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I went to get my car washed today in freezing weather, the day of a massive snow storm about to hit DC. Needless to say, nobody else was there. (Why did I do this? Because the car desperately needed to be waxed + interior cleaned, and I'm not in DC for long). The experience got me thinking about dynamic pricing and customer loyalty.
Businesses typically try to use frequent-purchase tactics to drive loyalty, like a "buy 9 get 1 free" card or, in the case of airlines, frequent flyer miles. But I believe there's a better way to drive deep loyalty while at the same time maximizing the revenue a business gets: Dynamic pricing, with a Hedge. Here's what I mean:
As I mention in the video above, to say it was a slow day at the car wash facility would be putting it nicely -- I must've been one of only a couple dozen customers they would have the entire day. It's expensive to keep a carwash open on a day like today, including paying at least 10 employees to sit around and do nothing.
I ran across a fantastic PDF on HackerNews by Henrik Kniberg that pulls back the covers on How Spotify Builds Products. It's such a good article -- and so different how many companies actually execute on building products -- that I wanted to highlight a few of the best parts.
Firstly, Spotify starts with a a strong, concise vision (with a singular focus): "Spotify’s vision is to bring you the right music for every moment." This has proven to be a fantastic guide as they iterate on their platform. In a similar way to Dropbox, which I described recently, everything Spotify does furthers that singular vision -- every new feature, every performance enhancement. "Starting as a music player a few years ago, their products are now evolving into a ubiquitous platform for discovering new music and connecting artists with their fans directly." This allows Spotify to expend all its energy on optimizing for product/market fit around that vision, and that's what creates tremendous shareholder value in product companies.
The article sets up, in simple terms, the product prioritization dilemma that trips many companies:
"Here’s the paradox though: Successful companies like Spotify only want to deliver products that people love. But they don’t know if people love it until they’ve delivered it. So how do they do it?"
Coin is a new startup that's trying to replace traditional credit cards. Its YouTube video has 6.8MM views. When you Google the word "coin" they show up as the #1 search result -- not only that, but news story results fill out much of the first page of search results. Not bad for a startup with a product that won't even be available for another 6+ months.
What did this startup do to have such massively successful launch? And why is it coming from a small startup vs. an established company in the space?
In the world of product launches, many companies rely on Paid Media (i.e., ads) to launch new products. But startups don't have the huge ad budgets that big companies do, so they have to get creative by leveraging Earned Media (i.e., you, on Facebook, talking about it). Just like Lockitron did last year, Coin has touched a nerve, hitting its $50,000 crowdfunding campaign goal in under an hour, according to this Forbes article. The founder was quoted as saying:
Here's a great post by Skellie that dissects Elon Musk's approach to disruptive innovation, which is based on reasoning from first principles.
I had an MBA group come in to visit ShareThis yesterday, and we were talking about how to create really disruptive innovation. I realized today when I saw this post that reasoning from first principles puts into words what I've gutturally felt to be true: That really disruptive innovation happens when looking at a problem from a completely new angle.
Skellie quotes Musk as saying:
The nice thing about Musk's approach is that it provides a framework with which to do this. Breaking a problem down to its core components and then building back up from there with a fresh perspective often helps us arrive at very different conclusions than established approaches.
Great to meet the Berkeley Haas crew today; thanks for stopping by the ShareThis office! Also, thank you to Jacqueline and Janice in our office for getting everything set up, including your schwag!
Here is the video from our talk:
And here are my notes from the talk today, as promised:
I've been using Hackpad for a few months and I absolutely love it. Hackpad is a collaborative editing tool similar to Google Docs, and yet very different (and in many ways better) at the same time. Fred Wilson had a great writeup of Hackpad here. He said:
If you want to try using Hackpad, you can open a pad that I created just for this blog post. Feel free to add content to it, edit it, etc.
My primary use of Hackpad is to take collaborative notes in every meeting I participate in. The first thing I'll do when I walk into a meeting is add the other people in the room as Hackapd contributors to the pad I make for the meeting. That way, anyone who wants to can take notes in a central place, and edit each other's notes. It's super powerful -- feels magical even to have a "whole is greater than sum of the parts" note taking experience, where others fill in stuff you missed, etc.
So how is Hackpad better than Google Docs? Well, there's actually a Hackpad that addresses that question! But the two reasons I love it are because a) you can see on the left-hand side who wrote what text, and b) because it's super lightweight and easy to spool up a pad on a moment's notice.
My incredible wife gave birth to a beautiful daughter earlier this week. 6lbs, 6oz. Mom and baby are doing great. No name yet (we have to get to know her first!). A few pictures are below.
• Visitors: We can't wait to introduce Baby DROdio to our friends and family; mom & baby are recovering at home. We'll let you know as soon as we get a handle on everything.
• No gifts, please! We are taking an "agile" approach to parenting. For those of you who aren't techies, that means we are taking it step by step, and we will purchase baby items as we learn the needs of our baby. We don't want to start out with a room full of boxes of baby things that we don't know whether we'll need or not. However, we'll happily take any of your tried & true hand-me-down clothing that you no longer need (reduce, reuse, recycle!).
If you really really want to get us something (and you're really stubborn even though we don't need anything!), we would ask that you get us a Munchery Gift Card. This is a food ordering service that will allow us to have freshly prepared food delivered daily for the first few weeks, and that would help both of us cope. (Since Sue is the one who usually feeds us, I especially would appreciate this, since I'll be responsible for feeding her!) To make sure it arrives at the right place, use email address "us -at- danielodio -dot- com" for the gift card.
That's it for now, more updates to come!
I've found myself thinking a lot about process recently.
Creating and documenting processes in startups is hard, for several reasons. First, it feels like time unwisely spent. A startup has to move so fast that it doesn't have time to think about process. Secondly, things change in startups so quickly that a process is going to quickly become obsolete, so why bother? And lastly, sticking to process takes discipline. When that discipline isn't there (especially from the leaders of the organization) then any process becomes unused and wasted.
On the flipside, having too much rigid adherence to an inflexible process can definitely hamper creativity and innovation.
So what's the right amount of process, and how is it kept relevant?
One of the advantages of focusing on focus is the ability to go "deep" instead of "wide" on what a company's actual business is.
A fantastic example is Dropbox. They do one thing, and they do it with such an intense focus that I continue to be amazed by the level of innovation they achieve.
It seems like every day, their entire team is asking itself "what can we do to go deeper on our main objective?" And their main objective is to acquire as many users as possible, and then get them to store as much of their content on Dropbox as possible. Simple.
They do this so incredibly well, and their valuation is north of $4 billion, just for doing that one thing better than anyone else on the planet, with an incredible depth of focus.
Hi DROdio, I wanted to get your take on how a CEO should handle the case where a valuable employee quits or resigns on good terms. I've been at a number of companies recently where the process has been poorly handled and just leads to uncertainty and stress all around.
As a CEO, how do you ensure that when a valuable employee leaves, they leave in a timely and respectful manner to both them and the team they had worked with?
Thanks for your thoughts!