Archive for the ‘General’Category

3P First

I was surfing the web one evening recently when I stumbled upon a tweet about Amazon by the investor Kanyi Maqubela (@km):

The tweet is a screenshot of part of an email Maqubela had sent to a friend a couple of days after Amazon’s massive Q3 2017 earnings call. Amazon’s outlook has never been brighter. While he is correct that Amazon has done well at “venture investing”, he is missing one key piece of information in that is central to Amazon’s business strategy: When Amazon experiments in new markets, particularly in retail, they practice “3P First”.

What is “3P First”?

3P First is when Amazon starts selling a new category of products in their marketplace, but all of the sales are priced, fulfilled, and managed by a third-party seller. By opening up new product categories exclusively to third-party sellers, Amazon gets a bird’s-eye view of market testing at the expense of third-party sellers, thereby absolving themselves from significant upfront capital expenses. When demand proves to be solid for its third-party vendors, Amazon moves forward with its own first-party fulfillment, otherwise known as the friendly words: “Ships from and sold by Amazon.com“. At this point, Amazon exerts maximum control over pricing and negotiates extensively with vendors to reduce their wholesale prices and provide additional sales incentives.

Still not convinced?

Take a look at the 3P First strategy in action: Amazon’s next big retail play is rumored to be the pharmacy business. One year ago, Amazon announced they were testing the waters in Seattle by partnering with the local pharmacy chain, Bartell Drugs. If history has a way of telling the future, Amazon will more than likely partner with an existing pharmacy or pharmacy benefit manager (PBM), such as UnitedHealth’s OptumRx, or the largest PBM in the U.S., Express Scripts. Finally, once Amazon is able to evaluate the third-party pharmacy sales, they will make the decision on whether or not to sell direct, which in this example includes navigating a complex federal and state by state regulatory process.

Know of other companies who practice 3P First? Let me know. I am curious to find other examples.

31

10 2017

Coinhive: A Crypto Miner for your Website

This past month I came across one of the most interesting applications of the blockchain that I’ve seen to date: https://coinhive.com.

The idea is simple: You get access to the CPU of your website’s visitors (in order to mine cryptocurrency) in exchange for providing access to your website’s content. Notably, The Pirate Bay announced that they are testing to see if Coinhive specifically will earn as much revenue per visitor as their display ads:

Miner

As you may have noticed we are testing a Monero javascript miner.

This is only a test. We really want to get rid of all the ads. But we also need enough money to keep the site running.

Let us know what you think in the comments. Do you want ads or do you want to give away a few of your CPU cycles every time you visit the site?

Of course the mining can be blocked by a normal ad-blocker.

https://thepiratebay.org/blog/242

It remains to be seen whether or not the miner will be more profitable than display ads for The Pirate Bay, however, I am certain that website owners will also be considering how a JavaScript miner can be complementary to existing revenue channels, not just as a replacement. As noted on the Coinhive website, the service can also be used for two additional use cases:

  1. Spam protection, in the form of solving a hash, which would be an inconvenience equivalent to a computer attempting to automatically solve a CAPTCHA.
  2. Interstitial advertising, in the form of solving a hash before website content loads, similar to the full-page ads that visitors to Forbes and other prominent publications must view before viewing the content they are seeking.

 

Coinhive makes use of an alternative coin, Monero, which is designed with a mining theory, “Proof of Work”, that rewards miners for the time and energy used to correctly calculate hashes of blocks on the end of an ever growing chain. So, as the miner is left active on sites where users spend significant amounts of time, the miner is able to get to work and complete calculations for more lucrative hashes. Like the Coinhive site mentions, their services won’t make a relatively low traffic blog super valuable overnight, but for other sites with high traffic and extremely high engagement, this could be a welcome reprieve to chronically declining ad revenue. Finally, I believe Coinhive demonstrates that the blokchain is not just another silly over-hyped tech bubble; there can be real value when the technology is applied thoughtfully and tastefully.

30

09 2017

X-Acto Knife Versus Swiss Army Knife Products

 

Recently I watched Des Traynor, co-founder of the popular customer communication tool Intercom, deliver a talk that codifies much of how I have come to think about building new products. He highlights the difference in utility between a scalpel (known as an X-Acto knife in the arts world) and a Swiss Army Knife in order to emphasize the importance of simplicity and “doing one job”. The difference, Traynor explains, is a product that does one thing extremely well versus a bunch of things kind-of well. This difference can mean life or death for your product or feature. Think about it: Do you know anyone who would rather open a bottle of wine with a Swiss Army Kine instead of a wine opener? Both can accomplish the goal, but one is designed specifically for the task.

So, when I am thinking about new products and features, I’m always striving for an X-Acto knife product: A product that does one thing extremely well; a product that is insanely useful to a very specific group of people. A product that isn’t just something new but instead creates new value. Then, once you’ve started simple by doing one thing incredibly well, you can increase complexity with time. Complex systems cannot be built the other way around.

31

08 2017

Empire State of Mind

This month I did something that I have been looking forward to for a long time: I moved back to New York. There is no other place I would rather be. Here area couple of quotes that I’ve always found to be relatable:

“One belongs to New York instantly, one belongs to it as much in five minutes as in five years.” — Tom Wolfe

“People go to LA to “find themselves”, they come to New York to become someone new.” — Lindsey Kelk, I Heart New York

I am so happy to be here!

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31

07 2017

Notes to Remember for When I Am Running a Company

I’ve been keeping a mental check list over the past few years regarding some ideas that I want to keep in mind when I am running my own company one day in the future. The purpose of this list is to gather ideas that optimize for employee happiness and to ensure that I do not repeat the mistakes I have either witnessed or observed through others. Let’s jump right into it:

  1. There’s no such thing as a free lunch. Is a “free” lunch in the office just another way to keep employees working at their desks for longer? I want to encourage employees to leave the office regularly to eat or pick up lunch. I think this would make employees feel supported in choosing whatever food they like, eat with whomever they prefer, in addition to contributing towards a more vibrant neighborhood by supporting small businesses.
  2. Unlimited vacation means no vacation. When vacation time is not bounded by minimums or maximums, there is inevitably going to be abusers of the system and also people who do not take off enough time. I firmly believe in a minimum vacation policy. Three weeks off, paid, for your first year. Then four weeks off every year after that.
  3. The company doesn’t own your personal work. Personal projects developed during free time are owned by the person, not the company. GitHub recently took a stand in this regard by stating that all personal projects that do not relate to their business are not owned by them. I believe this leads to numerous benefits for the employer and the employee, as stated on GitHub’s Balanced Employee IP Agreement page.
  4. Transparency regarding cash flow matters. Employees who understand exactly how cash flows in and out of the business are able to prioritize their tasks more effectively because they can make the connection between their work and the overall health of the business. Additionally, transparency regarding cash flow gives employees better insights into their own positioning in the markets for which they are creating goods or services.
  5. Butts in seats does not equal productivity. The optics of work are not work anymore. This attitude prevails from the manufacturing economy of the industrial-era, where more time on the assembly line actually correlated to increased productivity and revenue growth for the company. The information economy does not always reward longer hours with better productivity.
  6. We’re all learning. The workplaces where I have personally been most comfortable are environments in which the team has the mindset that we’re all learning (we do not expect you to know everything, but we do expect you to read a lot!), mistakes are tolerated, and we’re all just trying to do the best work of our lives. To that end, this list of ideas, of course, is just that: a list of ideas that I think will help me learn and improve in the future. If you have ideas that you think I might like to add to this list, please feel free to reach out and let me know!

 

30

06 2017

Stay Inspired with Dribbble New Tab

When I recently replaced my MacBook Pro, there was one tool that I quickly forgot how much I missed: Dribbble New Tab. I missed this tool because all of the sudden I was lacking my daily design inspiration, which is a critical part of the information diet for makers of all kinds. Since I discovered this tool a couple of years ago, The Dribbble New Tab application has become my go-to source for design inspiration.

The application works easily: Every time I open a new tab in Chrome, I see all of the most recent popular creative designs from Dribbble, a popular online community of digital designers. If I like a design and want to save it for future reference, I can click through the image and then click the heart button on the Dribbble website.

Give it a try! Add to Chrome:

https://chrome.google.com/webstore/detail/dribbble-new-tab/hmhjbefkpednjogghoibpejdmemkinbn?hl=en

 

31

05 2017

Sales Productivity Software Is Eating the World

In Jeff Bezos’ annual letter to shareholders last week, he proclaimed, “The outside world can push you into [stasis and irrelevance] if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.” So, what are the world’s trends in sales right now, and importantly, which trends will help you move faster than ever before?

Increased Specialization in Sales Organizations

Recently many of the most successful sales organizations have greatly increased the specialization within their teams, leading to two primary sales roles: prospectors and closers. Prospectors are focused on the laborious process of generating new leads and qualifying them through the pipeline. Closers then take qualified leads off the hands of prospectors and in turn focus on converting qualified leads into new deals.

An increase in sales specialization is evident by simply investigating the Google search traffic for the keyword “Sales Development Representative” (SDR), an entry-level position that specializes in outbound prospecting and qualifying new leads. Over the past five years, the search traffic for this keyword has more than tripled:

 

As a consequence of increased sales specialization, the day-to-day activities of sales roles have become more repetitive and metrics-driven. For example, it is typical for an SDR to spend the overwhelming majority of their time completing just two tasks: manually researching and writing cold emails to an average of 265 new sales prospects every month (The Bridge Group 2016). Once the SDR is able to get a prospect on the phone for a certain number of minutes, the potential new customer is then handed off to a closer, typically known as an “Account Executive” (AE), who is paid for their number of deals closed. This rigorous approach of separating the sales prospecting and closing responsibilities has lead to more efficient teams and increased profits for all who have adopted the strategy.

But how can a modern sales team squeeze-out even more efficiency once all of the responsibilities are divided? The future is trending towards sales processes that make extensive use of their data to achieve dramatically better results, and the winds are picking up strongly. To paraphrase from Jeff Bezos’ annual letter once again:

We’re in the middle of an obvious trend right now: machine learning and artificial intelligence… Though less visible, much of the impact of machine learning will be quietly but meaningfully improving core operations.

In the context of sales, there are a number of time-consuming operations and outreach tasks where Bezos’ prediction applies: obtaining prospects, outreach via cold emails and cold phone calls, coordinating product demonstrations, and completing the onboarding process. Data and machine learning is already helping salespeople gain insights to be even more effective in each of these fundamental sales tasks. Let’s have a look.

Here are a few of the leading startups building sales productivity software:

Obtaining Prospects

Finding new leads has come a long way from paging through the phone book. Today, dozens of companies provide lists of high quality leads for purchase. 6sense, Data.com, and GrowBots are leading solutions that help sales teams obtain the contact information of in-market buyers.

Outreach

Establishing candid rapport with a stranger over email or phone call is among the most difficult of sales tasks to consistently complete successfully. In the past, only true sales grandmasters have risen to the top in this cutthroat activity. Fortunately, there are promising new products in this category that help build relationships during the outreach process, which is often referred to as “lead nurturing”.

For sales teams who are comfortable practicing a spray and pray approach, products like Outreach.io, SalesLoft, and Prospect.io have emerged as major players that help SDR’s automate outreach efforts. More recent entrants to the market have been focused on bringing much-needed context and personalization to outreach efforts. For example, sales teams using copywriters from Cavalry are able to get highly engaging cold emails written quickly.

Coordinating Demo’s

Once a qualified prospect is finally on the hook, it’s critical to not let the logistics of a test drive get in the way of closing a sale. Time saved for the prospect and AE is a win-win, so here are a few tools that have become go-to solutions for handling the demo process from start to finish: Calendly and Clara are automated scheduling assistants that make finding a convenient time painless. ClearSlide goes one step further by providing sales teams with insights into how their prospects are engaging with the demo experience.

Onboarding

Finally, once the sale is closed the onboarding process begins as the last remaining sales task. Appcues helps with onboarding by making it easy to implement a tour of an application’s features. Next, Drift and Intercom help companies automatically communicate with their customers in a way that is personalized to their usage of the product, leading to increased engagement and reduced churn.

What’s next?

While the influx of sales productivity software makes it easy to believe that the trend of sales software is pointing towards total human-replacement, I think that is the wrong conclusion to take away. In sales, the most appropriate applications of technology like artificial intelligence or machine learning will be the tools that enable more personal touches, better research, and more face time ? while removing needless overhead costs and administrative tasks.

Technology works best when it helps humans to mechanize a repetitive process so that they can do even more. Which software will you make use of to help you and your team achieve even better results? As Bezos says, embrace these new tools and the world’s trends will be your tailwinds, if not, you’re probably fighting the future.

26

04 2017

Ethereum

While in recent weeks it seems that politics and tech-scandals have dominated the headline news, a sleeper open source project has been gaining critical mass appeal: The Ethereum Project is a new blockchain developed by Vitalik Buterin that has similar characteristics to Bitcoin. Importantly, the blockchain can be used to reduce risks in market transactions and as a store of value. For example, take a look at the growth in the price of one ether over the past year (courtesy of Coinbase):

 

 

 

 

 

If you click to see a detailed view of this graph, you’ll notice that the price per unit has more than quadrupled over the past three months alone. I am not able to pin point the cause of the divergence of interest from Bitcoin to Ethereum, however, it is apparent Bitcoin is experiencing problems (such as the possibility of a hard fork) and also major public companies such as Microsoft are demonstrating serious interest in commercializing blockchain services using Ethereum. As a consequence, it is possible that a significant number of speculators are taking some of their profits from Bitcoin and diversifying their holdings into Ethereum. Either way, the interest in Ethereum is booming and there is still time to position yourself ahead of the curve if you wish to take part.

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31

03 2017

Vitamins Versus Painkillers

During a recent conversation with some folks in the startup world, I heard an entrepreneur call their product a “vitamin” product. Seeing that it was clear to me that this person was not making traditionally edible vitamins, I asked what this person really meant by calling their product a vitamin product. They explained the vitamins versus painkillers metaphor as follows:

A painkiller product solves your important pain immediately. The user experience takes you from having a headache to being perfectly delighted. A vitamin product sets you up for healthy habits over the long term. By using a vitamin product a little bit over many years, you will ensure a healthy lifestyle in all facets of your life, from physical to financial health.

This really struck me as a useful binary heuristic for going about classifying a majority of startups and their corresponding products. Either your product solves an important pain immediately, or the product appeals to the users’ emotions by reinforcing the belief that sustained use will lead to positive outcomes.

I am not able to quickly determine exactly who first coined this metaphor, but Nir Far is commonly referred to one of the authors who has popularized this heuristic. Far writes about vitamins and painkillers in his book Hooked which provides advice on how to build habit-forming products. Check it out:

The Real Reason “Stupid” Startups Raise So Much Money

Nirandfar.com | Hooked: How to Build Habit-Forming Products

28

02 2017

Indifference and Reciprocation

As I think about the relationships in my life and the people who have come and gone, I can’t help but think about the feelings of indifference and reciprocation. I believe these two feelings reveal some of the strongest clues into any relationship.

Indifference

The Nobel Peace Prize winner and Holocaust survivor Elie Wiesel once wrote:

The opposite of love is not hate, it’s indifference. The opposite of art is not ugliness, it’s indifference. The opposite of faith is not heresy, it’s indifference. And the opposite of life is not death, it’s indifference. 

Wiesel says that emotions such as anger and hate do not describe the opposite of love. Instead, the opposite of love is the absence of any emotion at all. Indifference is complete darkness. Indifference knows our deepest secrets and our deepest desires. Indifference abounds when reciprocity fails.

Reciprocation

In a recent New York Times article appropriately titled “Do your friends actually like you?“, the author highlights several studies which consistently conclude that only about half of the people you believe to be your friend actually reciprocate the feeling. In other words, when you think your friendship is mutual, the odds your feeling is right is typically at best the flip of a coin.

It is important to note that reciprocation is not merely participation. It is something more: an act of generosity wherein one gives something of themselves because both parties recognize each other’s essential goodness. The adage “Never show up to a party empty handed.” comes to mind.

 

31

01 2017