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Posts by Jason Rushin
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.
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.
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.)
Each 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.
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.
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.
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’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.
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.
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!
Admin & Sales
(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.
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?
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.)
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.
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.
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!
During 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:
- There’s an iPhone app with the same name, but geared towards two- to five-year-olds. Let’s hope this isn’t Mia’s version of Joe the Camel marketing cigarettes to kids…
- The brand is produced by Don Sebastiani & Sons.
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.
$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.
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.
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…
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.
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.
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.)
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!
I guess that I’m not alone in being baffled by the horrible marketing being perpetrated on consumers by technology companies. (Side note: when is “tech” going to be considered simply “consumer electronics?” Are mobile phones and laptops still so cutting edge that they need to be referred to as “high technology?”)
Saturday Night Live took on the consumer puzzle known as Verizon (and the ‘guilty-by-association’ handset makers) in a very funny skit this past weekend. Just watch it and you’ll be laughing out loud.
Verizon’s marketing department, on the other hand, should be crying…and updating their resumes.
Note: Today was “SOPA Blackout” day, where Google, Wikipedia, and thousands of other websites blocked access to protest SOPA. I’m vehemently anti-censorship, have contacted my local Senators and Congresspeople (several times), and wrote the following post, which originally appeared on Aloha Startups.
SOPA: Wrong for Startups, Wrong for the Internet, Wrong for America
I really don’t want to get political, but the issue of censorship really tweaks my craw. When I was in high school, I learned about Freedom of Speech, due process, and how censorship was used to oppress people in other, “evil” countries. I had to read “Fahrenheit 451″ and was taught that the USSR was evil because, among other things, the government controlled the news. More recently, I’ve read stories about the “Arab Spring” being energized via social media, and that the US helped to keep those channels of communication open while their governments tried to censor them. Now, it appears that our own government is trying to make it easier to censor the internet in the US.
SOPA, the Stop Online Piracy Act, is a bill introduced to the House of Representatives this fall to give law enforcement and copyright holders more power to fight internet piracy. According to Wikipedia…
Proponents of the bill say it protects the intellectual property market and corresponding industry, jobs and revenue, and is necessary to bolster enforcement of copyright laws especially against foreign websites. Opponents say it is Internet censorship, that it will cripple the Internet, and will threaten whistleblowing and other free speech.
While I’m obviously against online piracy, as everyone should be, SOPA gives rights holders the ability to shut down websites’ payment systems just by claiming copyright infringement. PCMag.com had this to say:
Among the more controversial provisions is a section that would allow rights holders to contact the financial institutions that do business with a particular Web site and ask them to shut down access because of infringing content. If you ran a Web site that used PayPal or accepted payment via MasterCard, for example, and someone thought your site contained pirated content, they could contact PayPal or MasterCard and have those companies cut off access to your site, effectively shutting down your business.
Representative Lamar Smith (R-TX), who introduced the bill, said that the bill’s critics are “spreading lies” after some of the top internet companies printed an open letter saying that the bill (and the PROTECT IP Act) provides censorship “techniques similar to those used by China, Malaysia and Iran.”
SOPA is still in committee, but they are meeting today to vote on amendments to the bill. (I was going to link the word “committee” to the YouTube-posted version of “I’m Just a Bill,” but it was taken down due to copyright infringement. Irony?)
Democracy In Action
So what did I do? I contacted my representative, Congresswoman Colleen Hanabusa, to express a constituent’s opposition to SOPA. (It’s made very easy at http://americancensorship.org/, where you just type in your phone number and zip code, they give you a few talking points, and then your phone rings, already connect with your representative’s office!)
While Rep. Hanabusa’s email response to an earlier anti-SOPA note I submitted via her website, pasted in its entirety below, assures me that she will “keep (my) thoughts in mind should this bill or any similar piece of legislation come to the floor,” it’s obvious to me that she supports SOPA. She does go into detail to clear up some potential confusion about the controversial portions of the bill, and uses the typical politician fear-mongering lines around “unsuspecting consumers,” “expose children to serious health risks,” and “identity theft,” but avoids the bigger points around due process and censorship as they relate to the rights holder’s (not the Attorney General’s) ability to impact suspect sites.
Read the email for yourself, educate yourself on SOPA, make your views known to your representative, and let us know what you think in the comments. Whether you’re for or against this legislation, let your voice be heard. While our rights may be starting to erode with this bill, at least the macro democratic process is still going strong…in theory.
|December 14, 2011
Thank you for your correspondence regarding H.R. 3261, the Stop Online Piracy Act. I appreciate your input on this important issue.
H.R. 3261, introduced by Representative Lamar Smith (TX), allows the Attorney General to seek an injunction that would block access to foreign websites dedicated to intellectual property infringement. Intellectual property is any product conceptualized by an individual that has commercial value. This includes among other things patents, trademarks and trade secrets. Common intellectual property infringement includes pirated software, illegal distribution of music or movies, or counterfeit merchandise.
Many of these foreign sites appear legitimate to unsuspecting consumers, who are tricked into purchasing shoddy products or downloading pirated content like music, movies or games. Some of these counterfeiters sell imitation
Under this bill, once the Attorney General formally seeks an injunction against a foreign website, the Justice Department must go to a federal judge and lay out the case against the site. If a federal judge agrees that the website in question is dedicated to illegal and infringing activity, then a court order can be issued directing companies to sever ties with the illegal website. Third-party intermediaries, like credit card companies and online ad providers, are only required to stop working with the site. They cannot be held liable for the illegal or infringing actions taken by the foreign website.
Under existing law, it is already illegal to operate domestic websites that infringe on intellectual property rights, just as it is illegal to operate a brick-and-mortar store selling pirated goods. H.R. 3261 simply extends those prohibitions to foreign infringing websites.
This legislation elicits vigorous debate on both sides of the issue and I appreciate all the input from constituents I have received on this bill. Unfortunately I believe there are several misconceptions of the bill that I would like to clear up.
First, H.R. 3261 does not restrict lawful free speech and is not a form of censorship. The fact is the bill establishes judicial review and requires judicial approval for a site to be shut down. Ultimately restricting sites from offering fake designer purses or selling copies of the latest Hollywood movie is not an unlawful restriction of an individual’s Constitutional right to freedom of speech.
Next, the bill would not require an entire site to be shut down if a single page is found to be infringing. H.R. 3261 allows a court to target only the portion of the site that is engaging in criminal activity or infringing, leaving access to or funding of the rest of the site alone.
Finally, the legislation does not require internet service providers to engage in any monitoring, supervising, or policing of their networks. It only requires them to take action at the direction of the Attorney General if a federal court rules that a foreign site is engaged in criminal activity for which seizure would apply if it were in the U.S. Just like 1998′s Digital Millennium Copyright Act, internet service providers are only required to take minimum steps, with no duty to monitor.
H.R. 3261 has been referred to the House Committee on the Judiciary, where it awaits further consideration. Please be assured that I will keep your thoughts in mind should this bill or any similar piece of legislation come to the floor of the House of Representatives for a vote during the 112th Congress.
Again, thank you for expressing your views on this crucial issue. I hope you will continue to contact me on federal matters of concern to you. If you would like regular updates, please sign up for my e-newsletter athttp://hanabusa.house.gov.
After nearly two years with my beloved HTC Nexus One phone (great name, eh?), I just upgraded to the new Samsung Galaxy S II 4G. But, since three of the four US carriers have a Samsung Galaxy S II 4G phone, mine is the Samsung Galaxy S II 4G for AT&T. Please don’t confuse my phone with the Samsung Galaxy S II, Epic 4G Touch (yes, with the comma), which is Sprint’s version, or the plain vanilla-sounding Samsung Galaxy S II, available at T-Mobile.
My phone, as its name implies, is a 4G version, same as the Sprint model. T-Mobile’s model doesn’t have 4G in its name, despite it also being a fully 4G phone. T-Mobile has other phones with 4G in the name, but not sure why they chose to skip it for the Galaxy S II.
Oh, and even though only Sprint calls out the fact that their phone is a “Touch” (indicating a touch screen, I suppose), all of these Galaxy S II phones have a touch screen. Of course. Not sure why they didn’t all call that out, other than the fact that it’s pretty obvious to everyone these days that a “smartphone” is also a touch-screen phone.
Let me be clear that none of these phones are to be confused with AT&T’s Samsung Galaxy S II Skyrocket Android Smartphone. Yes, that’s its full name: Samsung Galaxy S II Skyrocket Android Smartphone.
Let’s review that last point: the phone utilizing slower, older 4G tech has “4G” in the name, but the phone utilizing the newer, faster LTE 4G tech does not have 4G in its name. Nor does it have LTE in its name. It does have “Skyrocket,” which, I guess, a focus group equated with super-fast mobile data speeds, so no need to be redundant. I’d love to know the reasoning behind that decision. Maybe all of AT&T’s LTE phones will be branded as Skyrockets?
Confused yet? You should be, although Samsung has made some confusing product naming decisions recently. In this case, however, I’m guessing that the carriers had more to do with it than Samsung.
(I had someone ask me the other day, “What’s the difference between an Android and a Droid?” I won’t even get in to the marketing behind that perplexing branding, or the fact that Verizon is marketing Droids as some sort of tech robot device…)
Apple is King, Right?
Not all tech companies have sucky product names. Apple, the master of marketing, has pretty straight-forward product names. The iPhone. The iPhone 3G. The iPhone 3GS. The iPhone 4. And the new iPhone 4S. Simple. Same with their MacBook and MacBook Pro, and iPad and iPad 2. Not entirely consistent, but easy to follow. Although, when you get into their iPods, their naming becomes so simple that it’s confusing: every iPod is named simply “iPod <model>”, like iPod Touch or iPod Nano. But Apple changes the format or design or features every year, which sometimes renders past iPods incompatible with software updates or accessories or, more often, cases. Apple then resorts to the product’s generation, like, “Fits first and second generation iPod Shuffles.” Or, Apple forces accessory makers to resort to this type of crystal clear description: Fits 13-inch MacBook (aluminum unibody/black keyboard) & MacBook Pro 13-inch (incorporated SD Card Slot Version).
How do you know which generation iPod you have? And how does the average person know if their MacBook has a unibody?
HP Puts in Minimal Effort
In the past, I’ve marveled at HP’s confusing, long, cryptic product names. They’ve started to get better, but they still have a ways to go. Simply navigating to HP’s laptop products page you’ll see their Pavilion line in this order, sorted by price: dm1z, g6z, g6s, g4t, dv4t, g6x, g7t, dm4t, dv6t, dv6z, dm4x, dv7t, and dv6t (“select edition” and “quad edition”).
What the hell do those names mean? What’s the difference between the initial letters of d or g? Why are g’s mixed with dm’s and dv’s? And how do they expect the typical consumer to ever know what those names mean or which product they should purchase?
Let’s not even get into their printers…HP Photosmart Plus e-All-in-One Printer – B210a…
Sure, they have a massive product portfolio, but there’s no way for consumers to make heads or tails of their naming conventions.
Ask a Mac owner what laptop they have and they’ll say, “MacBook Air” or maybe even “13-inch MacBook Air” to be specific. But ask an HP laptop owner and I’m sure you’ll get, “Um, an HP.” Heck, I personally own an HP laptop and know that it’s some dv something or other, but have no clue of the full, proper name, or why it’s even named that way—and I’m a geek!
Sure, there are a lot of available options, lightning-fast innovations, and frequent upgrades to tech products, but there needs to be more creativity and innovation on the naming side. Software companies have always made it easy with sequential version numbering or, more recently, annual releases tied to the year or season. Microsoft, who can’t seem to make up their minds, flip-flopped when they moved from Windows 3.1 to Windows 95 then Windows 98, but then switched again to Windows XP, then Vista, and now Windows 7 and the upcoming Windows 8, but I digress…
What’s the solution? Give some marketing people access to these product naming decision meetings to provide a consumer’s point of view, rather than just the engineers’ point of view. I’m sure that there’s some very specific translation for all of these product names, but the average consumer will never spend the time to understand. Instead, they’ll just remain confused.
* The best line from PC Mag’s article on AT&T’s perversion of the term “4G” – “The International Telecommunications Union started out by defining 4G as a set of technologies that no U.S. carrier will have for several years. But as carriers defined 4G down, the ITU basically gave up.”