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Dave Walters

Dave Walters

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I’m Demanding EnoughGate

Friday, 08 October 2010 04:02 Published in Technology

I was cruising through my tweet stream today, and I ran across yet another wildly annoying reference to a ‘developing’, ‘rumored’, or ‘alleged’ (use whatever adjective you want) situation at Apple. This time around, the guys at GDGT are reporting on a potential issue with slide-on cases for the iPhone 4G. Apparently debris could get trapped behind the case and damage the glass – the potential effects range from light scratching all the way to shattered glass, according to the GDGT guys.  And guess what they’ve named this? Yep, it’s ‘Glassgate’. Whether or not this turns out to be a real issue, can we please stop ending everything with Gate? It’s the name of a hotel, damn it!

Besides, the really interesting detail in the GDGT article was that Apple gets a rev slice of all accessories designed specifically for iPhones, iPads and iPods. Here’s the quote:

“…Apple also officially licenses third-party companies to make accessories for its various products (which are designated MFI, as in: "Made for iPhone," "Made for iPad," "Made for iPod," etc.), often selling those accessories in its Apple Stores. Although the numbers have never been disclosed, Apple supposedly gets 10-15% off the top of all officially licensed MFI accessories (in recent years this has said to have changed to a flat rate per accessory).”

And beyond that, Apple has a whole other lever to pull on these companies – the pure power of their retail operations. The Holy Grail of distribution for these accessory makers is shelf space inside the Apple Store. So beyond the 10-15% cut outlined above, Apple can still buy them at wholesale and mark ‘em up. Pretty good work if you can get it.

Regardless of your opinion of Apple, you gotta give them some serious business cred for figuring out how to monetize virtually every corner of their ecosystem. 10% on cases, 30% on iTunes songs and apps, and a reported $2/click cost basis inside iAd. They literally print money, which funds fun little escapades like building a billion-dollar datacenter in rural North Carolina that will probably change the face of streaming media. For the opposite end of the intelligence spectrum, make sure to check out Cisco’s new $600 consumer video chat system.

But the next time something goes wrong (at Apple or with angel investors or anywhere), let’s find another catch phase. How about ‘Who’ from the Dr. Seuss classic ‘Horton Hears A Who’? We could have problems with the Who-tenna or celebrate the next Who-centenntial. Or maybe the Mayor from the movie just knows the real truth: “starting everything with ‘Who’ doesn’t make it hurt less, it just wastes time.”

The Future Just Ain’t What It Used To Be

Wednesday, 06 October 2010 06:49 Published in Startups

I’ve spent the last couple weeks rolling through the conference scene, and I’m always talking with startups and their advisors around town. The topic of the ‘future’ is usually just below the surface, but it’s been utterly pervasive since mid-September. The most obvious example is the Future Media Fest 2010 going on now at the Georgia Tech Hotel & Conference Center. My time there so far has been more future looking than the average event, but it feels like many ideas and companies these days are more incremental than truly disruptive (which I would contend is a cornerstone of being ‘of the future’).

The same was true of the TechCrunch Disrupt conference last week in San Francisco. It seemed the majority of startups there were some derivation of a location-based system, including the latest golden child Foursquare. As a Sarah Lacy piece over at TechCrunch accurately points out:

“…we had the group of startups in the middle of Monday’s afternoon of competitions that were all basically iterations on Foursquare. It’s one thing for companies to build off of the success of Facebook or the iPhone, but Foursquare hasn’t even proved it can go mainstream.”

I can honestly say the smartest thing I’ve heard recently about ‘the future’ was from Georgia Tech professor Dr. Ian Bogost today while leading a panel on the ‘Future of Gaming in 25 Years’:

“In 25 years, the prospect of us sitting on stage talking about the future of gaming will be absurd.”

His point was we’d be immersed in it. And isn’t that really how we want it anyway?

I also had the conversation today about how my favorite conference moments of the 90s were when the Intel Labs or PARC guys showed up at DEMO and wowed the crowd with amazing projects – that had absolutely no immediate commercialization aspects. And I clearly remember sitting at IBM Wildwood seeing a very early demo of Dragon speech recognition in 1991, and guess what? It was about as accurate as the Dragon Naturally Speaking app I have on my iPhone today. So much for the theory everything would be voice controlled in the not-so-distant future.

You can even look at two very high-profile apps as proof points: the TechCrunch Disrupt-winning Qwiki and the iPad’s reference news app Flipboard. Both are beautifully designed apps that focus on visualization of existing data, but let’s be fair: they’re not really indicative of the future of apps. Flipboard is – in many ways – RSS reader #2,935 to come to market. It just so happens they created an amazingly beautiful design in conjunction with our generation’s #1 content consumption device, the iPad. And while Qwiki feels very futuristic, questions remain around how much of the ‘magic’ can be created from an automated script. If it requires a ton of hand curation, then it really just becomes another authoring platform like Adobe’s Flash.

And I finished my day at a Nintendo press event, and found an even lower quotient of futureness (is that even a word?). I saw demos and walkthroughs of many upcoming Holiday 2010 titles, and they’re almost all part of long-loved franchises like Donkey Kong, Mickey Mouse or Metroid. I absolutely understand the hits-based methodology of video game marketing (and music, for that matter), but I’d still love to see the next level of innovation ala the Wii Remote of 2006. Now that Sony and Microsoft have caught up with Move and Kinect respectively, I can’t wait to see who sets the tone for the next five years. Most would agree the Wii pretty clearly won the last round on innovation plus price.

So while I’m not going to complain I didn’t get my Jetson’s car, I do wonder where the next big innovation will come from. Who will define the ‘future’ of gaming or the ‘future’ of location-based services? Does this future hang on the inventions of big brands like Nintendo, or will it rise from the minds of small startups like Square? I’d almost surely wager on the startups to grab the future by the throat. Big players like Nintendo and Intel will always improve successive generations of technology and devices, but will rarely break the mold altogether. That rare air is reserved for the best and brightest startups. And I’d love to see more of them!

How Google’s Next 100 Hires Could Change The World

Wednesday, 29 September 2010 02:23 Published in Technology

When I headed out to TechCrunch Disrupt this week, I was geared-up to see and touch the hottest startups in the land – and I’ve seen some great ones, but I’ve also had my share of Seth & Amy “Really?” moments. I’ve heard people pitching product-based check-ins where users gallivant around a grocery store scanning barcodes on frozen chicken with their iPhones to get points – sounds realistic. I’ve also been told a pink dragon is going to change the way CPG brands allocate media dollars – and it’s all because he’s a hilarious, irreverent fella. What I didn’t expect from Day 2 of Disrupt was that conversations around Google would be the most interesting thing I heard.

First off, it’s been 5-6 years since I’ve been in a room with Eric Schmidt speaking and I now remember it’s an amazing event. Even in the old Novell days at tech industry show classics like Net Interop, Eric had a way of articulating a future vision like few CEOs. His talk today was no exception, and he outlined three key trends that will shape the next phase of technology as we know it: 1) the rise of the smartphone; 2) an era of pervasive connectivity; and 3) cloud computing. With these three building blocks, he outlined Google’s desire to “build an augmented version of humanity.” Big words, but he’s really just talking about optimizing tasks for the combination of humans and computers – with each focusing on what they do most efficiently. For example, he contends it’s a bug that cars were invented before computers because computers are much more suited to operate cars than people. And these three key building blocks create a scenario where you have a supercomputer (the cloud) connected to a smartphone via pervasive connectivity. He cites the example of being able to translate languages on-the-fly during a real-time telephone conversation. These are the types of things Google engineers are cranking away on, and there’s not a better guy in the world to be leading them than Eric.

That being said, the sharpest question of the day was posed by TechCrunch’s MG Siegler of Brad Horowitz, Google’s VP of Products: Are designers to blame for Google’s lack of success on the product side – specifically social applications? Brad was quick to say no, but I believe the answer is slightly more complex. Perhaps the existing designers aren’t culpable, but few would argue Google’s at the top of the product game. (Hell, some I know would debate if Google even has any designers.) Witness the debacle of Buzz from a software perspective, and the death of Nexus One from a hardware perspective. Google simply may not have the right people in the mix.

So here’s my hypothesis: immediately divert all engineering job reqs to UI/UX, design, and front-end coding – and let it ride for about 100 people. In essence, stand up a product design and build function that can effectively wrangle all the innovation coming out of Google. And don’t worry, there are plenty of PhDs in areas like Human Factors if they want to remain somewhat academic inside this group. But also step out and grab a bunch of agency creatives with deep project-level experience and a work-around-the-clock mentality. They won’t fit in very well with the culture, but start out with them in a quiet corner (or separate facility) until they have 3-4 big wins under their belt. After that, their value will be undeniable.

This is exactly what my small team did at UPS in 1999-2000, and it’s paid huge dividends over the last 10 years. Massive volume applications like Tracking and Shipping were pared down to manageable beasts by sheer determination and relentless usability testing. For the first time ever, interactive professionals had strong influence over the product roadmap, and were in direct charge of the UI. Eventually, we even assumed development responsibilities over the front-end code with a team of 50-60 people. This exact approach could bolt directly into the Google business, and I’m not sure it’d be more of a shock than we created at Big Brown. It simply takes visionaries in the IT and interactive spaces. Not easy, but so worth the pain…

So under Eric Schmidt’s visionary leadership, why not make every possible move to dominate the world? If half of what he’s thinking could be brought to market, Google would be our generation’s most important technology company. They have undeniable engineering horsepower and amazing leadership, but lack the ability to formulate and launch a product that captures the hearts and minds of consumers. If they cross that chasm, our world will be a different place. I, for one, hope they do.

Why AngelGate Is A Good Thing

Monday, 27 September 2010 18:37 Published in Startups

In all the chatter, debate and outrage (real and fake) around AngelGate, it’s easy to lose track of one critical point: there are a lot of damn startups being funded right now. The parallel rise of the super-angel and the seed incubator model has tilted the early-stage funding process strongly in favor of the entrepreneur. Few would argue there’s a better chance to get a startup’s first break from someone like Paul Graham, Dave McClure, Chris Sacca or Ron Conway than from a traditional VC firm. There are concepts, people and companies coming to market that simply would never meet the deal criteria of the big VCs – and that’s the best news of all.

So the real question is who leads this new breed of investors? Unless you can somehow argue with sheer numbers and stunning success, you have to give the hat tip to Ron Conway and his 600+ deals. He broke this ground, and turned on an entire generation of new investors like Chris Sacca. Chris’ recently leaked email to Ron opens with the type of awe that exists for Ron. But like any Sherwood Forest band of merry men (subtracting the thief innuendo, of course), there are players of all kinds but they have one critical trait in common: they celebrate entrepreneurs. It should be empowering to all co-founders to hear Chris Sacca say:

“Founders have never been better educated or more empowered than they are today. We aren’t giving them money; they are giving us the right to invest in their companies. Our founders hire us and they do so after consulting a rich network of datapoints confirming whether we are or are not helpful. Slackers don’t get deal flow. Jerks don’t get deal flow. Poseurs get left aside.”

Dave McClure lives in the same pro-entrepreneur space, but in a style all his own:

“Innovation & investing is not about price.  it's about finding great entrepreneurs to build solid companies, and solve customer problems.  price matters, but innovation & execution matter a helluva lot more. find good people, bet on them, help them succeed. try to improve the ecosystem, and try not to be a dick (that last one is actually hard... it's sort of easy to be an asshole as an investor).”

But if you don’t think Ron is the impetus behind this pro-entrepreneur thinking, go back and watch him take on Mike Arrington at July’s Social Currency CrunchUp. He defends the entrepreneur’s right to make M&A decisions carte blanche. He may not agree, but notes that those who had the “guts, fortitude and passion” to start the company have the right to make those calls. Having been involved with many VC-funded startups, this was rarely the case…

This rise in funding does however have a downside in the bigger picture. Talk at this morning’s ‘Super Angels To Super VCs’ panel here at TechCrunch Disrupt focused on rising valuations for startups. When Mike Arrington asked the question, Chris Sacca was the first to respond, and his answer was simple: “we do fewer deals.” So while all this funding activity is good, the average angel or super angel has a smaller pot of money than a traditional VC. The good news is there's a wide range of personalities and styles among these many angel investors. You should surely be able to find one of these guys who best fit your outlook of the world, and in a perfect world they’ll bring along 3-4 friends.

So are we really going to dump on these guys for trying to work together more effectively? Why wouldn’t they try to find an open source doc approach to executing a round? Why not collectively figure out the rules of the road for this new category of investor? Call me naïve, but it would seem they each have more to lose in reputation than they have to gain in manipulating the funding process. This is – as Chris Sacca points out – the age of Twitter after all…

But don’t worry too much about the VCs. While they may lose a portion of the big-bang software deals to these smaller entities, Fred Wilson points out there are still plenty of capital-intensive industries like medical devices, biotech and cleantech that could barely buy lab coats and Bunsen burners with $25K from YCombinator. And they still have GreenDot

As an example, Dr. Jay Yadav of CARDIOmems told me recently their medical trials cost $30M alone. And they just inked a deal with St. Jude Medical that tees-up a $375M acquisition as an add-on to a recent $60M cash infusion for 19% of the company. Clearly there are still some nice multiples to be made. The VC business will change, but that’s not necessarily a bad thing – especially if you’re a consumer internet startup whose two choices have been big VCs or local angels that have been slaughtered by the economic downturn – neither have a high propensity to lend early-stage dollars.

So kill the drama once and for all, and let’s celebrate the fact smart people are getting their chance to change the world. That dynamic is good for us all…

Going Back to Cali

Friday, 24 September 2010 05:24 Published in Startups

I spent the first half of the ‘90s neck-deep in the West Coast venture-funded startup game. Our crew at Alexander Communications was the first point of contact for newly funded startups who’d just cashed checks from Kleiner Perkins, Hummer Winblad or Vulcan Ventures. During those years, I spent half my time at the Marriott Fisherman’s Wharf in San Francisco, a quarter of my time in a Delta 757, and a quarter of my time in Atlanta. It was an amazing era, and the speed of innovation was astounding. I could probably win a decent-sized bet if I could locate the Palm Pilot 1000 I preordered at Demo96. And the climate out West kinda feels like 1995 all over again. What better way to test my ‘Golden Age Of Consumer-Focused Startups’ hypothesis than to roll TechCrunch Disrupt SF next week with my press credentials?

I like the way John Doerr framed his ‘Third Wave’ concept with Charlie Rose at Disrupt NYC earlier this year. It’s all about social, mobile and commerce; and John’s contention is we could be on the cusp of redefining the Internet as we know it. He believes we’re moving past the web as sites and documents to be more about “people, places and relationships.” There’s little doubt John’s onto something here, and I find his construct a useful way to look at the current crop of startups.

And there are going to be some great examples of the species on-display (24 in the Startup Battlefield alone). I’ll be sitting down with a bunch of startups, including the folks from Toktumi who bring a second line to your iPhone via VOIP (over both 3G and wireless!). They’ve had a summer of accolades, and represent a very interesting segment of the mobile market. If anyone doubts web-based telephony isn’t blazing hot, witness Dave McClure’s 500 Startups announcement today of a $250K micro-fund 100% targeted to the Twilio platform.

I – like the rest of the world – will be interested to see Monday morning’s ‘Super Angels To Super VCs’ panel presumably hosted by the king pot-stirrer himself Mike Arrington. It’ll be interesting to see the dynamic there, and where Mike’s falling on the spectrum between Karen Silkwood and P.T. Barnum. With guys like Ron Conway, Dave McClure, Chris Sacca, Roelof Botha and Chris Dixon on-stage I’m expecting some serious insights into the current and future state of investing. And of course I’ll be rolling with the lite version of the TechDrawl video rig, so you can expect some interviews and panel footage from the show.

Many thanks to my buddy Vivek Wadhwa for greasing the skids all the way to TechCrunch CEO Heather Harde to lock-up press passes for Ben Dyer and me. And speaking of Vivek and Mike Arrington, don't miss their onstage debate at UC Berkley earlier this week.

Have a great weekend, and we’ll keep you updated from TechCrunch Disrupt SF.

Back in December 2008, I first saw an Augmented Reality demo built on the then-new FLARToolKit for Flash. About a month later, a deeper look appeared courtesy of Japanese coder Saqoosha. While it was definitely high on the cool factor, the real-life implementations didn’t really show up until a French company launched an iPhone app called Metro Paris Subway in August 2009. Since then, AR has made a slow move toward the mainstream, with its most famous current tool being Yelp.

To get a full-blown insider’s view of current state of AR, we took our TechDrawl cameras over to Blair MacIntyre’s Augmented Environments Lab. Blair and his team are hard at work in many areas of AR, including gaming and creating an open source AR-enabled mobile browser. Suffice to say these guys are on the absolute edge of AR – working with B2B and B2C brands to bring the technology to the mainstream.

To hear even more from Blair, he’s moderating an Augmented Reality panel on Day Three (October 6) of the upcoming FutureMedia Fest 2010 at the Georgia Tech Hotel & Conference Center. Enjoy the video interview below:

KillHB173: So Long Professional Services

Monday, 20 September 2010 05:18 Published in Startups

In a town full of Fortune 500 companies, I’d bet we all know someone who’s involved in professional services around these firms – lawyers, accountants, insurance brokers, marketing agencies, consulting firms, ad agencies etc. The simple fact is running a service company absolutely requires a young, vibrant, risk-taking employee base. Someone has to take that $22K entry-level position to get his or her foot in the door. And for many of these industries, changing jobs is the most effective way to get promoted. And that’s a huge issue with the Georgia Restrictive Covenant Act (HB173) in play.

These organizations are typically anchored by a core executive team that swaps out low- and mid-level players on regular basis. Now imagine that any mid-level employee who has any significant client interaction is restricted from moving to a competitor. In most cases, the relationships are entrenched at the senior-most levels so an Account Manager changing companies has nothing to do with the Agency-of-Record relationship. And when it’s the most senior-level executives changing sides, most of the rules of the road are agreed-to upfront before the move (it’s critical to maintain a good reputation in such a small pond). And some period of non-solicitation of clients and employees is understood and accepted. But existing law clearly doesn’t stop the move. HB173 would lock this down tight.

In the case of low-level employees, I’m confident firms would begin making arguments around exposure to trade secrets that have been the exclusive domain of higher-paid workers. Think about it from the employer’s perspective: why not lock-down the low to medium paid workers to improve the net margin on each hour they work? If you can bill the client $75/hour and an employee costs $36/hour fully loaded with benefits, then the company is rocking out $39/hour in pure margin – or right at 108%. This is the business model that service companies are based on.

Beyond the financial aspects of service businesses, it’s not uncommon to find hyper-competitive, hard-charging executives running them. A service business is a great example of the old adage: It’s a hard way to make an easy living. Many of the most successful people have deep six figure compensation packages, and are self-aware enough to know they’re only as good as the clients they can sell and retain. Anything that interferes with that process is usually pursued to the death by whatever means available. In today’s legal environment, they can lay some general restrictions on an employee, but they can’t go quite as far as many would prefer. (Apologies in advance to the litany of service folks who don’t run their business this way, but it’s important to recognize that some do.) And these firms are exactly the ones that will have a revised employment agreement ready on November 3 should this bill pass. They have both internal and external counsel working RIGHT NOW to define their ‘Restrictive Covenants’ strategy. They also have massive profit motivation and the resources to play serious hardball.

But most importantly, the real issue is the quality of the service provided. Every one of those $22K entry-level people has the opportunity to rise to mid-level management by killing it day-in and day-out. And the pace and expectations of most professional services firms require massive dedication to move ahead quickly. Inevitably, an employee will find the virtual ceiling within a company – when you’ve been promoted quickly, but now find yourself staring at a non-movable incumbent. It’s that moment when the best and brightest move laterally (or ideally up) to another firm. This allows them to continue their great work in an environment where they can thrive – and continue to be reward by promotion. That’s exactly how the next generation of great SVPs or Partners is created. Professional service firms are probably the closest things you’ll find to a true meritocracy. And they absolutely depend on an ever-rising generation of ‘young guns’ to drive the business. The smartest executives at these firms recognize this fact, and manage their entire staff toward that end. And the clients are the beneficiaries given they get the best and brightest talent at rates set by the market.

So if recruiting additional Fortune 500 companies to relocate their headquarters to Atlanta were a stated reason for passing HB173, why would you want to lobotomize the professional services industries that directly support these firms? Seems like yet another contradiction of logic…

#KillHB173

Building out a decent network storage plan has been on my list of things to do for about six months. An environment chock full o’ 85,000 iTunes songs and 28,000 iPhoto images keeps things interesting around my home office network. I told myself I was almost there with a 500GB Time Capsule, a LaCie 1TB external and a Maxtor 1TB external. And then the Time Capsule and LaCie exploded within two weeks of each other. Ok universe, I hear you. I batted .500 in getting my dead drives replaced ­– you guessed it: Apple stood by their out-of-warranty hardware (an early version that was ‘within a range of serial numbers’ known to have issues) and LaCie told me to kiss it. Guess who’ll never get another penny from me, ever?

So began the research and series of chaotic choices that are network storage. I pinged my tech friends, Twitter followers and most anyone who would listen. Of course, the first response from a majority was the PT Barnum of network storage: the Drobo. I was quickly reminded by Heath Wilkes of its one inherent strong point: “it’s a robot, man.” Others suggested network attached storage devices (NAS) both with and without drives installed. But because I’m cheap, I wasn’t going to pay a huge premium for a bare bones Drobo or some $600 Western Digital box. Plus, I’d just rolled up on a sweet sale at Fry’s (more on them later): 2TB Seagate Barracuda LPs for $108 each. I snagged two, and the plan was now coming together. So a nice little two-bay, diskless NAS seemed like a decent enough option, but wait...

Like any self-respecting geek, I had an ancient Dell XPS box lying around and discovered it had a RAID controller on the motherboard. Hot damn, RAID 1 mirrored drives here I come. I don’t need no stinking NAS. That might be the last, best use for the boat anchor anyway! Then I figured why not really go hog wild, and give Ubuntu server a try. It seemed the perfect undertaking for a dad with a one-month-old daughter (yeah right).

And then came the PC. I’ve been an all-Mac guy for about five years, but could build a hell of a barebones machine back in the day. I’m no Gomeler, but I’ve Frankenstein’ed some junk up in my time. So imagine my surprise when the Dell’s BIOS wouldn’t even see the CD or DVD drives. And of course Ubuntu can only boot from a CD before wiping the always-evil WinXP. So I proceeded to spend three nights in the basement dicking around with BIOS settings. I replaced IDE ribbon cables. I swapped a CD drive. I considered shooting the Dell with my Smith & Wesson .357, but thought it might wake the kids. And on the fourth day, I accepted NAS into my life.

And in another fit of logic, my brain said “you gotta buy it local because it’s gotta be up-and-running this week – no time even for Amazon Prime.” As it turned out, I was spot-on. Not because I needed it fast, but because I’d never been through the utter shame of returning something to Fry’s – and that’s a life experience you don’t want to miss. When you walk in, someone is sharp enough to notice you have a box in your hand and ask if you have a return. When you say ‘uh, yeah’, they point you to a cattle line across the entrance from the six lanes of return desks – even when three of the desks are staffed by people doing nothing. (I’ll save my musings on Fry’s staffing plan for a future post, but suffice to say there’s middle ground between their 24 cashiers and my local Lowe’s having one plus three self-checkout lanes.) Lucky for me, I’ve been through it twice with two different NAS enclosures – one Sabio that was DOA (visible on my DHCP table, but otherwise vaporized) and one Patriot that wouldn’t format the drives via the Linksys-like web UI. Overall, I can tell you this: unless someone pays you to manage a network, NAS sucks! I’m pretty geeky, but that junk was far beyond my comprehension. Perhaps that’s why Drobo actually sells $400 RAID enclosures without any drives?!?

So what finally saved the day? The answer was simple: FireWire 800 a drive enclosure into the back of my iMac and be done. So I circled back with Randy Arrowood, who had recommended an Other World Computing device from MacSales very early on. I hit up the site and found an even better RAID 1 enclosure: the NewerTech Guardian MAXimus. Even with its ridiculous name, it made perfect sense: out-of-the-box ready for the Mac and less than $130. So it arrived yesterday, and I proceeded to slap the two drives in. I’d already read the entire manual, and was confident their three-step setup process was a stark-raving lie. It powered up, opened Disk Utility by itself, I clicked one radio button, opened one dropdown, clicked one Submit button and the damn thing popped up on my desktop. A beautiful 2TB drive that’s completely mirrored to the second drive in the background ­– no need to do anything else except move my files on over.

The lesson of all this is clear: being cheap is always a pain in the ass. No wait. The real lesson is simplicity always wins. Great UIs always eclipse poorly documented products ­– even when one has a feature-level benefit over the other. The ability to deliver a powerful (feature-rich) solution in an easy-to-use experience is nirvana. I would argue this single-handedly has led to the rise of Apple – but some haters out there would inevitably disagree. Just know I got my drives setup, baby. Now it’s my turn feed the baby…

Live Blog From TEDxAtlanta, RE:SOLVE

Tuesday, 14 September 2010 18:39 Published in Startups

Enough talk. What are the solutions?

Ten amazing speakers — each of whom is part of an active effort to solve a modern problem — will make this last TEDxAtlanta of 2010 a true call to action. We'll learn about the ingenuity, the boldness, the workarounds, the setbacks and the small-step-forward successes involved with tackling significant issues.

5:55p: The Modern Skirts 'Plugged'

4:10p: Anne Millings, Women of the Storm / Be The One Campaign

  • New Orleans was under water for weeks, not days.
  • Where was the leadership?
  • Less than 50 US senators and representatives visited New Orleans as of January 2006.
  • A group of women banded together and knocked on every door in DC inviting them to visit.
  • In 20 days, 140 women headed to DC.
  • Why women? Women are persistent, women are compassionate, women are caring.
  • If you want something said, ask a man. If you want something done, ask a woman.
  • Took blue tarp umbrellas everywhere, and became media heros.
  • Got money for the levees, and had money allocated for rebuilding.
  • But nothing on coastal reconstruction.
  • Women returned to DC.
  • Government set aside a portion of offshore oil taxes to rebuild the coast, but the program doesn't begin until 2017.
  • Building levees on the Mississippi inadvertantly broke the annual cycle of wetlands and the Delta.
  • You can't have salt water in the marsh. The fresh water from the river serves this purpose – without the levee.
  • Louisiana loses a football field of wetlands every 50 minutes.
  • Wetlands are the "speed bump" for hurricanes.
  • Louisiana produces one third of the seafood.
  • One third of the domestic energy comes from Louisiana.
  • The Mississippi carries 40% of US commerce.
  • Everything at risk *before* the oil spill.
  • What would the Women of the Storm do?
  • We're going viral, and 'that's not a disease'.
  • Created a video (see below).
  • Gotten 130,000 signatures so far.
  • Goal is 250,000.
  • She wants to wrap the White House in the signatures, but that's probably an issue.

4:10p: Sam Williams, Metro Atlanta Chamber

  • Lots of stories of poor decision making by CEOs.
  • A 150-year history of Atlanta in one minute.
  • Key was business executives working with government leaders.
  • These execs are "Urban Statesmans".
  • Grady as a case study.
  • Many metro hospitals concerned about 'patient tsunami' impact of Grady closing.
  • Tom Bell, Pete Correll and Michael Russell stepped in.
  • Grady now runs in the black following over $300M in funding.
  • Water as a case study.
  • John Brock and Tom Lowe appointed to chair Water Contingency Task Force.
  • Penalty: $27B loss to businesses each year if nothing is done.
  • Still working on the problem, but the task force is making headway in the legislature.
  • Five Principles of Urban Statesman: 1) issue is at a tipping point; 2) Choose a strong leader; 3) find the facts; 4) communicate the consequences; and 5) create a simple, clear action plan.
  • Who among you will be an Urban Statesman?

4:10p: Jim Hartzfeld, InterfaceRAISE

  • Chemical engineering background, MBA, treehugger, enthusiatic capitalist.
  • Works for a carpet company, and ended up spinning our a sustainability consulting business.
  • Viewing sustainability through the lens of business.
  • All started with an obnoxious customer.
  • Book: The Ecology of Commerce by Paul Hawken.
  • When you see the world differently, you do things differently.
  • To affect a change in a system, challenge the paradigms behind the system.
  • You can't push people into sustainabilty, but once you enter you can never leave (Hotel California style).
  • Huge difference between curing sickness and creating health.
  • "Human history proves the cure for poverty is industry. The problem is we now need a cure for industry."

3:50p: Tad Leithead, Atlanta Regional Commission

  • Atlanta: 100 Years and We're Halfway There.
  • In 1960, Atlanta was the same size as Birmingham, ~700,000 people.
  • And then came the Eisenhower Interstate Act.
  • Martin Luther King decided Atlanta would be the center of the civil rights movement.
  • William Hartsfield built a world-class airport.
  • Billy Payne brought the 1996 Olympics.
  • All started by a single individual.
  • ARC's role is to create a 30-year transportation plan.
  • Laying out Fifty Forward, the vision for the next 50 years.
  • Priority One: Water
  • Priority Two: Aging Services (20% of our population will be over 65 in 20 years).
  • Priority Three: Transportation (We have the longest commute times in the nation. We have a $200B deficit for transpotation improvements in the next 20 years.)
  • Priority Four: Education (SAT scores down almost 30% over the last two years.)
  • Priority Five: Vision
  • We need people putting passion into action.
  • "I have decided to make a difference in Atlanta, Georgia. Where will you make a difference?"

3:15p: Ryan Gravel, Atlanta BeltLine

  • What kind of city do we want to be?
  • Went to GA Tech.
  • A shopping mall shouldn't be the expectation for what a city is.
  • The problem is cultural.
  • Was his graduate thesis in 1999.
  • BeltLine is 22 miles long.
  • Mostly 'forgotten' places is where the lines run.
  • Great response from Councilwoman Cathy Wollard.
  • She pulled Ryan's team in, and helped the project along.
  • Built huge groundswell with politicians and planning committees.
  • Three main components: transportation; economic development and green space.
  • Trust For Public Land doubled the green space.
  • All the players jumped in to improve the project.
  • It's changing the space, and the way we look at our city.

2:00p: Harrison Dillon

  • The way any technology is judged is by how effectively it solves our problems.
  • What's bad about oil? Lots.
  • 2/3 of our oil imported.
  • In 2003, they started a company to create biofuels - oil from micro-algae.
  • Pond based algae creates oil that cost $1000 a gallon.
  • Feed biomass to algae via fermentation to create oil
  • Creates fuel under $1 per gallon.
  • Navy has a huge project to remove bases off petroleum and onboard them to renewable energy sources.
  • Oil companies challenged them to scale.
  • If you can't scale in energy, you're going nowhere.
  • Been scaling for three years.
  • First company ever to deliver renewable fuels to the military.
  • It's takes 10 years to build an energy source.
  • During that time, there are 5 political cycles, which is why we have no comprehensive energy policy.
  • Consumers have to care about where raw materials come from.
  • And assert that we care about solutions beyond the next election cycle.

1:45p: Mills Snowden

  • Competing in the X Prize for the 100 mpg car.
  • Number one selling vehicle in the US: Ford F150
  • Number Two: Chevy Silverado pickup
  • Those vehicles will have to be at 30 mpg by 2020 based on new standards.
  • Technology allows them to double the mileage.
  • Kicked off a six-month research project.
  • Hydrogen is their key.
  • Ran a bunch of prototypes.
  • Entered the XPrize in December 08.
  • Had seven months to make it work.
  • Total volunteer crew, including engineers and scientists.
  • Had to jailbreak the Prius to make their technology work.
  • Out of 111 teams, only 29 made the 'knock-out' round.
  • Didn't make it out of the knock-out round based on technical difficulties.
  • If you have a beneficial idea, act on it.

1:40p: 111 Chair Giveaway

  • Mike Hang wins

1:30p: David Butler, Coca-Cola

  • Thinking big.
  • Grew up surfing in Florida, with a small expectation of a 'big wave'.
  • Coke has 14 billion-dollar brands.
  • In 206 countries.
  • 500 brands.
  • 900,000 employees
  • 50m customers
  • 1.6b servings daily.
  • What do you do when the waves get big in your business?
  • Wicked problems can only be solved by design.
  • Think they can double the size if their juice business by 2020.
  • Wealth is shifting from West to East.
  • By 2020, 1/3 of the earth's population will be teenagers.
  • Food is moving toward liquid.
  • Working with Brazilian growers to make sure here's enough pulp to create the juice to double the business.
  • Need to understand the business horizontally.
  • Shot images of 400 fruits.
  • Build systems, not solutions.
  • 'We all win when we think big about design'

1:05p: Daron 'Farmer D' Joffe

  • Designs gardens in urban spaces.
  • Teaches people how to grow food.
  • Soil is the key to good food.
  • Plants are like humans: Eat well, grow well.
  • Drip irrigation is a key element that's also green friendly.
  • But why should you grow a garden?
  • First asked the question after considering the origin of his turkey sandwich.
  • Could have easily traveled 3000 miles and left a trail of fossil fuel waste.
  • 1 of 3 bites of food you take depend directly on bee pollination.
  • Ammonium nitrate runoff poisons lakes and other waterways.
  • America's favorite fertilizer is Afghanistan's favorite explosive.
  • Most people don't when know they're consuming engineered food.
  • Enter biodynamic farming.
  • Kind of like the Farmers Almanac view, plant during specific moon cycles.
  • Chicken manure is great for fertilizing fruit plants.
  • Like we add vitamins to our food, biodynamic farmers add flowers to their compost.
  • Stopped farming and went 'Johnny Appleseed'.
  • Works with Whole Foods to recycle and compost their waste.
  • Creates gardens at schools, at prisons, with anyone.
  • Gardens teach about the heart and soul of food.

12:45p: Logan Smalley, Darius Goes West

  • Filmmakers can use the freemuim model and 'sideways' marketing.
  • Raising money to build awareness for MD.
  • Raise awareness via selling bracelets and DVDs.
  • They give away the DVD to every educator, and offer a Skype chat with Darius if they raise more than $100 for MD research.
  • 1 in 5 raises more than $100.

12:25p: The Modern Skirts

  • The Modern Skirts kick-off TEDxAtlanta with a great four-song unplugged set.
  • Drums on a old suitcase.
  • The Modern Skirts will return for an electric set later today.

Dead Man Walking: The Fragile Future Of Loyalty Programs

Monday, 13 September 2010 07:32 Published in Technology

During my weekend travels, I was hit up for two more lame old-school rewards programs from brands I already like and support: Panera Bread and Dunkin Donuts. The interesting thing about these two retailers is a loyalty program will have absolutely zero impact on my spend with either – they have my cash when it’s geographically convenient.  So unless my customer status allows me to work with the real estate and/or franchising folks, it’s an utter waste of time. (But I sure would like to see a Dunkin Donuts on Windward Parkway if anyone in Massachusetts is listening!)

All this got me thinking about what the future state of loyalty programs should be. And that’s from someone who’s had a fair amount of cycles in creating and running existing loyalty and retention programs for the likes of UPS, Home Depot, Delta Air Lines and a few private-label deals ­– both internally and on the agency side. During my Digitas days, I worked with 20-30 of the best minds in the space, including the guys who developed American Express Rewards, Best Buy Rewards and GM Lease Loyalty. So, in essence, I guess I’m calling my own t-shirt ugly.

So here’s my Top 5 ways the loyalty business needs to completely change if there’s any hope:

1) Embrace Open Authentication: Why not start off with the hairiest of them all? If cross-brand loyalty is going anywhere (and I think that’s the industry’s best hope), there needs to be a standard toolkit for any brand to plug into – including both a technology backend and point values. The days of proprietary programs created by Maritz or Digitas will eventually fade based on the cost-to-deliver and which companies can afford them. In my experience, most companies aren’t running tight ROI calculations to determine revenue lift (adjusted for discounting and SKU-level margins) versus cost to operate a program. You’ll see all kinds of cost avoidance strategies – like moving statements and redemption methods online – but no one wants to admit their program might not make fiscal sense anymore. (Just think about the difference in SkyMiles when an average business traveler paid $1,200 versus $350.) If there was a single program that allowed brands to share hard costs like card production and technology enhancements, I think you’d find a happy medium for offer details and the sharing of transaction-level data – the two main drivers of why every company thinks they need their very own loyalty program. And sure, you’d need to sort out the branding junk but who wouldn’t be down for 2x increase in ROI?

2) Become Socially Aware: Purchase behavior has been the primary cornerstone metric over the entire history of loyalty marketing. You gathered punches or points or stamps or boxtops or whatever, but every single one required a purchase. This concept should be killed with a quickness. In the new socially aware world, you could argue influence on a purchase might earn you even more points. I’ll share a real-life example: I’m shopping for a RAID backup solution for my network. When I tweet or Facebook my followers to ask their opinions, why isn’t Sanjay Parekh given points for engaging me in a discussion on Drobo? Or Rob Kischuk being given some cred for recommending NetGear? Imagine if Drobo knew Sanjay was a customer (and had already awarded him points for his purchase) and then dropped a few more based on his tweet mention. Now that would be a way to create grassroots conversation about your brand or product. Or what if a Foursquare or Gowalla check-in earned you some small increment of the same points? And finally, why wouldn’t any new-style loyalty system be Facebook core from the start – including Places? The demographic match between Facebook and the traditional deal-seeker is tough to ignore (female head-of-house, over 30).

3) Move Beyond Discounts: The core of any great loyalty program should be pretty simple: Get your best customers (usually defined as most profitable) to spend more money with you, thereby increasing revenue and profits. Somewhere along the line, this concept got bastardized into increasing market share and hopefully creating more revenue, which led to deeper discounting to draw the attention (and purchase behavior) of a fickle consumer with ever-expanding retailer alternatives. So in essence, your loyalty program ended up creating a whackload of coupon customers who now have to feel like they’re getting a deal to even consider a purchase. And yep, the Groupon phenomenon is just about the zenith of this trend. This is a natural tug-of-war, and can only really be short-circuited by adding non-discount strategies to your loyalty program. Think Best Buy’s Exclusive Shopping Evenings, or the occasional offer I get from Mercedes Benz to attend track day at some exotic location. They don’t send me $5 off an oil change like Jiffy Lube does, they convince me that Mercedes is a brand I want in my life. And it works like milk and cookies on me personally…

4) Deliver Affinity-Based Rewards: This is another concept that fundamentally changes loyalty marketing, but requires brands to work together. The key is to separate the earning events from the redemption events, and give the choice to the consumer. Any brand worth its salt has at least some basic persona types applied to their customer segments. In the absence of hard research data, you can extrapolate that teenagers like social stuff, dads like sports and moms are the primary buyers of virtually every item in a household. So if this is the case, why not play right into these affinities? Again, let’s look at another example: What if eating Whoppers at Burger King earned me discounts at GameStop instead of simply more (or cheaper) food? The ability for me to select my own rewards would certainly motivate my earning behavior better than almost any monetary offer. Hell, I’d even pay full price for the Whopper because I knew I was accumulating more points for something I love. Again, back to the core strategy of getting high-margin customers to increase their spend…

5) Get Mobile – And Fast: One of my biggest issues with Panera Bread on Saturday was they wanted to me carry another damn key fob. Well guess what, I’ve got a much more capable device than a key ring in my pocket – it’s called a smartphone. Why would a retailer give every program member a physical card that costs ~$1.50 when they could find a multitude of other ways to drop a unique ID on me like Bluetooth pairing codes or an Address Book entry? Oh, and I’m going to lose that card, so you better budget for 2-3 per customer per program lifetime. I really do struggle to understand how Kroger affords to run their loyalty program with how aggressively they sling physical cards. But make no mistake, you don’t just go digital with your loyalty program one day. Most businesses have an upper-income segment of users who are older and potentially not that into technology (although exceptions abound), but the savviest marketers understand their next generation of customers is going to have completely different expectations. The beauty of mobile platforms is they also bring along all the location-based services that absolutely should be part of the loyalty equation. I know the Apple kids would freak from a T&C perspective, but imagine layering GPS data into a customer record…

So I’ll sum up my thoughts with an equation:

Social + Location + Affinity = New Loyalty

The consumer’s patience with wallets full of punch cards or key chains full of bar codes is coming to an end. And what I don’t mention in the equation above is just as important: purchase history and coupons. A completely different mindset is required if any semblance of a loyalty program is going to stick to today’s 20-year-old, who is the prime earner of the next 20 years. Online reputation and real-life experiences will trump a 15% coupon any day of the week and twice on Sundays.

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