Acer’s Everywhere in the PC World

Monday, June 29th, 2009

Acer’s everywhere in the PC world, with 11.6 percent of the market to Dell’s 13.6 percent:

For close to 15 years, Acer suffered from a split personality. One part of the company built computers for other PC sellers that would then put their labels on the machines. Another part of Acer sold very similar computers under the company’s own brand.

The arrangement created obvious conflicts, Acer executives say, with the group responsible for the Acer-branded products competing against the customers of the manufacturing arm.

In 2000, Acer began cleaving off its manufacturing division. A year later it formed an independent company called Wistron to handle these operations. A smaller, nimbler Acer emerged, outfitted with a new logo and lofty, global aspirations.

With a clean slate, Acer made what looked like counterintuitive decisions. It decided to focus on laptops for consumers, and to sell them through partners and retailers, avoiding any kind of direct sales.

This approach placed Acer on a distinctly opposite path from Dell, which was the PC industry’s major success story in 2000. Dell had surged past rivals like Compaq, I.B.M. and H.P. through an ultra-lean direct sales model that hinged to a large degree on shipping desktop computers to big businesses.

In the subsequent years, however, computer retailing shifted in favor of Acer. Consumers now buy more computers than businesses do, and these buyers tend to prefer laptops to desktops. The advantages that Dell once gained by mixing and matching components for customers at its factories have faded as consumers have flocked to stores to buy preconfigured computers.

“When we split, we thought that if the PC is going to become more of a commodity, consumers will end up as the largest part of the business,” says Mr. Lanci, who became chief executive last year. “Going direct didn’t look like the right model for addressing that. After eight or nine years, it looks like we made a very good decision.”
[...]
Last year, Acer relied on about 6,000 employees to hit $16.6 billion in revenue and a profit of $358 million. While the company probably produces more revenue per employee than its rivals, it does so on the back of less profitable products. Its operating margin of 2 percent is about half that of H.P. and Dell, placing it in a profit category below even some retailers, said A. M. Sacconaghi, a securities analyst at Sanford C. Bernstein & Company.
[...]
Over the last two years, it has acquired brands like eMachines, Gateway and Packard Bell. It pitches eMachines as its most affordable brand, while Acer-branded products cater to the mainstream. The Gateway moniker covers more expensive, flashier computers in the United States, while the Packard Bell brand serves the same purpose in Europe.

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A Master of the Consultative Sale

Friday, June 26th, 2009

Twenty-eight years ago, Steve Blank was a bright, young, eager product marketing manager called out to the field to support sales by explaining the technical details of products to potential customers. He was not a master of the consultative sale:

Convergent’s business was selling desktop computers (with our own operating system and office applications) to other computer manufacturers — most of them long gone: Burroughs, Prime, Monroe Data Systems, ADP, Mohawk, Gould, NCR, 4-Phase, AT&T. These companies would take our computers and put their name on them and resell them to their customers.

Business customers were starting to ask for “office automation solutions” — word processing, spreadsheets, graphing software on a desktop. This was just before the IBM PC hit the desktop so there were no “standard” operating systems or applications for desktop platforms. Computer hardware companies were faced with their customers asking for low-cost (relatively) desktop computers they had no experience in building. Their engineering teams didn’t have the expertise using off-the-shelf microprocessors (back then “real” computer companies designed their own instruction sets and operating systems.) They couldn’t keep up with the fast product development times that were enabled by using standard microprocessors. So their management teams were insisting that they OEM (buy from someone else) these products. Convergent Technologies was one of those OEM suppliers.

Their engineers hated us.

I was traveling with the regional sales manager who had called on these companies, gotten them interested and now needed someone from the factory to provide technical details and answer questions about how the product could be configured and customized.

As the eager young marketer on my first sales call, as soon as we shook hands I was in front of the room pitching our product and technical features. I knew everything about our operating system, hardware and applications – and I was going to prove it. I talked all about how great the new products were and went into excruciating detail on our hardware and operating system and explained why no one other than our company could build something so brilliantly designed. (This being presented to another company’s proud engineering team who was being forced to buy product from us because they couldn’t build their own in time.) After I sat down I was convinced the only logical conclusion was for the customer to tell us how many they wanted to buy.

The result wasn’t what I expected. The customers didn’t act particularly excited about the product and how brilliantly I presented it. I do believe some actually rolled their eyes. They looked at their watches, gave our sales guy a quizzical look and left.

After the meeting our sale rep took me aside and asked if “perhaps I wouldn’t mind watching him on the next call.“

The next day, as I drove to our next meeting the sales guy was intently reading the sports section of the newspaper and as I glanced over he seemed to be writing down the scores. I wondered if he had a bookie. When we got to the meeting he reminded me to be quiet and follow his lead.

We shook hands with the customers, but instead of launching into a product pitch (or better, letting me launch into the pitch) he started asking how their families were. He even remembered the names of their wives and kids and some details about schools or events. (I couldn’t believe it, here we were wasting precious time and the dumb sales guy is talking about other stuff.)

Just as I thought we were going to talk about the product, he then mentioned the previous nights football game. (Damn, another five minutes down the tube as the whole room chimed in with an opinion as we talked about something else unimportant.)

Then instead of talking about our products he segued the conversation into their products. He complemented their elegantly designed minicomputers and made some astute comment about their architecture (now I’m rolling my eyes, their computers were dinosaurs) and asked who were the brilliant designers. I was surprised to see that they were in the room. And soon the conversation were about architectural tradeoffs and then how customers didn’t appreciate the elegant designs and how the world was going to hell in a handbasket because of these commodity microprocessors. And our sales guy was agreeing and commiserating. (And I’m thinking why is he doing all this, just tell these idiots that the world has passed them by and they need to buy our stuff and lets get an order.)

The engineers spoke about all the pressure they were getting from management to build desktop personal computers rather than their traditional minicomputers. And that their management wanted these new systems on a schedule that was impossible to meet. Then our sales guy says something that makes me stop breathing for a while. “I bet if your management team would give you guys the resources you guys could build desktop computers better than anyone, even better than us.” There’s a unanimous agreement around the table about how great they were and how bad management was.

The Consultative Sale

Our sales guy then quietly asked if there was any way we could help them. (Help them?!! We’re here to sell them our stuff, why can’t we just present what we got and they’ll buy it.) The VP of Engineering says, “well we don’t have the resources or time, and as long as you know we could build better computers then you guys, why don’t you tell us the details about your computers.”

I had just watched a master of the consultative sale.

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Elephants Can Dance

Tuesday, June 23rd, 2009

Steve Blank was at the Stanford library, going through the papers of Fred Terman, the professor who encouraged Bill Hewlett and David Packard to start HP, when he came across this letter from Hewlett back to Terman:

At the time, HP was a 17-year old company with $20 million in test equipment sales and 900 employees. It was still a year away from its IPO.

Ten years later — at Dave Packard’s insistence — it introduced its first computer, the HP2116A, as an instrument controller.

Thirty-three years after that, it split into two companies, which have gone their separate ways:

  • Agilent is a $5.8 billion dollar test and measurement company.
  • Hewlett Packard (HP) is a $118 billion PC manufacturer — the largest in the world.

And that’s why Steve Blank says that elephants can dance — under the guidance of either a founder or an outsider with fresh eyes:

Intel was founded in 1968 to make memory chips (bipolar RAM) but 17 years later they got out of the memory business and become the leading microprocessor company.

IBM had a near death experience in 1993, and moved from a product-centric hardware company to selling a complete set of solutions and services.

After failing dismally at making disposable digital cameras in 2003 Pure Digital Technologies reinvented their company in 2007 to make the Flip line of camcorders.

Apple was a personal computer company but 25 years after it started, it began the transformation to the iPod and iPhone.

A few carriage makers in the early part of the 20th century made the transition to become car companies. A great example is William Durant’s Durant-Dort Carriage Company. Durant took over Buick, in 1904 and in 1908 he created General Motors by acquiring Oldsmobile, Pontiac, and Cadillac.

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The Benefits of a Classical Education

Monday, June 22nd, 2009

I didn’t realize that famed technologist Tim O’Reilly had a classical education, which he discussed with Forbes:

I’ve been deeply influenced by Aristotle’s idea that virtue is a habit, something you practice and get better at, rather than something that comes naturally. “The control of the appetites by right reason,” is how he defined it. My brother James once brilliantly reframed this as “Virtue is knowing what you really want,” and then building the intellectual and moral muscle to go after it.

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Email patterns can predict impending doom

Monday, June 22nd, 2009

Email patterns can predict impending doom:

After US energy giant Enron collapsed in December 2001, federal investigators obtained records of emails sent by around 150 senior staff during the company’s final 18 months. The logs, which record 517,000 emails sent to around 15,000 employees, provide a rare insight into how communication within an organisation changes during stressful times.
[...]
Menezes says he expected communication networks to change during moments of crisis. Yet the researchers found that the biggest changes actually happened around a month before. For example, the number of active email cliques, defined as groups in which every member has had direct email contact with every other member, jumped from 100 to almost 800 around a month before the December 2001 collapse. Messages were also increasingly exchanged within these groups and not shared with other employees.

Menezes thinks he and Collingsworth may have identified a characteristic change that occurs as stress builds within a company: employees start talking directly to people they feel comfortable with, and stop sharing information more widely.

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The Ins-N-Outs of Lean

Thursday, June 18th, 2009

Bill Waddell explains what he has gleaned of the Ins-N-Outs of the lean production of a not-so-lean product:

Check out the menu:

That’s it — no kids menu, no breakfast menu, no salads, chicken, fish, no low calorie, no diet anything — just very, very good burgers.

The burgers come from their own butcher operation in California, and the buns come from their own baking plant. The potatoes are peeled, sliced and cooked in the restaurant fresh. They are about as vertically integrated as a business can be.

Their employees make a buck an hour or more over the pay scale of the competition, and they participate in a 401K

In-N-Out Burger makes a lot of money.

So what are the lean lessons?

Focus – these people know what business they are in and they concentrate everything on it

Simplicity – they don’t try to be all things to all potential customers. They have quite obviously rejected the old Alfred Sloan “A car for every purse and purpose” mantra, and have followed a simple model much more akin to Toyota’s

Long term thinking – they grow at a steady snail’s pace and keep it under control. The aim is obviously sustainable profits. They have about 230 stores and only recently have slowly spread from California into the neighboring states of Arizona, Nevada and Utah. No franchises — everything is company owned and controlled.

Control of the critical elements of the product – They are in the hamburger business and they maintain absolute control over everything that goes into it.

By avoiding the lure of offering a lot of things around the edges of their core business, they achieve a cost structure much better than McDonalds or Burger King. No floor space, inventory and maintenance costs are wasted on all of the resources needed to support peripheral products. The priority they put on people and quality is what makes waiting in those long lines worth the customers’ while.

The owners of In-N-Out Burger are a great example of the folly of thinking that ‘innovation’ is a strategic imperative. Being the very best at the core product of the business is the key to success. They also demonstrate that outsourcing and keeping labor cost low doesn’t equal success either.

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Forget SAP, Run Down to Staples

Wednesday, June 17th, 2009

Kevin Meyer says you should forget SAP and just run down to Staples:

First get some people together and go through a value stream mapping exercise. Nothing fancy… just figure out what you’re currently doing. Take a few hours to think about it, to identify non-value-added activities, and kill those wasteful activities.

Next, run down to Staples. Buy a nice big whiteboard. While you’re there, pick up a some markers and erasers, a webcam, and a copy of QuickBooks (Manufacturing Edition). Grab some pizza for your team to celebrate their accomplishment (and a keg of beer if your HR group hasn’t tied you up in your underwear yet).

Back at the plant, mount the whiteboard on the shop floor where it will see the most traffic. Draw the flowchart on it. As a lean company you want to pull jobs from customer orders, so think about how the chart flows. Put little labeled magnet tags on the flowchart to indicate jobs. Remember to include your suppliers so you can trigger raw material orders. Get everyone on the shopfloor together and explain this visual method, and how it is everyone’s responsibility to manage the board.

Now take the webcam and aim it at the board and connect it to the company’s network so anyone, such as sales and customer service, can remotely view the board at any time to see the status of any job. Take your copy of QuickBooks, spend a couple hours setting it up, create a couple of user accounts for shipping and receiving people (of course receiving is done right to the point of use on the shop floor…).

Cost? A couple grand… maybe.

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Value of $125,000-a-Year Teachers

Wednesday, June 10th, 2009

So what kind of teachers could a school get if it paid them $125,000 a year?

An accomplished violist who infuses her music lessons with the neuroscience of why one needs to practice, and creatively worded instructions like, “Pass the melody gently, as if it were a bowl of Jell-O!”

A self-described “explorer” from Arizona who spent three decades honing her craft at public, private, urban and rural schools.

Two with Ivy League degrees. And Joe Carbone, a phys ed teacher, who has the most unusual résumé of the bunch, having worked as Kobe Bryant’s personal trainer.

“Developed Kobe from 185 lbs. to 225 lbs. of pure muscle over eight years,” it reads.

A New York charter school called the Equity Project is hiring teachers like that, because it believes that teacher quality is the key to “achieving educational equity for low income students.” I suspect they’ll find out that student quality matters too.

I don’t doubt that teacher quality matters tremendously, but the real question is, what exactly is teacher quality?

The school’s founder, Zeke M. Vanderhoek, is the 32-year-old founder of Mahattan GMAT, is he thinks that contagious enthusiasm — a high “engagement factor” — is what matters. I suspect you can get that for a lot less than $125k.

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The Improbable Rise and Fall of E-Gold

Tuesday, June 9th, 2009

Ten years ago, Douglas Jackson was an affluent physician, an oncologist. Then he decided to start E-Gold. After he cooperated with authorities and helped them catch money-launderers, those same authorities came for him:

After a year-and-a-half of court wrangling and negotiations, Jackson pleaded guilty last year to conspiracy to operate an unlicensed money transmitting service and conspiracy to commit money laundering. In November he was sentenced to 36 months of supervised released — including six months of house arrest and electronic monitoring, and 300 hours of community service. In addition to forfeiting about $1.2 million to the government, his two companies — Gold and Silver Reserve and E-Gold Limited — were fined $300,000, to be paid in $10,000 monthly installments beginning last month.

The plea agreement is conditional on Jackson revamping his business to comply with regulations governing money-transmitting services — a goal that, Jackson concedes, faces many hurdles. To begin the process of compliance, he suspended the creation of new accounts. Existing customers are now required to submit a government-issued photo ID and proof of residence to authenticate their name, address and other details, and are limited to $1,000 to $3,000 a month in transactions until they pass muster. Customers in high-risk countries — such as Nigeria, Russia and Ukraine — are suspended from making any transactions at all for now. Their money is locked indefinitely in E-Gold’s servers.
[...]
Although E-Gold was occasionally profitable, Jackson only drew a salary, like his employees. The two upscale homes he once owned with his wife are long gone. Now his wife and 12-year-old son occupy half a duplex in Pennsylvania near her family, and Jackson lives in a one-bedroom apartment in Melbourne with his 17-year-old son, while the latter finishes high school, and Jackson and his staff attempt to rebuild the business.

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The Start-up Guru

Monday, June 8th, 2009

Max Chafkin, Inc.‘s senior writer, has written a piece on Paul Graham, The Start-up Guru. I enjoyed Graham’s take on getting acquired by Yahoo, back in the day:

“Running a start-up is like being punched in the face repeatedly,” he says. “But working for a large company is like being waterboarded.”

If you’re not familiar with Paul Graham and Y Combinator, here’s the story:

After leaving Yahoo, Graham spent most of his time writing essays about technology and business and developing a new programming language. His best work was collected in a book, published in 2004, called Hackers and Painters: Big Ideas From the Computer Age. “Everything around us is turning into computers,” he writes in the preface. “So if you want to understand where we are, and where we’re going, it will help if you understand what’s going on inside the heads of hackers.”

In March 2005, Graham was invited by the Harvard Computer Society, an undergraduate group, to talk about starting a company. “I told them to raise money from angel investors, preferably people who have started start-ups themselves,” he says. After delivering that line, he glanced at the audience and noticed that everyone was looking at him expectantly. Fearing a deluge of bad business plans from bright-eyed Harvard students, he quickly added, “Not me.” Later that day, while having coffee with some of the students, he remembered that if he hadn’t been able to find his own angel investors, Viaweb never would have gotten off the ground. He decided it might be worth seeing what these kids could come up with.

Y Combinator began as an experiment in angel investing, conducted during the summer of 2005. Graham recruited Morris, Livingston, and a Viaweb employee named Trevor Blackwell to join him. The pitch was straightforward: $6,000 for a company with one founder, $12,000 if the company had two founders, and $18,000 if the company had three. In exchange, Y Combinator would get roughly 6 percent in common stock. (Exact ownership stakes vary. The most Y Combinator has taken is 10 percent; the least is 1.4 percent.)

Graham promoted the program with an essay that he posted on his website and that quickly found its way to many college students’ e-mail inboxes. “We give you enough money to live on for a summer, as with a regular summer job,” he wrote. “But instead of working for an existing company, you’ll be working for your own; instead of showing up at some office building at 9 a.m., you can work when and where you like; and instead of salary, the money you get will be seed funding.”

Graham received 227 applications, mostly from computer science students, and he invested in eight start-ups. Half went on to raise additional funding, and two turned down acquisition offers. Graham knew that most of the companies would probably die, but he also believed he was onto something. For example, Loopt, which develops software for cell phones that allows users to see where their friends are, managed to raise $13 million from two Sand Hill Road firms. Another company in the first batch, Reddit, operates a social news website similar to Digg. It was acquired by Condé Nast just a year and a half after its founding and before it had hired any full-time employees. Though the price was not disclosed, reports have pegged it at anywhere from $10 million to $13 million, which means that Y Combinator generated a sizable return, as much as 25 times its initial investment.

Reddit is a good example of what happens to a Y Combinator company when most things go right. But few Y Combinator start-ups enjoy such a straight line to success. That, in part, explains why Graham encourages companies to release products quickly. Doing so, he says, is the best way to turn a bad idea into a good one. “As long as you pay attention to your users, you can change a bad idea,” he says.

Case in point: Justin.tv. The wildly popular online video site now attracts 41 million viewers a month. But it has its roots in a failed start-up called Kiko. The company, a part of Y Combinator’s first class, began with a plan to do for online calendars what Google’s Gmail had done for e-mail. Things went well at first, but then Google decided to do for calendars what it had done for e-mail, making Kiko suddenly irrelevant. Co-founders Justin Kan and Emmett Shear bailed out and sold the company on eBay for $258,000.

Graham lost money on the idea but nonetheless decided to back Kan and Shear’s next venture, a bizarre take on reality television. Kan attached a video camera to his head, wore a backpack stuffed with cell-phone modems, and broadcast his life 24 hours a day. The idea was that Justin.tv would produce similar programs and sell equipment to aspiring reality stars. “I thought it was insanely weird,” Graham recalls.

Kan’s life attracted a few thousand fans and reams of press. But Kan soon noticed that instead of broadcasting from hat-cams, some users were interested in more traditional types of broadcasting. “People were e-mailing us saying, ‘I want to broadcast a bike race or a talk show or a concert,’ ” Kan says. “We were like, ‘OK.’ ” Kan stopped wearing the camera and focused on building a live video platform.

This kind of meandering path, Graham says, is encouraged at Y Combinator. “A lot of great companies started with different ideas,” Graham says, noting that Steve Jobs’s first plan for Apple was to sell do-it-yourself plans for building computers. “You need to listen to your users, figure out what they want, and do that.” When founders are accepted into Y Combinator, they are given a gray T-shirt that says, “Make something people want.” When a company sells, the founders get a black shirt that says, “I made something people want.”

Graham finds unusual parallels between hacking and painting:

But one thing painting taught him was the value of living frugally. “It taught me how to do cheap in a cool way,” Graham says. Artists, Graham discovered, don’t pretend to be rich; they live in sparsely decorated lofts and wear cool vintage clothes. “A start-up is that philosophy applied to business,” he says.

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Cigarettes Without Smoke, or Regulation

Wednesday, June 3rd, 2009

Smokers are starting to enjoy electronic cigarettes without smoke — but what concerns the New York Times is that these are also cigarettes without regulation:

For $100 to $150 or so, a user can buy a starter kit including a battery-powered cigarette and replaceable cartridges that typically contain nicotine (though cartridges can be bought without it), flavoring and propylene glycol, a liquid whose vaporizing produces the smokelike mist. When a user inhales, a sensor heats the cartridge. The flavorings include tobacco, menthol and cherry, and the levels of nicotine vary by cartridge.

Propylene glycol is used in antifreeze, and also to create artificial smoke or fog in theatrical productions. The F.D.A. has classified it as an additive that is “generally recognized as safe” for use in food. But when asked whether inhaling it was safe, Dr. Richard D. Hurt, director of the Nicotine Dependence Center at the Mayo Clinic, said, “I don’t think so, but I’m not sure anyone knows for sure.”

Of the e-cigarettes themselves, Dr. Hurt added: “We basically don’t know anything about them. They’ve never been tested for safety or efficacy to help people stop smoking.”


Public health officials also worry that the devices’ fruit flavors, novelty and ease of access may entice children.

“It looks like a cigarette and is marketed as a cigarette,” said Jonathan P. Winickoff, an associate professor at the Massachusetts General Hospital for Children and chairman of the American Academy of Pediatrics Tobacco Consortium. “There’s nothing that prevents youth from getting addicted to nicotine.”

Indeed, there’s nothing to stop kids from buying electronic cigarettes — except for the $100 price tag.

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The Quagmire Ahead

Wednesday, June 3rd, 2009

David Brooks describes the quagmire ahead:

The Obama plan won’t revolutionize G.M.’s corporate culture. It could make things worse.

First, the Obama plan will reduce the influence of commercial outsiders. The best place for fresh thinking could come from outside private investors. But the Obama plan rides roughshod over the current private investors and so discourages future investors. G.M. is now a pariah on Wall Street. Say farewell to a potentially powerful source of external commercial pressure.

Second, the Obama plan entrenches the ancien régime. The old C.E.O. is gone, but he’s been replaced by a veteran insider and similar executive coterie. Meanwhile, the U.A.W. has been given a bigger leadership role. This is the union that fought for job banks, where employees get paid for doing nothing. This is the organization that championed retirement with full benefits at around age 50. This is not an organization that represents fundamental cultural change.

Third, the Obama approach reduces the fear that impels change. The U.S. government will own most of G.M. It would be politically suicidal for the Democrats, or whoever is in power, to pull the plug on the company — now or ever. Therefore, the current managers can rest assured that they never need to fear liquidation again. There will always be federal subsidies for their own mediocrity.

Fourth, the Obama plan dilutes the company’s focus. Instead of thinking obsessively about profitability and quality, G.M. will also have to meet the administration’s environmental goals. There is no evidence G.M. is good at building the sort of small cars the administration demands. There is no evidence that there is a large American market for these cars. But G.M. now has to serve two masters, the market and the administration’s policy goals.

Fifth, G.M.’s executives and unions now have an incentive to see Washington as a prime revenue center. Already, the union has successfully lobbied to move production centers back from overseas. Already, the company has successfully sought to restrict the import of cars that might compete with G.M. brands. In the years ahead, G.M.’s management will have a strong incentive to spend time in Washington, urging the company’s owner, the federal government, to issue laws to help it against Ford and Honda.

Sixth, the new plan will create an ever-thickening set of relationships between G.M.’s new owners — in government, management and unions. These thickening bonds between public and private bureaucrats will fundamentally alter the corporate culture, and not for the better. Members of Congress are also getting more involved in the company they own, and will have their own quaint impact.

The end result is that G.M. will not become more like successful car companies. It will become less like them.

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The Flimsy Doorknob & A Forgettable Receipt

Monday, June 1st, 2009

Dustin Curtis tells the parable of the flimsy doorknob & a forgettable receipt:

A while ago, I went to a dinner party at the house of a very wealthy executive in San Francisco. The food was great, but the house was absolutely, insanely beautiful. The living room has large, 20-foot-tall floor-to-ceiling windows that expose the entire San Francisco Bay. The kitchen has 3-inch-thick transparent blue glass countertops with slightly red-shifted LEDs embedded underneath to create a warm explosion of light. And the bathroom sinks are made of imported Itallian blown glass. The toilet paper is even custom made with the logo of the executive’s company embossed on each sheet. Just about everything in the house is remarkable.

But there’s one part of the experience that really dampened everything for me. As I was entering the bathroom, I grabbed the doorknob and it felt loose and hollow, like cheap crap. As I closed the door behind me, the click of the latching mechanism didn’t feel… substantial enough. The door in this incredible house is complemented by flimsy, shitty hardware.

For a long time, I thought about how this amazing house could have such shitty doorknobs; it just didn’t make sense to me. After all, there’s only two things you ever really physically touch and interact with in a home on a regular basis: the doorknobs and the sink/toilet controls. It always seemed obvious to me that architects, home builders, and interior designers would focus on those things first, to make sure they feel solid, substantial, and at least match the quality of other aspects of the home. During the past few months, I’ve been asking some of them about this problem. And it has been a complete shock to me that most had not even realized it existed until I pointed it out.

Curtis has found this same pattern elsewhere — like the$1,000 receipt that cost $0.02:

A few months ago, I went to a restaurant in New York City called MASA. It is supposedly one of the greatest Japanese restaurants in the world. The food there is delicately prepared. The atmosphere in the dining room is carefully designed to produce the perfect emotional experience. Even the air circulation system was built to push light amounts of air over specific tables. When you pay $500 for a meal, you expect perfection like this. But at the end of my experience, I was presented with something that, like the doorknobs in the executive’s home, totally sucked the awesomeness out of my meal. I was given a receipt that looks like the one [to the left].


This particular behavior has always baffled me. When a customer leaves a business, there is generally only one physical thing they take with them as a reminder of the experience: the receipt. But most companies treat the receipt as a wasted expense — and buy the shittiest and crappiest paper and ink possible — instead of as a marketing expense. [...] For some reason, I have never seen a receipt treated as a marketing/branding opportunity. For example, imagine if you went to Starbucks and received the receipt [to the left].

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Rocks in the Rocket Science Lobby

Monday, June 1st, 2009

In 1994, Rocket Science Games was the hip, new, edgy, “Hollywood meets Silicon Valley” video game company — or, alternatively, a “big hat, no cattle” startup — with a rock in the lobby:

Our receptionists’ desk was built on the wing of a WWII P-51 fighter plane, and the rest of the office décor matched. All that is, except for our lobby, as our offices were on the 4th floor. When you got off the elevator, you faced a non descript corporate-looking set of walls.

This was about the time Christies and Sotheby’s were starting to auction Soviet space program artifacts, and I was thinking that perhaps a spacesuit in the lobby would be appropriate given our name.
[...]
A week later as our employees came up the elevator there was a Lucite case on a pedestal with a single grey rock, lit with a single spotlight, on a velvet pillow. In front of it was a brass plaque that read:

“Moon rock, Apollo 18, July 1973 – Copernicus Crater.”

For the next few years, people from all around South of Market would come by the Rocket Science Games lobby to see our moon rock. It added to the mystique of the company – which helped with raising money and getting press ink. Everyone agreed that having our own moon rock was way cool.


In all that time, not a single person who admired the moon rock questioned its provenance or authenticity. A bit surprising considering the intersection between geekdom and space. Maybe it was just too much ancient history.

NASA’s moon missions ended at Apollo 17.

The rock was a piece of rubble from the [recently demolished] Embarcadero Freeway.

Only over time would I realize it augured the future of the company.

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Yes! 50 Scientifically Proven Ways to Be Persuasive

Thursday, May 28th, 2009

Alex Moskalyuk gives a pretty good summary of Noah Goldstein’s, Steve Martin’s, and Robert Cialdini’s Yes!: 50 Scientifically Proven Ways to Be Persuasive. For example:

  1. Inconvenience the audience by creating an impression of product scarcity. It’s the famous change from “Call now, the operators are standing by” to “If the line is busy, call again”, that greatly improved the call volume by creating the impression that everybody else is trying to buy the same product.

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