deciphering this grey area. MBNA was great at this. when a credit analyst calls an applicant and asks them a bunch of questions, they are able to get a much richer picture of the consumer and they can apply their experientially based judgement to put a finer lens on this population. A good analytical shop will sit with the credit analysts, particularly those that out perform the average, and understand what they look at and their rationale… those model builders will then go and use that insight to build better models.

My gut says, the crowd can tell you more about an individual (and with more accuracy) than a model alone. it’s the combination of a model and human judgmental review that gives you the richest answer. however, algorithms prevail on the internet. They are used to target ads, to help you find stuff in search, find dates, find houses, find jobs… due to the abundance of choices and efficiency of the medium, there is not a big penalty for type 1 or 2 errors of these models… so the technologist who run these companies continue to invest in their models. but they can only be so good… because they lack the judgmental review on the grey area. and there is a big cost… its noise to the user… a user has to sift through hundreds, thousands, or more choices to find what they want… but that is slow and tedious… for an individual user… so how can we leverage the cloud to do the judgmental review for us.

For example, when posting a job… how do we find the best candidates… we post a job… and sift through responders… but those aren’t necessarily the best candidates… they are the best candidates that saw the ad and applied. They in fact could be the most desperate. I have found in my career, that the best hires are often the ones not looking… so how do we find the absolute best candidate… we do a search of linked in… or we hire a head hunter… to do the search or sift through responses… but neither of these are really leveraging the power of the crowd…. the crowd knows more about me than a linked in profile or a head hunter interview could ever tell… how do we leverage that insight???

3. electric planes.

I own a flight school. There are just a few basic costs in running a flight school. Fuel, maintenance, labor (pilots) and insurance. If our training planes were like my Tesla S, we would dramatically reduce the cost of at least two of these and maybe three. first, flying an electric plane with similar technology to the model S would drastically reduce the cost of flying. about 1/3 of the cost is fuel. Second, electric motors are much more reliable and maintenance free relative to internal combustion. Finally, with the improved reliability, I bet you find that the cost of insurance would decline too.

4. what are the implications of a world of abundance?

I think we are coming on a time when a fundamental principle of economics might be overturned… that is the principle of endless needs and wants… could there be a time approaching when we are satiated? where the world has enough wealth to provide satiation to all living people? maybe the bar keeps going up… or maybe we reach an point of enlightenment, where we realize more doesn’t equal happier… and we no longer need any more. What if that happens on a grand scale… then what does the world look like? What are the implications?

When I was in Hawaii last year… they talked about the early days with the indigenous people prior to european settlers… and they would leave their shoes on the front porch when they went inside, so that anyone in the community could use them if they needed them… is that the world of abundance?

Owning things is only relevant when they are scarce… but if they are abundant, then they will be free to use for all. how do you protect them from being misused or wasted? is there a finite limit on anything? or will our ingenuity innovate abundance????

The only finite thing I see is life itself… the time we have on this planet… today… we have not yet figured out how to extend lifespans… will scarcity be redefined to the use of the time we have… and optimizing it. you have 80-100 years in this life if you are lucky… how will you use it? what do you want to experience? it seems as though time will be the new currency of economy…. when optimizing the use of your time, what is the objective function… money? wealth? happiness? social impact? how many lives you touched? how many people adored you?

And what happens when we figure out how to extend lifespans…. 50, 100 or infinitely… then what? will we have overcrowding or will we stop having kids or will we innovate our way back to abundance????

5. how do we better redistribute wealth?

we have more than enough wealth to provide food, shelter, education and health care for the world. How do we bring everyone’s standard of living up to a minimum that enables them to pursue their happiness and prosperity without creating a disincentive for them to be productive…

Capitalism is our religion in the US…. its’ our unifying principle and belief system… but I wonder where its limits are… do we really have the stomach for survival of the fittest?  is that where our heart lies?  can we stand by and watch the weak die?  what if survival of the fittest meant that a new species emerged that devoured all humans, would we stand by and say they are the stronger species or would we fight?  won’t those that don’t proper in capitalism, stand up and fight?

Also, Capitalism and democracy seemed to have slightly conflicting principles. Capitalism at its heart is about freedom to chose and value exchange. Democracy is about collective decision making for the betterment of the whole where the majority rules. implicit in democracy is a loss of choice if you are the minority. These two competing principles are at the center of much strife in our society. how do we reconcile these?

I know next to nothing about most of these… but I see the opportunity!!!! I have the problem. It would be fun to work on the solution… but where to start?

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Remembering the Summer of 2000

Today, we announced that I am the CEO of GiveCorps.  Its old news to me since I made the decision 4 months ago, but today was the day we got around to making the announcement.  I changed my linkedin a little over a month ago, so for anyone watching, they already knew.  However, we needed to make it official, so today we issued a press release.  

This last 4 months has reminded me of the summer of 2000.  That summer I made a decision that has and will continue to profoundly affect the rest of my life.  I knew it was a big decision at the time and I dwelled on it.  I labored over that decision for many hours.  

In the summer of 2000, I decided to work for a startup called GoPin.  It was spinout of Nortel Networks.  It was funded by CrossPoint Venture Partners.  There were 69 people in Ottawa, Canada working on GoPin.  They were planning to use long distance calling cards issued by the Regional Bell Operating Companies as a payment method for digital goods online.  

What was I thinking?

I had worked for Talk.com until June 2000.  However, I had really stopped working for them back in April.  At Talk, I learned a few valuable lessons.  

First, do your due diligence.  I saw a lot of similarities to what I had been doing at First USA and thought that it would be simple to translate the experience over to long distance.  What I didn’t appreciate was that long distance was very different that financial services.  Long distance telephony was changing fast and I had no idea.  Which led to the next lesson.  Don’t work in an industry that is commodity hell.  Since there was very limited differentiation between carriers, it became an all out price war within months of my joining Talk.com.  I was not prepared for that.  Finally, and most importantly, work with people you know and trust.  I only interviewed with three people.  The CEO, his right hand man and a friendly board member.  What I didn’t appreciate was that these people were only one faction of the business.  They were brought in to right the ship and take it to the next level, however, there was a whole other side to this business which included a legacy team brought in by the founder.  It was an odd mix of this new group that had been with the CEO on several different stints prior and the legacy group.  Then there was me.  Odd man out!

Every one of these rules I broke and ended up in a job I hated, working with people that I had no connection.  That was a bad place to be.  However, I have always been good at “failing fast”.  If I see that it won’t work, I have no problem cutting and running.  In the same vane, I have no problem sticking with something and fighting through obstacles if I believe the mission is worthy and possible.  At Talk, it became clear that I made a mistake.  However, it would lead to the best career decision I ever made.  It only took 7 or 8 years to prove that it was a great career decision.

There were so many great things about that summer.  My daughter was born in March of that year.  We moved back to the Baltimore area before I had found a new job, so I had a lot of time to spend with my daughter and wife.  

I started actively looking for a job and was offered the head of marketing at Advertising.com early that summer.  Something didn’t feel right about the job.  First, the board member that I interviewed with at Talk.com was on the board of Ad.com too.  So, when I started negotiating, they withdrew the offer.  I am certain the board member chimed in at that point and I was toast.  It’s funny.  I knew I didn’t want to work there, but it was the high flying hot startup, so I felt like I should want to work there.  It was in my home town.  It was an internet advertising company and I was the internet advertiser of the year.  A perfect fit, but it wasn’t.  I didn’t know the people.  I didn’t know the technology.   And they had dogs in the office… I am allergic to dogs.  My gut was telling me that if I took it, I would be making the same mistakes again.  I was glad they pulled out because my rationale side might have over ruled my gut and I might have made another mistake.  

Just a month after that offer blew up, I was connected with Gary Marino.  We were connected through a common friend.   I knew of him but didn’t really know him.  However, we had worked at Citibank and First USA at the same time .  We shared close relationships with the same colleagues, so even though we hadn’t worked together closely, we had shared language and experience.  We were part of the same tribe.  We had the same domain expertise.   Gary had started working with GoPin as an advisor and CEO in waiting.  He was hired by CrossPoint to be parental supervision and domain expert to the Nortel folks who had spun out.  He asked me if I wanted to help him out.  It felt right.  Although I didn’t know him well, we had a common language and common experiences.  We were from the same tribe.  It felt good and safe.  I agreed to work with him on a consultative basis and we would see where it went.  

It was a crazy first few months.  We quickly realized that phone card payment strategy had all kinds of flaws, but we had 69 people in Ottawa working to make it a reality.    The shear mass of them gave their strategy more credibility than it deserved.  It was a cluster f#*k!  But we did use the time to do some great research on what the consumers and merchants would want in an internet payment option.  This research led to Bill Me Later, but it wouldn’t be until 6 months later that Bill Me Later clearly emerged as a strategy.  In the meantime, we were trying to figure out how to make an internet payment option out of a long distance phone card.  It was painful!  

However, we continued to hire.  Surround ourselves with our tribe.  People we knew and trusted.  People with a common language and experience.  These were the foundations of what would become a powerful team that built Bill Me Later.

During that summer, it wasn’t so clear that Bill Me Later would emerge out of this morass.  In the meantime, I continued to pursue other more stable jobs in Baltimore.  

I had always harbored an interest in education.  Education changed my life.  However, I also saw our public education model as flawed.  I felt like I wasted a lot of time until the lightbulb finally went off.  I wished that I could have had a better experience earlier.  Instead I was trapped in this regimented factory like education model that turned me off rather than lit me up.  I always wanted to figure out a better way to educate our young people.   Interestingly, Baltimore was home to one of the more successful for profit education companies, sylvan learning centers.  I heard of a position opening as the CMO for Sylvan and pursued it aggressively.  It was perfect.  It was in Baltimore.  It would allow me to focus on a passion, education.  And it would leverage my functional domain expertise, direct marketing.  I couldn’t have scripted it better.  This time I did it right.  I interviewed with everyone.  I even attended company events to get to know the people.  But my gut kept nagging at me that it wasn’t right.  I didn’t really know the people.  I was gun shy to join another tribe.  I waited the full two weeks to decide and then finally, I turned the job down.  I know I pissed off the President, but it just didn’t feel right.  

I remember the hours spent riding my tractor mowing my lawn that summer and mulling over the decision.  I struggled with it.  I thought I was crazy for even considering doing the GoPin job.  The Sylvan job was so clearly a better fit all around.  

It was funny, but it felt safer to be with my tribe in a company that really didn’t exist with a product that would never work, then it was to join an established company with a proven product in a senior role working with people I didn’t know and trust.  I followed my gut and it worked out.  Even joining Talk proved to be a wise decision.  If I hadn’t gone to Talk and failed, I wouldn’t have even considered GoPin (which became Bill Me Later).  However, the Talk experience taught me what to value in a career decision and serendipitously aligned with the timing of my next opportunity.  

All along I was following my gut and it worked out.  

So, when I think about this summer with GiveCorps, I remember the anxiety of the summer of 2000 and remind myself to trust my gut, don’t sweat trying to rationalize what your gut is telling you and have faith that it all works out the way it should.  

Some people may say this is reckless, but my gut hasn’t let me down this far, so why should I stop trusting it now.  

My gut is telling me that we are trying to solve an important problem at GiveCorps.  We need to create a more efficient means for Non-profits to leverage the resources of the community to fulfill their missions.  Our government is broken and populace are disenfranchised.  We need a better way to come together as a society to make our world a better place.  

I suspect that I will look back on this decision to join GiveCorps and look back many years from now and be amazed at how this decision has profoundly affected so many lives.  That is my goal!

I continue to dare to dream… and I continue to be amazed that my dreams keep coming true!

 

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So, you want me to invest in your startup????

Yes, I have made a few investments in startups.  Some have worked out amazingly well, others have been complete bombs.  Most of the investing I do that I direct is because it is focused on my areas of interest.  Otherwise, I leave the investing up to the professionals.  

If you want me to invest, read this first and see if it fits in at least one of these areas.  The more the better.  

Revitalize Baltimore

I am interested in making Baltimore a more vibrant economic environment.  The thing I am most proud about Bill Me Later is that there are over 600 people who have jobs in Baltimore County because we started Bill Me Later.  Imagine if there were 20 Bill Me Later’s in Baltimore, what that could do for the metro economy.  If you have a business that is going to sustainably create jobs in the Baltimore metro area, I want to talk to you!!!!

Improve Public Education

I believe education is the highest return investment society makes.  However, I don’t think we are getting our money’s worth now.  It could be so much better.  The world has changed.  We are no longer a manufacturing or agricultural economy.   We are a knowledge economy.  We don’t need to conform, we need to innovate.  We need to cultivate the natural curiosity and desire to learn that each of us had when we came out of the womb, not stifle it to ensure predictable repeatable outcomes.  If you have a vision for how we should re-invent public education to support the needs of the 21st century, I want to talk to you!!!

Leverage My Skills and Experience

I have over 20 years experience in consumer credit, payments, direct marketing, partnership marketing, internet marketing, entrepreneurship, new product development, e-commerce, B2B marketing.  I am a creative problem solver.  I like to architect new business models that uniquely solve customer problems and create a win-win for all involved in the exchange.  If you have a company that can benefit from my experience, I might be interested.  However, it needs to fall into one of the above areas to get my attention or it has to be truly a once in a lifetime opportunity.  

Leverage My Tribe

On June 7, 1989, I started my internship at Citibank.  I didn’t know it then, but that was the beginning of the rest of my career.  The people I met at Citibank, I would work with the remainder of my career.  Many people helped me along the way.  Now, I would like to give back by helping others in my tribe.  So, if you are in my tribe, you know it.  I am here to help.  If you need my tribe to make your business successful, come talk to me.  

If you don’t fall into at least two of these buckets, its very unlikely I am going to invest my time or money.  However, if it truly is a once in a lifetime opportunity to change the world or make a lot of money, then I am open to breaking that rule.

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The Future of Education is Pilot Training

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When I am in discussions about Ed Reform and Ed entrepreneurship, I often forget that I own a flight school, but then I see a pattern that I recognize and realize that “it’s already happening in pilot training!”

First, some statistics.  At any given time there are about 100,000 people in the US who have a current student pilot certificate.  This is a round number because the term for a student pilot certificate has just recently extended to 5 years for those under 40 from 2 years previously.  Of those Student pilots, about 25,000 students take the private pilot written exam every year and about 91% pass.  

Becoming a pilot is actually pretty easy, but a very thorough and rigorous process.  There is a ton of content and decision making skills you have to master along with mastering the physical part of flying.   However, the process is highly flexible, adaptable and personalized.

Multi-modal Instruction

A student has many options to learn to become a pilot.  They can watch videos like King Schools, Sporty’s or even some free videos on youtube.  They can read various text books, FAA books, the FAA website or even various material on the internet.  They can talk one on one with a flight instructor.  They can take classes at a flight school or college.  Or, they can even play video games on the computer, like Flight Simulator, or mobile device.   Each of these usually includes some form of formative assessment – small quizzes that ensure that you comprehended, retained and can apply the material as you are learning it.   The great thing is that you can mix and match.  So, I really enjoyed watching the King videos.  They were corny but entertaining and they had quizzes at the end of each video to ensure you got the material.  If you got something wrong, they would immediately take you back to the place in the video so you could re-watch the section and then take the quiz again.  This loop would continue until you got it right or cancelled out.   In contrast, my friend who was taking lessons at the same time really enjoyed reading the text book. He read it cover to cover, over and over.  I can’t do that!!!

At the same time, we would be training on the actual flying part with an instructor.  Our instructor was quite good. He would be throwing questions at me in context to ensure I was getting through my material.  Similarly, I was taking practice tests on my iphone while I was sitting in boring meetings at work.  With this much reinforcement, I knew exactly when I was ready to take the test.

Certification

Testing isn’t a single test but more of a process of many tests.  

The first assessment comes from the FAA certified physician.  They give you a thorough physical to determine if you are qualified physically to fly solo.  You could have been flying the plane by yourself with an instructor next to you for a long time, but before they will let you get in a plane to fly on your own without a your instructor, you must pass their physical.  There is an exception to this rule for Sport Pilots, but that is a limited license with a small population of students – less than 1,000 take this path each year.

The next assessment is your instructor.  They have two assessments to determine whether you are ready to fly solo.  First is their judgement as to what they have seen the student do while they were training.  They have a check list of things that they have to know you know how to do before they will let you fly solo.  Second, they will give you a brief quiz that they prepared to ensure you know the basics.  Once you have past their quiz and their judgement says you are ready.  You get to do 3 take offs and landings “in the pattern”.  Once you have passed that step, you are free to fly yourself to any airport that the instructor has given you permission to land.  This completes the first real step to flying.  You aren’t a certified pilot yet, but you can practice flying on your own.  That is both the most scary and greatest sense of accomplishment in becoming a pilot.  

Once you have accumulated the minimum 40 hours of flight time and your instructor feels that you are ready to take the written test, the instructor will sign you off to take the test.  Again, the instructor plays a key role in ensuring that you are ready.  They should be asking you questions every time you go flying with them to ensure that you are comprehending, retaining and know how to apply the information, skills and judgement required to be a pilot.  In fact, its high stakes for the instructor.  If their students have too low a pass rate on the exams, they risk their certification as a flight instructor.

There are a lot of other tools out there that support this screening.  I used an iphone app to continuously take sample test questions until I could consistently get a better than passing grade on the test.  Once I felt I was ready and the instructor agreed, I went and took the test at a certified testing center on a computer.  It took 30 minutes and I passed.  WhaHOOO!

At this point, the only step left was meeting with a FAA examiner to take the verbal and practical (flying) test.  This takes a few weeks generally because there are a limited number of examiners and their schedule is filled up.  

The FAA examiner has a checklist to go over as they conduct the verbal test.  Usually the verbal test is in an informal setting and scenario based.  The examiner presents situations to you and asks you related questions.  They are testing to see if you can apply the material that you consumed to pass the written test.  The scenarios are real world situations that you may face and are very practical.  I actually learned a lot in the process.  My examiner took me through situations that I hadn’t thought about but with my training I could figure out the answer.   One in particular, figuring out how long it will take your plane to lift off and determining what to do, if you don’t lift off in that expected time, proved very insightful and valuable to experiences I had later.  The verbal test was by far the toughest of the 3 tests.  The final test was the practical exam.  This is when you get in the plane and perform maneuvers to show you know how to fly the plane and what to do in case of an emergency.  This is actually the easiest of the tests, because you have practiced them for over 40 hours and it is the fun part of flying!!!  

Takeaways

There are many insights I gained from my flight school.  

  1. Instruction should be de-linked from certification.
  2. However, instructors should be continuously using formative assessment to ensure the student is comprehending, retaining and able to apply the skills, knowledge and judgement you are instructing.
  3. Instructors should be measured by the success of their students.
  4. Instruction should move at the pace of the students motivation and abilities
  5. Instruction should be provided in as many modes as feasible.
  6. The student should be free to chose the modality that works well for them.  
  7. The student should be free to select an instructor that works well for them.

Of course, the biggest difference between flight training and traditional education is that the motivation to do it is completely student driven.    However, I believe that students are born naturally curious and want to learn.  They just want to learn what they see value in learning.  So, why don’t we harness that natural curiosity and desire to learn and use it to provide a better education for each of our citizens.   I learned meteorology, physics, biology, mathematics, geometry, passenger management and more, all driven by my desire to fly a plane.  I had no real desire to study any of those subjects, but my desire to fly a plane drove me to learn quite a bit about each.  Every person has a passion.  Every person has interests.  Can’t we discover those interests and use them as a platform to deliver the education they will need to be a positive, contributing member of society???!!!!

The biggest lesson is that the problem isn’t money!!!.  Learning to become a pilot easily has a school year’s worth of content in it and the total cost including gas and plane rental (the biggest expenses by far) was under $10,000.  That is less than we spend to put a kid through school for a year.   Take out the plane rental and the gas and the cost was under $2,000.  The instruction costs $45 per hour for 20-30 hours.  The videos cost under $300.  The equipment costs another $200-400.    Learning to fly is expensive, but if you take the unusually high cost of the plane and gas out, its actually pretty cheap.  Why isn’t all school this cheap?

I think I will continue to add to this article over time, as I continue to learn so much about teaching, learning, etc from my flight school.

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It’s Distribution Stupid!

Over the last year or so, I have talked to a lot of entrepreneurs about their ideas.  Most of the good ones, have a somewhat complete team, a sense of the market and a clear idea of the problem they are trying to solve.  They even have a pretty well articulated solution to the problem.  They have read about lean startup and design thinking and are now quite adept at following those guidelines.  

However, the one thing I consistently see is even the good teams fail to have a well thought out distribution strategy.   Some people test for the presence of a distribution strategy, by looking for momentum or traction.   Investors are always looking for the exponential growth curve in either customers or revenue and preferably both.  I prefer to understand the thought process that went into trying to create that exponential growth.

After I have asked people about the team, the market, the problem, their solution and how it is differentiated, my next question is almost always “how are you going to distribute it, market it or get people to buy or use it?”

I have two favorite answers to this question.  

1.  People will like it so much it will go viral, OR

2. We will do a lot of PR, get a lot of buzz and leverage SEM/SEO.  

These answers show me that they really haven’t thought about it.  And let me tell you the difference between a great idea and a great business is most often an effective distribution/marketing strategy.  

All distribution strategies start with a key question:  How much can I afford to spend to get a customer? 

The answer to this question depends on your unit economics and customer economics. 

Unit Economics:  How much do you make for every purchase?

Customer Economics:  How many purchases will a customer make?

Assuming you don’t have to spend any more to get a customer to make repeat purchases*, then figuring out how much you have to spend to get a customer is as easy as multiplying the profit per purchase by the number of purchase the customer will make.  This will give you an acceptable Cost Per Acquired Customer (CPA).  Note, this is over simplifying, but a reasonable back of the envelop method to figure out the general ballpark.   (*not a great assumption) 

After knowing how the maximum CPA you can bare, the best distribution strategies depend on the business you are in. 

For consumer internet, the most successful distribution strategies are ones that leverage network effects as a result of the product design.  One of the earliest examples of this was Hotmail.  Hotmail got a lot of buzz being one of the first “free web email” providers, but that wasn’t really the secret sauce.  The real secret sauce was that at the bottom of every email sent using Hotmail, was a simple call to action “want free email, click here”.   So, the very use of the product by one customer was marketing it to hundreds or more prospects.  This led to network effects that drove exponential user growth at a low or no cost.  Finding these situations is like finding a pot of gold.  If you ever find a network effects driven adoption model, come find me.  I want to invest!  It’s a guaranteed winner.

Another effective distribution strategy for consumer internet companies is that of the Remoras (or sucker fish).  These are the companies find a much larger and fast growing company and design a complementary product/service that can ride along with their growth.  Probably, the best most recent example is Zynga which exists because of the Facebook platform and grew along with the growth of Facebook.

Similar but more interdependent are the clownfish and the anemones.  They have a symbiotic relationship and grow with each other.  A great example of this was the mutual interdependence of eBay and PayPal.  

For B2B technology solutions, it really depends on your target market.  Are you pursuing enterprise clients or SMBs?

If you are pursuing enterprise customers, then you need an exceptional sales force and sales support.  The key to a successful enterprise sales strategy is a well designed end to end sales process.   The process will cover the following elements:

  1. A strong and clear value proposition that is well articulated in presentation and marketing materials.
  2. Testimonials from satisfied clients willing to speak at trade shows, quoted in the press and/or captured on video
  3. Target customer list with relative value ranking
  4. A commission plan with clear goals/quotas and incentives that ties to the financial goals of the company which are derived from the value placed on the opportunities
  5. Proven sales team with a strong sales manager (process focus, not a closer)
  6. Strong technical sales support
  7. A well articulated and managed plan for customer boarding

If you are pursuing SMBs, you might very well have a direct sales force in the form of a call center or outsourced sales, but you will often need to rely on channels or partners to distribute your product as well. 

Channels or partners can be very effective for both SMBs as well as selling to consumers.  The challenge with both is that the value of each individual customer is not large enough to justify the investment in a direct sales effort.  Finding a channel or partner who already has a connection with your end customer can be a very cost effective path to acquiring new customers.   The key is to find partners who will have an interest in cross selling your product.  It can’t just be about economic incentives, your product has to help their product or their relationship with the customer.  I have seen way too many partnerships fail because the only incentive to distribution the partners product was monetary.    That hardly ever works. 

I could go on all day, talking about the various strategies for distributing your product, but I won’t because the answer for every company has to be tailored to their situation. 

The key is to have thought through the question: “how are you going to distribute it, market it or get people to buy or use it?”

The key to a fast growth business is the distribution strategy.

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A new vision of community….

One of the key tenants of Adam Smith’s work was the specialization of the labor force.  Well, I have bene thinking about that for sometime.  Our jobs are getting more and more specialized to the point where no one job or one employee looks like the next.  Sure there are similarities, but its not like the manufacturing world of the 20th century where there were thousands of people doing the same job.  

The other aspect is that our duties in our life are getting more and more narrow.  We no longer hunt or farm for our food.  We don’t build our own houses or transportation (horse and buggy).  In fact, we do very little for ourselves, other than make money to pay other people to do stuff for us.   We are each a cog in the greater economic engine both contributing to it and benefiting from it.  

So, where is this trend going to take us?

I imagine a world where our lives look more like college dorms or senior living or even a cruise than what has been the traditional image of an american family.    We as a society are very clearly at the top of the pyramid of maslov’s hierarchy of needs.  Remember, the entire US population is in the top 1% of the world’s wealth/income.  We have the ability to focus our time on those activities that fulfill us and make us happy.  

Imagine a world where you didn’t have to do your laundry, cook meals, take the garbage out, do the yard work or clean the toilets.  That sounds like the life of the rich and famous, but its actually the natural progression of specialization of the labor force.   There are people who love to cook or clean and that is their job.  

Imagine if all you had to do was the things you loved doing.  

I wonder if there is a community model that would enable that vision to come to life.  

 

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What I learned from Downton Abbey?

My family just got the DVDs for the first season of Downton Abbey.  First, I have to admit it is completely addictive.  These historical fiction soap opera’s are really interesting and engaging.

In the spirit of pattern recognition, I saw an analogy between the class system of WWI period of England and the hierarchy in modern day business world.  In our capitalistic society of modern day USA, there is a similar class system.

An espoused difference is the process on which your class is determined.  In WWI England, it was based primarily on the family you were born into.  Certainly, there was opportunity to be a “self made” individual, but this was relatively rare.  Where as, in modern day US, your family of birth still plays a role, as those that are born into wealth have both the means and the expectations to prosper.  However, our system provides, or at least espouses to be, a capitalistic meritocracy where those that work hard and smart will prosper no matter their background.   I can attest to the possibility of this reality.

And yet, I wonder if there is still a class system at work in our capitalistic system.  Having worked at very large companies and the very small, one big difference is the relative stratification of the employee pool.  In large companies, there are lots of layers of employees.  In contrast, the small company usually only has 2 or 3 layers.

This is where I saw similarities between WWI English aristocracy and today’s modern corporation.  If the Downton Abbey portrayal is remotely accurate, then it appears that their is much political jockeying for position based solely on seeking the favor of those in power.   I can’t help but see similarities between the Downton shenanigans and those that I have witnessed in big companies.    Where as, in small companies, there isn’t as much room for these types of games.  There is no place to hide.  No wake to draft.  An individual’s contributions are far more transparent.  For sure, even small companies have politics, but for a high performing team within a small company, politics are not a large component of the operating norms and culture.

As I watch Downton Abbey, I am clear about what I hate about large companies.  Once the organization becomes too complex and individual contributions are hard to directly tie to the bottom line, political maneuvering becomes a much higher component of the objective function for an individual to maximize their success within the organization.  At the point where political accumen becomes a requirement for success or the highest weighted coefficient of the success objective function, I no longer find the experience enjoyable.

However, I find it really entertaining to watch.  Maybe someone should create a similar series about office politics.  Oh wait, they have… The Office.  But, maybe there is one that is more big business oriented.

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