Teaser rates in mortgages have become controversial because they impact such a huge portion of peoples’ incomes.  I wonder if teaser rates in less costly products and services slip by, simply because most people don’t check their credit card bills that closely.

Either way, I haven’t seen a good behavioral economics discusion of teaser rates, and if any reader has one, please leave it in the comments.  My hunch is that people are unaware of the rate change, and I imagine that recurring-billing is a key component of teaser rate success.

The overriding issue is that most restaurants take reservations yet require no deposits.  Also, while some restaurants track no-shows and deny future reservations, most do not.  Reservations are effectively a costless option for reservers.  The same is true of reserved parking spots, haircut appointments, and seats of varying kinds.  No one really needs to reserve a chair at the pool or beach.  If everyone just sat in a chair when they needed one or parked when they needed a spot, in most cases, the system would work much better – first come first serve.

I’m well aware that this is not always the case.  In our own business, there is an importance to brands running specific messages and engaging in specific social exchanges on days of product launches and tune-ins.  The same is true of a host of appointments for medical, tutoring, etc.  And reservations are especially important for high demand events like movie premiers and new restaurants, where the risk of showing up to a “sold out” situation is high.  With that said, I think the pendulum of reserved versus spot market is unbalanced, and most businesses use reservations to their disservice.  In most cases, I find first come and wait till available to be take far less time than anticipated.

I recently finished reading the great new behavioral economics book, Thinking Fast, and Slow by  Noble Prize winner, Daniel Kahneman.  I can’t help but think of reservations in terms of the kind of behavioral experiments often performed to show how child behavior is mirrored in adults.  When my 3 year old, Edie, has a playmate over, she is often playing with Toy A, while simultaneously refusing to let her playmate enjoy the use of Toy B.   Edie is busy with Toy A but wants to keep Toy B “reserved” should she desire the use of it.  How different is this from an adult out at a meeting who wants their parking spot back at the office “reserved” should they need it?  Or the bather who has a specific chair in the shade “reserved” for if and when they finish swimming.  In the vast majority of cases, they are plenty of parking spots, toys, shade, seats…

Space in commercial office buildings is leased on a dollars per square foot per year basis.  So you often see space quoted like: $25 a foot; 2,000 square feet.  Such a lease would be $50,000 a year, paid monthly in advance for $4,167.  A security deposit of several months if also required, just like when you’re renting a residential apartment.

However, these numbers are not as straight forward as they might appear.  The quoted square footage often differs from what is called the “usable square footage.”  That 2,000 square feet often includes: mechanical areas, support beams, and common areas – space you cannot actually use.  In New York (I’m not sure about other places) it is often measured to the external wall, or curtain, of the building.  Where you can stand and the curtain of the building can be a few feet.  A good broker or building owner will often give you a usable number – or you can have an architect or contractor economically measure the space.

Another number that is not straight forward is the annual rent.  Depending on the state of the space, the building owner will often offer to build out the space to your specifications or grant you a “tenant improvement allowance.”  For example, if the space if very raw, on that $50k/year lease, you might be granted $15,000 dollars to construct your conference rooms, bathrooms, etc.  Depending on the landlord you either submit receipts or have them billed directly.  Having the owner do the work can often be easiest, and offer the least exposure, since you don’t need to get reimbursed.

Terms of leases are at minimum, typically, 3-5 years.  (An alternative would be to sublease space, that is, lease space from someone holding a lease with the building, for a shorter period of time.)  In each of the years of the lease, you’ll probably see a percentage increase in the rent defined.

If you’re a growth company, you want to take a space that gives you some room to grow.  With that said, too much room to grow, and you’re wasting money on square footage that you don’t need.  If you grow more quickly than anticipated, you have a few options:

1. Often the best option is to look for more space in the building.  Ideally, you’re in a building with numerous tenants; this creates a high likelihood that space is continually freeing up. It may seem inconvenient to have space on floors 3 and 11, but ultimately, in Manhattan,  at a certain size, you’re going to be on multiple floors.  Closer together is better, so you can use stairs, but ultimately an elevator ride to another floor isn’t the worst thing.  For years before buying the entire building, Google was grabbing space at 111 8th avenue in this manner.  I often would go from floor 4 to 15, or 4 to 6, etc.  This often even involved switching elevator banks. They even took two floors in the building across the street on 9th avenue (Chelsea Market)
2. Move to a new space and sublease your existing space to a new tenant.
3. Ask and receive an early termination of your lease from your landlord.

In leasing, you also want to think about who pays for and manages air conditioning, hours of freight elevator usage, bike access, etc.  These concerns and arrangements often require some ongoing management.  There will always be plumbing, heating, internet connectivity and other associated issues even in a small space.  So be prepared to have the kind of ongoing maintenance needs and issues that one has in maintaining a house.

In closing, the big difference in real estate between NYC and out West is that you can’t just grab buildings.  As I watched Google expand in Mountain View there were always nearby buildings freeing up that could be used to expand the campus.  In New York things are vertical and often have much tighter inventory.  Thus, it’s best to be in a building that’s of decent size and has lots of tenants that have leases continually freeing up.

Each lease and real estate need is a little unique, so please leave questions or thoughts in the comments, and  I’ll answer.

We’re sick and tired of picture-perfect babies and flawless models. Why do we love YouTube videos so much? Because they’re imperfect, amateurish, and the people in them remind us of us.

This is why, in places like Whole Foods, we’re seeing more and more Brussels sprouts and tomatoes still tethered to their stalks, many with dirt still clinging to the roots and leaves still hanging from the stalks.

I’ve believed for months now, that consumers like their branded content, rough, quick, and organic feeling.  Instead of releasing one perfect, polished commercial about a car, release a lot of iphone videos showing behind the scenes factory construction and road tests.  People appreciate and want REAL.

We even want simulacrum REAL.  My 20 month old got baby jeans that came pre-ripped with holes in them; my wife explained they are cute because they look like worn adult jeans.  Real and rough is a cultural aesthetic as much as it’s a sensing for the closeness to the unpolished real.

Real and rough is also more functional.  I download all my iPad movies in Standard Definition, instead of High Definition.  You typically want to download  a video the minute you are about to leave your house or hotel.  HD takes too long to download, and I either I can’t tell the quality difference or don’t care.

Real content, content that is rough and “discovered” is far more exciting for users to engage with and share – not unlike the way blog posts are more real-time and interesting to comment on, as opposed to sending a letter to the editor of a magazine or newspaper.

It’s the same reason why Facebook messages, has sought to move away from the formality and distinctions between email, chat, sms.

I think we’re moving towards a less formal more “real” age in our marketing and tools; social works especially well with this aesthetic.  No one wants polish, they want real.

Both of these chain clothing store just opened up all across Manhattan ,offering cheap and stylish clothing.  I bought $9.90 jeans from Uniqlo than seem just as good as the $100 ones I’ve bought from other places.  My Joe Fresh $19 button down shirts look cooler and feel more comfortable than the shirts I’ve bought at quadruple the price from the legacy shops.  You can add to this group H&M.

Whether the materials in the higher priced items are of finer quality or will last longer is irrelevant.  The way I live my life, most clothes never reach their natural healthy life expiration date.  And, frankly, I’d prefer four different shirts for the price of one.  For kids clothing, the point is even stronger.  Nothing avoids stains.

I just think something radical is happening in clothing.  It used to be that cheap clothes were crap and expensive clothes were good.  I think what we’re beginning to see is that cheap clothing can be great and stylish, and expensive clothing is ridiculously priced.

You think that only digital markets can be disrupted and then you look at something like lettuce in a bag.  Clothing is being completely disrupted right now.

In the data space, we at BuzzFeed also subscribe to photos and news from sources like the AP and Reuters.  We also license Comscore.

These databases add up to thousands of dollars a month in overhead.  They’re costly but until now there wasn’t really an alternative, and then it occurred to me, we’re beginning to see the Internet decentralize these databases.  We already see SellerCrowd beginning to fill the role of  the ad buyer database.  Rather than rely on an in house team to manually update contact info, SellerCrowd does this in real time pinging the wisdom of the crowd.

In similar fashion, it has always been my belief that Piictu (disclosure: I’m an investor) would become a crowdsourced version of AP or Getty images.  When a major world event happens, you can see the crowd reacting through images on Piictu.  No need to buy an expensive photos database.  Want to see Halloween around the world?  Go to Piictu.

We’ve seen Airbnb disintermediate room rentals.  I think in similar fashion we’re beginning to see professional data get disintermediated.  If I were an investor, or an entrepreneur looking for an idea, I’d scan the sectors where lots of information is being rolled up, databased, and then sold to the other side of the buy/sell equation.  I’d then look to crowdsource this info and give it away or sell it for a radically cheap price.

If you sell digital advertising, you need to join SellerCrowd immediately.  It’s a community that lets digital ad sellers communicate about RFPs, brand contacts, agency contacts, etc.  It operates right now as a simple Q&A platform, but I imagine they’ll be rolling out reputation and answer scoring at some point.  I’ve been reading about the verticalization of professional communities, and SellerCrowd is a clear case of community for a specific audience. On Sellercrowd industry standard terminologies and parlances flow freely.  People ask about specific RFPs, and whether or not winners have been announced.  Sellers share insights about which brands have moved agencies, and where they stand in their planning and campaign cycles.  The dialogue is almost completely civil and on point.  Candidly, I already used Sellercrowd to find out about some RFPs we would have liked to have gotten and pinged the agency.

I’m looking forward to some of elements of Quora being integrated into SellerCrowd, so that my time and effort to answer results in some rating that gets me quicker and better answers to my own questions.  I think this platform is innovative and already pulling in some of the brightest sellers that are early adopters of the type of social solutions that we’re selling.  I believe this so much, that I asked that BuzzFeed be the first company to recruit on SellerCrowd.

Digiday has a great interview with the founder if you’re interested.

If you sell social media, you gotta use social media.  In all the available ways:

Conferences routinely convert to real connections and business for me.  In fact, a face to face connection at a conference can often convert to business for us roughly 3x to 5x faster than other forms of leads.  With that said, I’ve read about the kind of scenarios Rosenberg described happening in the medical or even business fields.  One could argue that the Altair computers and discussions at a the Homebrew Computer Club meetings in the mid 1970s had this order of impact on a group of software engineers.  We even have the sequences of family members desperately approaching doctors at conferences or learning of new techniques that save lives as portrayed in movies like Lorenzo’s Oil.  And what of all the speeches that Nash gave in A Brilliant Mind that inspired leagues of future behavioral economists?

As I read the Steve Jobs book, it seems like that in addition to the enormous amount of hours and hard work turning around Apple, the rebuilding of the brand was very much a sequence of Steve Jobs keynotes. Great products, but also great talks about those great products and why they were important.  Also an enormous amount of work by jobs to make those talks perfect – he didn’t wing it or read a stock marketing kit.

I was inspired by Thomas Friedman’s speech at the ANAs, and so the common thread becomes speeches that are more academic than straight marketing.  I think it is these kinds of talks and kismet interactions that create the kind of chance meetings that result in luck, as the NY Times explained last week.  Talks and ideas that inspire, that result in meetings, that in turn result in collaborations.  I think it’s why we blog and why we prepare talks that are surprising and thought provoking.

It can’t be all talk.  We all need to work, analyze, read, write, model, code, sell.  But we also need to talk about what we’re doing in the most rigorous and surprising ways.  It’s amazing what can come from a single meeting.  It’s amazing the kind of “luck” that can happen when you put out ideas…

1. Think like an immigrant: Nothing is owed to you in the world today.  You need to earn it all on the basis of energy, vigor, consistency, and hunger.  ”Average if over” in a hyper-connected world, where competition knows no bounds and “critical thinking and problem solving” are the cost of entry to a job interview.
2. Think like an artisan: Be so proud of your work, you’d carve your initials in it.
3. Think like the waitress at Perkins Pancake House: I’m going to focus on this one.