DROdio http://danielodio.com A Sanctuary for Founders and Entrepreneurs en-us Sat, 28 Mar 2015 09:37:01 +0000 http://sett.com Sett RSS Generator Marketing Your Startup by Giving Out Stock Options http://danielodio.com/marketing-your-startup-by-giving-out-stock-options This new startup, Jet.com, is looking to be the Costco of the web, and to undercut Amazon's prices by an average of 10%. They won't focus on speedy 2 day "prime" delivery. Instead, by being a member and paying a $49 annual fee (like you do with Amazon or with Costco), yo]]>

This new startup, Jet.com, is looking to be the Costco of the web, and to undercut Amazon's prices by an average of 10%. They won't focus on speedy 2 day "prime" delivery. Instead, by being a member and paying a $49 annual fee (like you do with Amazon or with Costco), you'll get access to discounts, but the products will take longer to ship to you. This is a great model for non-time-sensitive things, like re-ordering diapers.

But the best part of it is how they're building a pre-launch interest list: When you sign up, they give you a unique sharing code. For example, mine is https://jet.com/#/ji/cj2tx and I'm currently member 124,837 of 124,877 on their interest list. The more people sign up based on your code, the more rewards you unlock. That's not all that new or innovative -- but the part that's great is that they're offering lifetime memberships and even stock options to their top sharers. Which is a great marketing move, although the reality is that getting 100k options doesn't mean much unless you know how many total shares are issued, and what the strike price is. But it's marketing genius!

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Fri, 09 Jan 2015 01:29:03 +0000 http://danielodio.com/marketing-your-startup-by-giving-out-stock-options
High Fives and Arash's Story http://danielodio.com/high-fives-and-arashs-story At a recent DFJ venture capital conference, I heard the story of Arash Bayatmakou.

He fell from a 3rd story balcony a few years ago and landed on his neck, paralyzing him from the chest down.

Incredibly, he's determined to walk again. We exchanged emails after the conference and he signed off with this:

A high five, coming from a guy who's facing incredible challenges every day just to get back to doing the things we take for granted. I loved it, and decided that from now on, I'm going to sign my emails with a high five as well, as a tribute to him and his positive attitude.

If you want to follow Arash's recovery, you can subscribe to his blog here. And below is a video where he tells his story.

High five, Arash!

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Mon, 24 Nov 2014 04:54:46 +0000 http://danielodio.com/high-fives-and-arashs-story
How Are You Spending Your 700,800 Hours? http://danielodio.com/what-are-you-doing-with-your-700800-hours

"Time is what we want most, but what we use worst." - William Penn

Time is our most precious asset, and none of us know how much of it we have left.

It's ironic, then, how easily we let it slip away. An hour for a meeting, an hour in traffic.

Next time you get asked to spend an hour doing something, just hold it up to this filter before you decide:

  • Each year, we are each allotted 8,760 hours. Most of us spend 30% of that sleeping, so in reality you have 6,132 hours per year to work with.
  • Of those, you'll likely spend at least 2,000 of them working, leaving just over 4,000 for everything else -- your family, your kids, yourself.
  • Even a long lived life is only 700,800 hours, and you'll only be awake for 500,000 of them. If you limit that to productive adult years, it's more like 350,000 hours that count.

Treat those hours preciously, and do great things with them, because you can never get them back.

The background picture is a watch my amazing wife gave me years... make that about 35,000 hours... ago. Feels like an antique in this age of iWatches!

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Thu, 20 Nov 2014 01:11:32 +0000 http://danielodio.com/what-are-you-doing-with-your-700800-hours
Negotiation Pro Tip: Creating An Obligation http://danielodio.com/creating-an-obligation I'm going to share one of my most powerful negotiating techniques. The funny thing is that up until a year ago, I didn't even realize this was a technique -- I thought everyone did this. But apparently not -- here's the backstory: A year ago I went mountain biking with s]]>

I'm going to share one of my most powerful negotiating techniques. The funny thing is that up until a year ago, I didn't even realize this was a technique -- I thought everyone did this. But apparently not -- here's the backstory:

A year ago I went mountain biking with some friends up at Northstar in Lake Tahoe. We decided to take lessons and rent gear for the day, and the rental shop didn't honor our reservation due to a scheduling conflict. I ended up getting our group a full day of riding + gear for the cost of a lesson. As we were walking out of the rental shop, one of my friends asked me "how did you just do that?" because they had been in there earlier and the shop had told them we were out of luck. I told them offhandedly "I just created an obligation." My friends asked me to explain what that meant -- which I did briefly-- but I've thought about it often since, realizing that it's a powerful technique I wanted to share in more detail.

But before we get started, remember what Spiderman was told: "With Great Power Comes Great Responsibility." The technique I'm going to share with you can be abused, and when it is, you'll come off as a total jerk. That might be fine if that's what you're going for. But make sure you focus on using it responsibly. More on that at the end.

Why You Want To Create an Obligation When Negotiating:

Negotiation of any type is a process where two or more parties work to find acceptable, common ground while optimizing their outcome. And just like poker, whoever is holding the best cards has the most power and ability to influence the outcome (whether they play their cards well is another matter entirely). So the reason you want to create an obligation is to increase your leverage in the negotiation process. With leverage you have an opportunity to better achieve the outcome you're going for.

How You Create An Obligation:

There are many ways to do this. The best way is for me to give you some examples.

Example #1: Mountain Biking Gear Rental:

The rental shop in my intro above had told us we needed to arrive by 10am in order to get gear and secure an instructor. We were litearlly pulling up at 9:55, so I called the shop and let them know that someone from our group would be coming in, and I dropped my friends off at the front of the lodge at about 9:57am. They arived in the shop right at 10am while I was parking.

When they got there, they were told it was too late -- all the instructors had already headed up the mountain. So by the time I got to the rental office at 10:10, my friends were sitting out front and let me know we were out of luck.

But I knew I had already created an obligation with the rental shop: I had called them and told someone (probably just a front desk person who had no idea the instructors had already left) that we were coming. That was my currency. I walked in, talked to the manager, and explained that a) we were told to be here by 10am and b) we had notified them before 10am that we were coming. Why did I do this? To make our problem the manager's problem. The manager told me the same thing he'd told my friends: That all the instructors had already left. But I pointed out that that wasn't my problem -- it was his problem, because we'd done as instructed and even notified them. A problem he now had to fix.

Now, here's where things can get kind of uncomfortable. And it's also where most people stand down because they don't want to deal with stressful situations. If you're going to employ this technique, you have to be ready to stand your ground. That happens to be something I generally have no problem doing (to the chagrin of my friends who have to observe me enforcing the obligation I've dropped in someone's lap). I tend to find that startup founders are really good at this because they have to be.

The manager tried to tell me again we were out of luck. There were no instructors. That's when I employed my 2nd favorite negotiating tactic: Getting someone to negotiate with themselves. Why is it my job to figure out the solution to this manager's problem? It's not -- at least not yet. So I told him to think up a couple solutions to the problem and I'd pick one.

You'll get varying responses at this point: If the other party genuinely wants to help, they will try to come up with some solutions. This manager mentioned that there was a second class at 1pm in the afternoon, and that he could get us into that one. Very good -- now we were getting somewhere!

I thanked him for his creative problem solving while also pointing out that 1pm was 3 hours away. We couldn't just sit around for three hours waiting. We had come for the 10am slot. Now I added a solution of my own: "Why don't we get the bikes and gear now. We'll ride until 1pm, then meet the instructor." He agreed, and that's how we got a full day of riding in, with gear, for the cost of a lesson.

Example #2: New iPhone 6 Plus Mixup:

Creating an obligation can come in many forms. I purchased an iPhone 6 Plus (which I absolutely love even though -- or maybe because?-- it's massive. But that's fodder for another post) from a to-remain-nameless wireless carrier on October 27th. I was told it would take a month for the phone to arrive since it was on backorder.

But then, on 11/1/14, I got an email from the carrier telling me the phone would ship "on or before 11/6/14" and that I'd get a status update in a week. I don't know who at the carrier sent that erroneous email out, but s/he just created an obligation for them. And when I did not get an update as promised in a week, nor did I receive the phone, I decided to do something about it, because I was going on a trip and didn't want the phone to be sitting on my doorstep.

I used Data.com to find the name and email of a Vice President, Corporate Strategy at the carrier. I emailed her, and I used the BigDripper to make it more likely that she would respond. Here was my email:

And after one BigDripper auto-ping...

... she wrote me back introducing me to a colleague...

...who expediently shipped me a new phone, overnight, to make sure it arrived before I had to leave for my trip:


Normally, I wouldn't have taken the time to make good on this obligation, but I did because I had to travel, and that's kind of the point: There are opportunities all around you to create obligations so you can maximize your situation. Many times, it's not worth the cost to push these obligations, because you'll have to live or work with the people afterwords. The nuance of knowing when to create the obligation, and when to let it slide, is an important one. But what's also important is that you realize that these opportunities exist, even if you choose not to do anything about them, and that you get comfortable pushing them when you need to.

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Mon, 17 Nov 2014 03:15:06 +0000 http://danielodio.com/creating-an-obligation
Zuck in 2005: No plans for world domination, but the product/market fit to get there. http://danielodio.com/zuck-in-2005-no-plans-for-world-domination-but-the-product-market-fit-to-get-there The best part: Zuck describes Facebook in minute 1 as an "online directory for co]]> I absolutely love this video of Zuck talking about Facebook back in 2005. If I had been in that room, I wouldn't have been able to guess that Facebook would become a $180+ billion company.

The best part: Zuck describes Facebook in minute 1 as an "online directory for colleges." Not only does that not like a billion dollar business, but it also sounds like a terrible startup idea.

The lesson: The key nugget is "I launched it in Harvard in early Feb 2004, and within a couple of weeks, 2/3 of the school had signed up". That is an incredibly strong signal that there's a really good initial product/market fit. This is a recurring theme that also permeated Y Combinator's recent Startup School, which talks about the importance of finding product/market fit above all else.

The kicker: I love how, in minute 3:55 Zuck is asked "And where are you taking Facebook?" He responds with "I mean, there doesn't necessarily have to be more."

Indeed... there didn't have to be, but there was. You don't need world domination planning if you can create world domination product/market fit. The rest takes care of itself.

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Sun, 19 Oct 2014 21:47:48 +0000 http://danielodio.com/zuck-in-2005-no-plans-for-world-domination-but-the-product-market-fit-to-get-there
Betterment vs. Wealthfront: Which One Will Maximize Your Wealth More? http://danielodio.com/betterment-vs-wealthfront-which-one-will-maximize-your-wealth-more The richest 1% of Americans have access to great financial tools and advice: Firms like Goldman Sachs provide them with (legal) tricks like Tax Loss Harvesting (TLH). Never heard of TLH? Neither had I until my buddy Andrew Dumas, after reading my post titled "Show Me The]]>

The richest 1% of Americans have access to great financial tools and advice: Firms like Goldman Sachs provide them with (legal) tricks like Tax Loss Harvesting (TLH). Never heard of TLH? Neither had I until my buddy Andrew Dumas, after reading my post titled "Show Me The Money: Six Strategies to Put Your Cash to Work," mentioned a new startup called Weathfront that was on the cutting edge of ETF fund-based portfolio management. This opened a whole new world of investing up to me, which I'd like to share with you.

But first some background: In my past blog post I talked about ETFs, or Exchange Traded Funds, which are a class of funds that create a basket of stocks based on a particular segment of the market. For example, in the past if you wanted to invest in technology companies you basically had two options: You could pick the companies you thought would be the winners, like Google and Yahoo and buy stock in those directly, or you could invest in a mutual fund that has an expert who picks the companies, and you'd pay a management fee for his or her expertise. But ETFs offer a third choice, and it's worth really understanding how they work. Here's a description from Wikipedia:

"ETFs generally provide the easy diversification, low expense ratios, and tax efficiency of index funds, while still maintaining all the features of ordinary stock, such as limit orders, short selling, and options. Because ETFs can be economically acquired, held, and disposed of, some investors invest in ETF shares as a long-term investment for asset allocation purposes, while other investors trade ETF shares frequently to implement market timing investment strategies. Among the advantages of ETFs are the following:

• Lower costs – ETFs generally have lower costs than other investment products because most ETFs are not actively managed and because ETFs are insulated from the costs of having to buy and sell securities to accommodate shareholder purchases and redemptions. ETFs typically have lower marketing, distribution and accounting expenses, and most ETFs do not have 12b-1 fees.

• Buying and selling flexibility – ETFs can be bought and sold at current market prices at any time during the trading day, unlike mutual funds and unit investment trusts, which can only be traded at the end of the trading day. As publicly traded securities, their shares can be purchased on margin and sold short, enabling the use of hedging strategies, and traded using stop orders and limit orders, which allow investors to specify the price points at which they are willing to trade.

• Tax efficiency – ETFs generally generate relatively low capital gains, because they typically have low turnover of their portfolio securities. While this is an advantage they share with other index funds, their tax efficiency is further enhanced because they do not have to sell securities to meet investor redemptions.

• Market exposure and diversification – ETFs provide an economical way to rebalance portfolio allocations and to "equitize" cash by investing it quickly. An index ETF inherently provides diversification across an entire index. ETFs offer exposure to a diverse variety of markets, including broad-based indices, broad-based international and country-specific indices, industry sector-specific indices, bond indices, and commodities.

• Transparency – ETFs, whether index funds or actively managed, have transparent portfolios and are priced at frequent intervals throughout the trading day.

Some of these advantages derive from the status of most ETFs as index funds."

So, ETFs are a great way to place bets on, say, "technology" or "healthcare" if you believe in those industries, or classes of companies like "Large Cap," "Small Cap," "Domestic Market" or "Emerging Market" stocks without having to pick specific stocks.

But back to Dumas' suggestion: There's also another way to get into ETFs -- via two startups that have created an investment management service around ETFs. Think of it as a "financial advisor 2.0," offering much lower fees (as low as 0.15%) than traditional mutual funds. One of these startups is called WealthFront, and the other is called Betterment. My wife and I have put money in both of them, at the same time, and we're going to compare which one is more effective at maximizing wealth, as well as being the most usable of the two. It's the "battle of the automated investment services."

These two services both offer access to things like Tax Loss Harvesting that once was reserved for the richest 1% of Americans. TLH is explained by Betterment here, but at a high level, it basically consists of selling assets that have depreciated in value to create a loss, then re-buying in that same asset class, and using the loss to offset your other gains. Think of it as making the best of a bad situation -- and it typically adds 0.77% to a typical customer’s after-tax returns, annually.

This blog will be a running post with updates as we experience the two services. Let the Games begin! See the comments on this post for running comparisons between the two services.

PS -- as I wrote in my "Show Me The Money" blog, anyone can start investing with as little as $25 -- seriously. Being an investor is a mindset more than anything. So if you don't think you have enough money to start investing, put down that Venti Starbucks Frappuccino, scrape together $25, and get started.

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Sat, 02 Aug 2014 19:48:21 +0000 http://danielodio.com/betterment-vs-wealthfront-which-one-will-maximize-your-wealth-more
Hey Managers: Show Me The Last Thing You Created http://danielodio.com/hey-managers-show-me-the-last-thing-you-created I'm the SVP of Strategic Partnerships at ShareThis. It's my job to find the right strategic partners for us to work with. This morning, in the shower, I thought "I'd like to have a simple combo slide deck + narrated screencast to show to prospective partners." So, I just]]>

I'm the SVP of Strategic Partnerships at ShareThis. It's my job to find the right strategic partners for us to work with. This morning, in the shower, I thought "I'd like to have a simple combo slide deck + narrated screencast to show to prospective partners."

So, I just finished hacking together a simple site that explains our business. It's something I did in just under an hour using a combination of HTML, Google App Engine, Google Slides, HelloBar, Vimeo, iShowU, Google Labs' ShortLinks and AdRoll. It was fun to make it and I expect it'll prove useful.

That activity, of taking an idea I had in the shower this morning and hacking it together in an hour today, got me thinking about the difference between makers and managers, and about how few managers really appreciate (or are able to participate in) the creation process -- especially when it involves some amount of hacking.

I find that managers who are also makers have an ability to key in on opportunities that non-maker managers miss. They have a better ability to connect with their teams. They can go a level deeper into projects than non-maker managers. They can ask more intelligent questions. They can conceptualize and create efficient processes much more quickly and easily. Or to put it another way, they can be much better managers by also being makers.

So if you're a manager, I'd ask you this question: Show me the last thing you created.

If you have a hard time answering that question, I'd cringe, and then encourage you to focus some percentage of your time on honing your 'making' skills. That can take many forms -- from the simple stuff like:

  • Be more curious: It sounds dumb, but it isn't. When someone sends you a tool or a site, or something they just made, spend even just 5 minutes poking around trying it out. Don't just say "great job!" but actually try to provide some constructive feedback. Why does something work like it does? Can you find a bug? What else would you like to see it do? What will it change in your daily flow? Asking questions like these show that you are curious enough to care and have a much bigger impact than an empty "great job".
  • Learn to code in some language, even if it's just basic HTML: HTML can be surprisingly useful. By combining it with a dropbox account, you can create and host pages in a snap -- a great way to test an MVP. You can also go a level deeper by using Google App Engine, which is insanely easy to use. (here's an example of the same site as above, but hosted on Dropbox instead of Google App Engine -- something I did just by dropping the HTML page into my "public" folder in Dropbox: https://dl.dropboxusercontent.com/u/1096184/about-sharethis.html)
  • Create a culture where you hire hackers: Some companies have this idea that "hackers" are only computer nerds who do the heavy lifting. I couldn't disagree more. Ensuring that every single employee has some hacking ability, however light, completely changes the company's culture. And yes, by 'every employee' I mean the salespeople, the general counsel, the bizdev guy (or gal), etc. Everyone. Having a culture of hiring "makers" and not just "managers" is what's made companies like Facebook, Stripe and Dropbox so successful.

These things will also help you identify much more deeply with makers, which they'll really appreciate, even if you don't become a maker yourself.

If I'm asking too much of you as a manager, then at least do this: Read Paul Graham's "Makers's Schedule, Manager's Schedule" to learn about how you're probably wrecking at least some level of havoc in your makers' lives with meetings.


PS thanks to Sean Seadmand for showing me and the entire team at ShareThis how to easily deploy sites via Google App Engine. I'd never tried it before that demo, and it was really valuable today (vs. spooling up a Heroku or AWS instance or something else more involved). Sean, you're a maker of makers! :)

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Fri, 20 Jun 2014 21:18:03 +0000 http://danielodio.com/hey-managers-show-me-the-last-thing-you-created
A Startup's Perspective on Time http://danielodio.com/a-startups-perspective-on-time Startups feel like a race against the clock, because they are. The trick is to extend a startup's runway (or as one of my investors put it, "oxygen in the the scuba tank") long enough to become successful. This means creating the right team, finding product/market fit, executing flawlessly, and either becoming profitable or raising enough money to keep oxygen in the tank until you do (or until you get acquired trying).

One thing I've firmly come to believe after doing several startups is that a startup doesn't die until its founder(s) give up. By that I mean, there's always one more thing that the founding team can do to eek a bit more oxygen from the tank, even when things look hopeless. But when a founder gives up, there can still be money in the bank and it won't matter; the startup is done. It kind of feels like the tail wagging the dog, in a way -- startups succeed from pure, raw determination of the founders as they race against time.

What got me thinking about writing this post, though, is an awesome blog post I read about putting time in perspective. So often in startups it can feel like time's running out that it's refreshing to think about time on a grander scale. Here's an infographic from that article that really does put things into perspective. A great quote from that article is:

"Humans are good at a lot of things, but putting time in perspective is not one of them."

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Sun, 15 Jun 2014 22:43:12 +0000 http://danielodio.com/a-startups-perspective-on-time
Musings on the State of the (App) Developer Nation http://danielodio.com/musings-on-the-state-of-the-developer-nation Vision Mobile just created a fantastic report called "State of the Developer Nation." Here are some highlights and thoughts: There's no question that apps are here to stay (and that was a big question, even just 24 months ago). Over half of all phones sold worldwide are ]]>

Vision Mobile just created a fantastic report called "State of the Developer Nation." Here are some highlights and thoughts:

There's no question that apps are here to stay (and that was a big question, even just 24 months ago). Over half of all phones sold worldwide are now smartphones:

With lots of app growth already and doubling in the next 24 months:

"The global app economy was worth $68 billion in 2013 and is projected to grow to $143 billion in 2016"

It's, unsurprisingly, a two-horse game between iOS and Android, with HTML5 rounding out the top three. Android is dominating the global developer mindshare, although iOS still dominates in non third-world countries and iOS still commands the most loyalty among its developers. So, some interesting tension there. One way to cast it is "Andorid is everywhere, but iOS is more meaningful."

"Android and iOS capturing over 94% of smartphone sales in Q4 2013. Android continues to dominate Developer Mindshare with 71% of developers that target mobile platforms, developing for Android.

Apple's iOS comes as a distant second at 55% of global app Developer Mindshare. iOS is strong in Europe and North America, but takes third position behind HTML5 in South Asia, South America and Middle East & Africa."

"iOS commands the most loyal developers with 59% of developers that target iOS prioritising it over any other platform. For many developers the question is now about which platform to prioritise, not which platform to develop for."

Windows Phone continues to be a dark horse third player, with developers saying they intend to adopt the platform, but usage still a distant fourth in actual usage.

Turns out, tablet-first may have just been a fad, and are actually companion devices more than primary devices. I've seen this trend really accelerating after tablet mania in 2011-2012.

"Tablets are very much a “companion” development option; tablets attract 83% of app developers but just 12% of developers target tablets as their primary development screen."

It's still a feast or famine world for app developers, with very few feasting. We're seeing a big rise in e-commerce via apps although the overall number is still low. iOS dominates monetization, with 10x the revenues of the average Android app that monetizes.

"60% of developers are below the “app poverty line”, i.e. earn less than $500 per app per month, according to the latest Developer Economics survey.

iOS has a larger “middle class” than Android. Among developers that generate $500 - $10K per app per month, 37% prioritise iOS vs. 25% Android.

In-app advertising remains one of most popular revenue models at 26% of app developers, particularly strong on platforms where demand for direct purchases is weak, such as Windows Phone and Android."

"Use of e-Commerce as a revenue model for apps grew significantly, from 5% of app developers in Q3 2013 to 8% in Q1 2014."

"In terms of developer revenues per capita, iOS maintains its momentous gap with median revenues between $500 and $1000 per app / month, much higher than the median revenues of Android developers ($100 - $200 per app / month). As Android continues to grow in mid- and low-end handset segments, we don’t see the revenues for Android developers catching up with iOS anytime soon."

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Tue, 29 Apr 2014 15:37:50 +0000 http://danielodio.com/musings-on-the-state-of-the-developer-nation
Finally: Making Advertising Relevant http://danielodio.com/finally-making-advertising-relevant I never thought I'd say this, and I'm not sure how I feel about myself for saying it, but it's an exciting time to be in advertising. There's a famous quote attributed to John Wanamaker, a pioneer in marketing from the late 1800's that goes: "Half the money I spend on ad]]>

I never thought I'd say this, and I'm not sure how I feel about myself for saying it, but it's an exciting time to be in advertising.

There's a famous quote attributed to John Wanamaker, a pioneer in marketing from the late 1800's that goes:

"Half the money I spend on advertising is wasted; the trouble is I don't know which half."

Indeed, it's almost certainly way more than half. But the lack of quantifiability has always been the elephant in the room, even now, 150 years later.

As a startup product guy, my attitude has always been that advertising is a tax on a brand for having an unremarkable product. Or to put it another way, why put money into advertising when you could plow those funds into being innovative instead?

But the reality is that there's something about the human psyche that really responds to advertising, especially when it's done right -- which it often isn't. Consumers want to identify with brands they care about, and advertising is an effective way to craft and strengthen those connections. So although I'd still recommend that a fast-moving startup focus on creating a world-class product, I've come to believe that larger brands, which simply can't move as fast as startups, are indeed effectively counteracting this slower pace of innovation via effective advertising. A good analogy is that while a startup is building its castle by creating superior products, a large brand is defending its existing castle with effective advertising. And to those who would say "the answer is actually for the brand to innovate faster" I would counter that while in a vacuum that may be true, in the real world that is effectively impossible. Larger companies cannot innovate as fast as small companies because they have the "baggage" of a successful product that's bringing in revenue, which they don't want to cannibalize. It's human nature: When you have something that's working, you're going to put your effort into optimizing that thing. You're not going to throw it away to find something new. It's the classic Innovator's Dilemma.

And sometimes, brands are able to create experiences that really resonate, and if I'm being honest with myself, it absolutely influences my perception and affinity to the brand. That's the thing: I, like most consumers, have an aversion to most advertising. But I've realized it's actually not advertising I dislike -- it's non-relevant advertising. When a brand connects with me in a relevant way, it's very powerful and I welcome it.

One of the first brands to really connect with me in a relevant way was BMW via a series of ads from 2001 called "The Hire," starring Clive Owen and a host of well known directors. Here's one of the ads, called Hostage, directed by Jon Woo:

Hostage ! BMW short film by John Woo with Clive Owen

I was in my mid 20's at the time and a huge fan of BMW cars already. These ads really cemented my relationship with the brand.

The problem is that that's been the exception, not the rule. I don't find most advertising to be relevant, and so I generally find it distracting, annoying and non-value add to my day.

But this is where the power of social media comes in, and specifically, mobile as the channel. I'm not referring to social in the traditional sense, like FB posts. Rather, I'm talking about the power of brands tapping into our digital identities.

A mobile phone isn't really a phone so much as it's the container that holds my digital identity. It's the vehicle with which I interact with the world, largely via social media channels (and especially, "dark social" which is a more intimate & meaningful form of social interaction).

And now, for the very first time, all of this data from my phone is allowing brands to craft their interactions with me in more meaningful ways.

Now, this is a very exciting and very scary thing. There was a powerful 60 Minutes piece that slammed data brokers, and it's worth watching, because these are very real issues. But as a consumer, I'm willing to pony up for a value exchange: I'll let brands know more about me -- especially if my identity is anonymized -- in exchange for having a more relevant, personalized experience. I'm willing to make that trade, and I think most of us are as well, because advertising isn't going away, and the alternative is a world full of noise and annoyance.

The advertising world is full of jargon. PII. DSP. SSP. RTB. RTM. DMP. XDevice. Native ads. Programmatic. Private Exchanges. The list goes on. And while these terms are meaningless to consumers, what they signify is a seismic shift in the structural foundation around how advertising reaches us. And it's all focused on one core metric: To solve the problem that John Wanamaker identified 150 years ago -- to make advertising the most relevant to each of us, individually.

This won't happen overnight, but the next decade of advertising will be very transformational. If you're an entrepreneur interested in this space, here are a few specific areas of opportunity:

  • At large media brands, linear advertising (i.e., TV ads) typically compromise 90% of revenue, with digital pegged at 10%. But audience engagement patterns are shifting, and we are now largely accessing content on mobile & other digital devices instead of TVs. There is already a huge shift underway to capitalize on this shift and a lot of dollars will be flowing into digital over the next decade.
  • Connecting brands to consumers' digital identities via their interests, in a personalized, relevant way, at scale, and via a privacy-friendly approach, is a huge opportunity -- one that's just now really getting significant traction. People do want to interact with brands they care about, in ways that are meaningful to them. The challenge, typically, is that brands want scale. Helping a brand re-think an individualized approach with a level of scale that moves the needle in a meaningful way is still a problem that needs solving.
  • Brands are starting to create content in an attempt to craft meaningful experiences for their customer bases. A leading example is Red Bull Media House, which produces viral and engaging videos like this one. But not every brand is ready to create its own production house. Helping a brand achieve this level of relevance with an audience, say, as a SaaS service, is a huge opportunity.

There are already many, many startups tackling these problems. But then again, AltaVista was the search engine to beat when Google came on the scene. We're in a similar environment now, with huge problems that still need to be solved, and a gigantic brand market awaiting to shower the victor(s) with advertising dollars.


The picture above is a shot of Aaron Magness at the Digiday conference talking about the brand he evangelizes for, Betabrand, which is what got me thinking about this post -- because their branding is awesome.

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Mon, 28 Apr 2014 16:53:46 +0000 http://danielodio.com/finally-making-advertising-relevant