OverMatter

Berlin Wall now in pieces across USA

2009-11-05T18:51:49-07:00

Your Bank Hates You

2009-09-27T03:59:52-07:00

"If consumers mattered, your bank would offer one retail product. It would be part checking account and part credit card. And by that I mean your balance could either be above zero or below zero at any given point. When your balance is below zero, you pay interest to the bank. When it is above zero, the bank pays you interest. You'd have one plastic card that does what your ATM and your credit card does now.

If you needed more credit, you could secure your account with your home equity. That way you wouldn't have multiple types of credit with the same bank, where the bank hopes you misplace at least one of their bills so they get the late fee."

Scott Adams Blog: Your Bank Hates You 06/26/2009

The Real Way to Start a Web Startup

2009-09-27T03:56:18-07:00

From Nothing To Something. How To Get There..

Get Satisfaction, Or Else...

2009-09-26T07:02:38-07:00

Get Satisfaction, Or Else... (37signals)

Seth Godin on Marketing

2009-09-20T13:33:32-07:00

Ideas That Spread Win. Why marketing is too important to be left to the marketing department...
More Business of Software Conference 2008 Videos

Smart Startup

2009-09-14T20:33:58-07:00

Mint Acquired by Intuit for $170m Two Years After Winning TC40 (TechCrunch.com)

I Will Not Read Your F-cking Script

2009-09-13T23:54:30-07:00

"Yes. That's right. I called you a dick. Because you created this situation. You put me in this spot where my only option is to acquiesce to your demands or be the bad guy. That, my friend, is the very definition of a dick move." (Josh Olson, New York News
via TechCrunch)

The Real Story of the Placebo Effect

2009-09-01T18:18:53-07:00

Wired Magazine: Placebos Are Getting More Effective. Drugmakers Are Desperate to Know Why...

The Secret History of Silicon Valley

2009-08-30T17:55:54-07:00

Presentation slides are here (include extra slides not shown in the video). Another version of the video is here.

More: "The Secret History of Silicon Valley"

Via: "The long lost formula for start-up success" (also see: "Customer Development: The Definitive Resource")

Some key points:

Some cool "secret war" facts:

From Postcards to SMS to Twitter

2009-08-16T03:48:15-07:00

Short Is Sweet: Postcards Begat SMS Begat Twitter
by MG Siegler on July 4, 2009

Recently, I’ve noticed something. If you send me an email, the likelihood that I’m going to respond is pretty small. But if you send me a message on Twitter, the likelihood that I’ll respond is much higher. Certainly, part of it is that I get fewer messages on Twitter. But you might be surprised at how close it’s getting in volume when you add @replies to direct messages. The bigger factor for me, is the length of the messages.

If I open up an email and see it filled with paragraphs of information, guaranteed my eyes are going to glaze over. Certainly sometimes it’s an important message that I do need to read, but most of the time it’s just a core message filled with paragraphs of bloat. I don’t want or need the bloat, I need the core message. And that’s why I love Twitter. You simply cannot go over 140 characters. And more often than you may imagine, that’s enough.

Now, on the face of it, plenty of people will disagree with me on that point. But think about it. In an age where we’re bombarded by tons of information, from multiple angles, all day long, there is something beautiful about brevity.

I used to read screenplays for a living. Trust me when I say that there is no shortage of people who can blather on about something to seemingly no end. But the skill in writing a screenplay often came down to if you could convey what you needed to convey in just a few lines. It’s not an easy thing to do — at all. And while it’s not quite the same because it’s even more compact, Twitter forces you do to a similar thing in its own way. And Twitter is hardly the only form of communication that has done this.

Most users know by now that the 140 character limit of Twitter is actually tied to the limits of text messaging. Text messages can only be 160 characters long (Twitter needed to reserve the extra 20 characters for usernames). But do you know where the 160 character limit comes from?

The LA Times ran an excellent piece a few months ago about Friedhelm Hillebrand, the father of the modern text message. He dreamed up the 160 character limit while working at a typewriter in the mid-1980s, trying to see how long sentences needed to be to convey something. He found 160 characters was the magic number he kept arriving at. But the deciding committee for SMS still wasn’t sure until they looked at postcards and found that most of those had messages of 150 characters or less.

And so you see, while you may think Twitter’s character limit is silly or frustrating, it’s actually born out of two other forms of communication that are widely accepted and used the world over. You may not think of Twitter being just like a postcard, but in some ways it is — one that you can instantaneously send to many friends or acquaintances at the same time. And minus the cost of a stamp.

Even with the rise of technology, the lure of the short message remains. And that was the key reason why I found Twitter compelling when I first started using it over two years ago. I never thought of the limitation in a negative sense, but rather as something that could inspire creativity in messages. And could even spur communication.

It’s liberating to know that you only have 140 characters or less to respond to something. For a lot of messages, that removes a huge burden of trying to say enough to the person you’re talking to so that they don’t think you’re being rude. With a 140 character limit, a correlation between briefness and rudeness doesn’t exist.

And that’s why more and more I’m finding myself telling people, “Just message me on Twitter.” It’s a two-way street. I don’t want to have to read you go on and on about something that could be said in one line, and you won’t have to listen to me go on and on about something in response. Again, it won’t work for all messages, which is why Twitter or something like it will never kill email, but for a lot of messages, it works just fine.

Characters and time are saved. It’s a limitation that is liberating.

(Techcrunch)
=====

Why text messages are limited to 160 characters
May 3, 2009 | 1:28 pm
Credit: Lori Shepler / Los Angeles Times

Alone in a room in his home in Bonn, Germany, Friedhelm Hillebrand sat at his typewriter, tapping out random sentences and questions on a sheet of paper.

As he went along, Hillebrand counted the number of letters, numbers, punctuation marks and spaces on the page. Each blurb ran on for a line or two and nearly always clocked in under 160 characters.

That became Hillebrand's magic number -- and set the standard for one of today's most popular forms of digital communication: text messaging.

"This is perfectly sufficient," he recalled thinking during that epiphany of 1985, when he was 45 years old. "Perfectly sufficient."

The communications researcher and a dozen others had been laying out the plans to standardize a technology that would allow cellphones to transmit and display text messages. Because of tight bandwidth constraints of the wireless networks at the time -- which were mostly used for car phones -- each message would have to be as short as possible.

Before his typewriter experiment, Hillebrand had an argument with a friend about whether 160 characters provided enough space to communicate most thoughts. "My friend said this was impossible for the mass market," Hillebrand said. "I was more optimistic."

His optimism was clearly on the mark. Text messaging has become the prevalent form of mobile communication worldwide. Americans are sending more text messages than making calls on their cellphones, according to a Nielsen Mobile report released last year.

U.S. mobile users sent an average of 357 texts per month in the second quarter of 2008 versus an average of 204 calls, the report said.

Texting has been a boon for telecoms. Giants Verizon Wireless and AT&T each charge 20 to 25 cents a message, or $20 for unlimited texts. Verizon has 86 million subscribers, while AT&T's wireless service has 78.2 million.

And Twitter, the fastest growing online social network, which is being adopted practically en masse by politicians, celebrities ...

... and news outlets, has its very DNA in text messaging. To avoid the need for splitting cellular text messages into multiple parts, the creators of Twitter capped the length of a tweet at 140 characters, keeping the extra 20 for the user's unique address.

Back in 1985, of course, the guys who invented Twitter were probably still playing with Matchbox cars.

Hillebrand found new confidence after his rather unscientific investigations. As chairman of the nonvoice services committee within the Global System for Mobile Communications (GSM), a group that sets standards for the majority of the global mobile market, he pushed forward the group's plans in 1986. All cellular carriers and mobile phones, they decreed, must support the short messaging service (SMS).

Looking for a data pipeline that would fit these micro messages, Hillebrand came up with the idea to harness a secondary radio channel that already existed on mobile networks.

This smaller data lane had been used only to alert a cellphone about reception strength and to supply it with bits of information regarding incoming calls. Voice communication itself had taken place via a separate signal.

"We were looking to a cheap implementation," Hillebrand said on the phone from Bonn. "Most of the time, nothing happens on this control link. So, it was free capacity on the system."

Initially, Hillebrand's team could fit only 128 characters into that space, but that didn't seem like nearly enough. With a little tweaking and a decision to cut down the set of possible letters, numbers and symbols that the system could represent, they squeezed out room for another 32 characters.

Still, his committee wondered, would the 160-character maximum be enough space to prove a useful form of communication? Having zero market research, they based their initial assumptions on two "convincing arguments," Hillebrand said.

For one, they found that postcards often contained fewer than 150 characters.

Second, they analyzed a set of messages sent through Telex, a then-prevalent telegraphy network for business professionals. Despite not having a technical limitation, Hillebrand said, Telex transmissions were usually about the same length as postcards.

Just look at your average e-mail today, he noted. Many can be summed up in the subject line, and the rest often contains just a line or two of text asking for a favor or updating about a particular project.

But length wasn't SMS's only limitation. "The input was cumbersome," Hillebrand said. With multiple letters being assigned to each number button on the keypad, finding a single correct letter could take three or four taps. Typing out a sentence or two was a painstaking task.

Later, software such as T9, which predicts words based on the first few letters typed by the user, QWERTY keyboards such as the BlackBerry's and touchscreen keyboards including the iPhone's made the process more palatable.

But even with these inconveniences, text messaging took off. Fast. Hillebrand never imagined how quickly and universally the technology would be adopted. What was originally devised as a portable paging system for craftsmen using their cars as a mobile office is now the preferred form of on-the-go communication for cellphone users of all ages.

"Nobody had foreseen how fast and quickly the young people would use this," Hillebrand said. He's still fascinated by stories of young couples breaking up via text message.

When he tells the story of his 160-character breakthrough, Hillebrand says, people assume he's rich. But he's not.

There are no text message royalties. He doesn't receive a couple of pennies each time someone sends a text, like songwriters do for radio airplay. Though "that would be nice," Hillebrand said.

Now Hillebrand lives in Bonn, managing Hillebrand & Partners, a technology patent consulting firm. He has written a book about the creation of GSM, a $255 hardcover tome.

Following an early retirement that didn't take, Hillebrand is pondering his next project. Multimedia messaging could benefit from regulation, he said. With so many different cellphones taking photos, videos and audio in a variety of formats, you can never be sure whether your friend's phone will be able to display it.

But he's hoping to make a respectable salary for the work this time."

(Technology | Los Angeles Times)

=====

Twitter creator Jack Dorsey illuminates the site's founding document. Part I
February 18, 2009 | 5:04 pm

Twitter's prehistoric document, circa 2000. An early temporary name was "Stat.us."
Credit: Jack Dorsey.

Sitting in the Flickr archives is a nearly 10-year-old document uploaded a couple of years ago by its author, Jack Dorsey (@jack), who started Twitter in 2006 along with co-founders Evan Williams (@ev) and Biz Stone (@biz).

The legal-pad sketch of the idea that would become Twitter has been noticed before, but given all the recent hype, we thought we'd track down Dorsey and ask him about it in a little more detail. In the following interview, Dorsey uses the document to touch on aspects of the micromessaging service's history, including the inspirations and constraints that came to define one of the Web's most rapidly growing information channels.

Twitter didn't just fly out of thin air and land on a branch. As Dorsey explains, it has conceptual roots in the world of vehicle dispatch -- where cars and bikes zooming around town must constantly squawk to each other about where they are and what they're up to.

It was when Dorsey saw these systems through the eyes of the social, mobile Web, where anyone can squawk from anywhere, that Twitter's Big Idea was born.

Is this the founding Twitter document?

It has very special significance -- it's hanging in the office somewhere with one other page. Whenever I'm thinking about something, I really like to take out the yellow notepad and get it down.

Twitter has been my life's work in many senses. It started with a fascination with cities and how they work, and what’s going on in them right now. That led me to the only thing that was tractable in discovering that, which was bicycle messengers and truck couriers roaming about, delivering packages.

That allowed me to create this visualization -- to create software that allowed me to see how this was all moving in a city. Then we started adding in the next element, which are taxi cabs. Now we have another entity roaming about the metropolis, reporting where it is and what work it has, going over GPS and CB radio or cellphone. And then you get to the emergency services: ambulances, firetrucks and police -- and suddenly you have have this very rich sense of what’s happening right now in the city.

But it’s missing the public. It's missing normal people.

And that’s where Twitter came in. What really brought me to that conclusion ...

... was instant messenger. This aspect where you can just locate your buddy list and at a glance locate what your friends are up to, or what they say they’re up to. I found the same parallels in dispatch -- here’s a bunch of ambulances and couriers reporting where they are, and here’s my friends. Now, the problem with IM is that you’re bound to the computer, so it really limited the interestingness of the messages.

So that document was around 2000-2001 when I really got into IM and a service called LiveJournal. And it was crystallizing the thought: What if you have LiveJournal, but you just make it more live? You have these people watching your journal, but it all happens in real time, and you can update it from anywhere. That document was an exploration of that concept.

When did you first try to build out the idea?

I tried it back in 2000 with the first device that RIM made -- the RIM 850, which was the predecessor to the BlackBerry. A very simple squat little e-mail device. It had four lines of text and a typical BlackBerry keyboard. They were like $400, and it would just do e-mail. I wrote a very simple program to listen to an e-mail address and take any updates from me and send them out to a list of my friends. And my friends could reply to that e-mail and tell me what they’re doing.

But the problem was that no one else had those devices –- so again, it limited the experience of that. We were limited until 2005-2006 when SMS took off in this country and I could finally send a message from Cingular to Verizon. And that just crystallized -- well, now’s the time for this idea. And we started working on it.

It was really SMS that inspired the further direction -- the particular constraint of 140 characters was kind of borrowed. You have a natural constraint with the couriers when you update your location or with IM when you update your status. But SMS allowed this other constraint, where most basic phones are limited to 160 characters before they split the messages. So in order to minimize the hassle and thinking around receiving a message, we wanted to make sure that we were not splitting any messages. So we took 20 characters for the user name, and left 140 for the content. That’s where it all came from.

For any potential Twitter historians out there, can you offer a few more details about the drawing -- the little googly eyes, for example?

The little eyeballs were "watching." The concept was watching before we kind of switched it and developed it into "following." So you could watch or unwatch someone -- but we found a better word -- follow or unfollow. The important consideration there was that on Twitter, you’re not watching the person, you’re watching what they produce. It’s not a social network, so there’s no real social pressure inherent in having to call them a "friend" or having to call them a relative, because you’re not dealing with them personally, you’re dealing with what they’ve put out there.

The document's user interface metaphor is very similar [to how Twitter turned out]. You have a little box to "set" your update, and past updates would go down into the timeline below.

Immediately the idea was device-agnostic. You could deliver over e-mail or deliver over Jabber, because IM was a real-time mechanism -- and eventually you could deliver over SMS as well. And the only other aspect on that page was how to find other people. If you know someone, you type in their name or e-mail address, and you can immediately start following their updates.

What are the "authentication triples" on the upper left there?

I was trying to be a little bit too smart, and was trying to figure out ways to do everything without a password. But that’s very difficult and requires way too much thought. So we punted on that. But someone will figure it out. [laughs]

Then when did the service's name morph from “Status/Stat.us” to “twittr” to Twitter?

The working name was just "Status" for a while. It actually didn’t have a name. We were trying to name it, and mobile was a big aspect of the product early on ... We liked the SMS aspect, and how you could update from anywhere and receive from anywhere.

We wanted to capture that in the name -- we wanted to capture that feeling: the physical sensation that you’re buzzing your friend’s pocket. It’s like buzzing all over the world. So we did a bunch of name-storming, and we came up with the word "twitch," because the phone kind of vibrates when it moves. But "twitch" is not a good product name because it doesn’t bring up the right imagery. So we looked in the dictionary for words around it, and we came across the word "twitter," and it was just perfect. The definition was "a short burst of inconsequential information," and "chirps from birds." And that’s exactly what the product was.

The whole bird thing: bird chirps sound meaningless to us, but meaning is applied by other birds. The same is true of Twitter: a lot of messages can be seen as completely useless and meaningless, but it’s entirely dependent on the recipient. So we just fell in love with the word. It was like, "Oh, this is it." We can use it as a verb, as a noun, it fits with so many other words. If you get too many messages you’re "twitterpated" -- the name was just perfect.

But you needed that short code -– in order to operate SMS you need the short code to operate with this cellular administration. So we were trying to get "twttr" -- because we could just take out the vowels and get the 5-digit code. But unfortunately Teen People had that code -– it was ‘txttp’ [Text TP]. So we just decided to get an easy-to-remember short code [40404], and put the vowels back in.

So Twitter was it, and it’s been a big part of our success. Naming something and getting the branding right is really important.

(LA Times Blog)

Netflix Corporate Culture

2009-08-15T21:35:17-07:00

Culture

View more presentations from reed2001.

History of the PowerSquid

2009-08-15T20:20:43-07:00

The Inside Story of the Life of an Invention (part six is here)

Dirty Jobs' Mike Rowe on Real Life

2009-07-28T12:58:29-07:00

First Last

Bit.ly’s Grand Plans

2009-06-30T00:05:35-07:00

"URL shortener and analytics service Bit.ly has been working on a new set of products, being referred to as “Bit.ly Now” internally, which will define the next stage of the company’s growth. The company confirmed these plans to us today. The services will include both a destination website as well as a distributed service via expansions to the Bit.ly API.

The core Bit.ly service, which lets users shorten web URLs into something suitable for Twitter and other services with limits on characters per post, has continued to grow quickly. 7 million URLs are shortened via the service each day, the company says, and 2-3 million of those are unique URLs Bit.ly has not seen before. Those Bit.ly URLs are clicked on 150 million times per week across a wide range of services - Twitter, Facebook, instant messaging, email, etc. Twitter itself now uses Bit.ly for URl shortening, and the service has quickly taken the lead in their market.

The magic behind Bit.ly are the stats that the service makes available on the underlying domains being clicked. Investor John Borthwick explained it all to investors in an email we obtained earlier this month:

bit.ly has been on a tear since we launched it last summer — let me sketch out what it is, why its useful and offer some data points on progress. bit.ly is on its surface a link or URL shortener, helping people take long and unwieldy links and make them short and easy to share via email, Twitter, Facebook etc. But once you shorten a link with bit.ly the fun begins. You can put a simple “+” on the end of any bit.ly link and see, real time, the pace at which that link is getting shared and clicked on as it moves around these social distribution networks.

Bit.ly Now will take all of this deep (and wide) data on popular real time URLs and turn it into a service. That’s where the inevitable clash with Digg comes in.

Digg shows popular links based on what people vote on, filtered massively for fraud. The Digg home page is populated with the top stories voted on by Digg users.

But only 20,000 or so new links a day are submitted to Digg (compare that to 2-3 million for Bit.ly). And Digg has to constantly fight users who try to game the system and get access to home page traffic. They also rely on users to categorize links and provide other metadata about the stories.

That’s why Digg launched their own URL shortener service, and are planning a new real time product of their own. The goal is to reduce the dependence on this flawed human voting system.

Bit.ly’s new Bit.ly Now service will show popular links at any given time, just like Digg (for now, Bit.ly sends the most popular link every hour to a twitter account). When Bit.ly Now launches, that link data will be combined with additional metadata about the URLs. In particular, they plan to extract important entities, people and topics from the stories in real time, allowing for a categorized approach to popular links. Bit.ly says they are talking to a number of third party services, including Reuter’s Open Calais, to help them do this.

Those are two big advantages Bit.ly has over Digg - distributed link clicking data that is far harder to game than Digg, and automated real time categorization of links. But there’s a third advantage as well.

Bit.ly says that the data flow they are seeing is so massive that they are getting very good at predicting the number of clicks a link will get in the future. They look at acceleration of clicks as well as the source (Facebook, Twitter, IM, whatever) and whether people are clicking that are outside of the social graphs of other people clicking.

In other words, you could say that Bit.ly knows what will be on the Digg home page tomorrow.

They knew, for example, that the Neda Youtube video would be popular far before it was featured on CNN and other major media sites and then made its way to Digg.

The Bit.ly Now service will be both a destination site as well as a distributed service via the Bit.ly API. Third parties will be able to access the data based on topics or keywords. News sites may find this particularly valuable to monitor trends and supply additional relevant content to readers.

Perhaps even Digg may find this interesting. The real time stuff Digg is working on will overlap significantly with Bit.ly, we’ve heard. Digg will be looking for link information beyond what the Digg community adds directly.

The last thing Digg wants is to become reliant on Bit.ly data, though, with a directly competing Bit.ly destination site out there. If I were Digg, I’d start talking to Bit.ly now to see if I could find a way to avoid that situation.

It’s also clear that the new service will become a huge competitive advantage to Bit.ly’s core shortener service. Sites like ours, which use our own shortener service, will be left out of the Bit.ly service. Publishers who otherwise wouldn’t care will start to use Bit.ly to increase exposure in the ecosystem. Then the network effect kicks in - as more people use Bit.ly they get more data, making the service stronger, and forcing more people to use the service. It’s a great place to be."

Bit.ly’s Grand Plans, And Their Inevitable Clash With Digg: Bitly Now.

Googling with Bing

2009-06-26T16:04:47-07:00

See more funny videos and funny pictures at CollegeHumor.

Betaworks

2009-06-22T10:49:03-07:00

"We are still in the early days of building betaworks into a new type of media company - one characterized by a loosely coupled network of companies. A network that is connected by shared data services matched with a bottoms up structure."

Betaworks --- Email To Investors

Dr. T.J. Rodgers, March 25, 1993

2009-06-22T10:32:52-07:00

Dr. Rodgers' Testimony: High Technology Innovation: Free Markets or Government Subsidies? - Cypress Semiconductor

Redbox's machines vs Netflix's envelopes

2009-06-21T18:21:37-07:00

"With more subscribers than ever flocking to its DVD-by-mail service, Netflix Inc. is one of the few companies to prosper during the worst U.S. recession in 70 years. Yet Netflix CEO Reed Hastings still has something to worry about: an even cheaper DVD rental service run by one of his former lieutenants.

Once just an incongruous experiment amid the burgers and fries at McDonald's restaurants, Redbox has emerged as the largest operator of DVD-rental kiosks, with more than 15,400 vending machines set up to dispense $1-per-day discs in supermarkets and discount stores.

With Redbox opening an average of one kiosk per hour to lure budget-conscious consumers, Hastings is concerned that this upstart might upstage Netflix, whose cheapest mail-order plan costs $5 for two movie rentals in a month.

"By the end of the year, kiosks will likely be our No. 1 competitor," Hastings said in a recent conference call. "There are already more kiosks in America than video stores."

The fight for DVD-rental loyalties figures to intensify as Netflix, Redbox, Blockbuster Inc. and others vie for the attention of frugal consumers looking for inexpensive home entertainment. According to research from PricewaterhouseCoopers, Americans last year spent less money buying DVDs and more on rentals from stores, kiosks and online services like Netflix. The trend is expected to continue this year.

Redbox began in 2002 as a way for McDonald's Corp. to expand beyond the burger business. A strategy group inside the company tested a few "automated retail" ideas, as it called them.

"Vending sounded so last-century," said Gregg Kaplan, who led Redbox from inception until April, when he became chief operating officer of its parent company, Coinstar Inc.

McDonald's also tried a machine that made fresh french fries and an 18-foot-wide automated convenience store that sold everything from toilet paper to fancy sandwiches. Only the DVD kiosk stuck.

The group running Redbox grew from operating 12 of the DVD machines to about 900 in three years. By the middle of 2005, Redbox was itching to expand beyond burger joints, and McDonald's agreed to let it seek out another partner.

Coinstar already had a national sales team placing machines that converted loose change into bills in supermarkets, drug stores and other retailers — relationships it could use to pave the way for Redbox kiosks, too. In 2005 and 2006, Bellevue, Wash.-based Coinstar invested $37 million in Redbox and took majority ownership, and this year Coinstar bought out McDonald's and other investors for up to $25 million.

Redbox, still based near McDonald's in Oakbrook Terrace, Ill., said last May it planned to go public, but the economy deteriorated and an IPO never materialized. Now DVD kiosks account for more than half of Coinstar's sales and profit. That profit more than doubled in the last quarter on sales that rose even more swiftly to $154 million. (An undisclosed portion of that came from DVDXpress, a much smaller kiosk chain Coinstar also owns.)

Meanwhile, Netflix grew at a slower pace, with first-quarter revenue rising 21 percent to $394 million.

Mitch Lowe, Redbox's president, came to the company after six years with Netflix, where he was vice president of business development. While at Netflix, he managed one of the company's competitive advantages: a popular system that recommends lesser-known movies to subscribers based on ratings for films they've already watched. That helps Netflix's 10.3 million customers sift through 100,000 movie titles.

In contrast, Redbox machines carry about 700 discs with 200 titles, mainly recent releases, and rely instead on the $1 nightly rate to encourage people to experiment. Four million people have swiped a card at one of the kiosks in the past month.

Another difference: Because Netflix pays postage twice for every DVD it rents out, it does best when customers choose ambitious subscription plans but are slow to watch and return movies. By comparison, Redbox's profits depend on it renting out each disc as many times as possible before demand for the movie peters out.

To that end, Redbox tracks rentals to predict the right mix of titles and the right number of copies for each location. It also lets customers go online and reserve a DVD in a specific kiosk, then pick it up in person. The $1 price may be the initial draw, but most people end up paying to keep DVDs for two or three days.

If Redbox grows into a serious challenge to Netflix, it will have done what two much larger companies, Blockbuster and Wal-Mart Stores Inc., could not.

Both tried to match Netflix's DVD-by-mail success. Wal-Mart quit the business and gave all its customers to Netflix. Blockbuster still trails Netflix in DVDs by mail, and is also closing a growing number of unprofitable stores.

Now Redbox's success has prompted Blockbuster to promise 10,000 DVD kiosks of its own in a deal with NCR Corp. The maker of ATMs and cash registers acquired the second-largest movie kiosk company, TNR Holdings Corp., in April.

Redbox kiosks also sell used DVDs for $7, sometimes less than two weeks after they're available to rent, rather than the two or three months video stores usually wait. The practice irked some Hollywood studios — which may jeopardize the $1-a-day rental model that helps make Redbox so attractive.

Last year, NBC Universal's DVD distribution arm, Universal Studios Home Entertainment, pressed Redbox to limit the number of Universal DVDs its kiosks could carry and to destroy used discs instead of selling them at cut-rate prices. When Redbox refused, Universal ordered its partners to stop selling DVDs to Redbox at wholesale prices. Redbox sued Universal for violating antitrust laws, among other claims.

The case is still underway and Redbox would not say what effect it might have on its DVD rental or resale prices. But Wedbush Morgan Securities analyst Michael Pachter bets that if Redbox loses the lawsuit, other studios could follow Universal's lead, pushing Redbox to either agree to restrictions or buy movies at retail prices, then raise rental rates.

Universal Studios Home Entertainment did not return a call for comment.

In the era of YouTube and Hulu, video iPods, Netflix's own streaming video service and devices that connect TVs to the Internet, storming an industry by way of supermarket vending machines seems very yesterday.

But while DVDs will someday disappear, for now the market dynamics still work for Redbox: almost 90 percent of U.S. homes have a DVD or Blu-Ray player, while only a sliver download movies to their computer or stream them from the Internet, said Russ Crupnick, an entertainment analyst for market researcher NPD Group.

Crupnick doesn't expect streaming services to fully catch on until the technology is built into more television sets. And since many people just invested in new flat-screen TVs, it will be years before they replace them.

"Digital options and physical options can coexist," said Crupnick. "People think there's this balkanization — `Once I get Netflix, I never go to Blockbuster. Once I go to Redbox, I don't need Netflix.' That's really not the way that it works in the world.""

The Associated Press

What's off the table?

2009-06-19T06:20:09-07:00

"Breakthroughs always come from doing something that everyone else says is off the table."

Seth Godin

Daily Show Rips The New York Times

2009-06-13T17:22:00-07:00

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Google Translator Kit

2009-06-13T16:58:09-07:00

Automated Translation Meets Crowdsourcing

Harvesting

2009-06-11T01:17:27-07:00

"When you start a business, a brand or a project, there's a lot of work to be done. You must tell a story, build credibility and a permission asset. People don't trust you or believe you and you must earn their attention and trust. On top of that, you need skills, systems, machines and a team that works.

Quite an investment.

The goal is to reach the point where there's some harvesting going on. The first sales might cost you a hundred or thousand dollars each to make. At some point, though, you want sales to happen for free, people to show up with money. At some point, you want word of mouth to replace promotion and to earn back the money you invested up front.

That's why it's astonishing to me that people develop projects where harvesting is difficult or impossible. Here are some of the elements of a market where you are likely to reach the point where you can harvest the benefits of your investment:

* Word spreads. You want a market where stories of your success and reputation will reach other prospects.

* Needs are similar. You want a market where the skills you developed to help one person can also be used to help another person.

* Budgets exist. You want a market where there is more than one player with money to spend (on you) to solve a problem.

* Barriers exist. The market should reward insiders (like you) but make it really difficult for copycats to come in and steal share and lower prices.

* Price should rise with value delivered. As your work spreads and your reputation increases, you should be able to charge more, not less.

I think 90% of all markets don't meet these standards, and given the choice, I'd avoid them."

Seth Godin's Blog

Predictably Irrational

2009-05-29T17:27:56-07:00

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Best Cell Phone Company Ad Ever

2009-05-24T15:56:55-07:00

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V.C.’s Ignore Business Plans

2009-05-15T11:02:46-07:00

"Go ahead and write that 50-page business plan about your fledgling venture if it helps you to focus. Just do not bother showing it to venture capitalists, because it will do nothing to improve your chances of getting financing.

That, The New York Times’s Brent Bowers writes, is the surprising conclusion of a new study by researchers at the University of Maryland’s business school.

Researchers found that venture capitalists, who screen hundreds or thousands of solicitations each year, pay little or no heed to the content of business plans. Instead, the study said, because they make decisions “under conditions of high uncertainty,” venture capitalists rely on instinct and their expertise in ferreting out information by other means to evaluate the prospects of a business.

That means, the study said, that they pay little attention to the documentation from entrepreneurs about their academic credentials, work or start-up experience, previous success in raising equity capital, ability to form a top-notch management team or even how much money they want.

“In general, business plans don’t matter,” said Brent Goldfarb, an associate professor of management and entrepreneurship at the Robert H. Smith School of Business, who wrote the study with David A, Kirsch, also an associate professor at the school, and Azi Gera, a doctoral student. “Nobody is going to read them.”

That assertion flies in the face of the conventional wisdom that writing a business plan is one of the first and most essential tasks an entrepreneur should undertake, Mr. Goldfarb acknowledged. But, he says, the report’s conclusions jibe with the feedback he gets from venture capitalists.

Jeff Fagnan, general partner of Atlas Venture in Waltham, Mass., which provides seed money for young businesses, said he agreed with the study’s main premise. “I’ve never given funding to an entrepreneur who had a business plan with him when he walked into my office,” Mr. Fagnan told The Times. “Never. Most of the information you find there, five-year financial forecasts and so on, is not relevant.”

He says he looks for “market validation,” hard evidence that the entrepreneur has actually sold his product or at least lined up enthusiastic potential customers. Mr. Fagnan says that, rather than reading a report, he wants to hear the evidence in PowerPoint slides, white board presentations or “somebody just talking.”

But if he does not look at their business plans, how do entrepreneurs gain an audience with him? “The No. 1 way is referrals” by a respected figure in business or banking, Mr. Fagnan said. If he asked the people referred to him for a business plan, “they would probably say they don’t have one,” he told The Times.

Greg Herro, chief executive of LifeGem, a maker of specialty jewelry in Elk Grove Village, Ill., laughed when asked about the business plan he wrote to show to venture capitalists and other professional investors a few years ago.

“It was no use to us whatsoever,” Mr. Herro told The Times. “Investors might read a business plan’s executive summary, but they have no interest in the endless pages of nonsense that entrepreneurs like me put out. If you don’t have a track record or actual sales, they are leery.”"

V.C.’s Ignore Business Plans, Study Finds - DealBook Blog - NYTimes.com.