Category Archives: business

A “Felt Need” Is What Makes Us Buy

A “felt need” is what differentiates a vitamin from an aspirin: when we crave something (relief from pain), a product that satisfies that desire becomes a must-have rather than a nice-to-have. Realising this and re-framing a product in terms of this craving is an important step in ensuring a product’s success, say Dan and Chip Heath, authors of the excellent Switch and Made to Stick.

Becoming aware of this idea is what led to the success of Netflix and NetApp… as well as the demise of countless other companies. In a brief article describing how re-framing a nice-to-have product as a must-have is all about discovering and exploiting a specific “felt need”, the Heaths look at Ray Bards failed attempt at getting his “vitamin” book published and how realizing this idea of a felt need led him to become a successful publisher.

If entrepreneurs want to succeed […] they’d better be selling aspirin rather than vitamins. Vitamins are nice; they’re healthy. But aspirin cures your pain; it’s not a nice-to-have, it’s a must-have. […]

That aspirin quality is what Bard now looks for in a book. He says that successful books address a deep “felt need” — that is, readers hunger for the answers the book provides. Classic examples would be diet books, personal-finance books, and books that promise you mega success if you’ll just radiate positive energy to the universe, indicating your receptivity to mega success. Bard has become a talented diviner of felt need. Fully half of the books that he publishes become best sellers. […]

You’ve heard the old saying “If you invent a better mousetrap, the world will beat a path to your door.” Don’t bet on it. The world’s felt need isn’t for a better mousetrap. It’s for a dead mouse. […]

When engineers or marketers or entrepreneurs get too close to their products, it’s easy to mistake a vitamin for an aspirin. If your team is flirting with delusion, a little love might point you in the right direction.

The Inefficiencies of Local Bookstores

We should not hold Amazon in contempt for pressuring local independent bookstores to the brink of closure and instead should embrace the company for taking advantage of inefficiencies, furthering a reading culture, and–believe it or not–helping us ‘buy local’ more effectively.

In response to Richard Russo‘s recent New York Times article berating a recent not-so-well-considered Amazon promotion, Farhad Manjoo takes a different perspective on the Amazon vs. independent bookstores debate, this time coming down firmly in the Amazon camp.

I get that some people like bookstores, and they’re willing to pay extra to shop there. They find browsing through physical books to be a meditative experience, and they enjoy some of the ancillary benefits of physicality (authors’ readings, unlimited magazine browsing, in-store coffee shops, the warm couches that you can curl into on a cold day). And that’s fine: In the same way that I sometimes wander into Whole Foods for the luxurious experience of buying fancy food, I don’t begrudge bookstore devotees spending extra to get an experience they fancy.What rankles me, though, is the hectoring attitude of bookstore cultists […] when they argue that readers who spurn indies are abandoning some kind of “local” literary culture. There is little that’s “local” about most local bookstores. Unlike a farmers’ market, which connects you with the people who are seasonally and sustainably tending crops within driving distance of your house, an independent bookstore’s shelves don’t have much to do with your community. Sure, every local bookstore promotes local authors, but its bread and butter is the same stuff that Amazon sells—mass-manufactured goods whose intellectual property was produced by one of the major publishing houses in Manhattan. […]

Wait, but what about the bookstores’ owners and employees—aren’t they benefitting from your decision to buy local? Sure, but insofar as they’re doing it inefficiently (and their prices suggest they are), you could argue that they’re benefiting at the expense of someone else in the economy. After all, if you’re spending extra on books at your local indie, you’ve got less money to spend on everything else—including on authentically local cultural experiences. With the money you saved by buying books at Amazon, you could have gone to see a few productions at your local theater company, visited your city’s museum, purchased some locally crafted furniture, or spent more money at your farmers’ market. Each of these is a cultural experience that’s created in your community.

That said, occasionally I like to pay a ‘premium’ and buy books from local stores, but not for any of the reasons mentioned above. Rather, I hope for that bit of literary serendipity and haphazard discovery that only seems to happen in local independents.

Why Software Development Estimation is Hard: Sea Lions, and Coastal Paths

Among the many valid responses to the Quora question of why software development task estimations are often off by a factor of 2–3, Michael Wolfe, CEO of Pipewise, describes exactly why this is without once mentioning ‘software’ or ‘project’.

Instead, Wolfe eloquently provides undoubtedly the best analogy I’ve ever heard for explaining the difficulty in providing estimates for software projects: a couple of friends planning a coastal hike from San Francisco to Los Angeles and starting their journey.

Their friends are waiting in LA, phone calls have already been made pushing the date back…

Man, this is slow going! Sand, water, stairs, creeks, angry sea lions! We are walking at most 2 miles per hour, half as fast as we wanted. We can either start walking 20 hours per day, or we can push our friends out another week. OK, let’s split the difference: we’ll walk 12 hours per day and push our friends out til the following weekend. We call them and delay dinner until the following Sunday. They are a little peeved but say OK, we’ll see you then. […]

We get up the next morning, bandage up our feet and get going. We turn a corner. Shit! What’s this?

Goddamn map doesn’t show this shit!. We have to walk 3 miles inland, around some fenced-off, federally-protected land, get lost twice, then make it back to the coast around noon. Most of the day gone for one mile of progress. OK, we are *not* calling our friends to push back again. We walk until midnight to try to catch up and get back on schedule.

Of course, this isn’t exactly a new analogy: it’s applying the ideas behind Benoît Mandelbrot’s paper, How Long Is the Coast of Britain?, published back in 1967, to software estimation. Still, it works perfectly.

If you like Wolfe’s writing style and want to read more, he runs a blog called Dear Founder.

Update: And of course, there’s always O.P.C.

Record Label Demands on Music Streaming Services

New and potentially disruptive music streaming services are having a hard time breaking into the market, with many analysts blaming their business models and others blaming the contractual demands from labels for the troubles encountered. There are also complaints about the royalties paid to artists and poor revenues of existing services.

Michael Robertson–founder of MP3Tunes and MP3.com–attempts to lift the veil on the industry by looking at some of the (you could safely say “unreasonable”) contractual demands placed on music streaming services by record labels:

General deal structure: Pay the largest of A) Pro-rata share of minimum of $X per subscriber, B) Per-play costs at $Y per play, C) Z percent of total company revenue, regardless of other business areas.

Labels receive equity stake: Not only do labels get to set the price on the service, they also get partial ownership of the company.

Up front (and/or minimum) payments: Means large amounts of cash are necessary to even get into the game. […] This further stifles innovation in services and business models.

Detailed reporting, including monthly play counts: Providing additional reports unrelated to payment, including overall market share of sales in various categories. […] The labels effectively offload their business analysis (and the cost of such analysis) onto the music services.

Data normalization: Without standard naming conventions and canonical methods for referencing artist, tracks and albums, the services are left to try and match artist, track, album names provided by one label with those of another. It’s incredibly inefficient, as each service must undergo this process separately.

Publishing deals: Once you’ve signed deals with the labels, you then need to cut deals with the publishers. […] Although you may have the rights to stream from labels, you sometime can’t get the rights to stream from the publisher, or worse, even find the publisher.

Most favored nation: This is a deal term demanded by every major label that ensures the best terms provided to another label are available to it as well. This greatly constricts the ability to work out unique contractual terms and further limits business models.

Non-disclosure: This is the main reason music services, not the labels, have been getting heat from the artist community. Music services can’t defend against accusations about low artist payments because they pay the labels who don’t disclose what they’re paying to the artists.

It’s worth noting that while Michael Robertson is a trustworthy writer and likely to have access to people who know this information (if this isn’t first-hand information anyway), he’s also likely to harbour some resentment toward record labels from his business ventures. Still, even without a solid reference I felt that this was too interesting to just pass up.

The Demand for Product Obsolescence

Years ago (and still, for certain products) consumers decried the idea of planned product obsolescence in industrial design: the intentional engineering of products to have a limited useful life, such as with products produced with sealed-in batteries or fridges that will only function for seven years.

In recent years, however, the need for planned obsolescence has moved from the supply side to the demand side, with consumers themselves requiring that their gadgets don’t last so long that they become a burden: it’s desired functional obsolescence. Writing about the influence this has on our consumption habits, Rob Walker takes an interesting look at trends in product obsolescence and the rise of functional obsolescence as a demand-side phenomena rather than a supply-side one.

Consider that most ubiquitous gadget, the mobile phone. […] The typical American gets a new one every 18 months. […] The problem, if that’s the right word for it, is that new devices perform more functions, faster—and people, as a result, want them. […] The light-speed innovations in consumer electronics have turned many of us into serial replacers. A dealer in vintage home-entertainment equipment recently convinced me that it used to be possible to buy a top-notch stereo system that really would function admirably for decades. Imagine, by contrast, that tomorrow some company unveiled a cell phone guaranteed to last for 20 years. Who would genuinely want it? It’s not our devices that wear thin, it’s our patience with them.

The very real problem of electronic waste makes people like me hesitate to replace good-working-order possessions. Yet at the same time, we like to stay current with new technological innovations. So rather than provide evidence of some cynical corporate strategy, our gadgets’ minor malfunctions or disappointing features or unacceptably slow speeds largely provide an excuse to replace them—with a lighter laptop, a slimmer tablet, a clearer e-book reader. Obsolescence isn’t something companies are forcing on us. It’s progress, and it’s something we pretty much demand. As usual, the market gives us exactly what we want.