Category: markets

The Quality of Smallness

Published August 9, 2015 by cgerrish

This isn't addressed to you. It's addressed to a group of people like you. Or rather, it's addressed to the unconscious style they are encased in, and chase.

On the morning cable financial news channel, the hosts go on endlessly about how there's a change in consumer tastes. The reason that fast-food hamburger chains and soda pop companies are feeling a pain in their share price is that consumers are thinking “natural and organic.” Consumers are also starting to think about the supply chain. Where does this food come from? Under what regime of regulation and inspection was it produced? Did you say the fish I'm eating was imported from China?

It's a generational change, younger people weren't hooked by the “I'd like to buy the world a Coke” advertising blitz. They see fast food and soft drinks for what they are, and they have convenient alternatives. We should acknowledge that healthy alternatives have only recently achieved mass distribution. It's much easier to make this choice today. Or rather, it's easier to maintain the “fast-food mindset” and choose somewhat healthier foods.

The fast food companies are starting to abandon the use of antibiotics in the production of the chicken they serve. They're making other minor changes, as they chase the style that enchants the consumer these days. They're asking themselves how little the industrial food complex can change to take advantage of some of that “natural and organic” glow. What will take to get some of that appearance to rub off?

While there are a myriad of problems with the way the news media, companies and the regulators think about “natural and organic,” it's still a positive change of direction. More hopeful is that this change was initiated by consumers, not by companies. A change in consumer style is wrecking havoc on the business plans of the soft drink and casual/fast dining industries. It's a rare thing, so it's worth taking note.

I don't want to jinx it, but I'd like to make a request to that amorphous cloud of desire out there, that “style we chase.” I'd like you (I'm talking to you, amorphous cloud) to start associating “smaller” with better quality and more concentration. This would include things ranging from apples to onions, boneless skinless chicken breasts to movie theater popcorn sizes, McMansion houses to pizzas.

There's a natural large size that occurs rarely in the course of things. We should be surprised by this kind of largeness. Well, would you look at that. Look how big that thing is. Don't see that too often. Instead, large, extra-large and jumbo are the “normal” sizes. The way we produce this standard large size is by diluting and inflating whatever it is. While it appears to be more, it's actually less. It's vast quantities of weak tea.

So, here's the deal. Occasionally something changes in the way we perceive things. Suddenly we can plainly see that the product we're buying is pumped up with some diluting agent to make it look bigger. What was previously an attractive quality–bigger, no matter how it is achieved, is now a little repulsive.

The ultimate performance of taste is identifying the things you want to spit out. I want to make the case to your unconscious sense of style that “fake bigness” that attempts to appeal to your impulse toward gluttony, should be eschewed. Suddenly you have the sense that certain things are grotesquely big.

That is all.

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Apps and Sturgeon’s Law

Published May 4, 2014 by cgerrish

Despite the fact that the Network has a kind of permanent memory, it’s not very good at remembering certain things. Or maybe it’s just that we aren’t. We see what we want to see.

During the last internet bubble we learned about startups, venture capital and burn rate. There’s a small window for new technology companies to find an exit before they burn up. The more companies in a space, the more difficult the exit.

The last bubble was burst when a list of tech companies was published that compared their cash on hand to their burn rate. Suddenly it was simple to see how much time each company had to make a profit or an exit. It wasn’t a pretty picture.

The unlimited optimism of the time quickly turned into a climate of fear. Investors suddenly wanted to see revenues and profits. It changed everything. Should someone publish such a list today, it would have a similar effect. We’ve simply forgotten that start ups burn cash, and while many things are cheaper, the fuse has just been lengthened a bit.

Another thing we seem to forget is that free communications systems fill up with spam. It’s estimated that 70% of all email is robot-generated spam. Whenever a new social communications hub is created we think that this time it’ll be different. As a social networking system matures it attracts trolls and starts to fill with spam. It’s always worked that way.

If your company is marketing to a free (non-subscription) social network, it’s likely the audience is filled with robots and spam accounts. Free access to a social network lowers barriers to growth, but it also creates a fertile ground for gaming the system.

Recently I read that 80% of mobile apps are used only once. That seems like a high number until you remember Sturgeon’s Law. This law states that 90% of everything is crap. In light of that, 80% is actually an excellent number. The other thing this should tell you is that as the ecosystem of apps matures it will revert to the norm. That means the number of apps used only once is more likely to be headed toward 90% than 70%.

If an app store has 1 million apps, 900,000 of them are crap. That leaves 100,000 that might be useful. That’s actually a pretty big number. Some say that software is going to eat everything. It’s certainly going to try and eat everything. But despite the brilliance of the young engineers writing this ravenous software, 90% of what they produce is going to be crap. It’s easy to forget when everyone’s smiling, optimistic and sure that their new technology is going to fundamentally change the way we do this or that.

It might be more helpful to look at tech start ups as though they were a slot machine programmed to take your money 90% of the time. Some can afford to play games with those odds, most can’t.

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Pity Would Be No More: Google The Human Abstract

Published March 9, 2014 by cgerrish

The public relations profession was created to repair the reputations of the 1%. The robber barons who consolidated control over industry in the United States needed to boost their numbers in the polls, and thus began the professional publicizing of acts of charity. The technology industry and its titans have finally taken that lesson to heart.

Fighting tooth and nail, then threatening to leave San Francisco for more accommodating tax havens, technology companies have negotiated big tax breaks. They're special. Not the sense that they need an extra helping hand to get their business of the ground. It's just that they want to use every piece of leverage they have over the city. When what they've wrought becomes plain for everyone to see, the oldest public relations plan in the book is trotted out. They'll participate in the community, but only on their terms. Here it comes, sweet charity.

Instead of public services coming organically through our tax base and distributed through a public political process, the tech company decides what cause gets money and how much. The money they donate creates capacity within the public budget which is then redirected to other needs. In a few years when the corporations stop giving and the public budget can't accommodate the programs, they're eliminated. What seems to be a windfall is really a death sentence.

Criticism of charitable acts is a rare thing. That's why it's a classic public relations play for the 1%. Google funds a transportation program for low-income youth, Facebook buys a police officer, etc. PR firms are paid big bucks to make sure we all know about it. Meet the new boss. Same as the old boss.

William Blake wrote “The Human Abstract” as part of his Songs of Innocence and Experience. Put this poem on the “experience” side of the ledger. His criticism of pity and charity continue to ring true. Out of the pity of the technology giants comes charity for the poor and disadvantaged. Blake shows us that it's not “pity” and “charity” you want to put up on a pedestal. It's a difficult case to make, but Blake does it. These virtues are symptoms, born of inequalities.

THE HUMAN ABSTRACT

by William Blake

Pity would be no more

If we did not make somebody poor,

And Mercy no more could be

If all were as happy as we.

And mutual fear brings Peace,

Till the selfish loves increase;

Then Cruelty knits a snare,

And spreads his baits with care.

He sits down with holy fears,

And waters the ground with tears;

Then Humility takes its root

Underneath his foot.

Soon spreads the dismal shade

Of Mystery over his head,

And the caterpillar and fly

Feed on the Mystery.

And it bears the fruit of Deceit,

Ruddy and sweet to eat,

And the raven his nest has made

In its thickest shade.

The gods of the earth and sea

Sought through nature to find this tree,

But their search was all in vain:

There grows one in the human Brain.

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Travel Economics: Peak Carry On

Published November 17, 2013 by cgerrish

There was a time in pre-history. Long before the Internet. When you could book a flight from San Francisco to New York and it would mostly be empty. It was common to find an unoccupied row and stretch out — making use of all three seats. That form of travel no longer exists. Based on a recent flight, I’ve concluded we’ve reached another inflection point in air travel; I’m calling it: Peak Carry on.

In the early days of the carry on luggage era, it was only a small number of savvy travelers who packed everything into a small case, carried it along into the cabin and checked nothing. The suit carrier era was eclipsed by the rolling carry on bag. The rationale was simple. It takes too long to retrieve your checked luggage. A business traveler could deplane and go. No waiting around for a luggage carousel.

Over the years, all business travelers adopted this approach. To be the person in your group who checked luggage was to show you were hopelessly old fashioned. Clearly not management material. This approach spread from the business sector to almost all travelers. The carry on bag is everywhere.

The moment of peak carry on has occurred due to a confluence of events. Everyone believes they need to use carry on luggage to save time. In addition the airlines now work to fill every seat in an effort to make a profit. As part of that they generally charge $25 per checked bag. This means there’s an economic incentive to switch to carry on luggage which has no extra charges.

The terrorists have succeeded in degrading the experience of air travel. We’ve grown used to the security perimeter, to being searched and having our luggage scanned. We’ve completed the process of ruining air travel with carry on luggage. Boarding a plane is now a fight for space in the overhead compartment. If you’re last to board, it’s likely that all the overhead space has already been stuffed with carryon bags and you’ll need to check your carry on. Incidentally, there’s no fee to check your bag in this instance. When it comes time to deplane, it’s a scramble to pull carry ons from the overhead bin without cracking someone on the skull.

Getting on and off of airplanes has become horrible. And because carry on luggage is taking up so much space, often you’re sitting on your coat and you’ve been crammed into the ever smaller seating with whatever you’ve brought along to amuse yourself during the trip. Observe the upset that occurs when the person in the window seat needs to get up and use the restroom.

It’s within our power to fix air travel, or at least part of it. We just need to set some limits and change the incentives. First, assign overhead bin space to each seat. This is part of what you pay for when you book passage. If you don’t want your overhead space you can trade it for a discounted ticket. The airline can rent unwanted overhead space to other passengers. Second, limit the number of carry on bags to 30% of the passenger total — and charge $50 (double the checked rate) for a carry on. In addition, when deplaning, passengers with carry on luggage must wait until all other passengers have left the plane before removing their bags from the overhead bin.

These simple changes would make air travel better for everyone. I’m certain that business travelers would complain bitterly about these new rules and restrictions. However, by attempting to optimize speed and efficiency in every aspect of air travel, we’ve made it almost intolerable. The speedy part of air travel is the part where you fly through the air. Carry on luggage is only faster when a few people do it. When everyone does it you experience peak carry on. Airlines don’t need to introduce these new policies all at once. They could be introduced one flight at time — the key here is asking travelers about the difference it made in their experience of air travel.

To me the worst part of travel is the traveling part. Can you imagine an airline using actual footage of what it’s like for most of us in their television commercials? Imagine if we could make it better.

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