So I was standing next to this friend of mine the other night when he casually mentioned that he might be joining the board of Barnes & Noble. My first reaction. Dude, the Nook has no chance. No one talks about the Nook. No one uses the Nook. I sit in a Barnes & Noble Starbucks quite a few days a week and I have never ever seen anyone even pause to look at the huge Nook display at the front of the store. You have to give that thing away to get anyone to use it. It's the only hope. Quite possibly Barnes & Nobles only hope not just in the eReader market but for their survival. In ten years there are not going to be any bookstores to walk into.
Well I get up the next day find out that Barnes has broken off talks with a gentleman named Ron Burkle to expand the B&N board by three seats, and that a judge had ruled against Burkle in his attempt to increase his ownership position at B&N. Ron Burkle is seriously rich. He is in the Forbes 100. He owns an investment company called Yucaipa.
So quicker than you can say kindle Yucaipa started a proxy fight. Mike McQuary, whom I worked with for a number of years, is on Yucaipa's slate of nominees for Barnes & Noble's board of directors.
If you are ever going to read SEC filings proxy statements are the best. Proxy statements filed by a party other than the registrant are the very best. They are full of intrigue. Buried with the proxy statement is this little gem:
In Yucaipa’s view, the B&N College acquisition (Barnes and Noble purchased B&N College for $514 million. B&N College just happened to be owned by the Barnes & Noble CEO and his wife) benefitted the Riggio family but does not make strategic sense for the Company. It gave Barnes & Noble over 600 retail textbook locations and essentially doubled the Company’s exposure to a “brick and mortar” market segment most at risk to technological changes, including increasing online textbook sales and digital textbook downloads. Yucaipa believes this capital could have been better and more timely utilized to support the Company’s digital media and e-books strategy.
Yucaipa understands the need to aggressively go after the e-books market. And my bet is that McQuary is thinking the same way I am about what to do. Amazon wants to view Kindle as a business that will stand on its own. Apple is proud of the iPad.
Barnes & Noble has got to get price/promotionally aggressive on the Nook. Is anybody asking for a Nook this Christmas? No. Change that by giving the things away on Black Friday with the purchase of x number of books. Treat the Nook cost as a marketing customer acquisition expense. With a small and shrinking market share a razor and blades strategy is B&N's only chance in the digital media and e-book world.
If they don't use it Barnes and Noble becomes Tower Records.
As is often the case PG has an excellent essay up on "What Happened to Yahoo" (no exclamation point from him).
While the entire is a must read the money quote for me is:
Yahoo treated programming as a commodity. At Yahoo, user-facing software was controlled by product managers and designers. The job of programmers was just to take the work of the product managers and designers the final step, by translating it into code.
One obvious result of this practice was that when Yahoo built things, they often weren't very good. But that wasn't the worst problem. The worst problem was that they hired bad programmers.
In technology, once you have bad programmers, you're doomed. I can't think of an instance where a company has sunk into technical mediocrity and recovered. Good programmers want to work with other good programmers. So once the quality of programmers at your company starts to drop, you enter a death spiral from which there is no recovery.
Good stuff. The question is how do you build a hacker-centric culture. PG has some thoughts. I saw a good example this morning.
We are sitting around the kitchen counter eating breakfast when the Kokomo Kid asks "You know anything about SQL?" "A little, why" was my cautious reply.
While it just so happens one of the companies where she works as a controller, QuantiSense, sent out a throw down challenge. Who is the best SQL expert? They distributed one of the tests that they give to developers when they are being interviewed. The test went to the entire staff. The entire staff was expected to complete it, including writing a little code snippet at the end. So my wife, who is the part time controller, is reading SQL code and trying to determine the output of a command string. It just so happens that the sample table had a few null values. She could not determine how to treat them as different versions of SQL treat null values in different ways.
So my wife, the controller, who before this morning had never ever looked at a line of code in her life sent this note:
What variant of SQL are you using? Don't I need to know this in order to understand how Null values are treated?
When you get your controller to ask what version of SQL you are using to figure out the output of a query I would say that you might be on your way to building a hacker-centric culture.
So yesterday, according to The New York Times, Apple took about 600k in new iPhone orders. Rock on. At about $200 a pop that is about $120 million in revenue plus whatever the AT&T sub happens to be. Most likely three x that or $360 mill in total. Not bad for a day when you are unable to complete customer orders.
A big yippee ki-yay for Steve and his dedicated team from Cupertino. Atlanta based Gerry Purdy chimed in “It shows the Apple magic is still present, it’s impressive.”
As a heavy Apple user and someone that intends to get a new iPhone my response is "perhaps." The money quote from the NYT article:
Still, analysts said, Apple is struggling to maintain the same clear-cut lead over rivals that it had in the past. In particular, the growing portfolio of Android-powered phones, which number in the dozens this year and are offered by many companies, is a significant threat.“The reality is that in the long term, the Android market share is going to catch up to Apple,” said Charles Golvin, a wireless analyst at Forrester Research. “When you have one device being sold to a smaller portion of the population, it’s not going to compete as well as many devices from many vendors on multiple carriers.”
We've seen this movie before. Apple. Microsoft. The personal computer early market share war. We all know how that ended. Apple niche. Microsoft dominance.
The end game for the mobile OS wars has been foreshadowed.
Last week, in advance of the unveiling of the new iPhone 4G and the iPhone OS4 operating system a little bit later today by Steve Jobs at Apple's World Wide Developer Conference, AT&T announced that it is dropping it's unlimited data plans for iPhones. Of course they did not spin it this way but instead of its current $30 unlimited plan, AT&T is moving to a $15 200MB plan and a $25 2GB plan. The unlimited plan is going away. Buh bye.
Oh the irony. This is AT&T, the company that made $19.95 unlimited Internet pricing the market standard. That $19.95 all you can eat pricing exploded the use of the Internet and was the first shot to the body of AOL which at the time had metered pricing.
I have conducted a good deal of research on this subject. Consumers will pay significantly more per month for a flat rate plan in lieu of having to monitor their usage or getting the big bill one month. Most will pay a 25% premium for a flat rate plan and many will pay a 50% premium. And if you are a smart access provider, you price your services so that the flat rate non use breakage of the lighter users makes up for the heavier user behavior. This enables you to make money by rapidly growing your user base. You have to have the flat rate to remove consumer uncertainty which creates purchase hesitation.
AT&T knows this. They are looking to stop data consumption by heavier prospects/users by getting them to move to other networks, and get lighter data consumers to buy the $25 plan to remove billing uncertainty. The former is the quickest path to improve the overall performance of the AT&T network while the latter will help with margins. And once AT&T spends a little time actually building out a more robust network I expect that AT&T will return with an unlimited plan. And the price will be more than $30 a month.
"I think people are willing to pay for content. I believe it for music
and video, and I believe it for the media."
Steve Jobs
Steve made the comment at D8 on Tuesday. About the same time I was having an interesting conversation with some smart people about the same subject. And here was the most interesting point of the conversation. Music, video, and whatever the heck media is are very different.
People purchase music for the most part because it is provides very repeatable consumption. The number of times I have listened to Damn The Torpedos is countless. But with the exceptions The Lord of the Rings, T2, and whatever your personal favs happen to be, video is generally rented or subscribed to because you really only need to see it once.
Music, as content, is a little bit ahead of video in terms of consumption via new technology distribution methods. The buying model has held serve. I would surmise that as video becomes more Internet oriented that the traditional model of renting or subscribing and not owning will become the predominant purchase method.
People will indeed pay for content if packaged the right way. The big question is who will figure out the right way to package and deliver these next generation video rental/subscription services. It is going to be an interesting game.
Everyone knows someone who has come up with a good idea and who has not acted upon that idea. Or started working on the idea… and not finished.
Perhaps you can even personally relate to that.
People come up with good ideas for new businesses all of the
time. Unfortunately, many of those ideas are never acted upon and most are
never brought to market.
This is tragic, because it’s not a matter or whether or not
we can. In 2010, an average person of average intelligence can come up with a
good idea and bring it to market - thanks to a democratization of the tools of
production, distribution and sales.
But not everyone will.
Why do you suppose that is?
Lessons Learned
I’ve made it my focus over the past 20 years to turn ideas
into products and businesses. Most recently launching Spitter.com, and working
with other companies such as Rivals.com, RealNetworks, Turner Broadcasting, Ustream.tv, and Zazzle to bring their revolutionary ideas to market.
What have I learned that can shed some light on what makes
the difference in going to market with your ideas?
There will be
obstacles along the way. Distractions. Problems. Frustrations. Doubters. Skeptics.
The single greatest way to overcome those obstacles is
something often overlooked in execution: having a big enough reason why.
Big Enough
Reasons Why
Chris Klaus, founder and CEO of Atlanta-based Kaneva
explains why this is so important.
"Part of the secret sauce of a
successful startup, is finding a vision and mission that you and your team are
passionate about,” Klaus told me. “Every startup has incredible challenges. The
teams that are passionate about their mission will be determined to learn from
their mistakes. They have the desire and energy to overcome these obstacles."
Reasons why are the fuel that will get you to follow through.
Big enough reasons why can help get you through anything.
"Knowing why you are starting
your business -- how you will impact others, or even change the world -- will
fuel you through the inevitable periods of struggle as a first-stage
entrepreneur,” Slim told me. “Your customers will feel the meaning and purpose
behind your business, and your marketing position will be much stronger."
What Do Most People
Do Instead?
As entrepreneurs, we love our ideas - often to the point of
irrational exuberance. And being excited about our ideas, we
often focus so much on “what” we are doing (the product) that we don’t define -
or we lose sight of - “why” we are doing it.
And without big enough reasons why to motivate us through
the hard times, we’re more likely to get stalled - when we really need to be
putting in the extra effort.
"The difference between success and
failure might be the difference between calling it a day at 7 pm or midnight,” David Payne, founder of Atlanta-based Scoutmob, told me. “Only a strong mission will cause you to feel good about working those
hard extra few hours."
A Powerful Approach to Getting Important Things Done
Start by answering these time-tested four questions:
1) What is your
desired outcome?
Most people answer: "I don't know". Perhaps that
explains why so many ideas are never acted on.
Think about what your desired outcome is, what do you really
want? And write it down. Be as specific as possible. Set a specific date for
that outcome.
2) Why do you want that outcome?
The power is in why. When you get enough reasons you can do
just about anything, you can find the way.
A big enough reason why is where you get your drive to
follow through.
A useful way to frame this question is to think about why
you must do it (as opposed to why you
should do it).Think about what matters most to you, what do
you most value?
For example: so you want to make a million dollars? Why? Dig
deeper. Ultimately, what do you value most?
3) How am I going to
make it happen?
Think about - and write down - the most important actions
you need to take to accomplish your desired outcome.
Bonus: take it one step further. You are more than your to-do list. Think about and write down
the answer to these questions. What kind of person would you need to become to
accomplish your outcome? What skills would you need? And become that kind of person. Develop those skills.
4) How will I know
when I’m getting my outcome?
Sometimes we can be winning - and feel like we’re losing - because
we’re not keeping score. How will you measure it?How will you know?
Not All
Reasons Why Are Created Equal
I’m not here to tell you which reasons are the right reasons
for you. The “big enough reason why” is unique to each person. (Although some
reasons that are often cited by aspiring entrepreneurs are misguided at best - and really bad reasons at worst - and I’ve written about them here.)
But the reasons that drive you could make the difference
between success and failure.
What Have
You Learned?
So, what do you want to remember from this article?
Before you get started with your to-do list, be clear about
what it is you really want and why you want it.
You’ve got to be clear about your outcome and your purpose.
The “why” is what will get you to follow through on your decision.
And as you’re bringing your idea to market, remember that
Purpose = Power.
What do YOU think? What gives you your drive to follow
through and launch new businesses and products? I'd love to hear about your experiences, in the comment section here.
Coming Next Week: Lessons for Aspiring Entrepreneurs, Part
2: “Goals Alone Are Not Enough”
##
DAVID ECKOFF is co-founder
of Spitter.com, advisor to media & technology companies and business
educator. He has worked with Rivals.com, RealNetworks, Turner Broadcasting, UStream.tv,
Zazzle and more, to bring revolutionary ideas to market.
As the organizer of Atlanta Startup Weekend I have been involved with a few companies that emerge from the event. And as they move forward there is always an issue. An issue of equity holders and complexity of the cap table.
This issue has been a subject of conversations within both Skribit and Twitpay. Investors don't like the look of the cap table of Startup Weekend companies. Too many founders. Too much complexity. To an investor it is a bit of a mess. Something to be avoided. But how to do so?
The big news a few weeks back was that Twitpay was acquired for $100,000. Or more specifically, "the investors acquired Twitpay’s assets for $100,000 and plan to plow
an additional $1 million in product development and marketing."
Now I have done quite a few asset acquisitions in my time. Well over a hundred. The beauty of such transactions is that you get to buy the things that you believe to have value while leaving the liabilities and things that you don't believe have much value behind. While the co-founder participants in Startup Weekend may not like it, the fact of the matter is that over a year or so into a company they really don't add a lot of value while adding a lot of complexity to the company. As an investor an asset acquisition is an smart way to clean that up.
If other Startup Weekend companies garner angel funding in the future you may see transactions take the same form as the Twitpay deal.
In a nice opinion piece for The Wall Street Journal, by Schramm et al. They essentially say that the age of the business not the size is the more precise characteristic of companies creating jobs.
The more precise factor is not the size of businesses, but rather their
age. According to the Census Bureau, nearly all net job creation in the
U.S. since 1980 occurred in firms less than five years old. A Kauffman
Foundation report released yesterday shows that as recently as 2007,
two-thirds of the jobs created were in such firms. Put more starkly,
without new businesses, job creation in the American economy would have
been negative for many years.
The authors go on to cite economic and regulatory barriers that are in the way of young companies and propose a four pronged solution.
Welcome immigrants seeking scientific training to our universities by granting permanent residency and work status.
Unbridle academic entrepreneurs by opening up licensing to non-university entities.
Provide easier assess to capital.
Fix the cost burden of SOX compliance for small companies.
Seems like a reasonable course of action to me. How about you?
He is writing about the interesting things that happen when
technology innovation and business execution impact each other. How
technologists can get things done in a technology company and what
business managers need to know to be successful. When Worlds Collide is about how organizations can succeed when
business execution and technology innovation seem to be on a collision
course. The "hey, you got your peanut butter on my chocolate" result.
Rich has an impressive background. He was in charge of the rebirth of undergraduate education in computer science at Georgia Tech, Chief Technology Officer
at Hewlett-Packard, VP of Computer Science
Research at Bellcore, and Director of
Computing Research at the National Science Foundation. I had the chance to meet him at a football game a few years back. He is nice guy. And much easier to talk to than his background might suggest.
Force of Good is licensed under a Creative Commons License. You are free to share, remix, and share alike with attribution.
DISCLAIMER
The opinions expressed here are mine and mine alone (with the exception of comments by others of course). They do not represent the opinion or position of any other person or entity. All postings adhere to my personal values.
