kottke.org posts about business
Mule Design’s Mike Monteiro wrote a cracking guide on how clients can give better feedback to designers.
Let the design team be the design experts. Your job is to be the business expert. Ask them how their design solutions meet your business goals. If you trust your design team, and they can explain how their recommendations map to those goals, you’re fine. If you neither trust them, nor can they defend their choices it’s time to get a new design team.
This should be printed out and nailed into the forehead of every designer and their clients a la Luther’s Ninety-Five Theses, you know, for easy reference.
Items on this pimp’s handwritten business plan — aka “Keep It Pimpin’” — include:
- my word is my bond
- take my game to the next level (from the concrete streets to executive suites)
- take care my bitches more better
- minimize my budget (cash cars, houses, etc.)
- keep a good photographer
The dickwad who threatened his customers as an SEO tactic (detailed here in the NY Times) was arrested on Monday by federal agents.
The merchant, Vitaly Borker, 34, who operates a Web site called decormyeyes.com, was charged with one count each of mail fraud, wire fraud, making interstate threats and cyberstalking. The mail fraud and wire fraud charges each carry a maximum sentence of 20 years in prison. The stalking and interstate threats charges carry a maximum sentence of five years.
He was arrested early Monday by agents of the United States Postal Inspection Service. In an arraignment in the late afternoon in United States District Court in Lower Manhattan, Judge Michael H. Dolinger denied Mr. Borker’s request for bail, stating that the defendant was either “verging on psychotic” or had “an explosive personality.” Mr. Borker will be detained until a preliminary hearing, scheduled for Dec. 20.
From the New Yorker a week or two ago, John Cassidy has an article about the social value of what Wall Street and investment banking. It’s not a pretty picture.
Lord Adair Turner, the chairman of Britain’s top financial watchdog, the Financial Services Authority, has described much of what happens on Wall Street and in other financial centers as “socially useless activity” — a comment that suggests it could be eliminated without doing any damage to the economy. In a recent article titled “What Do Banks Do?,” which appeared in a collection of essays devoted to the future of finance, Turner pointed out that although certain financial activities were genuinely valuable, others generated revenues and profits without delivering anything of real worth — payments that economists refer to as rents. “It is possible for financial activity to extract rents from the real economy rather than to deliver economic value,” Turner wrote. “Financial innovation…may in some ways and under some circumstances foster economic value creation, but that needs to be illustrated at the level of specific effects: it cannot be asserted a priori.”
Turner’s viewpoint caused consternation in the City of London, the world’s largest financial market. A clear implication of his argument is that many people in the City and on Wall Street are the financial equivalent of slumlords or toll collectors in pin-striped suits. If they retired to their beach houses en masse, the rest of the economy would be fine, or perhaps even healthier.
I particularly enjoyed the characterization of banking as a utility:
Most people on Wall Street, not surprisingly, believe that they earn their keep, but at least one influential financier vehemently disagrees: Paul Woolley, a seventy-one-year-old Englishman who has set up an institute at the London School of Economics called the Woolley Centre for the Study of Capital Market Dysfunctionality. “Why on earth should finance be the biggest and most highly paid industry when it’s just a utility, like sewage or gas?” Woolley said to me when I met with him in London. “It is like a cancer that is growing to infinite size, until it takes over the entire body.”
p.s. Thanks to Typekit, the New Yorker’s web site now uses the same familiar typefaces that you find in the magazine. Looks great.
Incanto owner Mark Pastore explains why his restaurant isn’t on Opentable. His analysis is that Opentable is too expensive and monopolistic to offer much in the way of value to restaurants.
The recurring themes were the opinion that OpenTable took home a disproportionate (relative to other vendors) chunk of the restaurants’ revenues each month and the feeling of being trapped in the service, it was too expensive to keep, but letting it go could be harmful. The GM of one very well known New York restaurant group, which spends thousands of dollars on OpenTable each month, put it to me this way, “OpenTable is out for itself, the worst business partner I have ever worked with in all my years in restaurants. If I could find a way to eliminate it from my restaurants I would.” Another high-profile, 3.5-star San Francisco restaurateur told me he feels held hostage by OpenTable. For the past several years, his payments to them have been substantially more than he has himself earned from 80-hour workweeks at his restaurant. But he believes that if he stops offering it, his customers will revolt and many would stop coming to his restaurant. So he keeps paying, but carries a grudge and wishes for something better.
Startup opportunity? (via @amandahesser)
If this profile of Jay-Z in the WSJ is any indication, the guy doesn’t seem to have any problems anymore.
In his office, by a coffee table stacked with art books (Damien Hirst, Ed Ruscha), his Forbes magazine and a humidor, he perches on the edge of a chair with his fingers tucked into his pockets. He says he’ll always rap about variations on the same themes: drug hustling, business boasts, luxury hopscotching from Gucci to Louis Vuitton to the new Dior suit he says is a perfect fit. They’re all narrative devices:
“I’m just describing a scene, but the crux of the story is the message. Almost like a movie. Setting: South of France. This is what’s happening. This guy from out the projects who didn’t graduate from high school is now living this sort of life. And this is how he got here.”
Nice little piece by David Carr in the NY Times about The Awl, a small batch blogging concern owned and operated by Choire Sicha, Alex Balk, and David Cho.
“My friends keep talking to me about how they want to start a Web site, but they need to get some backing, and I look at them and ask them what they are waiting for,” Mr. Sicha said. “All it takes is some WordPress and a lot of typing. Sure, I went broke trying to start it, it trashed my life and I work all the time, but other than that, it wasn’t that hard to figure out.”
I enjoyed this extensive interview with John Sculley about his time at Apple (he was CEO from 83-93) because of 1) his insight into Steve Jobs’ way of thinking, 2) his willingness to talk about his mistakes, and 3) his insights about business in general…he gives Jobs a lot of credit but Sculley is clearly no slouch. Some high points:
[Jobs] felt that the computer was going to change the world and it was going to become what he called “the bicycle for the mind.”
On the small size of teams actually building products:
Normally you will only see a handful of software engineers who are building an operating system. People think that it must be hundreds and hundreds working on an operating system. It really isn’t. It’s really just a small team of people. Think of it like the atelier of an artist.
Sculley was president of Pepsi before coming to Apple:
We did some research and we discovered that when people were going to serve soft drinks to a friend in their home, if they had Coca Cola in the fridge, they would go out to the kitchen, open the fridge, take out the Coke bottle, bring it out, put it on the table and pour a glass in front of their guests.
If it was a Pepsi, they would go out in to the kitchen, take it out of the fridge, open it, and pour it in a glass in the kitchen, and only bring the glass out. The point was people were embarrassed to have someone know that they were serving Pepsi. Maybe they would think it was Coke because Coke had a better perception. It was a better necktie. Steve was fascinated by that.
On why he should not have been hired as Apple’s CEO:
The reason why I said it was a mistake to have hired me as CEO was Steve always wanted to be CEO. It would have been much more honest if the board had said, “Let’s figure out a way for him to be CEO. You could focus on the stuff that you bring and he focuses on the stuff he brings.”
Remember, he was the chairman of the board, the largest shareholder and he ran the Macintosh division, so he was above me and below me.
After Jobs left, Sculley tried to run the company as Jobs would have:
All the design ideas were clearly Steve’s. The one who should really be given credit for all that stuff while I was there is really Steve. […] Unfortunately, I wasn’t as good at it as he was.
And finally, Sculley and Jobs probably haven’t spoken since Jobs left the company:
He won’t talk to me, so I don’t know.
Jobs is pulling a page from the Don Draper playbook here. In season two, Don tells mental hospital patient Peggy:
Peggy listen to me, get out of here and move forward. This never happened. It will shock you how much it never happened.
Maybe Jobs is still pissed at Sculley and holds a grudge or whatever, but it seems more likely that looking backwards is something that Jobs simply doesn’t do. Move forward, Steve.
Using Blockbuster and Netflix (and Redbox) as an example, James Surowiecki writes about how big incumbent companies can lose out to smaller upstarts.
The problem — in Blockbuster’s case, at least — was that the very features that people thought were strengths turned out to be weaknesses. Blockbuster’s huge investment, both literally and psychologically, in traditional stores made it slow to recognize the Web’s importance: in 2002, it was still calling the Net a “niche” market. And it wasn’t just the Net. Blockbuster was late on everything — online rentals, Redbox-style kiosks, streaming video. There was a time when customers had few alternatives, so they tolerated the chain’s limited stock, exorbitant late fees (Blockbuster collected about half a billion dollars a year in late fees), and absence of good advice about what to watch. But, once Netflix came along, it became clear that you could have tremendous variety, keep movies as long as you liked, and, thanks to the Netflix recommendation engine, actually get some serviceable advice. (Places like Netflix and Amazon have demonstrated the great irony that computer algorithms can provide a more personalized and engaging customer experience than many physical stores.) Then Redbox delivered the coup de grace, offering new Hollywood releases for just a dollar.
From Scott McCloud, here’s Blockbuster’s new logo.
A reporter for the Toronto Star handed out prepaid credit cards to panhandlers and waited to see what happened.
“Can I trust you with this?” I said, handing him a $50 card and telling him to buy what he needs, but that I need it back when he was done. He nodded and scrambled to his feet. He said he would be back in a half-hour.
He came back right on time, slurping from a large McDonald’s soft drink cup — root beer — and with sweat on his brow. He wanted to have pork and rice from a Vietnamese noodle joint on Spadina but they wouldn’t take the card. So, he scrambled to McDonald’s. Lunch was a double quarter-pounder with cheese.
The reporter’s offer was frequently declined, which seems surprising at first. But panhandlers are savvy businesspeople. They didn’t want a short-term and potentially risky venture interfering with their main panhandling income stream. Eyes on the prize. (via the browser)
Privately held Trader Joe’s is highly secretive and doesn’t do interviews, so Fortune did some digging around to see what makes the retail chain such a success.
A ringing bell instead of an intercom signals that more help is needed at the registers. Registers don’t have conveyor belts or scales, and perishables are sold by unit instead of weight, speeding up checkout. Crew members aren’t told the margins on products, so placement decisions are made based not on profits but on what’s best for the shopper. Every employee works all aspects of the store, and if you ask where the roasted chestnuts are he’ll walk you over instead of just saying “aisle five.” Want to know what they taste like? He can probably tell you, and he might even open the bag on the spot for you to try.
Customer service, pay people well, and trust them to do good work. That and be clever about what you sell and to whom.
Patrick Calello tells the story of how Automoblox (a wooden car toy) came about. Lots of business lessons to be gleaned from this one.
Mr. Ling, one of the partners from the injection molding factory, picked up Henry and me at our hotel. Henry was quick to inform Mr. Ling that he did not speak Cantonese, the local language. This deception positioned Henry as a spy for me, pretending to not understand the conversations between my agent, Lenny, the molder, Mr. Ling, and the tool maker. After a short while, Henry pulled me aside and advised me to get my business out of Swift Tread as swiftly as possible. He overheard the toolmaker tell Mr. Ling that there was nothing else he could do to adjust the mold. Henry also learned that my agent, Vinnie — who was supposed to have my interests at heart — was really protecting the interests of the molder.
My three-year-old son has four Automoblox cars. He loves them and plays with them as much as all his other toys and books combined. (via hello typepad)
Zappos’ CEO Tony Hsieh on why he sold his company to Amazon. Bascially most of Zappos’ board of directors didn’t approve of Hsieh’s focus on employee and customer happiness at the short term expense of profits.
I left Seattle pretty sure that Amazon would be a better partner for Zappos than our current board of directors or any other outside investor. Our board wanted an immediate exit; we wanted to build an enduring company that would spread happiness. With Amazon, it seemed that Zappos could continue to build its culture, brand, and business. We would be free to be ourselves.
(via the browser)
Chinese companies are temporarily hiring white men to pose as fake businessmen.
One friend, an American who works in film, was paid to represent a Canadian company and give a speech espousing a low-carbon future. Another was flown to Shanghai to act as a seasonal-gifts buyer. Recruiting fake businessmen is one way to create the image — particularly, the image of connection — that Chinese companies crave. My Chinese-language tutor, at first aghast about how much we were getting paid, put it this way: “Having foreigners in nice suits gives the company face.”
(thx, goob)
Charles Munger, who works with Warren Buffett as Vice-Chairman of Berkshire Hathaway, gave a talk at USC Business School in 1994 that is very much worth reading. Although the main point of Munger’s talk is how to pick stocks, he spends much of the time talking about “the art of worldly wisdom”…basically what you need to know to be a functional human being who can make informed decisions.
I have a name for people who went to the extreme efficient market theory-which is “bonkers”. It was an intellectually consistent theory that enabled them to do pretty mathematics. So I understand its seductiveness to people with large mathematical gifts. It just had a difficulty in that the fundamental assumption did not tie properly to reality. […]
The model I like — to sort of simplify the notion of what goes on in a market for common stocks — is the pari-mutuel system at the racetrack. If you stop to think about it, a pari-mutuel system is a market. Everybody goes there and bets and the odds change based on what’s bet. That’s what happens in the stock market.
Any damn fool can see that a horse carrying a light weight with a wonderful win rate and a good post position etc., etc. is way more likely to win than a horse with a terrible record and extra weight and so on and so on. But if you look at the odds, the bad horse pays 100 to 1, whereas the good horse pays 3 to 2. Then it’s not clear which is statistically the best bet using the mathematics of Fermat and Pascal. The prices have changed in such a way that it’s very hard to beat the system.
(via the browser)
Inc. Magazine has a nice profile of Tim O’Reilly. Tim’s business philosophy is refreshing.
O’Reilly says he sometimes wonders what would have happened if he had raised venture capital and given his company a chance to get really big. But he sounds more amused by this question than truly troubled by it. “Money is like gasoline during a road trip,” he says. “You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations. You have to pay attention to money, but it shouldn’t be about the money.”
Dan Pink argues that businesses should engage their employees’ third drive, our “inherent tendency to seek out novelty and challenges, to extend and exercise their capacities, to explore and to learn”.
Management is the ideal technology if you’re seeking compliance — getting people to do what you want them to do, the way you want them to do it. But in today’s workforce, which demands much more in the way of creative and conceptual capabilities, we don’t want compliance. We want engagement. And self-direction is a far better technology for engagement.
(via bobulate)
Twitter announced their long-awaited advertising model last night: Promoted Tweets. Companies and people will be able to purchase tweets that will show up first in certain search results or right in people’s tweet streams. Which, if you rewind the clock a few years, is exactly the sort of thing that used to get people all upset with search engine results…and is one of the (many) reasons that Google won the search wars: they kept their sponsored results and organic results separate. It will be interesting to see if the world has changed in that time.
Great interview with Five Guys Burgers and Fries founder Jerry Murrell. Their entire focus is on the product.
The magic to our hamburgers is quality control. We toast our buns on a grill — a bun toaster is faster, cheaper, and toasts more evenly, but it doesn’t give you that caramelized taste. Our beef is 80 percent lean, never frozen, and our plants are so clean, you could eat off the floor. The burgers are made to order — you can choose from 17 toppings. That’s why we can’t do drive-throughs — it takes too long. We had a sign: “If you’re in a hurry, there are a lot of really good hamburger places within a short distance from here.” People thought I was nuts. But the customers appreciated it.
Good name too. My son frequently asks if we’re “going to go visit the five guys” to get “hangleburgers and peanuts”.
Somali pirates run their business pretty much like everyone else does.
To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this ‘contribution’, he receives a ‘class A’ share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.
(via df)
In defending itself against a copyright lawsuit brought by Viacom, YouTube notes that the media company has been surreptitiously uploading its copyrighted content to YouTube for years.
For years, Viacom continuously and secretly uploaded its content to YouTube, even while publicly complaining about its presence there. It hired no fewer than 18 different marketing agencies to upload its content to the site. It deliberately “roughed up” the videos to make them look stolen or leaked. It opened YouTube accounts using phony email addresses. It even sent employees to Kinko’s to upload clips from computers that couldn’t be traced to Viacom. And in an effort to promote its own shows, as a matter of company policy Viacom routinely left up clips from shows that had been uploaded to YouTube by ordinary users. Executives as high up as the president of Comedy Central and the head of MTV Networks felt “very strongly” that clips from shows like The Daily Show and The Colbert Report should remain on YouTube.
This jibes with what I heard a couple of years ago:
I heard that the staff of the Daily Show and Colbert Report upload the shows to YouTube as soon as they can after the shows air and then the next day, lawyers from Comedy Central hit YouTube with takedown requests for the uploaded shows.
(thx, @peretti)
Companies who target the middle of the market (Sony, Dell, General Motors) are losing customers to companies like Apple & Hermes at the high end and Ikea & H&M at the low end. From James Surowiecki:
The products made by midrange companies are neither exceptional enough to justify premium prices nor cheap enough to win over value-conscious consumers. Furthermore, the squeeze is getting tighter every day. Thanks to economies of scale, products that start out mediocre often get better without getting much more expensive — the newest Flip, for instance, shoots in high-def and has four times as much memory as the original — so consumers can trade down without a significant drop in quality. Conversely, economies of scale also allow makers of high-end products to reduce prices without skimping on quality. A top-of-the-line iPod now features video and four times as much storage as it did six years ago, but costs a hundred and fifty dollars less. At the same time, the global market has become so huge that you can occupy a high-end niche and still sell a lot of units. Apple has just 2.2 per cent of the world cell-phone market, but that means it sold twenty-five million iPhones last year.
The September Issue director R.J. Cutler sums up what he learned about business from Anna Wintour, the editor of Vogue and subject of his film.
I work in the film business, where schmoozing is an art form, lunch hour lasts from 12:30 until 3, and every meeting takes an hour whether there’s an hour’s worth of business or not. Not so at Vogue, where meetings are long if they go more than seven minutes and everyone knows to show up on time, prepared and ready to dive in. In Anna’s world, meetings often start a few minutes before they’re scheduled. If you arrive five minutes late, chances are you’ll have missed it entirely. Imagine the hours of time that are saved every day by not wasting so much of it in meetings.
Three out of the top 40 Hollywood earners for 2009 are the 20-something stars of the Harry Potter films…Daniel Radcliffe is sixth on the list, below James Cameron but above Jerry Bruckheimer. Robert Pattinson makes the list at #35 (Kristen Stewart is at #37)…I expect those totals will go up if the Twilight films continue to do well.
It is winter. A third of the city is poor. And unworn clothing is being destroyed nightly.
That’s the NY Times writing about H&M and Wal-Mart cutting up and then dumping unwanted inventory on the streets of Manhattan.
This week’s issue of the New Yorker has a long profile of John Mackey, the CEO of Whole Foods.
John Mackey, the co-founder and chief executive of Whole Foods Market, refers to the company as his child-not just his creation but the thing on earth whose difficulties or downfall it pains him most to contemplate. He also sees himself as a “daddy” to his fifty-four thousand employees, who are known as “team members,” but they may occasionally consider him to be more like a crazy uncle. To the extent that a child inherits or adopts a parent’s traits, Whole Foods is an embodiment of many of Mackey’s. A Whole Foods store, in some respects, is like Mackey’s mind turned inside out. Certainly, the evolution of the corporation has often traced his own as a man; it has been an incarnation of his dreams and quirks, his contradictions and trespasses, and whatever he happened to be reading and eating, or not eating.
Use PayPal for your small business? Maybe you shouldn’t.
Money in your PayPal account will be held for 180 days. After 180 days, we’ll email you information on how to receive your funds. We regret any inconvenience this may cause.
Nice. PayPal can unilaterally decide you’re being fraudulent and keep your money for six months while they collect the interest on it. Holy fucking conflict of interest, Batman! Are banks just naturally customer hostile?
Update: Feedback from several people: PayPal is not a bank and therefore they can do (and do do) anything they want.
Jared Diamond has come to believe that some large multinational companies (like Chevron, Wal-Mart, and Coca-Cola) are “among the world’s strongest positive forces for environmental sustainability”.
The embrace of environmental concerns by chief executives has accelerated recently for several reasons. Lower consumption of environmental resources saves money in the short run. Maintaining sustainable resource levels and not polluting saves money in the long run. And a clean image — one attained by, say, avoiding oil spills and other environmental disasters — reduces criticism from employees, consumers and government.
Lawsuits, bad management, and knockoffs, oh my! From Fast Company:
Discontent has steadily grown among formerly stalwart DWR supporters. New York-based textile designer Sandy Chilewich, whose rugs and mats are stocked by DWR ($280 to $600), says she’s considering pulling her business and has been talking with other DWR designers about banding together to “tell them we don’t approve.” Eames Demetrios, grandson of Charles and Ray Eames and the guardian of their legacy, says, “DWR has been a great ambassador for the Eames story and DWR hasn’t carried knockoff Eames product, but I think one needs to look beyond that. In the long run, we don’t see our authentic product being sold next to knockoff products of any kind.”
A fascinating but short case study of Ferran Adrià’s restaurant El Bulli from the perspective of an MBA.
There is much about the restaurant that is inefficient, as MBAs are quick to note: Adrià should lower his staff numbers, use cheaper ingredients, improve his supply chain, and increase the restaurant’s hours of operation. But “fixing” elBulli turns it into just another restaurant, says Norton: “The things that make it inefficient are part of what makes it so valuable to people.”
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