Prop 19 Politics

I’ve been hanging out in San Francisco the past few weeks and one topic that keeps coming up is Prop 19. It’s a measure on the California ballot this year that basically makes it legal for adults to grow/possess/smoke marijuana. I was having a drink with my friend Judy last night, and she made me realized a few things that sort of blew my mind.

I’ve always been a little live and let live around the pot issue; you like it fine, you don’t like it fine. I though it was novel that they might legalize the substance and tax it to help California climb out of the financial gutter. With that in mind, it didn’t seem like the worst thing in the world. It also seems like in some ways it could mellow out the drug war that we fund so ferociously on the border. Anyway, musings aside I started to think about what the business around the legalization would mean and it was sort of jaw dropping. The issue seems like a pretty crazy social iceberg.

Let’s play this through. Lets say Prop 19 passes (which by the way, looks like it won’t). If it were to pass, it would basically create an instant industry. I get that there are all sorts of illegal pot practices, but if it became legal large corporations like RJ Reynolds and Altria would immediately enter the space. They would set up shop with so much capital to operate you wouldn’t even remember it was supposed to be a local business growth initiative. If they can make a tobacco operation profitable, they would go bananas growing marijuana – much higher profit, much smaller operation. Much like factory food, they would systematize and standardize the product; it would eventually get cheaper and stronger, etc. And, if the measure held, they would lobby for national legalization. It would be pretty impossible to keep California from become the pot supplier to rest of the US. So even if it didn’t pass, people would buy it on the web.

As this all started to sink in, I realized that there’s just a massive irony to the story for me. This Proposition is sponsored by this progressive pro-pot activist in Oakland. (How he got thousands of pot-heads motivated to get enough signatures to force a state ballot proposition, I have no idea.) If that initiative passes, there’s a good chance he could create a market so appealing that bigger players would move in and put him right out of business. Most companies have a really hard time sizing new, untested markets. This markets been more or less sized through the war on drugs.

I don’t think I can think of any single event that has the potential to instantly create an industry. And to top it off, from a business perspective the measure seems like it would cause more problems for the people who hoped to benefit from it the most. We live in interesting times.

Probability, Possibility, Monopoly, & McDonald’s

This morning I caught this tweet in my Twitter stream:

@LenKendall – I’ve got Park Place for McDonald’s monopoly. If you have boardwalk I want to be your friend

This made me think about how times have changed. When McDonald’s Monopoly was originally designed, the world wasn’t connected. So the possibility of you finding the elusive Boardwalk piece to complete your set and win millions was extremely slim. Today, in the connected world, I wonder if you would have a better chance? (Think Lazlo Hollyfeld.)

Ionically, from McDonald’s perspective the probability of you winning today was the same as it was 10 years ago. McD’s releases 3 Boardwalk pieces into the world and those pieces divided by the total number of play pieces released is your probability. The underlying assumption is that the only pieces you can play are the pieces you earn through buying fries/drinks/burgers. It doesn’t work that way anymore, (and hasn’t for some time). In 2007 people were selling pieces on eBay. The contest just launch and nothing’s changed..

The best inspiration/example to explain the difference between yesterday and today is the DARPA balloon challenge this past December. DARPA wanted to know how fast a networked group of people could solve a large-scale, time critical task. To learn, they offered $40k in a challenge that involved releasing 10 8-foot balloons in secret locations across the US. It took a team from MIT less than nine hours because they created a pyramid scheme around the challenge. Before the challenge they issued the following message:

“We’re giving $2,000 per balloon to the first person to send us the correct coordinates, but that’s not all — we’re also giving $1,000 to the person who invited them. Then we’re giving $500 whoever invited the inviter, and $250 to whoever invited them, and so on…”

So imagine if a networked entity (like 4Chan) decided to unleash the same wrath on McDonald’s that they did on Time’s Time’s Person of the Year. There are already Facebook and MySpace groups with the same intention. There was a Andriod app in the UK for the last contest.

Let’s say only 5% of McDonald’s customers are capable of pulling of this sort of collusion, should McDonald’s design the game differently? (It would cost the same either way.) Should the game be built for the connected world? Individually, those consumers aren’t that significant, but collectively they could screw the game to the wall.

I’m sure McDonald’s has all sorts of rules to prevent this sort of collaborating, but maybe they shouldn’t? The whole contest is about marketing and buzz. maybe they should invite people collude. The cost to McDOnald’s would be the same, but the engagement from their consumers would be radically different. They would reframe their brand in an entirely different context, you would have stories celebrating how people were collaborating to win. The game would be about collaborating to win, not gobbling more McDonald’s. It feels like the publicity alone would reach new audiences and meet our culture where it already is.

(Not So) Gaga over Groupon

I’m having a tough time with this whole Groupon phenomenon. Every time someone mentions them as a great example of a new business, it makes me nuts. Now, I have respect for anyone who can launch and idea into a business, but I feel like the service is missing a bigger point. The idea of group buying isn’t new; consumers have been consolidating their buying power for better deals for a long time, but Groupon isn’t a function of consumer buying power. It’s an exercise in heavy-handed, value-driven marketing that put’s Groupon in the center of the universe, not the consumer. Harsh words I know, let me explain.

The way the service works is that businesses contact Groupon about a partnership and together they create a bargain that will run in over a period of time – could be a one day blitz, could be a longer-term cupon. (This deal includes Groupon earning around 50% of the coupon price for its service.) Since the business is deciding what to push and Groupon serves as the delivery channel, that’s not actually consumer buying power. It’s not driven by consumer demand, the Groupon community isn’t polling it’s users to figure out where they would like deal; Groupon makes the call. Groupon’s main customer is the business offering the bargain, the Groupon community is a means to an end. The service isn’t even a platform that allows consumers to connect with each other and organize for buying power – it’s a pop-up, loss-leader service that businesses can rent by the day to drive consumers through their doors.

So, say you’re a small business, Groupon sounds like a pretty great idea, right? All of a sudden you can help people learn about your services and it’s cheaper than buying expensive advertising, right? Well, maybe. Groupon reports that about 22% of the people attracted by their make return purchases. Growth can be good, but what about the customer experience?

Let’s say you just opened an ice cream store and the first time a new customer walks into your shop it’s jammed with people looking for a $1 ice cream cone (that usually costs $3). It’s hectic, everyone’s very transactional because they came for the deal, and it’s very hard to engage with the ice cream store because all of the electricity in the air. People are pushy, lines are long. The extra sales are great for the buiness, but you aren’t building any new relationships, you’re just ringing up (discounted) sales. It seems like if you want that atmosphere maybe you should open Crazy Eddie’s Bargain Basement, buy lots of sales advertising and run that game every day. (The WSJ ran a story yesterday with some small business owners with similar sentiments.)

I’m frustrated because I know the experience could be designed with the end customer in mind. Groupon could connect people, look for shared interests, and source a mix of deals tailored for their community. Groupon could encourage people to share reviews that would help the businesses they serve so they can improve (right now, all discussions are about ‘the deal’). Groupon could really would be help businesses grow on their own merits. I feel like Groupon could be about more than just blatant consumerism. I’m sure it will be a big business, I think it’s a big idea, I just wish it had a little higher purpose.

Crowd-Sourced Pay Raise

Today I spotted this link in @faris’s Twitter feed. It’s a homegrown report comparing the current salaries of account planners in large advertising agencies. Now salary comparison reports are nothing new, and I have zero interest in what account planners are paid, but the way this report seems to have come into existence is pretty incredible.

According to the foreword in the report, the author ( Heather LeFevre ) found herself in a pretty normal predicament; she felt she was underpaid, but couldn’t prove it. So instead of sitting on her hands, she put together an anonymous survey and sent it out to her network inquiring about their skill level and pay scale. She promised to share out the results and she’s been conducting this experiment for a few years. So, with a cheap web survey and a decent address book, she completely turned an age old process on it’s head.

This is pretty inspiring for me for a few reasons. First, instead of wringing her hands that she didn’t have the information to figure out her problem, she just went after the data. Instead of reinventing the wheel, she used simple tools she had at her disposal- an anonymous survey and an email. The data we don’t have often seems to be the first roadblock to progress; we don’t start because we’re not sure. This is such a great example of how to keep it simple and get it going.

Second, she solved for her problem, not all the world’s problems. If she would have stepped back and thought to herself “this is a big idea, how can create a salary report for the entire industry” she probably would have failed. Even limiting to the industry, she probably wouldn’t have gotten enough responses to complete the first report. By keeping the effort small, she could actually engage her audience. There are salary comparison websites all over the web (Glassdoor.com, Salary.com). These sites promise to share salary data, but they never seem to get enough scale to be useful. The idea behind the concept is so big people don’t know where they fit in the process. I love how she used technology to amplify her effort and didn’t make building the tool the object of her project.

There’s a big idea here for me. It’s the same thing that drove the success of Facebook (and social media in general). How can you use technology to amplify the network, connect people and then get the hell out of the way. The Internet isn’t much different than a good house party- if you can set the stage for people to interact, the party will usually take care of itself.

Going Open

The last few years has seen quite a few companies build idea generation platforms. Some have gone the semi-open route, retaining a network of participant who will contribute to mostly private challenges. Others have gone radically open, Victor & Spoils and 99 Designs post the actual client briefs calling for entrants to do the work, rewarding a few with the winning ideas. There are some brave experiments going on in this space; it’s a brave new world and no one really knows what’s going to happen here.

Today, IDEO threw it’s hat in ring today launching OpenIDEO. I’m biased, but I think they’ve designed a new evolution for this space. Many sites serve as a platform to capture ideas, but most haven’t truly involved ‘the crowd’ in the process past “hey give me your idea”. OpenIDEO creates Challenges that are designed to lead the community through the design process. Participants contribute inspiration, then generate concepts, and finally help select the best idea in the end. The idea is that everyone can participate as the process diverges and converges toward the final selected solution.

I’m really inspired by the site because it realizes a very important point: ideas aren’t scarce. Now it’s not about gathering tons of those ideas just to collect them, it’s about creating a framework where ideas can inspire each other. I think the smart cookies behind OpenIDEO have nailed this in the site design. The experience basically creates like the largest, most unorthodox design team in the world thinking, submitting, and churning on some really big problems. I have no idea how the site will play out and that’s exactly why I think the site is so important. It’s a big fat social experiment that’s daring, inspired and super smart.

Ok, don’t take my word for it, join in the fun here. There’s two hot challenges up at the moment; one hopes to help Jamie Oliver in his effort to help children improve their diet, the other is aimed at fostering educational tools for the developing world.

The Art of Passive Aggression

Yesterday I was waiting for an elevator with my colleagues Michael & Clark. As we stepped inside the elevator, it took a little too long for the door to close and we had an awkward moment. In that moment, someone quipped we should just take the stairs and right on cue the elevator doors shut. We chuckled and I sort of deadpanned that it would be amazing to have a Passive Aggressive Elevator installed in the building.

On the way home, I thought more about that moment. It’s funny to me how people can have complex relationships with objects, but most of their interactions are designed to be pretty simple – objects don’t have opinions, they can’t argue. People on the other hand are completely different, people have feelings and opinions and biases and baggage and interactions get quite complicated. Sometimes we get so wrapped up in that complexity we (ironically) don’t think about how we treat each other.

I started to wonder what it would feel like to create an art piece after some of the nastier ways we treat each other. You would probably stage it in a kitchen, since that’s sort of a communal hub. Instead of having simple interactions with all the appliances, you would have to verbally abuse them to make them work.

You could imagine a Berated Blender that only had one speed. To make it blend faster, you would have to scream at the machine because it was going to slow. Or maybe a Stove of Shame that, in order to keep it warm, you needed to continually counsel it in a disgusted tone that it wasn’t living up to it’s potential. And of course you’d have to have a Passive Aggressive Toaster, in which you’d place the bread and press the lever only to have it not work until you loudly proclaimed that you would “have rather used the oven anyway”.

The big idea behind all this is that we’d probably feel stupid chastising at a toaster, but we don’t think twice about doing it to people. If you could create a moment that was so ridiculous, could you provoke people to treat each other better? Could you use humor and akwardness to interrupt people’s routines to help people be a little more thoughtful.

I guess creating an art piece that is passive aggressively trying to make people less passive aggressive could be sort of interesting. I figure all I need is a blender and an MIT student and we can make this happen.

Media, Culture, and Evolution

I had an sort of an interesting moment this weekend. While screwing around on the Internet, I happened upon this clip , (go ahead, watch it).

Sort of funny, right? Well I LOL’d, but then I started to wonder, could this video be a fake? Without really realizing it, I found myself dissecting the clip looking for deeper meaning – it looks older, so maybe it predates Internet pratfalls…but the grainy flim technique wreaks of post-production…but the guy does start screaming quite quickly and somewhat naturally…but maybe it’s a comedian and this is a stunt.

Whether the video is real or not isn’t the point. I realized that I was trying to figure out if the video was fake because its authenticity would determine whether or not i would share that video. (Meanwhile determining the clips authenticity was also some sort of odd meta puzzle in itself. If the clip is real, i’ve found internet gold. If its a fake and i share it, I’ve been duped making me the fool.

Why, I feel this way i really don’t know. What interesting to me is that this is an evolved reaction. Had I seen this clip 5 years ago, I would have probably emailed it to half my friends, dishing out a cheap laugh over email. But since i couldn’t decide if it was real, I couldn’t send it.

It dawned on me that viral videos have changed how we consume online content. If we think someone has created something that only intends to trick us into spreading the idea to our network, we may actually not share it…which is the exact opposite effect the creators hoped for. Here’s the root of it. If we’re manipulated into sharing something, somehow we’re saying to our inner circle that we aren’t quick enough to recognize a fake. We care about authenticity because we don’t want to be tricked and we don’t want to trick our friends. This act of filtering/curating is a form of self-actualization – you don’t want to be associated with a fake.

All this made me wonder if it will become more difficult for media to be deemed share-worthy because authenticity and intention matter more and more as we build online identities. We’re in the early days of this movement, but this is playing out very rapidly. As our online identities continue to be more and more important to us, we will redefine what’s acceptable to share. Viral content as we know it now may become quickly become passé.

I started to wonder if this self-editing phenomenon effects how we create media. Sharing is still happening, but the tricking people into spreading seems to be dangerous territory for your brand. Take this Domino’s video from CP+B. The video starts as a full-on, unflinching Christopher Guest lampoon of a pizza photo shoot. It driving straight for prime 2005 viral territory. Then, about hallway through the video a protagonist chef emerges to lead us away from the lampoon and toward the core message – ‘Dominos is the real deal, we don’t need a fancy photo shoot.’ This seems like an evolution of the style; teasing with the lampoon, but pulling back curtain before the joke finishes. The spot’s well done, but I keep wondering if it were only five years ago, would the spot have just been one solid lampoon that wanted to ‘go viral’?

In a very short span of time, i think we’re getting really good at rapidly adapting to the media we consume. Much of this seems driven by our own online identity – we are what we share. So this all sort of begs the question; does culture create the media, or does media create the culture?

Buying Culture

I’ve been really inspired by Amazon lately. They’re great at what they do, but I’m really charged-up by their recent acquisitions of Zappos and Woot! . Both companies are healthy and admirable, but from all accounts Amazon was mostly interested in them because they had a great company culture (which leads to great customer service, and from that a solid business.)

The thing that’s inspiring to me is that you rarely read about a company being bought because it has a great culture. Bankers and M&A people don’t really know how to value a company’s culture that well. And if you can’t value something, it’s hard to price it – everything gets messy in the valuation, so you usually a stick with things that are more numbers-oriented. Companies usually like to pay for things they can count: market share, channel access, IP, scarce resources, etc. Cisco is a great example. From the late-90′s to mid-00′s, Cisco was on a major buying spree to pick up any patents or technologies in their space. They usually bought technology cheaper than they thought they could build it, they rolled it into a product road map and slowly, consistently grew the orb.

That sort of acquisition strategy works great if your a tech company, but not if you’re an online retailer. There’s almost nothing you can do to force customers to come back to your site over and over except serve them better than anyone else can. Amazon gets this, and I think they also get that good service starts with strong culture. Tech companies buy other companies because many times they need some technology they coolant manage to build themselves. By that same logic, culture seems even harder to create (and maybe more valuable) than some of the most brilliant IP. Getting the right culture is like catching lightning in a bottle. It’s the right people at the right place at the right time. You can invest in R&D to build specific IP, but it’s almost impossible to invest with the same intention and build a great culture.

All of this thinking on company culture lead me to one last thought. If traditional retail was all about location, location, location (can your customers find you), and if the early days of the web were all about access, access, access (can you offer all the long tail of goods your consumer could possibly want), retailing on the web now is about personality, personality, personality (brands than connect deeply with how their customers think and feel). Let’s face it, if in three clicks or less we can find anything our hearts desire, isn’t the next frontier buying those things under terms that are personal to us? (Think Zappos and their shoe returns, Woot and their one-item-a-day geekfest, or Amazon and their Prime shipping).

As the internet gives us more and more options, we seem to create more and more fractions in an attempt to create meaning in this ever-expanding sea of access. That’s happening everywhere online; content, services, networks, you name it. Today, it seems perfectly normal to go to the same (online) store everyday just to check out the one item they’re selling at a discount. This sort of evolution can’t come from a well constructed sensical strategy that makes good business sense, it has to come from a company with personality and a culture that’s just crazy enough to try.

Androids, iPhones, and Informal Collusion.

I ran across this recent post on the constant evolution of the Android phone. The post talks a lot about how the Android platform is evolving so rapidly that phones become antiquated pretty quickly. That’s probably not great news for Android customers, but it’s even worse for Google/Android competitors people like Apple.

I started to ask myself this question: If you really wanted to beat Apple, who seems years a head of many phone providers, what would you do? I started to think about Apple’s main Achilles heal – planned obsolescence. Apple may do a lot of radical things, but there’s one thing you can set your watch to; they’ll refresh a product line about every 2-3 years. You can count on each new model to contain amazing new functionality, but that feature set is framed around one single release. (They’re beginning to break this pattern with phone OS updates, but those are rather rare.)

All this Android activity could hit Apple in their weak spot. By using an open platform Google has convinced many providers to constantly evolve a product platform. What this mean is that multiple companies are working to add more customers to the common platform, which will create more apps, and an overall better experience. This open platform is sort of working as an informal collusion amongst many of Apple’s competitors. The platform is their agreement on how the market will evolve. If you notice how rapidly this platform has begun to gain parity with the iPhone experience, you can also see how soon it could actually surpass it. Sure, the fact that the platform doesn’t have walled gardens creates some quality control problem on their apps, but it also allows for some pretty cool features, (mobile, ad hoc wifi networks.)

This made me realize that the products that a company creates can actually be a fleeting advantage. I had a strategy professor in school that used to talk about ‘economic time.’ His big thesis was that no competitive advantage could withstand the tests of time, and you could only create temporary inhibitors (patents will expire, technology will obsolesce, relationships will erode).

As Android (and other open platforms) gain ground, it sort of takes the wind out of planned obsoleteness for Apple. They’re going to have to start pushing more OS updates, they’re going to have to get better carrier partners. They created a solid game, but now a group of players is looking like they’re ready to play harder (which could be rocky for their customers). While working on the same platform will make it more difficult for any one player to surpass the others, that’s still bad news for Apple, who quickly becomes the odd man out.

Apple has a lot of other advantages that hurt the overall Android movement, but if you were Apple, how would you defend?

(Side note: I ran across this ridiculously extensive review of smart phone sales. If you’re interested, you can grab it here.)

It’s the Little Things

So Vanity Fair launch an iPad app this weekend, (more details here). Given the whole sky-is-falling, death-of-print rally of 2009, I felt compelled to try it out. There were a lot of apps that launched with the iPad that felt like they were made custom to take advantage of the launch, but this one feels like a platform for all VF mags. I guess the app’s nice enough, it has all the content and advertising you’d expect. It’s got all of the promises of rich media; embedded video, high res photos, etc. Here’s the one thing you might not expect, the thing crashes like every 5 minutes.

It’s quite a funny experience because they’ve designed every little detail of the experience, yet the app just freezes and you have to hard-restart your device. From a readers standpoint, you would appreciate less flourish and more stability. It’s obvious that a team of interaction designers sweated every last thing, but you can also tell they outsourced the development portion. The app wasn’t developed and run through QA, it was built on spec.

This experience led me to think about capability and depth. There are people at VF that know the most arcane things about magazines; how layouts read, which fonts communicate subtle meaning, how something will look on paper vs. screen – they are extremely deep in the craft of print media. They don’t know anything about software; magazines don’t have bugs, they have errata.

The death of print conversation that drug on and on last year was a business case conversation – the cost of magazines would be too high, digital distribution would blow it to bits. No one really thought too much the capability of an organization, and how it helped delivery. We just sort of assume that you can build a capability if the business is big enough. This experience made me realize there a difference between capability and expertise, the difference between those to is how good you are at the details.