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Was driving home and thinking to myself, if intelligence were plotted against inclination to compete, would it be a normal distribution? Or is there no correlation at all?

A quick Google search didn’t really turn up much.

Tags:   researchNo Comments.

It goes without saying that the economy has been going down the tubes lately, and a lot of tech news coverage has been centered on how Google seems to be trying to monetize everything more. That means ads in places where there weren’t ads before, etc… Example, Example2. I remember something on Techcrunch about how there seems to be more experimentation (A/B testing) for new ad types, too.

My question is thus: is Google best served by trimming expenses and trying new types of monetization *now* or *later*? I’d actually suggest there is a good argument for doing this all later.

Trimming expenses and making more money “now” is basically too late. The economy is already sucky. It would have been nice perhaps to get lean before the market started tanking, in order to keep one’s stock price up as others’ went down with the indices (which might not have worked, besides). But since everyone’s already down so far, presumably this means that we all missed the opportunity. With all the bad news everywhere, my naive assessment is that it is “ok” to have an earnings miss now — everyone more or less expects earnings misses, and that’s priced in to everyone’s stock already. If a company makes or beats estimates — would their stock really go up that much? Everyone expects everything to get worse before it gets better, so I could imagine that beating estimates has little impact — why invest now when things probably haven’t bottomed out yet?

On the other hand, what if Google had a really or sorta poor quarter right now, but then aggressively started making more money “later”? We’d be deeper into the recession at that point, and perhaps Google would start to look like a real star compared to all the other lackluster companies that would still be slumping. Google can afford to wait out the economy for a while, especially seeing as all the original Google gang are already quite rich, and the company has something like $14 billion in cash available — so convert some of the employee compensation from stock to salary (temporarily) to keep morale up and just wait it out.

The reason I’m making this argument is because advertising without true innovation (i.e. new markets or a paradigm shift) really only has one way to go — getting worse over time. Putting “more ads” on a page doesn’t necessarily make “more money” even though the user experience deteriorates very rapidly. Advertising tends to get more invasive, more in your face… and while that might have short term boost to revenue, it certainly won’t last forever.  (Look at Yahoo search, which has 14 ads served for a search on “basket” even with only 10 results given; no wonder the company is dying)

So once Google goes down the path of, “hey quick guys, let’s monetize by putting ads where there weren’t ads before!” — you can’t really do that trick again later. It sounds like Google is choosing to do this now (Q4); it’s too bad they didn’t decide to wait and do these same actions some time “later”. That could have been a lot more impressive.

Tags:   advertising · economy · google · monetization · strategyNo Comments.

I just saw a NYT article suggesting that academic textbook publishers are the next group to try digital rights management (DRM), which really tickles me.

I wonder if anyone in the textbook industry has read last week’s news that Yahoo! Music is shutting down, just about bringing to a close the era of DRM for music. DRM tends to fail for numerous reasons, as well documented on the web — technological problems, customers’ skepticism, etc. At the end of the day, it’s hard to argue that DRM actually helps consumers at all — why should I buy something with DRM when it’s likely to not work on my iPod or successfully transfer onto my next computer?

But just because DRM failed for music, we shouldn’t immediately assume DRM will fail for textbooks. They are dramatically different industries, so let’s look at some of the factors behind the business decision of entering the digital delivery area for textbooks.

Context for textbook publishing:

• Textbooks are required for most high school and college classes, and the industry enjoys semi-captive, semi-monopolistic audiences.
• There are clear leaders for textbooks — Kandel’s Principles of Neural Science textbook is better than all the other competitors, in my opinion, and frankly I’d pay basically any price for Kandel’s book. It’s used by both Stanford and Yale medical schools, for instance.
• Publishers seek to print new editions frequently since the used book market does not funnel any money back to them after the initial purchase.
• Publishers are increasingly trying to come up with “added value” services like online course websites or DVD/CDs with quizzes, etc. to complement the printed textbook.
• Publishers aren’t putting enough effort into making good added valued services — although a physical CD may be attached, there isn’t any real incentive for anyone to care since the production values are so low.
• More and more content is available outside of printed form; truly cutting edge science classes often work only off of academic journal articles, for instance.
• Online coursework websites are helping professors coordinate digital delivery of PDFs of academic journal articles or PDF photocopies.

My observations/beliefs about student behavior:

• Students tend to prefer to buy used books since there is essentially no difference between a brand new book and a book that’s only been read once.
• Students know they are likely to resell their book back to the bookstore after using it, so students are less likely to highlight or underline text so they can get a better price back later.
• Students are on a budget and have little-to-no income, so paying $300-400 every three months is seriously shocking and horrifying each quarter.
• Students know that publishers aren’t making substantive changes when they up-rev a book to a new edition; quite literally, students compare the old and new edition and simply don’t see much or any differences.
• Students don’t get any value out of online textbook “companion” websites — the real companion to a textbook is the professor and class they are attending, not a website. I only logged in to an online textbook website once and was sorely disappointed — why even bother charging for it?
• Students don’t get any value out of attached CD/DVD content, even for programming classes. Seriously, why wouldn’t I get that type of content online from somewhere else anyhow?
• Students are mad enough about textbook prices that the topic gets significant amounts of coverage in college newspapers, and have tried to create small marketplaces or businesses to facilitate used book sharing/selling. According to the NYT article sited above, students are even scanning whole textbooks and illegally sharing them using BitTorrent! (That is a huge amount of effort!)
• Professors are increasingly sensitive to textbook prices and turning to PDFs of journal articles for the latest content.

Given this landscape, I understand why textbook publishers want to try DRM and digital delivery. Their revenue model is presumably not growing as quickly as it used to since the digital world is offering alternatives (PDFs and journal articles), used book reselling is ubiquitous, and their customers — students and professors — are cognizant of the tricks publishers use to make money (new editions that aren’t any better than the previous copy, CDs and DVDs that nobody looks at, and companion websites that don’t lead to any meaningful learning).

The problem with DRM for textbooks boils down to a single question: “How does DRM help the customer?” Frankly, it does not — the student no longer can resell the book to recover some of their temporary investment, and the cost to buy a book is really going to skyrocket.

The NYT article quotes several prices for an O-Chem textbook by John McMurry:

• New: $209.95
• Discounted (through Amazon?): $150
• Used: $110 and up
• Digital with DRM: $109.99

The above doesn’t paint the whole picture, however. A used textbook will cost me $110 to buy, but then I can resell it back for $75 or so I’d guess. So, the overall outlay is only $35 for the quarter. That means that the digital DRM version costs $75 more for me without adding any extra value for me!! In fact, I’m paying $75 more for something that is likely to stop working at some point when the digital license service dies or expires!

So my initial thought is that DRM for textbooks is a terrible idea that hurts students and doesn’t give the customer any added benefit. And that means DRM is likely to not succeed as an idea in its current incarnation.

I think there is still a big opportunity here, however, but it would require a rethinking of how publishers make money. The publishers could try to decimate the used book market by offering DRM copies at an actually competitive price.

What if DRM textbooks cost $25 only? I’d end up choosing the $25 DRM copy instead of the net $35 cost for a used textbook… maybe. The publisher doesn’t have to maintain huge infrastructure for printing and distributing books, they don’t need to print new editions every 2 years and go through the hassle of creating new content, and they capture 100% of the revenue every year instead of just 100% the first year only.

There’s something to be said for a print copy — there is a huge difference between a print copy vs. a digital copy, as compared to a MP3 vs. CD that performs the same for your ears. The music still comes out of the same headphones, whereas the text hits your eyes in different ways.

Nonetheless, I’ll venture that DRM textbooks at a price point of $25 are seriously competitive and potentially a big win-win situation for both publishers and students. Now that’s the definition of satisfying the needs of your customers, not simply profiting off of them!

PS: I think there might be an interesting opportunity for academic presses to step up, or a new non-profit to step up now, and promote the express goal of facilitating learning through the dissemination of knowledge without seeking to hit revenue growth metrics. Is this all just a byproduct of public companies seeking to grow at 20% a year and now finally finding a saturated and unhappy market? What if that academic press or non-profit did offer DRM textbooks for only $20 each? That would be pretty amazing.

Tags:   academic · budget · college · DRM · high school · NYT · personal finance · price gouging · publishers · publishing · revenue · student · textbooks · universityNo Comments.

I just had a weird experience with one of the old guard power companies, Pacific Gas & Electric. These guys were founded in 1905, so I have to salute their tenacity through the last century. Presumably, they are still around because they have been able to successfully innovate and adapt to change. And, given they have a nice little website to help consumers pay, I think PG&E is definitely trying to stay relevant and modern. I have to say though, some of that old school upbringing is coming through in a bad way on the PG&E website.

Last month I moved to San Jose, and so I also managed to get my first ever power bill that was addressed personally to me. In the past, one of my housemates always was on the hook. Well, no problem, I can pay a bill. Right?

Turns out it wasn’t so easy. The first difficulty is just figuring out when the bill is considered “due” — is the listed due date inclusive or exclusive (considered late the day after the bill is due)? Then if I mail back the check in their little envelope, is the bill considered late if postmarked by or received by the due date?

Both questions had me scratching my head, so I went to the PG&E website to find out. I didn’t really find any helpful info there, but as far as I could tell from a “how to read your bill” section, it seems like PG&E has a “must be processed by PG&E on or before the due date” rule.

Ok, fine. I’ll just pay online then so the transaction is instant; it was Saturday and the bill was due on Tuesday.

Oops, did I say “instant”? Not so fast, hotshot. If you pay by check online (bank withdrawal from a checking account), PG&E warns you about a three business day processing time! Say what?!

So, given the scary thought of PG&E cutting off power to my brand new apartment, I chose the other available online option — payment by credit card.

Well, at least I tried to pay by credit card. Turns out that PG&E only accepts Visa cards, but I have a Mastercard. Are you kidding me? I really want to pay this bill, but … can’t … because my bank assigned me a Mastercard? I didn’t even make the choice here between Visa or Mastercard — my bank made that decision for me.

Here’s where I think PG&E is showing its age a little too much.

• Internet transactions are considered “instant” – the customer should not be responsible for PG&E’s 3 days to process a checking account withdrawal. Note that the customer is only responsible for this delay when transacting online, but not when physically delivering a check to PG&E via mail or at an office.
• Internet transactions have less overhead for everyone – paying online should be a win-win situation for both customer and PG&E, since the costs/overhead are lower for both sides. The customer doesn’t have to pay for a stamp, while PG&E doesn’t have to pay overhead to run local offices or deal with hundreds of thousands of pieces of mail received each month. Paying online should be the preferred way to pay, so incentivize, not penalize (with regard to processing time and options)!
• Old guard companies have exclusive relationships with a vendor — I don’t see how PG&E only allowing Visa cards helps the customer. This probably originated with some biz dev deal guaranteeing exclusivity for a percentage point or two less processing fees.  But “only Visa” in and of itself doesn’t help the customer at all — it is no different than Mastercard in my opinion — and instead hoists an inconvenience on the customer for no apparent reason. I remember going to restaurants in my youth that only allowed one card company or the other, but really now, when was the last time you saw that practice in the last 10 years? It just doesn’t happen these days.

The two questions I have for you are:

• Do you think PG&E has an opportunity here to drum up traffic to their website and get more virtual payments, and thereby reduce overhead costs for the processing of physical payments?

• Do you think PG&E should start allowing Mastercard and take the 1-2% hit to the Visa processing fees? Will accepting Mastercard reduce any bad revenue metrics like number of missed payments? I’m actually not sure about this one, because ACH/bank withdrawal is significantly less expensive than credit card… so moving some of the traffic that is currently satisfied by ACH into Mastercard could be disasterous for PG&E in terms of fees.

By the way, I ended up paying the bill on time. But I had to ask my fiancee to pay with her Visa card!

Tags:   ACH · customer · innovation · internet · mastercard · PGE · power bill · utility bill · visa2 Comments

After 5 years of blogging daily, Fred Wilson seems to be running out of things to say. Happily, I’m here to take up the slack with this brand new blog.

Let’s start with some level setting.

Who am I?

I graduated from Stanford in 2006 and went to work for eBay shortly thereafter. I’m a product manager for Trust & Safety on the world’s largest online marketplace. I’m fascinated by the internet and believe strongly in the reach and capabilities of technology to do good.

My first “real” job was for UCSB creating webpages for the Theoretical Physics department when I was 15, after teaching myself HTML from one of those huge books. I suppose I also did IT support for my middle school a little before that, too. You know the drill.

What is the purpose of this blog?

Good question. Sharing knowledge is important to me, and in the past I’ve been heavily involved with running 3 blogs and several journalistic pursuits (including an academic journal). However, I ended up shutting the 3 blogs down for various reasons. My personal blog was too personal, my Stanford-area food review blog neglected to build a community and was humbled by Yelp, and my student leadership blog was a bit preachy and perhaps too early for Generation Y blogging.

Now that those connections are gone, I miss being able to add to the conversation and publish my thoughts. Hence, this blog is.

What is the goal of this blog?

I hope to write good analysis and opinion posts about technology, cultural trends, Generation Y, and business (including marketing and customer support). My interests are very broad, and include everything from recruiting to neuroscience. We’ll see what pops out.

The big, hairy, audacious goal of this blog is to have enough pull to get new posts up on Techmeme and commented on by el señor Robert Scoble.

I do not expect to make any revenue off this blog.

Last thoughts

In the past, I spent a lot of time learning how to run a good blog: SEO, Problogger, short posts with lists, multiple posts each day, staying in a specific topic area, networking with other bloggers, etc. The trouble with that is it doesn’t always work, and when it does, it is costly particularly in terms of time. Truly successful blogs have numerous writers and serve as aggregation and filtering functions for the masses. That model isn’t what I want to do; it’s outside the scope of this blog.

Instead, I seek to have very high quality thought on this blog mixed with a bunch of random junk (quite literally, like what I ate for lunch), and as such know this blog isn’t a serious effort to make money or build a huge audience. So be it. We’ll see what happens. Let me know what you think!

Tags:   hello world · metaNo Comments.