Cogblog

I realized recently that my  perspective on “what is interesting about daily deal companies” is different than most people, so I wanted to articulate it.

Lot’s of people worry that consumers will suffer daily deal burnout and they say, “these daily deal companies whole businesses are built around email marketing lists, when consumers burn out, they are doomed”. That drives headlines like, “BURNOUT IS HAPPENING”. Don’t get me wrong, that is a concern, but this is not what makes the daily deal companies so interesting to me, and it is precisely what I find interesting about them that makes them so valuable in my opinion.

For a decade, Internet start-ups bemoaned the challenge of penetrating the local market – no one had the sales force. Everyone dreamed of partnering with people like the Yellow Pages that had 10,000 feet on the street. Every start-up had a product that, if they could somehow magically motivate a third party salesforce of thousands of people, they could turn into a mint of money. The problem was, building a sales force was super expensive. Only one company really did it: ReachLocal. They raised huge chunks of money at extraordinary risk and successfully made it happen. But they were the exception, not the rule.

With the advent of the daily deal, several companies have had the chance to build out giant sales forces – Groupon and LivingSocial now have sales organizations that dwarf ReachLocal and they are rapidly going international.

Sure, there is a finite limit to the amount of daily deals a vendor will offer. And a finite limit to the amount of daily deals that consumers will buy. But that is not bad. All they need is more product. LivingSocial and Groupon suffer today because they have this huge sales organization, but they really only have one thing for them to sell. They go to all this trouble to build a relationship with a business, they do a daily deal, and they are done. Can’t really sell them anything else for six months or a year. What they need is MORE STUFF TO SELL THEM.

That is easy. Go buy companies. You have the equity to do it. You have cash in the bank too. I predict that Groupon and LivingSocial will start munching up companies left and right in the next few years. They need more product in the pipeline for their salesforce. And being a salesforce, they will always want something new. Now the ideas will meet distribution in a beautiful marriage and tons of early stage companies will be gobbled up to feed the hungry maw of sales. And many entrepreneurs will get to see their dream fulfilled as their idea is used by thousands of small businesses.

Check Crunchbase out: Groupon has already done 10 acquisitions. LivingSocial has done 7. This is just the beginning.

1) Have linkbait titles.

I was recently reflecting on whether all this blogging has made me a better person because, we all know, no one reads this stuff. Similarly, it is unlikely that it has made me a better person in any respect other than that I may be a better writer. Am I a better writer? Well, I read Tim Ferris’ study on titles that get retweeted. I have heard the standard Digg-bait logic for title writing.

2) Appreciation of SEO.

My gut instinct is that most of that stuff about linkbait titles only has value at scale. Am I getting value out of that? I suspect that the only real value I am getting from writing better titles is probably SEO and Tim’s suggestions about writing crazy titles probably diminish the SEO value of a post. Of course, I am knowledgeable enough about SEO to know that the real driver is not my amazing title writing but the number of links to my post/blog. Which is few.

3) Writing a good lead.

I am terrible at this. Most of my posts are stream of conscious rambles – also, generally, rambles that are continuations of things that were going on in my head already, so the first paragraph rarely tells you the preceding story. I would actually say that my tendency is far more to have the first sentence be either a sub-title to the title, an explanation of why I am writing a post with that title, or a bad joke. Mostly bad jokes. The good news is, if this were fiction, I am doing a good job of starting in the middle rather than the beginning, so it is Hollywood.

4) Story Structure

Alas, I rarely even bother with this any more. When I was a high school debater, I was required to do extemporaneous speaking events as well – until I proved so consistently terrible and disinterested in it that I was finally put out of my misery. Every competitor in that game knew the format:

• Introduction
• Point 1
• Point 2
• Point 3
• Conclusion with circular reference

I have found that most of my blog posts today are something like:

• Introduction
• Point 1
• Peter out……..

This is a visceral trade-off in some ways. Would people prefer me to bang out a post or three per week (my target is three per week) or would you like a monthly post that is a ten page well-constructed diatribe?

I have opted to ere on the side of volume and pointless-ness. Certainly, that means many posts are simply me getting a quick thing off my chest, but that isn’t necessarily bad. Some of those things are good.

5) Value Brevity

Some days I think I should simply focus all my wittiness on Twitter. Some days I think I should abandon Twitter to capture all the wittiness on my blog. Maybe I should more aggressively stream my wittiest tweets onto Twitter. Regardless, I certainly look at some of my blog posts and how they peter out and think, “If I could get this down another ten characters, it could just be a tweet.” But I like to tell my stories how they are. I do think of myself as an entertaining storyteller and I am loath to ruin a good story simply to get it down to 150 characters.

But I do think it tells you something about the market that if you go google “blogging makes you a better writer”, 4 of the first 8 results are actually “twitter makes you a better writer”. If twitter actually makes you a better writer, we are doomed as a society.

6) Writing makes you a better writer

This is probably the best thing that I have gotten out of blogging – besides the relationships I have built through blogging. Every single writer says, “to become a better writer, you have to write.” I have cranked out almost 400 blog posts. There has to be a pony in there somewhere.

Despite that, I do not think I will ever write a book. I love great writing. I appreciate great writing. I have found that if I work very, very hard I can write very well (few examples of this exist on my blog, but you could look here or here), but I cannot sustain it. And I have bad writing so much that I cannot write a book. You want good writing? Go read Jonathan Safran Foer.

6.5) Annoying writing devices are annoying

Any time people use that “and a half” cliche in list writing, I instantly loathe them. I loathe them. Jeffrey Gitomer? LOATHE HIM. (I cannot link to him but let’s say that every week he tells you X.5 ways to do something in sales.)

I cannot read a post, no matter how linkbait, that starts that way. I encourage you to never, ever do that. It is a stupid thing to say and a stupid device. It reminds me of people that price things with a $0.99 on the end – maybe studies demonstrate its effectiveness, but I find it so smug and I feel like I am being sold the post – and Jeffrey Gitomer knows that no one likes to be sold, they like to buy.

Your transparent use of devices makes me hate you. That is not good writing. It is as unsubtle as a jackhammer.

Was this post facetious? As I mentioned, I ramble. That was not the original intent. I was spending some B-time thinking about what I could do to improve my blog posts, but unfortunately I have been struck with the stark realization that the key to this is time and the only way I can create time to improve my posts is to post less frequently.  My informal polling, as well as research by third parties, indicates that frequency right now is pretty good and I would be hurting myself to lower it. And I am barely keeping up as it is.

So I have decided to settle – a recipe for non-greatness.

I know I went after Tim Ferris pretty hard earlier this week. As a Tim Ferris disciple, as I am sure many of you are, it was a hard thing. But I must keep going. I MUST KEEP GOING.

Maybe you are saying, “Maybe the moral of the story is that losing weight is hard. The MED is high.”

Maybe. At the end of the day, there is an element of caloric restriction that is basically a law of nature. If you eat less than X, you lose weight. Eating less is hard, ipso facto, diet is hard.

But I want to give you an example, unexplored by the Ferris, of what I was hoping for.

Saw a new study on CNN last August that I have tried to take advantage of and I recommend it to you as well. This was a small sample size, but it was published in the peer-reviewed journal “Obesity”, which is the leading journal in the field for medical research, so it is the real deal.

Here was the study:

• The scientists prescribed the exact same low calorie diet to two different groups.
• The variable they introduced was that one group drank 16oz of water before each meal.

What happened?

The group that drank water before each meal lost 4.5 pounds more than the control group in three months.

That is a great diet. All you have to do before dinner each night is drink a large glass of water and you will lose a tiny, tiny amount of weight.

You will soon see Facebook ads for “water” replacing the ads for Acai Berry. I suspect the conversion rates will be low.

The Minimum Effective Dose not only delivers the most dramatic results, but it does so in the least time possible… These are the types of prescriptions you should seek and these are the kinds of prescriptions I will offer.”

- Tim Ferris, The Four Hour Body

I have historically been a Tim Ferris fan. I blog about him all the time. I wrote an endorsement of his new book before it even came out and bought five copies of his book when it was released.

But now I am in a snit. I am trying to adopt the Tim Ferris philosophy regarding diet and it is sub-optimal. He outlines at the start of the book that he is looking for little changes that make a big difference. At the start of the diet chapter, he characterizes his diet thusly:

“Let me explain exactly how Chris and I reach and maintain sub-12% body-fat, often sub-10%, by strategically eating like pigs”

That is all well and good to say, but what he outlines is a diet where you can eat like a pig one day per week and the other six days you must follow a draconian diet plan that crushes my soul. Here are the things you are not allowed to eat on Tim’s diet plan:

• No bread
• No rice
• No cereal
• No oatmeal
• No potatoes
• No pasta
• No fried foods
• No dairy
• No fruit

Tim further comments in a recent blog post:

“The following will address 99%+ of those who are confused:

- If you have to ask, don’t eat it.
- If you haven’t had blood tests done, I don’t want to hear that the diet doesn’t work.
- If you aren’t measuring inches or haven’t measured bodyfat % with an accurate tool (BodPod, etc. and NOT bodyfat scales), I don’t want to hear that the diet doesn’t work.
- If you’re a woman and taking measurements within 10 days prior to menstruation (which I advise against in the book), I don’t want to hear about the lack of progress.”

So much for taking the easy way out. My failure to do extensive blood testing and get access to tools like a BodPod mean I have no recourse to complain, yet my complaint is that I have to do all this stuff in the first place.

Enjoy meats, eggs, non-starchy vegetables, and plenty of beans.

I have to tell you, if that is the minimum effective dose to drop fat, then I am a monkey’s uncle. Am I losing weight? Some, not as much as I would like. Of course, I am basically getting there via caloric restriction: Egg whites are low calorie. Vegetables are low calorie. Chicken, etc. I don’t eat beans every meal.

Does this feel easy? Is this how I enjoy the holidays without the weight gain? Doesn’t sound like a recipe for holiday fun.

As I reflect on this, it seems like just playing the weight watchers game would be a more “Occam’s Protocol” than this plan. Or that thing that home delivers meals.

Recently, a budding entrepreneur sent me the following question:

How valuable is “the zone” to you – that working flow state?  If it’s extremely valuable how do you protect it (closed doors? headphones? etc.)?  How do you protect it without alienating family?

I thought this was a fascinating question and syndicated it out to some of my fellow entrepreneurs and people I know and respect. Here were their answers:

Brian O’Kelley

I sit smack in the middle of the AppNexus office. We don’t have cubes, just lines of tables. It’s my job to be the nexus of communication for the company, to hear the  sales pitches and creative ideas (and dumb ones). I think I exude a “don’t bother me unless it’s important” vibe, but let me tell you: if somebody interrupts me when they know I’m in the zone – it’s important, and I want to be bothered.

Some of my developers say the buzz and murmur of the office is annoying, so they wear headphones. I don’t like headphones, because you don’t hear anything going on around you. There’s a lot of ambient information floating around. I can tune out the noise, and I’d argue that selective hearing is a skill that entrepreneurs need. I think it works well at home (and not just when the baby is crying). My family is priority #1, so they get dibs on my attention – but they also respect my need to focus.

Finally, I’d say that the ability to context switch quickly and fully is imperative. I can’t type and listen fully to someone, so I need to stop typing, give you my full attention, and then go back to total focus. Cooperative multitasking, if you will. That mitigates the need for “the zone” to be protected. If I can pop in and out easily, interruptions aren’t that big of a deal.

Dave Troy

It’s all about planning how you’re going to use your time. I block out each day in terms of what I plan to do; if I’m doing email, I plan a couple of hours to focus only on that. If I’m doing programming, I set aside a block of time for that. In general, bigger blocks are better. Also, if you really want to program creatively, there’s nothing worse than having something hanging over you – like a phone call at 3pm. Block out the whole day and leave yourself an open end-time. Amazing how creative you can be in that context.

Mike Subelsky

When I am feeling stagnated, I tend to leave my house and go to a coffee shop.  I can get a lot of things done outside the house, even though I have a pretty sweet office setup.  When I’m home and working I turn on a loud white noise generator app that blocks out all sounds, so I’m less tempted to stop what I’m doing every few minutes to see what awesome things my kids are up to.

But, I just recently started to change my mind about the importance of all this.  The Zone is extremely valuable to me, but there’s only so much I can do to get it. As much as I want to be in the zone all the time, I don’t want to miss out on a second of my young children’s development.  My wife also works and we share the childcare duties 50/50, so there’s a real limit to how isolated and creative I can be on a given day.  So, I’ve started to squeeze what productivity I can out of the short intervals that I do have.  I guess I’m saying that while nothing beats being in that flow state, I’m finding I don’t have to be in a flow state to be creative and get things done.

Andy Monfried

“the zone” is hugely valuable to me.  it comes in two ways.  one is verbal — which is phone time, and the other is idea, or email, writing time

i like to make my commute in, and drive home (and drive 60-90 minutes each way in and out of nyc, and its only a 15 mile drive) my “phone zone.”  i use this time to connect with employees, clients, and people i need to speak with.  i typically make a list of 2-3 calls i MUST make — and make sure i call them (scheduled or not) then.

second is writing emails and/or jotting down ideas.  most of my ideas come to me at odd times, therefore i leave myself long voicemails, and then the next day listen to them, and briefly transcribe my thoughts.  i will leave myself generally 3-5 essages on my phone per week (i call my office number and leave a message) — and, i’ve done it in the middle of the night, or while watching a game.

my REAL zone of thought and output typically comes from “solo” time (commuting, traveling on a plane) and 99% of my ideas are not good — but the 1% is important that i can capture the “lighting in a bottle” to remind myself and DOCUMENT when the “goodness” of the zone happens.

Capturing and documenting sometimes is AS IMPORTANT, as finding the zone….

Jonathan Mendez

best way to protect is get your flow on from 9pm – 2am when you can’t be disturbed

Jerry Neumann

It’s very valuable to me, when I can find it.

I protect it by:

(a) having an office (can’t get it when kids are around)

(b) having blocks of time when I don’t plan any meetings or calls, either whole days or half-days

(c) occasionally turning off the internet, when I’m having trouble concentrating

One thing I noticed recently is that Root Markets generated a host of entrepreneurial activity. Root Markets was a failed start-up in the 2006-ish time frame. I think the conventional wisdom is that successful start-ups witness a host of people spun out that then start companies. Root is an instance of failure begetting a host of start-ups and that seems interesting.

Root alum include:

• Joshua Reich – founded BankSimple
• Greg Yardley – founded Pinch Media (merged with Flurry)
• Rob Leathern – founded XA.net

That is a lot of value for a company that didn’t really get too far. What was so unique about Root that enabled this entrepreneurial activity?

Here is my theory: One of the great things about a successful exit is that the founders become rich angels and everyone that didn’t get rich thinks that this adventure was easy. The result is a virtuous cycle of new entrepreneurial activity.

So Root had a few things that ended differently for them then your average start-up that doesn’t work out:

• I don’t think people at Root came to the conclusion that the idea was a bad one. I think most of them felt that investors screwed up the company.
• Several people came out of Root as prominent angel investors. Even though Root did not make them rich, Seth Goldstein and Jerry Neumann both were already wealthy and the credibility that people established at Root let to the opportunity to raise financing for their ideas.

I know Root people stumble across my blog all the time, tell me what have I missed here.

Does anyone know other companies outside Silicon Valley that saw such a prosperous cycle of innovation spring from the ashes of dead companies?

Great stuff ahead:

• The Dirty Secret of Small Ad Networks
• Customer Development Is Not A Breakthrough Idea
• Size Matters and Other Obfuscations by Ad Networks and Google
• Whither Ad Networks – Probably my favorite blog post ever.
• The Chaos of Second Price Auctions
• The Value of Vectors in Behavioral Targeting
• How To Build A Great Start-up Economy

And we are done. Happy Reading.

I get Startup Digest every week and at various points when I traveled a fair bit, I got it for many cities at the same time. One thing I realized was that, despite it’s popularity, quality varied widely and coverage tended to be lopsided. Dave Troy runs Startup Digest for Baltimore and the result is that it is filled with Rails events and the various things that Dave is involved in directly such as Bicycle Baltimore.

I thought that the lists that I saw felt very driven by the owners: either the types of events were slanted or a paucity of events implied that the list owner was not as wired into the community as one might like.

Here is a graph of the number of activities listed in Startup Digest. There are data problems here. Assume that empty weeks were, in every case, weeks that I lost the email as opposed to weeks with data points that were actually zero.

New York’s list tended to be not much bigger than Baltimore’s. That cannot possibly be right. Further, in DC, the list had virtually no items. What that says to me is that the volume of items in Startup Digest is really a proxy for how “at the epicenter” a given locations author is. Finding more events is not too hard: go on Meetup.

http://www.flickr.com/photos/giantpandazoo/5129250719/

Everyone is moaning about the Wall Street Journal article/book coming out explaining why calling your kids “garbage” will make your kids better. Let’s share some excerpts:

Despite our squeamishness about cultural stereotypes, there are tons of studies out there showing marked and quantifiable differences between Chinese and Westerners when it comes to parenting. In one study of 50 Western American mothers and 48 Chinese immigrant mothers, almost 70% of the Western mothers said either that “stressing academic success is not good for children” or that “parents need to foster the idea that learning is fun.” By contrast, roughly 0% of the Chinese mothers felt the same way. Instead, the vast majority of the Chinese mothers said that they believe their children can be “the best” students, that “academic achievement reflects successful parenting,” and that if children did not excel at school then there was “a problem” and parents “were not doing their job.” Other studies indicate that compared to Western parents, Chinese parents spend approximately 10 times as long every day drilling academic activities with their children. By contrast, Western kids are more likely to participate in sports teams.

I have to say, and obviously a key part of a her argument is, this all sounds hard to disagree with. For my value system, I would say:

• Academics is good, therefore stressing the value of academics does not sound bad.
• Learning can be fun or not fun, but it must be done. There are classes and subjects that are hard. It is nice if it is fun. If is more pleasant if you have a good attitude towards it.
• Academic achievement is related to successful parenting. I think you can’t take all the credit for it, but study after study shows that better parenting situations drive better academic outcomes.

Here is another great quote:

What Chinese parents understand is that nothing is fun until you’re good at it. To get good at anything you have to work, and children on their own never want to work, which is why it is crucial to override their preferences. This often requires fortitude on the part of the parents because the child will resist; things are always hardest at the beginning, which is where Western parents tend to give up.

That is a good point. Hard work is required to become good at things. Things you are good at are more fun.

But that last area is a critical area where I diverge.

Here is my leap: Teaching your children the value of working hard – and that they must work hard on things they do – is critical. The “Chinese Mother” approach she takes is implying correlation where there is only the tiniest bit.

Before I start down my winding road of parenting tips, allow me to caveat: My wife is Chinese. Her parents are Chinese. My wife turned out great and our kids are working hard to become great (!). My wife and I have a shared value system on this stuff and that is what I am discussing. The concept of “Chinese Mothers” as discussed here is an extremely broad stereotype and we are all reasonable people that understand the context of this discussion.

When I became a parent, I became a connoisseur of the literature, as do many parents. The study I homed in on was a study published in Scientific American that indicated, in short, that teaching your child the value of working hard is critical for success in life. Allow me to quote:

…our studies show that teaching people to have a “growth mind-set,” which encourages a focus on effort rather than on intelligence or talent, helps make them into high achievers in school and in life.

The classic study looked at in this article was so simple that a child could do it. Longer quote:

In studies involving several hundred fifth graders published in 1998, for example, Columbia psychologist Claudia M. Mueller and I gave children questions from a nonverbal IQ test. After the first 10 problems, on which most children did fairly well, we praised them. We praised some of them for their intelligence: “Wow … that’s a really good score. You must be smart at this.” We commended others for their effort: “Wow … that’s a really good score. You must have worked really hard.”We found that intelligence praise encouraged a fixed mind-set more often than did pats on the back for effort. Those congratulated for their intelligence, for example, shied away from a challenging assignment—they wanted an easy one instead—far moreoften than the kids applauded for their effort. (Most of those lauded for their hard work wanted the difficult problem set from which they would learn.) When we gave everyone hard problems anyway, those praised for being smart became discouraged, doubting their ability. And their scores, even on an easier problem set we gave them afterward, declined as compared with their previous results on equivalent problems. In contrast, students praised for their effort did not lose confidence when faced with the harder questions, and their performance improved markedly on the easier problems that followed.

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• There is no remnant, there is only optimized and non-optimized
• Can Ad Networks and Premier Inventory Co-exist?
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2010 is next!