Company Predictive Markets - What's in it for me?

What's in it for me? That is the question that your employees will ask if you try to enforce the use of predictive markets...or quite frankly, any other new tool or resource that will affect their current job responsibilities. The company MUST display the benefits of such a tool. Not only do they need to illustrate the benefits, they must do so in an informative, yet innovative way. People don't like change. But if they can see how it's going to make their job easier and can have a little bit of fun along the way, then it might just work.

But don't even bother if your corporate culture doesn't support it. You can try as hard as you can, you can try to illustrate all of the benefits and do all of this in the funnest (yes, I know that's not a word) way possible, but if your company culture won't support it, then there's no point...

Threadless & GamedayPassion

Three years ago as I was sitting on a train reading Inc. magazine on the way to NYC, I came across an article that got my motor running. The article was about a company called Threadless - the article was titled "The Customer is the Company". Crowdsourcing, interesting concept.

Two years prior, a friend of mine started a company called mygamedaytshirt.com and it was focused on creating simple t-shirts with Virginia Tech-themed designs/slogans on them. I loved the idea. Unfortunately he shut the company down about a year after it started. The business model was wrong. He was having to come up with the designs himself. He was focused on selling direct to consumers at tailgates and football games. He didn't have a presence on Facebook or any social media outlets. He wasn't using the power of the internet.

As I sat there reading that article, I knew right then and there that the Threadless business model could and should be applied to his concept. I texted him right away. He replied w/in 5 minutes and said, "wow, what a concept!". That was June 2008. One year later, GamedayPassion was born!

Almost two years later, let's take a look at some of the key challenges that has confronted GamedayPassion as compared to Threadless.

Community
Threadless is a community of artists who want their work to be seen. They are passionate about seeing their designs on t-shirts and about receiving feedback on their artwork.

GamedayPassion is a community of sports fans who are passionate about a particular team. Most are not designers by trade, they simply love their sports team. This has been a challenge for GamedayPassion as the level of innovation and level of creativity has been hindered. To offset that, we have engaged some designers who have helped spark some of the creativity that has led to new designs.

Scalability
After being in business for two years (well almost - two full football seasons anyway), GamedayPassion is still targeted towards one target market, Virginia Tech. One of the key reasons is web scalability and web design. All web design/development has been accomplished in house to date, but I think we're at a point where we need to engage a user experience expert and need some help creating a design that will allow for scalability when adding new schools to the portfolio.

The other main reason we have been hindered by this issue is financial, see next point.

Constraints
My partner and I have been very conscientious about our investment and are both somewhat risk adverse so we have put limited funds into this venture to date. We do realize though that in order to grow, we'll have to put some additional investment into the company. All profits to date have been reinvested.

Other constraints have been time (thanks to this MBA program) and other business applications (we use that wonderful program called MS Excel to manage our finances and inventory). Because of the large volume of business that Threadless has been able to generate and because they have a community of over 500k, they haven't traditionally had any of these issues.

Seasonality
Threadless does not have any issues with seasonality cycles. GamedayPassion, on the other hand, does have some seasonality challenges based on the nature of the sales and marketing strategy. The current target market is on one particular university, but the vast majority of the business is generated is during the football season. We have also done a little bit of marketing during the basketball season as well, but the key focus has been the football season.

I think we have something excellent started at this point and I really enjoy owning this business, but there's a long, long way to go to make it a sustainable and worthwhile business for us!

Check out the site @ www.gamedaypassion.com and of course, make sure you become a fan on Facebook and follow us on Twitter.

LinkedIn Got Me a Job!

LinkedIn has done an exceptional job keeping its user base from switching to other Professional Networking Services (PNS). Switching costs from a users perspective has been one of the single most important reasons that users have not jumped ship. Users have built up a huge network of professional contacts and if he/she were to leave LinkedIn, they would be forced to build that network from scratch again.

What must LinkedIn continue to focus on in the future?

Quasi-open Platform
Keep the network closed from a user's perspective to capitalize on the high switching costs. Open up the platform to developers to further enable monetization of the site and allow developers to create innovative (but non-privacy threatening) features to keep the user base interested and plugged in to LinkedIn.

Stay w/in the Professional Networking Space, Don't Go Social
Personally, I have my personal life and I have my professional life. I like to keep them separate. I have Facebook for my personal life and I have LinkedIn for my professional networking, I'd like to keep it that way. There is no gray area for me. That being said, I do realize that the youthful trends are bringing these two areas closer and closer.

Global Expansion
I'm not sure LinkedIn has even scratched the surface here. China is a huge market - LinkedIn needs to identify a way to tailor the site to meet the needs of Chinese professionals and scale the site accordingly. A key focus on BRIC countries should be given considerable attention as well, but only after obtaining a full understanding of the marketplace and understanding how business professionals interact in those cultures.

Mobile
This is a no brainer. Life is consumed by our mobile devices and business professionals are busier than ever these days. Going mobile and making that a key focus area is a necessity in today's business.

Recruitment Enablement
Through the use of LinkedIn, I was able to secure a job offer simply by reaching out to the SVP of HR of the company that I was interested in. I "connected" to her, sent her a personal note asking for the name/contact info of who I needed to follow up with, and eventually landed a job offer because of my resourcefulness...thanks to the power of LinkedIn. LinkedIn should continue to seek out and develop innovative practices to forge very close relationships with corporate entities to understand their needs. Eventually, I could see companies using LinkedIn as an integrated source for company job postings on company websites.

Wikipedia - Keeping the Vandals Out

Sorry, I couldn't resist posting this picture. This is a great example of the difficulty of "keeping the vandals" out of Wikipedia. As with any user-generated platform, there are significant challenges with not only ensuring the content is accurate and relevant, but ensuring that the content is clean and in good taste as well.



As indicated in the caption of the picture, Wikipedia has processes and procedures in place to ensure that graphics and article in poor taste such as the one above never get posted to the site.

Accurate, relevant articles are posted to Wikipedia because those who post the articles are typically passionate about the subject they are posting about. Most users would not go out of their way to post an article about something they do not care for. Additionally, the more and more folks that are on the 'network', the more accurate the article will become because of Wikipedia's edit functionality. Because the site is open-source and anybody can edit the articles, there are of course going to be instances where inaccurate data/articles are posted; those that are inaccurate are definitely in the minority.

Social Media...Embrace it, Don't Block It

United Airlines lost an estimated $100 million because of a customer service blunder.

Facebook's launch of the "News Feed" led to a customer protest which led to a group of student protesters creating a Facebook group of over 750,000 users in a week.

Sony lost billions of dollars in class-action suits when they decided to place copy protection (XCP) on its CDs to prevent pirating. They tried to deny and block bloggers from writing about it which led to a huge backlash among customers.

Motrin rec'd a huge backlash from moms on YouTube regarding their International Baby Wearing Week campaign.

Twitter user Astrospace deleted his/her account after flipping out on its Twitter base...the account was quickly snatched up by somebody else and the fan base was quickly lost.

The morale of the story...embrace social media, create a strategy around social media marketing efforts and show the world what your company is all about. If there are negative postings about your company, use that as a way to turn a negative into a positive.

Pop-up App Store in San Francisco

An interesting article considering our debate a couple of weeks ago re: bricks-and-mortar vs bricks-and-clicks.

http://www.inc.com/howard-greenstein/a-pop-up-app-store-in-san-francisco.html

Will Hulu change the way we watch tv forever?

So here it is the year 2011 and I have only logged on to the Hulu website once before today. Why? For starters, this MBA thing has kind of consumed all of my time for the past 3 years (not to mention my day job and 3 kids). My problem is simple, that thing called time. The only thing I watch on TV these days is sports and an occasional tv show at 11pm or so...and I just watch whatever happens to be on at that time.

A stat that I thought was truly amazing from the case..."while the average American web user spent about ten minutes a day viewing online video, they watched live television for about 300 minutes."

300 minutes a day? Excuse my french, but who in the hell has time to watch 5 hours of tv a day?!?! I need their job.

But what is Hulu's value proposition and why should I care? Hulu's mission is to "help users find and enjoy the world's premium, professionally produced content when, where and how they want it." Let me add one point to that mission (even though price should not be a part of their mission)...they are doing all of this while making it FREE to the user. There is your value proposition to the user. All of this original, professionally produced content is being delivered to the user absolutely FREE of charge. Of course, Hulu has since added a "Hulu Plus" option to provide this content to you on a variety of devices for $7.95/month, but at some point in time, I wouldn't be surprised to see Hulu Plus become free as well.

How does Hulu differ from traditional broadcast and cable operators? Did I mention this content is delivered to the consumer FREE? There ya go, there is one of your differentiating factors. Hulu also provides mechanisms to increase personalization options to increase the user experience. Hulu allows users to "manage their viewing experience, for instance by maintaining a video queue and adding videos to it for future viewing, by participating in Hulu's discussion boards and rating and reviewing videos, and by sharing interests with other users."

In my opinion, this "TV Everywhere" creation developed by Comcast and Time Warner will compete somewhat with Hulu, but the difference...this service is not FREE. You must be a subscriber in order to get this content.

Here's an interesting debate...many households now forego land line service for telephones in favor of cell phones; will the same be said for households foregoing traditional tv's (and cable service for that matter) in favor of internet tv? Only time will tell, stay tuned...

Yes Dennis Leary, I'm adding this entertaining commercial to my bliggity blog, just for you.

Google to Take Over the World by 2015!

Google is clearly on a path of world dominance, not just online dominance. Their ability to collect data and produce relevant information for the entire world is somewhat scary. There is no such thing as privacy anymore, unless you don't go online, but who would do that?

Is Google conspiring with the United States Government...or the CIA? Some think so...



Some of the key factors related to the early success of Google include:

* PageRank algorithm - this ground breaking technology favors pages with a multitude of inbound links and ensures relevance as opposed to spam results.

* Online Advertising - with its PageRank algorithm, in-house advertising intellect, focus on technological innovation and acquisition of DoubleClick, Google dominates the online advertising space

* Management Vision - "any kind of information will be accessible to anybody, controlled by Google itself"

* Innovation - new products, all the time; 20% of employees time dedicated to "pet projects"

Bricks-N-Clicks vs. Bricks-N-Mortar

Online companies such as TaxiMagic and MusicJuice face different obstacles than traditional brick-and-mortar companies. Where there is tremendous opportunity with an online presence due to its unlimited geographic boundaries, lower infrastructure costs, lower barriers to entry and 24/7 sale operations, there are added obstacles that are not as apparent for brick-and-mortar companies.

Marketing is a huge challenge for these companies. Because the internet is so accessible these days and is unlimited in terms of geographic coverage, it is essential for online companies to have significant investment in marketing and to have a sizable marketing budget that will allow for these companies to not only get noticed, but to remain in the forefront of consumers minds. Directly related to that point, investment and execution of a sound SEO strategy is paramount to success for B2C online companies in order to navigate to consumers.

In addition to the marketing challenges, online companies face constant competitive pressure because anybody can essentially create a website today thanks to tools such as weebly, webs.com, wix.com, wordpress, etc. The barriers to entry have been all but eliminated to have a web presence. BUT, that doesn't mean all internet companies are going to be successful. Proper planning, execution and monetization strategies will guide a company's success.

An online presence opens up new doors for businesses, but the fundamentals of the business start-up and business planning processes still apply in order for any business to be successful.

Netflix - In Pursuit of VOD

Netflix was at a cross-roads during early 2007 which could severely impact the future direction of the company. The options presented in the case were as follows:

1 - Licensing agreement with cable providers to use the proprietary recommendation system

2 - Integrate streaming online video feature into the core offering

3 - Build a stand-alone online video business

My recommendation would be to pursue option 2 with an extension of the original idea. I would recommend that Netflix partners with a full-service media company such as Verizon to stream its video content through the multitude of Verizon's pipes. I would not look solely at online streaming. The future is going more and more mobile, so I think an integrated strategy that allows a user to log-in via mobile phone, tv, or internet is vital to this option. Users like to have choices and are more connected than ever before so it only makes sense to accommodate all of these options.

I think Netflix could offer some sort of tiered pricing structure such that users can take advantage of this opportunity and so Netflix can gain some additional revenue as well. I think a consumer that pays $10/month for "hard copies" of the DVDs would be more than willing to pay a couple more dollars a month to obtain the instant gratification of having the ability to order a movie and watch it, whenever they wanted.

All of this being said, whichever option Netflix chooses, the company needs to still place a significant focus on the movie selection for the inventory, that is key to their entire strategy. I am not a Netflix subscriber, but the one gripe I hear over and over is that the movie selection needs improvement.

Yelp Monetization & Fending Off Competition

As with many online, user-generated content websites, Yelp has encountered issues with monetization and establishing steady revenue streams. I think Yelp needs to think seriously about a freemium model to start gaining revenue from its users. They are the benefactors from the reviews so it only makes sense to charge them a small monthly/yearly fee to review the content. The biggest negative is the fact that these users have gotten used to this being a free service, so there will be some backlash from the consumers and that should be accounted for. For that reason, Yelp should adopt a freemium model that balances some free content with some premium content under it's paid subscription model.

Additionally, there are some necessary actions that the company should take immediately to fend off its competition (CitySearch, Yahoo Local, Google HotPot, etc) and to continue to differentiate itself. Some considerations include:

• Integration with social networks, namely Facebook and Twitter
• Added focus on national account sales, in addition to local advertisement sales
• Reconsider CPM advertising model vs CPC model
• Targeted marketing campaigns in major markets
• Increase local Community Manager presence to drive traffic and user reviews to the site

In mid-January 2011, Yelp just recently announced added functionality that allows users to "check in" at establishments to compete with the likes of FourSquare and Gowalla via its iPhone app, this is an excellent step in the right direction.

Webvan - What happened?

There were several key issues/problems that led to the demise of the Webvan enterprise. Among those issues include:

Delivery – Window & Density. As stated in the case, “if you have delivery with the density of a paper route, this thing would work”[1], but unfortunately that was not possible for Webvan. The company depended on a high volume of customers that had an average order over $100 that lived near each other. A combination of those factors and the number of visits each customer would engage Webvan’s services would help spell out success for Webvan. The initial model called for a 30-minute delivery window as well, which was eventually revised to a 60-minute window. The initial projection was too aggressive which was a common theme in the rise and fall of Webvan.

Market Penetration. Initial estimates within Webvan indicated that a 1-3% penetration rate into the online grocery market would make the economics of the company feasible, whereas analysts predicted 10-12% penetration would be required to make the company successful. A bad forecast got the company off on the wrong foot and set bad expectations from day one.

Aggressive Expansion Plans. The Webvan business model calls for aggressive expansion plans into major markets. The expansion plans do not call for any sort of experiential market testing or adaptation to lessons learned from other markets, including understanding the consumer demand for each of the targeted geographic markets. According to a reference in the case, some analysts “sounded alarms that Webvan might expand faster than consumer demand.”[2]

Focus (or lack thereof) on Core Competencies. What is Webvan? The company is an online retailer that sells and delivers groceries directly to the consumer. But what does Webvan do well? They excel at producing a user-friendly web store, they have excellent warehousing and inventory management procedures, and they pick and pack their customers groceries for them. What does Webvan need help with? They need help from experts in transporting the groceries to the end consumer - that is not their core competency.

Capital Investment Requirements. Webvan has extremely high costs in several areas and has a considerably high cash burn rate. The distribution center (DC) investment is $35 million to build versus Homegrocer (a competitor at the time – later acquired by Webvan) whose DC capital investment was only $8 million. Marketing costs were also considerably high and were budgeted around $200 million a year.

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[1] Ibid.

[2] George Anders and Robert Berner, “Webvan’s splashy stock debut may shake up staid grocery industry-some traditional food cains are testing online retailing but, so far, very cautiously,” The Wall Street Journal, November 8, 1999.