Jason Rushin

Jason Rushin


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Posts by Jason Rushin

More Money Aimed at Hawaii Startups

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Mbloom, the Maui-based incubator and investment fund, announced the closing of their $10 million investment fund back in December, but little has been heard from them since. To get an update, I recently spoke with Arben Kryeziu who, along with Nick Bicanic, are the founders and driving force behind mbloom.

“Our whole mission over the past many months was to close the fund,” Kryeziu explained. “Now we’re working on our first few deals. We’ve also been working on the next stage of our incubator and will eventually take applications. And, we’re moving beyond Maui to establish a presence in Honolulu.”

Read the rest of my post as it originally appeared on HuffPost Hawaii:  http://www.huffingtonpost.com/jason-rushin/post_7100_b_4981557.html

C’mon, Google. You can do better.

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I’m an Android nut, no question about it.

I have three Android phones sitting on my desk, three Android tablets floating around the house, and even a Cr-48 Chromebook. I’ve embraced the Google ecosystem, and nearly all of my digital data–from music to contacts to files to photos–resides on Google servers.

AndroidEmailAs a marketer, however, I take a critical eye to how Google articulates and presents their solutions. As Android has evolved over the years, I’ve also evolved from utter frustration to iOS envy to a feeling of superiority over all other mobile operating system users. And, as Google hired more designers and non-technical product and marketing staff, it was visibly evident in their products and their marketing materials. Android morphed from a collection of disjointed features to a cohesive and connected OS with a single and pervasive design theme.

Google’s apps also started to look more and more similar, giving users a common set of metaphors and visual reinforcement that all of Google’s myriad apps and services were, in fact, being built by the same company.

Then, I get an email…

As backstory, there have been many rumors about Google’s upcoming Android upgrade. I’ve been rabidly consuming any and all speculation over the past few weeks related to Android 4.4, as well as their poorly-hidden Nexus 5 phone.

What I didn’t expect–given how Google has really upped their marketing game–was the weak, ineffectual, and uninspired Android 4.4 launch announcement I discovered in my inbox this morning.

Sigh.

Take a look for yourself. It’s as if it were sent from 1998, via AOL, over a dial-up connection. What are my nits? Here we go:

  1. First impressions count, and this email is boring, drab and, dare I say, ugly. White, black, and, ugh, brown? Sure, there’s a tiny bit of green in the header, but, c’mon, you can’t look at this email and feel anything. I’ll bet anything that it was designed by someone with an engineering degree.
  2. It is all text, which is boring and un-engaging. Sure, Android developers like details, but it’s boring and gives me no real reason to want to read it. Visually, it’s a “wall of text,” as a former executive I worked for once said as he berated a presenting product manager and, turning to the remaining presenters, screamed, “If I see another wall of text, your presentation is over.” (It was then comical to see a dozen product managers flip open their laptops and scramble to edit their presentations, but only because I wasn’t presenting that day.)
  3. It wasn’t sent to just developers, so why does it look like it’s for engineers? According to the footer, I received this email because I “previously opted in to receiving emails with product updates, new features, newsletters, special offers and market research related to Android.” That means that average people (i.e. consumers) are getting this email.
  4. It’s too detailed. Sure, people want details, but that’s what websites are for. This email tries to straddle the line between giving a lot of info and teasing enough to get readers to click through. But the textual nature of it causes it to look long. And boring.
  5. The call to action is at the end. And below the fold. And barely apparent.
  6. The call to action only appears once. Nothing else in the body of this email–not the Android logo, not the KitKat, not the individual bullet headings–is linked. When you finally do go to Android.com, you see a modern, responsive, interactive page. Why couldn’t the “smarter caller ID” header link directly to that content on the website? That’s not hard to do, especially when you have thousands of smart engineers in your company.
  7. Why no imagery? The website features great photos of the new OS’s features, but why didn’t they use any in the email? And if they decided to use one and only one image, why use the KitKat? That conveys nothing to the reader about the email’s content, especially if they are not already familiar with Google’s OS version nicknames.

Rant, over.

Amazing Technology Advances the Art of Surfboard Shaping

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(Note:  This article originally appeared on HuffPost Hawaii, where I write about Hawaii entrepreneurs.)

Surfing was enjoyed by the Polynesians well before Captain Cook landed in Hawaii in the late 1700s. At the time, he’e nalu, Hawaiian for “wave sliding,” was more than a sport. It was an integral component of Hawaiian culture and boards were made only from revered trees, shaped by craftsmen into that classic surfboard form: long, slightly thinner at the edges, rounded at the front.

Today, that artisan tradition continues, although much has changed over the centuries. As modern tools and materials appeared, surfboards morphed from wood to a block of foam with a central wooden stringer for strength, all covered with fiberglass and resin. Modern surfboards are lighter, less expensive and easier to produce, and incorporate curves and angles that make them unrecognizable against vintage boards.

2013-10-08-AkuShaperCutting.JPG
Aku Shaper’s computerized shaping machine dives into a surfboard blank.

Even with this radical change in materials and designs, the act of sculpting a rough-cut block of foam, or “blank,” into a final surfboard shape, or “shaping,” has remained an artform. But just as the board has advanced, the art of shaping is being advanced by Aku Shaper, a Hawaii-based company co-founded by Kailua native Jimmy Freese.

“I was towards the end of completing a Master’s degree program in chemical engineering at University of Texas and figured I’d head back to Kailua for a spring break rest,” Jimmy recalled when asked how he got started.

“I had a friend who was a shaper and he mentioned a new machine that was on the North Shore. Being an engineer and a surfer, I was curious to check it out.”

A few months later, during a vacation in Australia, Jimmy visited a factory with a more advanced, but still crude, machine that could shape a board in 15 minutes. Hand shaping requires about 90 minutes.

“I saw the machine-shaped board and it was amazing. The finish was good. The stringers were perfect. But the machine itself was pretty rough.”

As a former usability engineer for HotU, one of Hawaii’s dotcom darlings during the early 2000s, Jimmy learned that a software’s user interface was as integral to success as the base capabilities. Knowing that most shapers were more artists than technologists, he knew that usability was critical.

“The machine in Australia was fine, but not really something a typical shaper could use. I saw an opportunity but it needed a different approach. It had to be as easy as ‘just send the design and the machine cuts.’”

Jimmy worked for nearly two years with a pair of Australian partners and his father, a professor at University of Hawaii, to put together a prototype and start selling.

2013-10-08-AkuShaperSettingUp.JPG
Kerry Tokoro of Kaneohe’s Tokoro Surfboards positions a foam blank in the Aku Shaper.

“It was slow progress and we were doing okay as a company, but the machine development was taking much longer than expected. Eventually I dropped to part-time, finished grad school, then took a job trading currencies on Wall Street.”

As sales started to increase, he returned to Hawaii in 2005 and focused on the company full-time. After a series of disagreements on direction, Jimmy split from his former partner, joined with a new machine designer, Mike Rickard, and Aku Shaper was formed.

Jimmy, Mike, and a small team started looking for growth and found it in the standup paddleboarding boom. Standup boards are much larger than a typical surfboard, so the team made bigger machines. Their timing was perfect.

“For a while, we had the only machine that could handle standups. Advances like that helped us spread by word-of-mouth. We didn’t advertise, we just went after A-list shapers. We were making a top-tier product, so we wanted to work with top-tier shapers.”

As in any craft, there was some initial resistance to automating a previously hands-on process.

“Some shapers believe that shaping imparts the soul into the board, and that our machine was taking that soul out of the craft. These guys are artists. The curves that they shape are beautiful, but they can only make a few boards per day. We saw our machine as another tool, like their planers, sandpaper and screens.”

Shapers embraced the approach.

“One shaper told me that he’d had ideas in his head for 20 years but couldn’t take the time to perfect them by hand. With Aku Shaper, he could try new things then be more consistent when he found something that worked, and his customers loved him for it.”

As word spread, Aku Shaper expanded beyond Hawaii and Australia with customers in Spain, Brazil, Puerto Rico, and beyond.

“It’s great to hear our customers, like Wade and Kerry Tokoro at Tokoro Surfboards in Kaneohe, talk story about how we’ve helped them try new ideas, but it’s not a bad thing that they’ve also been able to scale their businesses a bit faster. Today, about a quarter of a million boards are shaped on our machines each year, so we’re really helping to grow the industry.”

2013-10-08-AkuShaperWade.JPG
Wade Tokoro inspects a finished surfboard blank at the shop he shares with his brother, Kerry, in Kaneohe, on the island of Oahu.

Through it all, the Aku Shaper team and their customers continue to believe that they’ve enhanced the traditions of shaping and surfing.

“I love surfing and have surfed my whole life. I appreciate the sport and the craft, so I’m stoked that we have both top shapers and surfers requesting boards shaped by our machines.”

Now there’s the one thing Jimmy never thought he’d help surfers manufacture: an excuse to buy their next board.

(Photos provided by Aku Shaper. Click here for additional images.)

A Marketer’s Approach to Harnessing Big Data

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Note: I wrote this as a contributed article in late 2012 for a consulting client, but they decided not to use it. Instead of letting it collect dust, I published it here. Enjoy!

 

The term “Big Data” has been gaining momentum in all aspects of business, especially with web analytics, mobile, social media, and customer data. And, it’s usually used in the context of impending doom and mixed with cryptic terms like Hadoop, MapReduce, and “in-memory database.” It’s becoming so pervasive that Gartner’s 2012 Hype Cycle for Emerging Technologies has it entering the “peak of inflated expectations,” a sure sign of hysteria.

When it comes to marketing, however, massive amounts of data—whatever you want to call it—are becoming a fact of life with which marketers need to be concerned. But what is it and how do you leverage it to enhance your marketing efforts?

Big, different, and fast

Big data is generally defined in terms of volume, variety, and velocity. From a marketing perspective, you’re already collecting reams of data on every prospect or customer during even just one visit to your website. Couple that with the variety of customer touch points—purchase, email, advertising, support, social—and you quickly realize that even a small business is collecting data on a massive scale. The velocity, or speed, of data collection is also accelerating, especially as smartphones, tablets, and other technologies continue to weave their way into every aspect of everyday life and ease a potential customer’s ability to interact with your brand.

As the challenge of big data grows, marketers are told that they’ll need huge IT investments to collect the data, expensive and complex analytics tools to dig into it, and legions of data scientists to understand it. Furthermore, most of the big data focus from those developing the technology is given to the back-end, with “speeds and feeds” being touted and novel software architectures promoted as the great new hope for attacking big data.

Getting a handle on your big data

So where should marketers focus?

CIO magazine recently covered how marketing departments should roll big data analytics into their marketing strategies. While they go a bit deeper than a marketer might need, they do suggest that you focus on the most basic of marketing concepts:  What do my customers want?

It’s a common misconception that your big data is elusive and that you’ll need a huge project to even gain access to it. In reality, most marketers already have access to the data they need, usually within the tools that collect it. Finding the low hanging fruit in your data is as simple as segmenting your targets based on specific attributes, like preferred channels, content consumed, or recency of engagement (or purchase or click).

Since most marketers aren’t data scientists, it’s going to require a few trials to understand what your data can do for you. Don’t be afraid to dig in to it and ask questions of it. Think about the last time you said, “If only we could do X…” and use that as your first project.

Forbes magazine, in an overview of big data business challenges, stated that, “Successfully exploiting the value in big data requires experimentation and exploration.” Take that experimentation approach and start looking for ways to intelligently segment your customers into groups that you can then easily target. It’s not so much what you do, but that you do something, do it now, and learn from it.

Enhancing your capabilities

Why put in this early effort to see what’s possible? Because there’s a huge amount of value in your marketing data. So much so that it’s easy to justify an investment in analytics.

A mid-2012 report from Aberdeen Group, “Customer Analytics: Leveraging Big Data to Achieve Big Results,” shows that companies who optimize their customer analytics have revenues 90% higher and retention rates 3.5x higher than companies who don’t. Even more, they see customer lifetime value growth of 20% annually. That’s a great start to help you calculate an ROI to justify resources for your customer data.

As previously mentioned, each of your current marketing tools undoubtedly has some sort of reporting or filtering functionality, which is a great place to begin looking for ideas. However, few of those stand-alone tools go beyond simple reporting. And, fewer yet enable marketers to integrate data from multiple systems.

Instead, and as you grow your customer knowledge and see how it can impact your revenues and attrition, start to seek out tools that have the capabilities to dig into more data from multiple systems at a faster pace. Big data is volume, variety and velocity, so make sure that you’re thinking ahead and will be able to manage all three of those areas.

Also, beware of analytics that claim to integrate data but do so by aggregating (summarizing) it, thereby blocking you from the post-analysis targeting of individual customers. It’s great to discover that you have 50,000 customers ready to purchase, but unless you can target them individually, that information is virtually worthless.

Stop delaying

Regardless of your capabilities, your marketing data mountain is becoming bigger by the second. The way to get a handle on it is to start digging into it now. Understand what you have, what you can discover with your current tools, and what other capabilities are needed to wring out the value.

As with most professions today, marketing is becoming increasingly digital. More data is collected, more interactions are measurable, and more options for engaging with targets are available. Each day that you delay, your big data mountain buries you a little bit more.

Need help?  Here’s an assignment: How many customers made a purchase in the past month? Or, how many of your active prospects visited your website last week? If you can’t answer those questions in a few minutes, you should have an urgent talk with your manager tomorrow.

Rolling the Dice on Hotel Tonight

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As soon as I decided to take a last-minute trip to this year’s CES, where 160,000 consumer electronics manufacturers, reporters, and fans descend upon Las Vegas, I had a hunch that I’d have trouble finding a hotel room. After spending five days scouring Hotels.com, Priceline, Hotwire, and all of the other usual suspects, I had zero luck finding a hotel in my “sweet spot” range of 4- or 5-stars, on or near the strip, and less than $250 per night. (Combining the phrase “zero luck” with a trip to Vegas is bad, I’m guessing.)

Hotel Tonight Vegas CESEach day leading up to the trip, I also checked out Hotel Tonight, searching for hotels in Vegas, but also triangulating my expectations by checking Honolulu and San Francisco, cities where I had a good feeling for the quality and pricing of many hotels.

If you’re not familiar, Hotel Tonight (HT) offers deals for, you guessed it, hotels with a check-in availability of tonight. If I remember correctly, HT began on the premise of giving hotels one final outlet for unused rooms. Or, if you were in need of a last-minute room, or if you liked traveling by the seat of your pants, then HT offered the potential for an amazing deal.

Expectations Set

In the days leading up to CES, the deals on HT looked pretty sweet. Rooms at the Hard Rock were in the $60/nt range, and higher-end hotels, like THEHotel, Vdira, and Aria, were under $200. Some of HT’s deals were only for a single night, while others allowed up to four nights. And, some offered multiple nights with varying prices each night.

Being in need of four nights during one of the biggest events in Vegas, and knowing that many hotels were either totally sold out or charging top-end rates, I decided to roll the dice and give HT a chance. What’s the worst that could happen? Given that Vegas has somewhere around 150,000 hotel rooms, I figured that, if I didn’t have any luck with HT, I’d be able to get something off, off Strip for a reasonable price, even on the same day.

One thing caused me some worry, however: HT deals go live at noon local time, and I’d be in the air until a bit after 2:45 PM Vegas time. Not good, especially if anyone else was considering the same plan. Also, I’m assuming that most hotels only offered up a limited number of rooms at HT’s discount price, so the “good” deals would be snapped up before I had access.

The Reveal

On the day before my departure, Vegas deals on HT didn’t look so great. Prices were higher and options were slim. I considered a few online deals from other travel sites, like the Luxor for $170/nt, but the sense of adventure (yeah, this is adventure for me) pushed me to take the risk and see what happens.

CES Hotel Tonight VegasUpon landing for my connection at SFO, I immediately whipped out my phone and opened HT. Both Bally’s and Rio had deals at $41 for one night only, but both are categorized by HT as just “solid.”

Scrolling further, there were a few off-Strip deals for $47 to $120, and then the “Bonus Luxe Hotel” of Encore at Wynn for only $699, which was $100 cheaper than I’d been seeing it online the previous week (but still about 3x my price ceiling).

HT also listed Palms Place as a “Luxe Impulse Deal” (whatever that is) at only $95 for one night, or $167/nt for two nights. It was off-Strip, but after seeing the word “luxe,” and knowing that it was near a restaurant I wanted to try, I dug deeper. It had a 95% “thumbs up” rating and Wifi was free – something for which the cheaper hotels charged up to and additional $25/night. Although every hotel seemed to charge a $20-30 “resort fee,” which sometimes included WiFi.

Checking the Competition

As a quick check, I looked at the rate for Palms Place on Kayak, Trip Advisor, and Priceline. I should note that Priceline directly competes with HT by offering “Tonight-Only Deals,” but like HT, the deals are only available via their smartphone app. No other service appears to offer a similar tonight-only deal. And, unlike HT, which offers multiple hotels, Priceline appears to offer only a single “tonight-only” deal.

Priceline Tonight OnlyPriceline’s tonight-only deal was for the Hard Rock Hotel at $132/nt, a property that, surprisingly, wasn’t listed on HT, either because they already sold their HT allotment for the day (remember that I was a few hours past the noon listing time), or they didn’t list that day. The price seemed to be an OK deal, but not even close to what I’d been seeing on HT for Hard Rock prior to my trip. (It’s also interesting to note on the screenshot to the right that Priceline clearly offers the Hard Rock at $161 as their non-deal price. But, if you look at the “tonight-only” listing, they show the non-deal price as $162. Sure, it’s only a buck difference, but percentage it let’s them slightly inflate their perceived savings by 0.5%. Ironic considering Priceline “blasted” HT over inflated savings claims…)

For Palms Place specifically, the cost was $167/nt on HT (for 2 nights). Trip Advisor’s app, which lists prices from several services, showed an astronomical $504/nt (for 2 nights). And Kayak, which is usually my go-to travel planning service, along with Hipmonk, listed Palms Place at $403/nt. HT was going to save me over $230/nt! Even if you don’t use HT, it’s surprising how widely the prices ranged for the same hotel across different websites. Regardless of how far out you’re planning, it obviously pays to shop around.

Doubling-down on Hotel Tonight

Since the Palms Place per-night average doubled to $198/nt if I stayed 3 nights, I decided to take this little experiment further and double-down on HT. So I grabbed Palms Place for two nights at $167/nt average, then used HT again midweek to see if I could upgrade to something nicer, cheaper, or on the strip.

As an aside, Palms Place was pretty nice, and definitely worth the price. It’s a residence property, with only some rooms offered as hotel rooms, and seemed virtually empty. I hardly ever saw anyone else, and even the adjoining Palms hotel and casino seemed deserted. And, the on-site N9NE Steakhouse was amazing! The only downside was the $12 taxi ride to and from the strip, since there’s nothing worthwhile within walking distance of the Palms properties.

By mid-week, I was ready to try something new and had been checking HT frequently to see which way prices were trending. Every service showed very high prices on Wednesday and Thursday nights, since that was smack in the middle of CES. But, I was hoping that there would be some last-minute cancellations or adjustments that would open up some deals on HT.

The Hard Rock Hotel seems to be a frequent HT property, and I’d heard a lot about it and was curious to try it. At noon on Wednesday, HT showed the Hard Rock at $90/nt, so my gamble paid off!

HT lists the Hard Rock as “hip,” and it is pretty neat to see all of the rock memorabila around the hotel. The place seemed a bit more crowded than the Palms, but was relatively quiet–except for the loud plumbing (I could hear every flush and shower from adjoining rooms) and the fact that it’s located on the airport’s flight path. I’m definitely older than the Hard Rock’s target demographic, so am probably a bit more critical than their typical guest, but they could stand to slap some paint on the walls and hit the carpeting with a vacuum more frequently.

Upon checking out of a HT-booked hotel, the app asks you for a thumbs up or down rating. Given the state of the hotel vs. my expectations, I gave it a thumbs down. However, at $90/nt, it was definitely a good deal…I just wouldn’t stay there again.

A Tiny Glitch

There’s always something, right?

At Palms Place, HT charged me the advertised room rate, plus taxes. When I checked out of the hotel, Palms Place only charged me the resort fee. At the Hard Rock, however, I was not only billed for a higher room rate at checkout, but the hotel listed my HT credit as only $116 instead of the actual $202. I didn’t bicker with the hotel staff, since they didn’t know anything, and HT asks users to call them before calling the hotel.

Now, not to get off on a tangent, but these are the types of occasions when customer-focused culture really comes into play. For example, when I’ve had issues with my Google Nexus One phone or Nexus 7 tablet, the customer service reps at Google were nice, knowledgeable and believed me when I said, “Yeah, I’ve already rebooted it and cleared the cache.” The Google reps then take the quick and customer-centric route of saying, “Just send it back and we’ll send you a new one.”

On the contrary, when I’ve had to deal with customer service at AT&T or Time-Warner, it’s been they typical slow, backwards, company-centric nightmare that we’ve all come to expect from most corporations.

With HT, I called their support line on a Saturday and was greeted by a friendly rep who took my info, said that she would take care of the issue, and promised to call me back when it was resolved. Even more, the rep asked me about my “thumbs down” rating on Hard Rock and mentioned that they try to always follow up on poor ratings, either via phone or email. That’s pretty good service, and makes me think that HT has really integrated customer service into their organizations as part of their culture. They don’t seem to be outsourced reps or just blindly following a script; they are knowledgeable  efficient, and seem genuinely concerned about the customer’s happiness. How refreshing!

As promised, an HT rep called me a few days later, said that everything was squared away, and that I’d be seeing adjustments on my credit card statement within a few days. Done.

Bottom Line

So what do I think of Hotel Tonight? In a word, it’s awesome! I got two fantastic deals, saving probably $600 or more over four nights (or, getting much nicer hotels for the price).

Given this experience, I’ll definitely use Hotel Tonight again and again, but I’ll be sure to set my expectations by doing some HT recon before I travel. If you’re thinking of trying Hotel Tonight, here’s what I’d recommend:

  • For the city to which you’re traveling, check Hotel Tonight right now, and check it daily for a few days. Get a good look at the hotels they work with, see if several appear again and again, and see if you’re comfortable staying at most of those that are frequently listed.
  • Check several other services to gauge the book-ahead prices. Start narrowing down your list of potential hotels to three or four listed on HT, and keep comparing prices.
  • On the day of your stay, get on HT right at noon (destination time) and book quickly. Be prepared to take your second or third choice. And, check Priceline’s “Tonight-only deal,” just to be sure you’re getting the best deal.
  • Upon checkout, make sure you aren’t charged for the room or the taxes, but only the extras.

Good luck!

 

Additional screenshots…

Kayak Hotels  Trip Advisor Hotels  Hotel Tonight 3

Worst Event Marketing Ever?

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I signed up to attend CES this year, which unleashed a torrent of emails encouraging me to visit booths, attend events, and check out new products. While most of these emails were fine, a few stood out in their awfulness.

I could go off on a tangent on how, even with an amazing product, marketing is a critical function. Good marketing should be seen as a requirement, especially when you’re marketing to the press and media covering the largest consumer electronics show on the globe. Furthermore, sales reps (and even sales VPs) shouldn’t be blasting marketing or event emails, and definitely shouldn’t be sending emails to press and media.

So, just for reference, if you’re blasting out a pre-event email and trying to drum up traffic at your booth or interest in your product, here’s what NOT to do.

(Note:  Below is the entire email, and I’ve obfuscated the name and booth number to prevent embarrassment.)

 

XXXX will be in booth #XXXX. We look forward to meeting you!

Jill XXXX
Admin & Sales

XXXX, Inc.

Easing Tech Transfer, ‘Burgh Style

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(Note: This post also appears on AlohaStartups.com under a less yinzer title…)

In the many calls and conversations I’ve had with accelerator execs from across the country, many of those in “off-market” areas (i.e. not Silicon Valley) have frequently mentioned the support and involvement of their local universities. Alpha Lab, in Pittsburgh, has a very tight relationship with local universities, and that has been a boon to their accelerator program, allowing them to pull educated entrepreneurs and technical expertise, cutting-edge research, and mostly-baked intellectual property and ideas into their accelerator program.

UNIVAC from Stuck in Customs

Source: Flickr CC “UNIVAC” from Stuck in Customs

In Hawaii, I’ve heard much admittedly second-hand talk about University of Hawaii’s lack of visible involvement in the startup ecosystem, the extreme difficulty in extracting IP and research from UH, and a “me first” approach to business relationships by their researchers and grad students. While I hope to gain more insight from the stakeholders at UH (I’m meeting with Peter Quigley next week, who’s heading up UH’s Innovation Initiative and aims to create $1B research industry in Hawaii), I came across a recent article related to Carnegie Mellon University’s approach to technology transfer and their innovative model for accelerating startup creation (disclosure: I’m a CMU grad).

One push has been to get researchers to take a market-focused approach to research, so that fewer end up with a solution searching for a problem. A second, more critical push has been to ease the actual privatization process – the uncomfortable negotiations to determine who gets what and how much stake the university retains (and at what terms). Aptly-named the “Five Percent, Go in Peace” program, here’s the crux:

  • The university limits its equity to 5%.
  • There are clear royalty guidelines.
  • There is a three-year delay in payments to allow incubation time.
  • There is no university interference in the operation of the company.

The article begins on page 10, but here are the key sections that describe the program (with my highlights in red):

“Most universities view start-ups primarily as money-makers,” Arthur A. Boni, director of the Don Jones Center and the John R. Thorne Chair of Entrepreneurship, explains. “It is very difficult to put a value on an early-stage technology. And that leads to an incredibly tense environment where, every time a faculty member or student wants to spin off a company or commercialize a technology, they have to negotiate against their own university. Who owns what, how do royalties shake out, which rights revert to whom, and so on.”

Or, as Joel Adams, Carnegie Mellon Trustee and prominent venture capitalist, explains, “At most other universities, the number of strings attached to any start-up makes the investment not worth it. It’s just too painful and hard to unwind.”

So, in 2004, the university implemented a policy it called “Five Percent, Go in Peace.” Under this approach, the university expressed a greater interest in fostering start-ups generally, rather than profiting off any one individually, and in providing faculty, students and investors with clear, consistent guidelines and an environment of unconditional encouragement. The university would limit its equity in any for-profit endeavor to 5 percent capped at $2 million (far below any peer institutions), with clear royalty guidelines, a three-year delay in payments to allow incubation time, and virtually no university interference in operations.

“The goal of Five Percent, Go In Peace is to create a transparent, expedient and easy-to-understand process that minimizes extensive negotiations,” said Carnegie Mellon Provost and Executive Vice President Mark Kamlet. “We have simplified our approach to free entrepreneurs so they can do what they do best.”

The results were nearly instantaneous. Since the policy was implemented, the rate of university spin-offs doubled, increasing from 15 or so companies a year to almost two new patentable ideas every week. This Five Percent, Go in Peace policy rapidly became a national model. McCullough was asked to testify before a U.S. House of Representatives Subcommittee on Technology and Innovation to explain its enormous impact, and, with a measure of irony, it has itself been called one of Carnegie Mellon’s great inventions.

From 15 spin-offs per year to 100! I don’t have a calculator handy, but those are amazing results.

Carnegie Mellon further provides support through various other initiatives which, for example, assess an idea’s potential business and commercialization opportunities, match entrepreneurs with investors, mentors, grants and incubation space, and connects entrepreneurs with a fund which provides early-stage capital.

Back to Hawaii, UH’s Innovation Council’s recommendations report includes great steps for improving the situation, but doesn’t mention anything related to easing the commercialization process, royalties, revenues, equity, or related “privatization” issues.

If innovative research is being produced at an accelerated rate and with a large influx of research investment, and students are being educated in entrepreneurship, yet UH forces complex, archaic, selfish limitations on the act of creating a private entity or licensing the IP, then what’s the use?

What Makes an Accelerator Work?

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Note: Hawaii’s startup community has been discussing incubators and accelerators for quite a while, and there’s been a lot of recent traction towards having a few of these entities actually launch. In the dozens of conversations I’ve had related to accelerators, however, a lot of challenges remain, particularly around structure, programming, and execution. To share my thoughts, I wrote this post, which originally appeared on Aloha Startups.

 

Content Makes an Accelerator Successful, Not Just Space and Money

Seems like every other person I talk with has a plan for a local incubator or accelerator aimed at helping Hawaii’s startups. There’s accelerator talk on almost every island, there’s interest in a social-impact incubator, there’s an idea for a live/work incubator, and there’s a chat about Hawaii’s first accelerator at this week’s Wetware Wednesday. Even the state government is getting into it—in a good way, for once—with the passage (yay!) of HB2319mandating a “Venture Accelerator Program,” and establishing $2M in venture accelerator funding. (It’s currently awaiting the governor’s signature.)

Tech Incubator at Sea

An entrepreneur wants to build a visa-free, floating tech incubator in international waters. Actually, for state surrounded by thousands of miles of international waters in every direction, this isn’t a bad idea for Hawaii…

While it’s awesome that so much effort is being put into helping our startups grow and flourish, it starts to make you wonder how many such programs can Hawaii support? Are there enough startups to go around? Do we have the expertise locally to run it? Will we need to bring in a portion of the entrepreneurs from the mainland (which is a great idea, IMHO)? And how does this exacerbate (or help?) the “lack of talent” that so many local companies lament?

Accelerate vs. Incubate

In many of the conversations I’ve had, there still needs to be a clearer understanding of the difference between an accelerator and an incubator. The terms are frequently used interchangeably, but are far from the same thing, so let’s get this straight (for the most part…):

  • An incubator helps to incubate ideas into startups, sometimes with money in return for significant equity (~20%, maybe more), and usually with workspace, connections with potential partners and co-founders, education, networking opportunities, advisers, and professional and other support. The term of incubation can last several months to several years. Incubators tend to be localized and supported by governments and/or universities, but not always (Y Combinator is trying out a new program that let’s teams apply without ideas).
  • An accelerator takes very early-stage startups (i.e. have a product, a plan and a team) and helps to accelerate their transition into a viable business, almost always with investment (<10% equity plus access to more investors), high-potential connections and networks, professional support, workspace, and valuable mentoring, guidance, and education. Accelerated companies are usually expected to “graduate” within a few months to a year. Y Combinator, 500 Startups, and TechStars are a few the more well-known tech accelerators.

While even the entities themselves frequently use the terms interchangeably, Inc. magazine has a good article on the differences, Brad Feld had this to say (YouTube, starting at 0:45), as does Pittsburgh Ventures (disclosure: I grew up near Pittsburgh and put a premium on any website whose favicon is a Steelers logo) and many others.

Beyond the terminology and scope, they both have one similarity: it’s not just a space to work and investment, it’s a complete program.

It Takes More than Cash and a Desk

The key components, regardless of what it’s called, are the formalized and structuredopportunities for networking, guidance, education, and mentoring during the program. Workspace is great, but it’s no different than working at a Starbucks if it doesn’t come with access to experts, entrepreneurs with experience (in both success and failure), back office support, sources of funding, partnership potentials, and just straight advice.

Ad Innovation Conference at Y Combinator

Going FAR beyond a desk, Y Combinator held an Ad Innovation Conference designed to showcase companies developing ad-related technologies. (From VentureBeat)

You see, the whole purpose of creating a “space” for startups is to foster relationships that benefit the startup. Without providing connections, expertise, experience and networks that the entrepreneurs can’t get at a coffee shop, it’s really nothing more than a shared workspace. And, without creating some sort of application process to accept only those who are serious and capable, it’s not an accelerator or incubator, it’s a co-working space.

Don’t get me wrong, co-working spaces are fantastic. They fill a valuable niche and give entrepreneurs, remote workers, and others a nice, professional space to get some work done. There’s also opportunity to make great connections and learn something, but it’s usually by chance, not by design, and definitely not required.

Done Right, Accelerators Enhance a Team’s Skills

Look at what Y Combinator offers to their companies, and drill down to their list of speakers: it has names like Marc Andreessen, Marc Benioff, Jack Dorsey, Shawn Fanning, Reid Hoffman, Guy Kawasaki, Stephen Levy, Mark Pincus, Jeremy Stoppelman, Stephen Wolfram, and, well, you get the idea.

Sure, most of those tech “celebrities” live or work within a few miles of Silicon Valley’s accelerators, but it creates a challenge for Hawaii accelerators to develop the right programs featuring the right people. Should they use all local expertise, or bring it in from the mainland? Should they focus on tech, or areas where Hawaii already has vast talent? What should the startups expect of their mentors and of the curriculum? Should they expect to meet with Instagram and Zynga founders, or local execs from Hawaiian Airlines and non-tech successes like Sig Zane?

How are others doing it?

AlphaLabs, for example, provides weekly educational sessions with access to and advice from late-stage startup entrepreneurs, high-level execs from companies such as Microsoft, professors and researchers from local universities, and, of course, venture capitalists. They also provide attention and hands-on support from the AlphaLab team, staff, mentors and advisers, and the local business community.

Momentum Michigan provides a 12-week bootcamp program filled with events and networking opportunities.

TechStars goes further by providing more tangible support, like $5,000 in communications consulting, $10,000 in Paypal processing fees, $25,000 in AWS hosting services, and more. (Very similar to Startup America’s perks…)

500 Startups provides resident mentors and designers who “live and breathe with startups at the accelerator. They give talks, hold office hours, design reviews, hack on product, and provide ongoing support and guidance.”

Yetizen, a creative accelerator focused solely on gaming startups, focuses on four pillars of their approach: Education, Partnerships, Investors, and M&A (exit strategies).  They also offer a deep bench of hands-on expertise, with mentors from Disney, Sony, Google, Visa, and more.

To Improve Success Rates, They Don’t Accept Just Anyone

Most of the top accelerators also have rigorous application processes. TechStars claims “selection rates lower than the Ivy League,” has 25 deep questions on their application page, and requires videos and details of the company’s monetization plans.

Y Combinator asks thought-provoking questions that quickly weed out those who have a half-baked idea, haven’t done the research on their viability, or just plain don’t have the skills:

  • Please tell us about the time you most successfully hacked some (non-computer) system to your advantage. 
  • What do you understand about your business that other companies in it just don’t get?
  • How do or will you make money? How much could you make? (We realize you can’t know precisely, but give your best estimate.)
  • How will you get users? If your idea is the type that faces a chicken-and-egg problem in the sense that it won’t be attractive to users till it has a lot of users (e.g. a marketplace, a dating site, an ad network), how will you overcome that? 

It’s also apparent that, to be even considered for a program, you need more than just a great idea. You need the skills, you need to have thought it through, and you need to have created some sort of plan. (It’s funny to hear early entrepreneurs as they bash advice to think about their go-to-market strategy or to create rough revenue projections. Sure, everyone knows that they are just guesses, but you need to have an informed guess to be taken seriously.)

A comprehensive application and vetting process is a lot of work for both the startup and the accelerator, but it creates a high bar that helps to improve the long-term success rate of graduates. It also increases the learning by osmosis. If you’re a stellar team with a real shot at success, do you want to work alongside a lackluster team with a half-baked idea and wavering commitment? No, you don’t.

Garbage in, garbage out, right?

What Should Graduates Expect?

For most tech incubators and accelerators, the “graduation day” is a demo day, complete with press coverage, top-tier judges or feedback, and access to additional funding. That last bit is key, especially in tech.

TechStar grads average over $1M in outside venture capital raised after leaving their program (totaling $155M to date). BoomStartup, in Utah, holds an “Investor Day” with private investors, angel groups, venture capitalists, banks and other members of the ecosystem. Y Combinator’s latest batch of grads all received an additional $150k from prominent angel investors. Launchpad LA, in Los Angeles, has had 33 graduates, of which 27 raised more than $100M, combined, mostly based on connections made by their participation in Launchpad.

While the experience of the program should stand on it’s own, should success also be measured by a grad’s ability to secure additional funding? In the tech world, that’s almost always the case. But, in Hawaii, there’s a clear lack of investors and investment. So should Hawaii’s accelerators focus on different types of companies and expect different outcomes?

It sounds quaint these days, but what about incubating a non-tech company whose goal is a great product that drives profit, not VC investment? Would that take considerably more resources from the accelerator? Is tech the only sector sexy enough to get interest?

An Exciting Time for Hawaii’s Startups

It’s an exciting time to be a startup entrepreneur in Hawaii. From Wetware Wednesdays to Startup Hawaii, and Startup Weekend to accelerators and incubators, the opportunities for local startups to connect, grow, and succeed are becoming bigger and brighter. We’re seeing more and more startups grow beyond the idea stage, more entrepreneurs getting the connections and experience that they need, and more reason for talent to stay in Hawaii and help grow the startup ecosystem.

Regardless of how these first incubators and accelerators perform or how long they last, it’s all pushing us in the right direction. Being a startup entrepreneur is a gamble, and most fail. But, that failure is a learning experience.

For incubators and accelerators, it’s the same. There might be a few that win and a few that fade away, but it’s critical for Hawaii that they continue to try.

What do you think? There are a lot of unanswered questions in this post, so add your thoughts to the comments below…

And, if you’ve read this far you’re obviously interested, so attend Wetware Wednesday on May 23 to share your thoughts with the community.

Aloha!

A/B Testing on Wine Labels

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As a huge wine non-snob, my first stop in the grocery store is always the wine discount shelf. The way I look at it, it’s like the store paid me to age their wine. Win-win!

Wine and marketing collideDuring a recent trip, however, my interests in wine and marketing collided as I spotted two wines from the same brand, Mia’s Playground, sporting wildly different labels. As you can see in the photo, their Cabernet, on the left, has a fun, playful, non-intimidating label, while the chardonnay on the right has a more serious, formal design.

I’d never heard of Mia’s Playground wine, but at $4.99, pretty much any wine is worth a shot. A quick web search shows that Mia’s chardonnay usually retails for $16, while their Cabernet goes for about $15. That’s a pretty steep discount, and makes the differences in the labels even more interesting. Why are two wines priced similarly yet sporting different label designs, and why are they both heavily discounted? Is this Mia’s A/B test gone horribly wrong? Are they trying to position the different varietals for different market segments?

As I thought about it more, I wondered if the label even makes a difference. I was confident that it did, but as a quant, I needed to see the numbers…

What Do the Academics Say?

Since wine is a $32.5 billion industry in the US alone, it’s no surprise that plenty of research has been put into wine marketing. Think about the logistics of the typical wine purchase: it’s highly-subjective, there are tons of choices, even at small stores, and each wine has a new vintage every year. As a wine consumer, you’d probably lean towards known wines that you’re familiar with (which just increases the marketing efforts required by competing wines) or, without additional information (like reviews or Wine Spectator scores), you’d just choose the one with the best marketing+price combo.

Here are a few tidbits from some semi-recent studies that show how much impact labels have on wine sales:

  • From a 2007 UC Berkeley study: “…the illustration used on the label had the greatest impact on both purchase intent and perceptions of brand personality.”
  • A 2007 study from University of Reims, France, found “that when the label is authentic, young consumers don’t see any risk buying the wine because the presence of the label is a definitive indication of the product’s authenticity.”
  • A paper presented at the 2010 International Academy of Wine Business Research Conference stated that “packaging can be related to between 26% and 42% of predicted price differences.”

To add some confusion to the mix, or just to show that even the consumers themselves don’t know what they want, I found these two conclusions from separate Cal Poly studies:

  • One study found that “Americans did not rank ‘has an animal on it’ as a desirable feature but two of the top three brands, Yellow Tail and Toasted Head, had an animal on them.”
  • Another study found that “there is little to no correlation between wine label design aesthetics and price.” However, this study focused more on font, colors, and layout over label content, and was written by an undergrad (gasp!). One interesting finding of their research was that tasting scores by Robert Parker were higher for wines with labels that were designed in a top-to-bottom format over a left-to-right format. What’s up with that?

Where Was I?

OK, I’m off the rails here. Back to Mia.

As I started writing this post and googling “Mia’s Playground,” I learned a few things:

Having worked a stint in the wine industry consulting for Robert Mondavi Wines, I immediately recognized Sebastiani as one of the biggest wine producers in the US. With 1.3 million cases sold in 2011, that puts them at #14 on the Wine Business Monthly list of the largest North American wine producers. Sebastiani’s website has them at 2 million cases in 2007, so the Great Recession has, apparently, not been kind.

Their most-recognizable brand is probably Smoking Loon, but their website shows nine brands, of which Mia’s Playground is not seen. Digging deeper, I found that Mia is actually Don Sebastiani’s daughter, and that her name also adorns a wine-based cooking sauce.

Wine.com shows Mia’s Playground as “no longer available,” and they and Snooth.com list vintages from 2002 through 2008.

$15 is “Luxury” Wine?

Marketing plays a huge role in the wine industry, obviously. This wine industry publicist says that 2% of a wine’s retail price is dedicated to marketing, which translates into $650 million spent on wine marketing in the US. With that amount of spend, there’s definitely room for consultants, focus groups, and, yes, even A/B testing.

Quality Segments of the Global Wine Market

Quality Segments of the Global Wine Market, Wine Communications Group

More googling seems to indicate that Mia’s Playground switched label designs with the 2005 or 2006 vintage from the fun version to the serious version, maybe in an attempt to spur sales or justify the price.

Sadly for Mia, a wine priced at $15-16 is considered an “ultra-premium” wine by the Wine Communications Group. (Other sources peg $15 as either “luxury” or “super-premium,” so this segmentation system is clearly unclear.)

It’s very telling about the US wine consumers’ palate (or wallet) that 94% of wine sold is under $14 per bottle. Or, maybe it’s indicating that, for those who are willing to spend more than $15 for a bottle of wine, price ceases to be a key decision-making factor? Either that, or I’ve been over-paying for wine for the past 10 years.

Bottom Line

Mia may have simply been another victim of the Great Recession, since the timing fits perfectly. As the economy started to slow, and instead of lowering the price, Mia tried to up-level her brand with a serious label befitting a $15 wine. With a 2008 vintage hitting the shelves in 2009, and with Sebastiani’s sales dropping 35% between 2007 and 2011, Mia’s bosses may have had to cut under-performing brands.

In any event, wasn’t this a fun exercise!? Let me know what you think with a comment below.

I’d really love to see the sales numbers before and after the label change. But, as a marketer myself, if the change of label had minimal or even negative impact, it was obviously a sales execution problem! ;-)

I’ve sent an email to Sebastiani to get the real story on Mia’s Playground and will update this post if/when they respond…

Cheers!

The Downside of CyanogenMod, The Wisdom of EA’s CEO

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About a month ago, I attended an event at Electronic Arts. It was a Haas/Berkeley b-school alumni event (yeah, as a Tepper alum, it was painful, and I was the only one without a blue sportcoat and khakis) and featured EA’s CEO, John Riccitiello, as the keynote, plus a presentation from the winning team of a recent Haas pitch competition.

EA CEO at Haas Berkeley Alum Event

EA’s CEO shares his wisdom while I diligently capture every bit in an app that will soon be flashed into oblivion.

During the event, Riccitiello talked about “three things startup entrepreneurs need to consider,” or something like that. I can’t remember because, well, because if I don’t write something down I tend to forget it within 24 hours.

What I do remember is that his insights were amazing, that they really resonated with me, and that I couldn’t wait to write a post diving into each one.

The kicker here is that I did write it down, in the Miui notes app in my rooted/flashed Samsung Galaxy S2 phone. Yes, I sometimes revel in my phone modding awesomeness!

At this point, I’m sure you’re asking, “Well, wtf? If you took notes, why am I reading this blog full of excuses instead of hanging on every word of your usually compelling and intelligent insights?”

Yeah, me too.

Seems as though my awesomeness usually manifests itself as outright stupidity in the form of not fully thinking things through (or not thoroughly reading the full instructions) before embarking on a project. Recipes are a particular problem area. For example, I’ll have a hankering for a creative dinner, find a great recipe, buy the ingredients, then start the cooking process around 7pm. Then, about once a quarter, the clock nears 8pm and the next step in the recipe says something like, “simmer for three hours.” Here’s a good example. It’s happened enough that the wife now laughs it off…and then makes cream of wheat for herself while I solider on and have dinner at 10:30p.

Where was I? Oh yeah, the insightful comments from Riccitiello.

Did you know that the Cyanogen dude behind CyanogenMod is from the ‘Burgh? Nice, n’at.

OK, so I took copious notes on my smartphone. I planned a great blog post, and even started thinking about ways to approach each of his different points. As usual, work and life got in the way and I put it off for a few weeks. But, I always remembered that I took great notes and would be able to whip out a post at any time.

Then, my daily news alert for the keywords “ICS+Galaxy+S2″ finally had a hit related to a working version of CyanogenMod 9 for my AT&T Samsung Galaxy S2 phone, better known as the i777. So, always wanting to have the cutting edge phone OS, I flashed the rom, installed Android 4.0 (Ice Cream Sandwich), and was in heaven…until I wanted to write this post.

As I realized that I flashed my notes out of existence, like Dicaprio in Inception,  my world crashed around me. Do you remember the days of MS Word crashing after you spent 90 minutes editing a doc? Well, regardless of how close this was to that experience, that’s how I felt. Yes, I like to blow things out of proportion.

So what did I do? Well, I wrote this amazingly entertaining post. Then, thanks to the ever-wonderful Google thingy, I was able to find a refresher on the event. Problem: solved!

Here’s a recap of Riccitiello’s main points:

  • Understand who the customer is and who the product is designed to serve
  • Have a clear value proposition to know what problem you’re trying to solve
  • Have the right kind of talent in order to make the product a success
  • Listen, listen again, adjust, then listen one more time
  • Successful ventures are ones that change over time

Great points, all. I’ve talked to many wannabe entrepreneurs over the years who absolutely KNOW without a doubt what their customers want, but refuse to consider any feedback because, “well, you just do get it.” I’ve heard time and time again from those who think that all they need to do is throw up a website and the crowds will just magically appear without any marketing, not to mention a clear value prop. Talent? Well, most of the soon-to-be failures think that they themselves are the only talent that they’ll ever need.

The last two points are the ones that really separate the wannabes from the truly sharp entrepreneurs. When I started HulaCopter, I told anyone who would listen about my idea, business model, marketing plan, etc., and then I listened to their feedback. Some feedback was great, some not so good, but I still listened and took everyone’s feedback as another data point to consider.

Changing over time? Well, the pervasiveness of the buzzword “pivot” proves that most people now think that it’s best to ensure that you change your plan quickly, just so you can say that you pivoted. (Kind of like I started this post as a reflection on EA’s CEO’s comments and then pivoted it to be about me and my lack of a phone backup solution.)

Bottom Line

I’m not sure what the bottom line is for this post. On one hand, it’s that you shouldn’t trust anything digital to save your thoughts. On the other hand, it’s that you should listen to smart people and take their advice, even if they went to a sub-par b-school.

By the way, Riccitiello worked at The Clorox Company, PepsiCo, Häagen-Dazs, Wilson Sporting Goods, and Sara Lee Corporation, in addition to EA. That’s quite the resume!

 

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