The Cathedrals and the Department Stores

I've been pondering mobile platforms lately, particularly Apple's iOS walled garden vs. Android's open platform. Owning iPads 1 & 2 and having recently switched to a Nexus S phone running stock Android Gingerbread, it's been interesting to compare the experience that each OS provides.

Let's start with one of the first things that hit me: Steve was right. When Jobs adamantly refused to allow flash on his devices many people (myself included) saw this as little more than a spirited defense of the walls around Apple's garden. I still believe that was a significant part of Apple's thinking, but on the first day I had my phone Steve's argument that flash's user experience was terrible on mobile hit home.

He was right! It didn't take much time surfing the web on my Nexus before I hit a site using flash and was invited to download the player from the Android market. Well, flash... leaves much to be desired. Running animations and video dramatically slows down responsiveness, way more than video encoded with H.263, Apple's alternative. Yes, I could now view the content, but the experience was a disappointment.

The more I used Android, the more I understood the value of iOS' walled garden and focus on user experience. Again and again, things you have to manage on Android just work on iOS. For instance Android gives me the battery consumption of all services running on the phone and allows me to force close them. On iOS? Nothing. You expect the apps to work properly and they pretty much do. Apple's framework makes it a lot harder for developers to hog resources or impact usability. Yes, it hampers devs a little too, though that clearly hasn't prevented over 400,000 apps from being written.

All this reminded me of that old article, The Cathedral and the Bazaar. In it, author Eric Raymond posits that the Windows "cathedral" (monolithic, slow moving, unwieldy, and, obviously, yucky) is doomed because the Linux "bazaar" (vibrant, innovative, fast paced, and, clearly, cool) can't help but overtake it. Roughly 15 years on, I'd say the results have been mixed: Linux mostly won on the server, definitely won in the appliance / embedded category, and failed on the client side.

Today few worry about Microsoft the way we used to. The cathedral these days is clearly Apple, and it's a much more invasive cathedral than MS ever was. Apple has a very long reach: they own the hardware, the OS, control what you can do on the OS (at least on iOS), the distribution mechanism (App Store), much of the content (iTunes, and the 30% "tax" on 3rd party subscription services), and soon storage (iCloud). Oh, let's not forget they own the tablet space. And to top it all off, Apple rules from a design perspective: Their products set the standards for the industry.

Focusing on the iPhone and extending the metaphore, I'd argue that Apple has two cathedrals: AT&T and Verizon. The buildings are in different parts of town, and you have to sign slightly different agreements to pray there (yes, pray). Once you're inside, though, almost everything is the same. From a user's perspective you don't identify with the location of the Cathedral (the carriers) you identify with what's inside it (Apple). AT&T and Verizon compete against each other by convincing you that their part of town is nicer.

What about Android? Well, it's clearly no bazaar. There's no PC-equivalent of a cell phone that manufacturers compete to build and that you then install Android on. Moreover Android development is largely done by Google. Instead of a cathedral, each manufacturer of Android handsets is more like a department store. That means they compete primarily by adding floors (i.e. new hardware capabilities, like a 3D screen in the latest Evo), and redesigning the interiors (i.e. adding customizations on top of the stock Android, like Samsung's Sense UI). And, in contrast with the iPhone cathedrals, each carrier neighborhood has a few department stores to choose from.

This gives users more choice at the expense of confusion and usability. The custom UIs and different revisions of Android make both picking and using a phone harder than it should be.

The situation is much worse for developers. It is easy to develop for iOS devices. There are only a handful of devices to choose from, they experience each provides is extremely consistent, and the development tools excellent.

Not so for Android: While browsing the Android Marketplace I was struck by the many apps stating which phones they do / don't support, and the number of one or two star reviews along the lines of "Your latest updates sucks, now the app won't start! Evo 4G" or "Crashes randomly on DroidX, please fix".

Google is recreating the fragmented market we had in the early Windows years when fiddling with device drivers, TSRs, and config.sys files were the norm. (Apparently, version 4 of Android, aka Ice Cream Sandwich, will address some of these issues).

Despite this I really like my Nexus S phone: The voice commands are amazing, the notifications are refreshingly useful (Apple's finally fixed this in version 5), maps & navigation rock, and, as a heavy Google user, the integration with Google's many apps is excellent. In my opinion Android's features today are more advanced than those of iOS.

However all this comes at price: having to manage battery life & services much more closely, and the occasional reboot to kickstart "dead" services. 

If someone told me they wanted a phone, tablet, or even computer today, I'd be hard pressed not to recommend an Apple product.

Looks like the Cathedrals are winning.

Addendum:
Most of my blog posts are written in small increments over a few weeks or months. This post was finished a couple weeks ago while on vacation in Belgium. With impeccable timing, Google made a very important announcement on Monday: the acquisition of Motorola's Mobility division, i.e. their cell phone manufacturing arm. This has a number of interesting angles (esp. with regards to patent acquisition) but as far as this article is concerned it signals something important...

Google's going to build cathedrals of its own.

Nine Tips to Reclaim your Focus and Creativity

TL;DR
Skip down a bit and follow these three tips: Eliminate notifications, Maximize your apps, and Use a Pomodoro timer. Later on, come back to read the rest! :-)

I recently finished Nick Carr's book "The Shallows", which describes the impact that technology has on our brains. While I can't say I enjoyed the book (a shame, I was very keen to read it), part of the author's introduction resonated strongly with me:

"Over the last few years I've had an uncomfortable sense that someone, or something, has been tinkering with my brain [...]. I'm not thinking the way I used to think. I feel it most strongly when I'm reading. I used to find it easy to immerse myself in a book or a lengthy article. [...] That's rarely the case anymore. Now my concentration starts to drift after a page or two. I get fidgety, lose the thread, begin looking for something else to do. [...] The deep reading that used to come naturally has become a struggle."

Carr states that the single biggest change in his professional life over this last decade has been the internet. The many boons it brings come at a price:

"[W]hat the Net seems to be doing is chipping away my capacity for concentration and contemplation. Whether I'm online or not, my mind now expects to take in information the way the Net distributes it: in a swiftly moving stream of particles. Once I was a scuba diver in the sea of words. Now I zip along the surface like a guy on a Jet Ski."

As the years pass I've noticed the same thing: checking email, reading new blog posts, or perusing interesting tweets sometimes have an almost inescapable appeal. What's worse is that, according to Carr's book, the more information I take in this way, the greater my appetite for it, and the harder it becomes to focus for any length of time.

In my experience, the "consumer half" of me crowds out my "producer half". I end up preferring the consumption of other people's work over the creation of my own.

Here are some of the techniques I've found useful in keeping both halves happy.

Eliminate notifications, or at least audible / visible cues
This is one of the basic rules: information should not announce its arrival. It's hard enough to resist infodrugs without arming them with a way to pull you in. Turn those notifications off!

Process information on your schedule
You'll find it difficult to live without notifications at first: the desire to frequently check for emails, tweets, and facebook updates will be hard to resist. Don't give in! If you do, you'll defeat the purpose of turning off notifications. Instead, make it a point to check at regular intervals, or between activities.

Maximize or "Full screen" your apps
There are many studies showing that multitasking impacts focus. Context switching is expensive. By maximizing your current application's window, it's harder for other apps to pull you away from your task. If your eye catches movement in a twitter client, or your Inbox suddenly becoming Inbox (1) you know what will happen next! :-)

GTD
David Allen's Getting Things Done is full great advice. A few principles I've found particularly useful to combat attention:
  • Keep your Inbox at zero: Knowing you've dealt with all your emails makes it easier to focus on other things
  • Log all thoughts / ideas / todos: Write them down, if you keep them in your head they waste precious "mind cycles"
  • Schedule tasks for the future: I found this technique particularly powerful yet I rarely see it mentioned. When you capture a todo that doesn't need to be done today, set its start date accordingly, and use a tool that can hide all future tasks. I've always found it disheartening to see a never ending stream of future todos, which is what most task managers show you. The feeling you get when all the day's tasks are accomplished is a powerful incentive to stay focused.

Organize workspaces by activity
I covered this more in-depth in an earlier post but the gist of it is to leverage tools like OS X's Spaces to keep your communication tools (i.e. distractions!) on one screen, while keeping productive work well away on a different screen.

Use a Pomodoro timer 
The premise of Pomodoro (Italian for tomato) is simple: if you focus for 25min without interruptions, you can reward yourself with a 5 minute break. As long as you can stick to your side of the bargain (no distractions for 25min!) that 5 min of relaxation does wonders to recharge your concentration. There are lots of Pomodoro apps out there (mobile, web, and desktop). Or you can just use a kitchen timer :-)

Music
Listening to music also helps me concentrate, as long as it's music I know well, otherwise my minds pays too much attention to the new lyrics and music. 

Reclaiming your attention does a lot to "protect" your creativity in my experience but here are a couple techniques more focused on creativity itself..

Exercise
I've stopped listening to podcasts and audiobooks while exercising (usually running or cycling). I've found that physical exertion combined with being outside frees my mind to think new thoughts. Many of my ideas for blog posts, applications, or activities come during this time. Bring a means of capturing those ideas with you!

CREATE!
That's the name of a daily activity in my task list. It's there to remind me that I want to create something every day. It doesn't have to be big, it doesn't have to be amazing, it just needs to be something: a draft of a blog post, a drawing, a poem to my lovely wife. They all count. And the great thing is that once you get started doing something creative, it's a lot easier to keep going.

Finally done with this post! Can't wait to see what's arrived in my twitter feed! :-)

Remembering a time when Microsoft was Apple's underdog

Long long ago, in a galaxy really not so far far away, Apple's yearly revenues used to be four times higher than Microsoft's. No kidding.

I've been analyzing companies' revenue per employee from 1990-2010. That may become a blog post in itself but today I want to focus on Apple vs. Microsoft.

Last year, much was made of Apple of passing Microsoft in terms of revenue and capitalization.

What struck me looking at this diagram is that 20 years ago, Apple's revenues were almost five times larger than Microsoft's!

I'd grown so used to thinking of Apple being David to Microsoft's Goliath that I'd forgotten that this wasn't always the case. To be fair, in those early days Apple thought of itself as David to IBM's Goliath. As IBM went from being the PC vendor (in the 80s) to just another PC vendor (from the 90s onwards), and Microsoft's fortunes rose, Microsoft replaced IBM as Apple's main competitor.

High revenues are good, but profits are (at least in the long term :-) better. Apple was barely making money before 2005, while Microsoft was always profitable during this time period.

Here are Microsoft's and Apple's employee counts.

So what of revenue and net income per employee? Surprisingly Apple's revenue per employee has almost always been higher than Microsoft's. The latter's consistently larger employee base impacts this metric. Since 2005 Apple far surpassed Microsoft. Last year, each Apple employee generated 1.3 million dollars. Wow. (Google, BTW, was at 1.16 milion dollars per employee).

Looking at net income per employee however, Apple's only recently surpassed Microsoft.

The 2004-2005 period is the turning point in Apple's fortunes. All four metrics (Revenue, Net Income, Total, and per Employee) are on the rise reflecting a growing demand for its products. And remember the iPhone wasn't even out yet.

The market certainly reflects this. In 2005 Apple's stock price exceeded Microsoft's for the first time in almost 10 years.

All this makes me wonder...
  • Can Apple keep growing its revenue and income faster than employees? (They hired over 10,000 people in fiscal year 2010)
  • The market obviously values and rewards trends (i.e. first & second order derivatives). How much of a hit will the stock take when Apple's growth slows?
  • When a company's revenue, income, rev per employee, and income per employee are all rising and keep doing so for a few quarters... Is it high time to buy the stock?

Whatever the answers, let's hope Apple behaves itself well as our new Technology Goliath.

Why is California Building the World's Most Expensive Bridge?

I was inspired by Jack Dorsey's recent discussion on the importance of design. Many a blog post could be written on that topic. Jack's presentation also reminded me of a question that has nagged me for a while: how do the ballooning costs of the Bay Bridge replacement compare with the Golden Gate Bridge's construction costs?

Golden Gate Bridge
  • Construction time: 4.5 years (1933-1937)
  • Longest span: 4,200ft
  • Lanes 6
  • Cost: $76 million in 1933 (source), equivalent to $1.3 billion today (source)
  • Tons of steel: 83,000 (source)
  • Fun fact: The bridge opened to pedestrians one day before it opened to cars. At the time the toll was $0.50 each way and $0.05 extra if you had more than 3 passengers
  • Wikipedia page

Bay Bridge Eastern Span Replacement
  • Construction time: 9 years and counting (2002-2013?)
  • Span: 1,260ft
  • Lanes: 10
  • Cost: $6.2 billion (source)
  • Fun fact: The original Bay Bridge was also started in 1933 and finished six months ahead of the Golden Gate
  • Wikipedia page

Woah! The Bay Bridge Eastern Span Replacement is FOUR TIMES more expensive than the Golden Gate Bridge!

Why?

Here are possible differences that, in my mind, can be discounted.

Labor costs: "The Golden Gate Bridge was built during the depression, when workers were cheap". True, but nowadays workers are augmented by much more capable machines.

Material costs: "Steel costs much more now".  At first glance, there's evidence to back this up. USGS data states that a ton of steel cost $10 in 1940 vs. $165 in 2009. Big difference? Not when you adjust for inflation... $10 in 1940 is $153 in 2009.

Complexity: "The replacement has to link itself to existing infrastructure, with a minimum of impact to the current users of the Bay Bridge". Fair enough... But can this really account for four times the cost? Hard to believe, esp. when the "trickiest Bay Bridge work" only cost $140 million.

Destruction: "We have to destroy the old eastern span of the Bay Bridge". Sorry, nice try but this was taken out of the current budget. Yes, we'll need to pay even more than $6.2 billion if we want to get rid of the old bridge.

OK, so maybe bridges are just more expensive these days?

Let's take a look at the top three longest suspension bridges in the world:

  1. Akashi Kaikyō Bridge (Japan) completed in 1998 at a cost of Y500 billion or $6 billion (converting to USD using this data and then adjusting to 2011 dollars)
  2. Xihoumen Bridge (China) completed in 2009 at a cost of $363 million (wow!)
  3. Great Belt Bridge (Denmark) completed in 1998 at a cost of DKK21.4 billion or $4.1 billion (converting to USD using this data and adjusting to 2011 dollars)

All three have significantly longer spans than the Golden Gate Bridge, let alone the Bay Bridge. 

What's left?

I'm no expert on bridges. I may be missing something... It's just hard to find a reason why the Bay Bridge retrofit is so expensive. Other than mismanagement. On a massive scale.

Addendum (2011.3.26)

After writing this post I found an article, "The Most Expensive Bridge in the World", published in 2004 in Modern Steel Construction. Which bridge is it about? You guessed it! The Bay Bridge. The author, a structural engineer, called on CalTrans to make design changes to reduce costs. Ironically he already considered it the most expensive bridge in history when in 2004 it was only projected to cost us $4 billion...

Addendum 2 (2011.3.27)

I received a request for details regarding the project's evolution: How much was the work originally slated to cost? Why / When did it rise?

This article has a good summary. I'm quoting the main events it lists:

  • December 1996: Consultant report recommends replacement over retrofit. It estimates the cost at $843 million for a bridge that includes a single tower. Two Caltrans panels recommend building a new eastern span, saying it will be safer and more economical than a retrofit.
  • January 2002: At eastern span project groundbreaking, Caltrans says span will open in 2007.
  • March 2003: Caltrans increases eastern span cost estimate to $3 billion, citing the unique scale and complexity of the project.
  • May 2004: Single bid received to build a self-anchored suspension bridge at a cost up to $1.8 billion, which is double Caltrans’ $730 million estimate.
  • August 2004: Eastern span cost estimated at $5.1 billion, with $1.3 billion in overruns blamed on self-anchored suspension bridge.
  • December 2009: Eastern span cost estimated at $6.3 billion, including $2.3 billion for self-anchored suspension bridge.
  • February 2011: Construction crews begin to lift into place the fourth section of the span’s self-anchored suspension tower. Current projections have the entire self-anchored suspension span to be completed by late 2013.

Addendum 3 (2011.3.28)

A friend of mine, a Civil Engineer and expert on bridges, sent me his summary of bridge costs across the world. It further highlights the fact that we Californians are paying way more than we should for this replacement...

Does Wealth Equal Happiness?

One of my favorite blogs is FlowingData. It's a great place to find all sorts of thought provoking (and sometimes weird) ways to visualize the world around us.

Yesterday, there was a reference to a very interesting article in the New York Times called "Mapping the Nation's Wellbeing". It measured Gallup's analysis of people in the United States well being across a number of variables: Happiness, Diabetes, Smoking, Exercise, Inadequate Food, etc. It's well worth viewing. Here's the summary graph (darker = greater wellbeing).


As you compare the different categories you'll be struck by how badly the South East of the US scores, which made me yearn for one piece of information that isn't included in this diagram: the per capita income of each state. Surely wealthy states are happier, right?

Wikipedia has data for 2009 but its graph dates back to 2006. That's pre-recession, things have changed since then. So I fired up Mathematica to create a 2009 version. (I won't include the code here but the notebook in this post made graphing the US very easy).

So does Wealth equal Happiness? It certainly seems to help but not universally: the South East is clearly poor and unhappy but Montana is about as poor as yet much happier. One surprise for me: Wyoming. I never realized it was so wealthy. Minerals and low taxes?

Whatever the correlation between happiness and wealth, smarter people than I have thought about this issue:

 “Money doesn’t make you happy. I have $50 million but I was just as happy when I had $48 million.”—Arnold Schwarzenegger

 “Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy.”—Groucho Marx

I'll let you know how I feel when I get to $48 million :-)

"You're a leader of servants, not a servant leader" and other warning signs

Yesterday I was surprised by this post from the Wall Street Journal: Five Signs You're a Bad Boss. Surprised because most of the signs listed were so obviously bad only the worst bosses could be oblivious to them. I quote:

1. Most of your emails are one-word long
2. You Rarely Talk to Your Employees Face-to-Face
3. Your employees are out sick–a lot.
4. Your team's working overtime, but still missing deadlines.
5. You yell.

Yelling? That's all they can come up with?  Or am so out of touch with how most bosses perform?

Of all the signs listed above I think #3 is the most interesting: given a large enough team size, this is an external metric HR could track as an indicator that something's wrong... Though of course there are many more reasons for people to take sick days than having a bad boss.

Reason #4, working overtime and missing deadlines, is clearly bad but in my experience many companies (certainly in high tech) don't track their employees' hours and so may not detect long periods of overtime. Moreover an organization that tolerates long periods of overtime and missed deadlines is itself guilty of poor performance, nevermind the boss.

It's always easy to criticize so here's my attempt at creating a more useful set of signs. These aren't all encompassing, there's a lot that could be added: fostering innovation, continuous improvement, recognition...

Think of these as a leadership Minimally Viable Product.

1. You communicate by "telling" not by "sharing", and infrequently at that
Telling is top down and usually focused on "we need to do X". Sharing is egalitarian. It's "here's why we're doing this" and "here's what's going on outside our group". By explaining or emphasizing the purpose of the team's projects, your employees will be bought in and better equipped to make decisions about priorities and tasks.

Recommendations: Communicate often and use multiple forms of communication, especially with large and/or dispersed teams.  At RelayHealth we used email, daily standups, experimented with Yammer, and had weekly / bi-weekly / monthly all hands meetings (as the size of the team grew I made those meetings left frequent to make space for managers to gather their teams together). Focus on context and purpose, not just nuts and bolts.

 

2. You don't know your employees
Do you know every person on your team by name? Do you know them as a person instead of someone who's on project X? Are you aware when something of importance happens in their private lives (e.g. birth of a child, passing of a relative)? If your team is large enough that you can't know everyone, are you making sure your managers are getting to know their employees?

Recommendations: Even if you don't interview all new members, welcome them to your group personally. Their manager will explain their duties but sometimes you're best placed to give them the wider context of the organization and the purpose of the group's projects. 

At RelayHealth, I took every new employee out to lunch after they'd been on the team a couple months: it gave me another touch point after welcoming them to the team, I could make sure they were doing OK, and it was an opportunity to find out if there were any improvements they thought we could make to our tools, processes, habits, etc. I learn a lot from doing this and often discussed the feedback I'd received with my managers.

 

3. Your employees aren't taking on new responsibilities
Are your employees growing? When was the last time you promoted someone? Or even had an employee take on a new or expanded role within your group? They should be, and you need to help them. 

Recommendations: Identify your top performers, ensure they have mentors, help them grow. At least once a year you and your managers should review all employees in your group and focus on how they are performing in the current role, what their career aspirations are, what opportunities you see, and how the management team can facilitate that growth. At RelayHealth, this meeting took us the better part of a day but it was time very well spent.

 

4. You're not mentoring one of your employees to replace you
This will likely be the most controvertial recommendation but I believe one of the best things you can do for your organization and your employees is mentor one or more of them to replace you. If you're worried about job security: it's too late! Extrinsic job security is an illusion. Intrinsic job security comes from performing to your fullest potential. Helping to grow the next generation of leaders is one of the most rewarding things you can do.

 

5. You don't give your employees realtime performance feedback. And, more importantly, you don't expect the same from them
The best time to catch and correct a performance problem is when it happens. If you've cultivated an open and honestly environment this feedback shouldn't be contentious, it should be a gift. You're helping someone improve, or someone's helping you!

Recommendation: Be mindful how you communicate. Don't blame. State the behavior you witnessed as objectively as possible and then explain how it made you feel personally or how you feel it impacted the group. Discuss alternative options. And when someone gives you constructive feedback? Thank them profusely, esp. if they report up to you. Giving feedback to your boss or your boss' boss takes courage. 

 

6. You tolerate poor performers and poor cultural fits
You can't afford to tolerate either for long or they'll impact the wider organization. Poor performers waste your team's time. Poor fits can destroy morale and productivity.

Recommendations: Periodically ask yourself "Would I hire this team member again in their current role? Would I hire them in a different one?" If it's a skill set issue then help the person learn. A cultural misfit shouldn't be tolerated long. In either case, realtime feedback is important to give the person a chance to change. I've long admired what Zappos does here: if, within a month of joining, you don't think you'll be happy there, Zappos will pay you $2,000 to leave. A very smart way to incent poor fits to manage themselves out of an organization.

 

7.You're a leader of servants, not a servant leader
If you're managing knowledge workers, they'll likely know more than you do in at least some areas, and often in many areas. Not giving your employees the autonomy to own their work is one of the worst ways to waste human capital.

Recommendations: In my experience a manager rarely has all the answers. A good leader focuses on asking the right questions. Helping your employees think through a problem, avoid pitfalls, and learn from the experience is a lot better than giving an answer (which may not be that great anyway!)

 

 

In the end here's what matters: Celebrate your employees!
Celebrate them by doing what you can to make them shine. The more your employees thrive, the more you're doing a good job. 

And when they outshine you? You'll know you've succeeded!

(Thanks to Mike Myers for letting me mod one of his pics)

The Day We Didn't Start eBay

Today has been a day of walking down memory lane. I've been looking through projects I worked on 15 years ago as I was studying in Europe and the US.

One in particular caught my eye. At the time I was studying for an MBA at the Solvay Business School in Brussels. It was a fun time: lots to learn, students from all over the world, and for the geeks among us, the dawn of the web.

Here's the startup a group of us researched for our New Ventures class. I've only reproduced the proposal below, we did a lot more analysis. We even interviewed Christies and other brokers...

March 1, 1995.

New Ventures

To: Professor Spindler

From: Michael ...
Won ...
Bart ...
Paul Clip

Re: New Ventures Proposal

The creation of a on-line collectibles brokerage. Collectibles (stamps, telecards, basecards, currency, etc.) are a worldwide phenomenon attracting vast crowds of collectors and money. Our company will setup an Internet World Wide Web server enabling customers anywhere anytime to buy, sell and exchange collectibles.

Could we have founded eBay before eBay? Unlikely... In early 1995 the web was in its infancy and the situation was much worse in Belgium, as high telco costs kept users from spending much time online (those few who actually knew what being "online" meant). We were also students with limited means and much to do before graduation.

Setting all that aside I think our biggest drawback was that we just didn't believe it would work, or at least I didn't. Would users really want to buy and sell from anonymous people online? Was the market really that big? Starting a company in Belgium takes effort (or used to, things may be different now) was it worth it?

Here's how eBay started, quoting Wikipedia:

The online auction website was founded as AuctionWeb in San Jose, California, on September 3, 1995, by French-born Iranian computer programmer Pierre Omidyar as part of a larger personal site [...]
One of the first items sold on eBay was a broken laser pointer for $14.83. Astonished, Omidyar contacted the winning bidder to ask if he understood that the laser pointer was broken. In his responding email, the buyer explained: "I'm a collector of broken laser pointers." 
The frequently repeated story that eBay was founded to help Omidyar's fiancée trade Pez candy dispensers was fabricated by a public relations manager in 1997 to interest the media.

This I think is the key lesson: Pierre Omidyar had an idea and tried it. Yes, he was lucky: he tapped a motherlode of pent-up demand. Yes, he had first mover advantage (as far as I can remember). But the fact is that he acted on his idea. He gave it a shot, learned from it, and turned it into a business.

And that's truer today than ever before. The barriers to entry on the web are very very low. It's easier than ever to find people to work with. There are many ways to reach people. And there are tons of us online.

So are you going to keep coming up with ideas? Or are you going to take one and make it happen?

(Picture credits)

Why Developed Countries Don't Experience Food Riots

I was listening to NPR on the iPad this morning (nice app, but so unstable). The subject was rising food prices (30+% increase over the last few years) impacting poorer countries, like those in northern Africa, and that this was one of the main causes of the riots in Tunisia and Egypt: when people go hungry for too long, revolution happens.

Still, if food prices are rising why haven't we seen price increases here in the US? After a bit of digging, I found this explanation. It turns out that in the US (and I expect developed countries in general) the actual cost of the food we eat is a fraction of what we actually pay for (the bolding is mine):

Production and marketing costs determine the minimum price of food in the retail marketplace. Production costs are typically called the "farm value" of food, and they comprise about 20 percent of the final food cost. This percentage varies by type of food, depending on how highly processed or perishable the food is. The farm value for meats and dairy products is around 28 percent, for poultry around 41 percent, for cereals around 5 percent, for fresh fruits 16 percent, and for fresh vegetables 19 percent. As consumers demand more highly processed foods, fresh foods from distant places, and foods ready to eat, the farm value falls as a percentage of the retail price.

So when you buy a $4 box of cereals at the grocery store, the raw ingredients only cost about $0.20. In a country like a Egypt where 20% of the population subsists on $2/day or less (some articles I've seen put this at 40%), people spend a substantial portion of their income on food. A 30% percent increase is going to hurt. A lot.

In the US most citizens probably wouldn't notice a 30% increase for two reasons. One is that we're (on average) over 20 times more affluent than our Egyptian counterparts, so we spend a much smaller portion of our income on food, and we can tolerate an increase.

(Hard not to notice how 30 years of dictatorship have flatlined Egypt's GDP per capita...)

The second reason we don't notice is that a 30% hike would push the farm value of that $4 box of cereals to $0.26, which is usually absorbed by the rest of the value chain without being passed on to consumers. So what are we paying for then?

Raw commodities (farm value), labor, and packaging comprise 67 percent of the cost of food. The rest of the costs are in transportation, advertising, rent, profits, energy, business taxes, depreciation, interest payments, miscellaneous costs, and repairs. These last types of costs have increased at about the rate of inflation and have not changed their share of the food dollar much over time. 

No wonder more and more people (ourselves included) are buying local.

Note: Yes, I know there are many other reasons developed countries don't have food riot (e.g. democracy & the ability vote bad leaders out of office). What struck me most is how most of the money we, in the developed world, pay for food doesn't even go towards the food itself.

Delivering Great Service? The Journey counts as much as the Destination


A few years ago some colleagues and I were dining at a Parisian restaurant. It had been a long day and we'd picked an establishment close to our hotel. I ordered a seafood dish. The waitress was perfunctory: just doing her job. After a few mouthfuls of gritty crunching between my teeth, it was clear that the food hadn't been properly cleaned.

I called the waitress and mentioned there was sand in my food. Used to living in the US I expected her to apologize, swiftly whisk my plate away, and offer me something else (on the house maybe?). Possibly the chef would come over to proffer his excuses. Did any of this happen? No. Instead the waitress explained in a sarcastic tone: "It comes from ze sea Monsieur, of course it will 'ave sand!" Then she walked away.

This attitude, though extreme in this example, is more prevalent in Europe than the States, esp. in Northern Europe. People in service industries focus on the destination, i.e. the ultimate transaction, such as curbing your hunger, at the expense of the journey. Who cares if there's sand if your food? At least you're no longer hungry, right?

Focusing on the transaction is fine if the service is low value. Fast food joints focus on a cheap, repeatable, consistent experience. Margins are thin enough that there's little room for personalized service, though even here courtesy and a smile can go a long way. As the price of the service rises, how the transaction is delivered, the "journey", is as important as its delivery, the "destination".

This applies online just as much as offline: your site may sell goods cheaper than the competition but if that's not enough if you care about your customers' lifetime value. And if you don't focus on repeat business, you'll be putting yourself at the mercy of search engines and spending more and more on advertising. In fact, unless you're selling commodity items being cheapest probably isn't even the most important criteria.

Ultimately you need your customers to reach the destination, i.e. purchase something. To achieve this you should focus on their journey: understand why people buy from you, what their needs are, how you can differentiate your service, how you can make their shopping experience more enjoyable, informative, and relevant (reviews, videos, testimonials, leveraging the social web, etc.), and deliver great customer support. 

If you can consistently delight your users with a fantastic experience, as well as a good product, your customers will happily reach your destinations over and over and over.

(Picture by James Jordan)

Diseases make you Dumber... and Smarter?

Couple of articles in The Economist caught my eye recently. The first on the effects of toxoplasmosis and human behavior, the second on the link between disease and intelligence.

Toxoplasma gondii is a parasite whose lifecycle alternates between rodents and cats. When it infects rats and mice it lodges itself in their brains and causes them to behave in an erratic, risk tolerant, manner. It may even make them attracted to the smell of cats. Once the infected rodent is eaten by a cat, the parasite eventually ends up in its feces, to be ingested by a rat. Repeat ad infinitum...

It turns out toxoplasma has this effect by producing dopamine which then acts on their hosts' nervous systems. What then is its impact on humans? Some studies show a correlation between toxoplasmosis and schizophrenia. Others, a higher level of road accidents in infected drivers (there's that increase in risk tolerance again). But "some researchers go further and propose that entire societies are being altered by Toxoplasma".

"In 2006 Kevin Lafferty of the University of California, Santa Barbara, published a paper noting a correlation between levels of neuroticism established by national surveys in various countries and the level of Toxoplasma infection recorded in pregnant women (a group who are tested routinely). The places he looked at ranged from phlegmatic Britain, with a neuroticism score of -0.8 and a Toxoplasma  infection rate of 6.6%, to hot-blooded France, which scored 1.8 and had an infection rate of 45%. […]

To repeat, correlation is not causation, and a lot more work would need to be done to prove the point. But it is just possible that a parasite’s desire to get eaten by a cat is shaping the cultures of the world."

The second article reviews a study comparing national IQ and a country's disease burden, i.e. the "disability-adjusted life years lost caused by 28 infectious diseases". They found a 67% correlation between the two and though they tried to find other causes, they kept coming back to the impact of disease on IQ.

The article is worth reading in its entirety. As with the case of toxoplasmosis, correlation is not causation, but if true, it's a key finding.

"If [the researchers] are right, it suggests that the control of such diseases is crucial to a country’s development in a way that had not been appreciated before. Places that harbour a lot of parasites and pathogens not only suffer the debilitating effects of disease on their workforces, but also have their human capital eroded, child by child, from birth."

So if we have evidence of diseases' deleterious effect on humans, couldn't other diseases make you smarter, stronger, or healthier? Wouldn't this give them a better chance at long term survival? 

In May of this year, scientists presented evidence of just such a effect: a bacteria linked to increases in learning behavior.

The researchers found that that mice fed live Mycobacterium vaccae "navigated the maze twice as fast and with less demonstrated anxiety behaviors as control mice" and speculated that "that creating learning environments in schools that include time in the outdoors where M. vaccae is present may decrease anxiety and improve the ability to learn new tasks."

All this makes me wonder how prevalent such effects are in our lives. Could it be that these little symbionts have shaped our evolution unbeknownst to us? And how would we know?

Here's one way: let's see if our collective IQ decreases as we all use increasing amounts of anti-bacterial soap! :-)