Cash in the clouds%u2014neither paper nor plastic.
Illustration: Aegir Hallmundur; Benjamin Franklin: CorbisThe Future of MoneyA simple typo gave Michael Ivey the idea for his company. One day in the fall of 2008, Ivey%u2019s wife, using her pink RAZR phone, sent him a note via Twitter. But instead of typing the letter d at the beginning of the tweet %u2014 which would have sent the note as a direct message, a private note just for Ivey %u2014 she hit p. It could have been an embarrassing snafu, but instead it sparked a brainstorm. That%u2019s how you should pay people, Ivey publicly replied. Ivey%u2019s friends quickly jumped into the conversation, enthusiastically endorsing the idea. Ivey, a computer programmer based in Alabama, began wondering if he and his wife hadn%u2019t hit on something: What if people could transfer money over Twitter for next to nothing, simply by typing a username and a dollar amount?
Money Over Time
A brief history of
currency technology.
%u2014Bryan Gardiner9000 BC: Cows
The rise of agriculture made commodities like cattle and grain ideal proto-currencies: Since everyone knew what a heifer or a bushel was worth, the system was more efficient than barter.
Just a decade ago, the idea of moving money that quickly and cheaply would have been ridiculous. Checks took ages to clear. Transferring money from one bank account to another could take days, as banks leisurely handed off funds, levying fees nearly every step of the way. Credit cards made it a little easier to pass money to a friend %u2014 provided that friend owned a credit card reader and didn%u2019t mind paying a few percentage points in fees or waiting a couple of days for the payment to process.
Ivey got around that problem by using PayPal. Since 1998, PayPal had enabled people to transfer money to each other instantly. For the most part, its powers were confined to eBay, the online auction company that purchased PayPal in 2002. But last summer, PayPal began giving a small group of developers access to its code, allowing them to work with its super-sophisticated transaction framework. Ivey immediately used it to link users%u2019 Twitter accounts to their PayPal accounts, and his new company, Twitpay, took off. Today, the service has almost 15,000 users.
That may not sound like much, but it sends a message: Moving money, once a function managed only by the biggest companies in the world, is now a feature available to any code jockey. Ivey is just one of hundreds of engineers and entrepreneurs who are attacking the payment ecosystem, seeking out ways small and large to tear down the stronghold the banks and credit card companies have built. Square, a new company founded by Twitter cocreator Jack Dorsey, lets anyone accept physical credit card payments through a smartphone or computer by plugging in a free sugar-cube-sized device %u2014 no expensive card reader required. A startup called Obopay, which has received funding from Nokia, allows phone owners to transfer money to one another with nothing more than a PIN. Amazon.com and Google are both distributing their shopping cart technologies across the Internet, letting even the lowliest etailers process credit cards for less than the old price, cutting out middlemen, and figuring out ways to bundle payments to sidestep the credit card companies%u2019 constant nickel-and-diming. Facebook appears to be building its own payment system for virtual goods purchased on its social network and on external sites. And last March, Apple gave iTunes developers the ability to charge subscription fees through their applications, making iTunes the gateway for an entirely new breed of transaction. When Research in Motion announced a similar initiative last fall at a session of the BlackBerry Developer Conference in San Francisco, programmers crowded the room, spilling out into the hallway. About 20 percent of all online transactions now take place over so-called alternative payment systems, according to consulting firm Javelin Strategy and Research. It expects that number to grow to nearly 30 percent in just three years.
But perhaps nobody is as ambitious as PayPal. In November, it further opened up its code, giving anyone with rudimentary programming skills access to the kind of technology and payment-industry experience that Ivey used to build Twitpay. The move could unleash a wave of innovation unlike any we%u2019ve seen since self-publishing came to the Web. Two months after PayPal opened its platform, 15,000 developers had used it to create new payment services, sending $15 million through the company%u2019s pipes. Software developer Big in Japan, whose ShopSavvy program lets people find an item%u2019s cheapest price by scanning its barcode, used PayPal to add a %u201Cquick pay%u201D button to its app. LiveOps, a call-center outsourcing firm, built a tool that streamlined payments to its operators, turning what had been a nightmare of invoicing and time-tracking into an automated process. Previously, anybody who wanted to create a service like this would have had to navigate a morass of state and federal regulations and licensing bodies. But now engineers can focus on building applications, while leaving the regulatory and risk-management issues to PayPal. %u201CI can focus on the social side of the business and not on touching money,%u201D as Ivey puts it.
PayPal is just the latest company to try to harness the creative powers of the open Internet. Google created a platform that lets anyone buy or display online advertisements. Facebook allows any developer to write applications for its social network, and Apple does the same with its iTunes App Store. Amazon%u2019s Web Services provides developers the cloud-based processing power and storage space they need to build applications and services. Now PayPal has brought this same spirit of innovation and experimentation to the world of payments. Your wallet may never be the same.
Rate of Exchange One US dollar translated into various virtual currencies.*
Social Network
Massively Multiplayer Role-Playing Game
Digital Marketplace
* Values are approximate. Not all currencies are pegged to the dollar, and many are not intended to be exchanged for cash.
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Tuesday, February 23, 2010
In an app-mad world, we need better ways to pay. From Wired: The Future of Money - It’s Flexible, Frictionless and (Almost) Free
Been choosy about sharing links. This one's worth it. From the NYT: North Face Campaign Sends Texts When Shoppers Near Stores
LIKE many retailers, the North Face has been having trouble luring shoppers into its stores. The company, which sells outdoor apparel and gear, is about to try a new tactic: sending people text messages as soon as they get near a store.
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This month, the North Face is beginning its first campaign aimed at customers based on where they are physically. Shoppers in and around New York, San Francisco, Seattle and Boston may receive text alerts when they and their cellphones are close to stores.
Advertisers have long been intrigued by the promise of cellphones, because they live in people%u2019s pockets and send signals about shoppers%u2019 locations. The dream has been to send people ads tailored to their location, like a coupon for a cappuccino when passing a coffee shop.
Despite the hype, few cellphone owners have received such ads. This year, that may change, analysts say, as companies like the North Face embrace location-based mobile ads.
%u201CTo be that close to the actual sale or physical location is such a value for marketers, and something they%u2019ve been looking for out of mobile for a long time,%u201D said Paul Gelb, national manager of emerging media at Razorfish, the digital advertising agency that is part of the Publicis Groupe.
The North Face%u2019s new campaign, which starts this month, is its first to single out customers depending on where they are physically.
The campaign was created by Placecast, a location-based mobile ad company in San Francisco. It uses a practice called geo-fencing, which draws a virtual perimeter around a particular location. When someone steps into the geo-fenced area, a text message is sent, but only if consumers have opted in to receive messages.
%u201CYou say, %u2018This is a brand I care about,%u2019 and then you go about your day and your phone tells you when something is interesting,%u201D said Alistair Goodman, chief executive of Placecast.
Placecast created 1,000 geo-fences in and around New York, San Francisco, Seattle and Boston, cities where the North Face has many stores and areas that get a lot of snow or rain, so the company can tailor its messages to the weather. In urban areas, the fences are up to half a mile around stores, and in suburban areas they are up to a mile around stores.
%u2022
For now, the North Face will send texts about promotions, like a free water bottle with a purchase, and new arrivals, because the company%u2019s gear is heavily seasonal. A text message would say, for example, %u201CTNF: The new spring running apparel has hit the stores! Check it out @ TNF Downtown Seattle.%u201D
The North Face plans to eventually send branded texts when people arrive at a hiking trail or mountain to alert them about weather conditions or logistics for a ski competition, for example. It also created an iPhone app called the North Face Snow Report that provides snow conditions and trail maps.
%u201CWe like things that people opt in to and that aren%u2019t going to be perceived as being intrusive, where we%u2019re bringing something to the table,%u201D Aaron Carpenter, vice president of marketing for the North Face, said.
That type of brand advertising via text message %u2014 as opposed to sending a call to action, like a coupon %u2014 is new, said Mr. Gelb of Razorfish.
%u201CAll of our highly brand-conscious clients were reluctant about text messaging because there was not as much of an engagement or sexiness to it,%u201D he said. %u201CBut here, when you have such relevance, it connects to a person%u2019s passions.%u201D
Razorfish, which is not involved in the North Face campaign, is working on campaigns with Placecast for five brands. It is signing up customers to receive the texts now and will start the campaigns around back-to-school time and the holidays.
In other uses, restaurants could text people leaving a concert, Mr. Goodman said. Location is a memory trigger, he said, so even if people do not visit a shop when they get the text, they may remember it next time they are nearby.
%u2022
To determine a cellphone%u2019s location, Placecast uses techniques including a phone%u2019s GPS signal, location data provided by carriers to companies that sell it to Placecast and information gleaned from triangulating the phone%u2019s distance to cell towers.
But shoppers should not expect all of their favorite brands to suddenly send alerts as they walk through town. According to Forrester Research, advertisers spent just $391 million on mobile last year %u2014 only 1.5 percent of what they spent on interactive advertising as a whole %u2014 and location-based ads were just a small portion of that.
They are projected to spend $561 million on mobile this year and $1.3 billion by 2014. Mr. Gelb said that this year, mobile was part of nearly every client%u2019s campaign.
%u201CIt%u2019s still nascent, but it has a lot of potential,%u201D Julie A. Ask, a vice president and mobile analyst at Forrester, said. %u201CBeing contextual and personal is the holy grail of mobile, and location is one of those aspects. But the mechanics of how this is going to work and how effective it%u2019s going to be get a bit murky.%u201D
Mobile ads are promising because they are highly personalized, but that intimacy also means the bar is higher for the ads to be well done and relevant, Ms. Ask said. Placecast sends a maximum of three texts a week to avoid annoying people, Mr. Goodman said. During a campaign last year, 6 percent of people opted out.
In addition to the mobile ads, the North Face sponsors sporting events, and runs print ads in outdoor and sporting magazines with images from its sponsored athletes%u2019 competitions, as well as outdoor and Web ads. It will run its first TV ads this year in three cities.
%u201CWhen we surround somebody with media during those key seasons is when we get the best results,%u201D Mr. Carpenter said.
Recommend Next Article in Business (8 of 33) � A version of this article appeared in print on February 23, 2010, on page B4 of the New York edition.
Thursday, February 18, 2010
And It Shouldn't Stop at E... From O'Reilly: The Convergence of Advertising and E-commerce
The Convergence of Advertising and E-commerce
by Tim O'Reilly | @timoreilly | comments: 18With hundreds of millions of users paying to download music, applications and ebooks on mobile phones, with reports of Zynga generating hundreds of millions of dollars from selling virtual goods in social games, with startups like Square making mobile payment systems the hot new startup category, it's clear that e-commerce is poised to supplant advertising as the business model of choice for new startups.
But that's only the beginning. A few weeks ago it occurred to me that there's a very real possibility that the next breakthrough in advertising itself is its convergence with e-commerce. Buying an app from the Android Market, I realized how those of us with smartphones have become accustomed to seamless purchases on our phone. That is, we search for an app, and then we buy it, directly from our search vendor.
Isn't that after all the goal of advertising? To cause a transaction. So why not do away with the intermediate step of sending someone to a website for more information? Especially with the limited screen real estate on the phone, there isn't really room for the contextual text advertising that made Google its billions. Interstitial or popup ads are intrusive and unwelcome. But how much search activity on the phone is tied to commerce already? Find a restaurant nearby and make a reservation? Why not pay as well? Point Google Goggles at a bottle of wine you enjoyed at that restaurant, and have a few bottles more show up on your doorstep?
This line of thought led me to the conclusion that Google, Apple, Microsoft, will soon be announcing e-commerce programs akin to Adsense, in which retailers will register with "app stores" to allow physical goods and services to be bought as easily as apps. We can also expect announcements of partnerships between phone providers and Amazon or Wal-Mart or other big retailers who can fulfill e-commerce requests from the phone. I have no inside information to support this contention, just the logic of the marketplace.
Interestingly enough, it was only a few days after I had this thought that I met with the folks at Siri, which bills itself as "Your virtual personal assistant." Siri does pretty much what I was imagining for Google or Apple: it searches, and then does something. In our conversation, one of the founders referred to it as a "do engine" rather than a search engine. Right now, Siri mainly interfaces with services that provide APIs for reservations, like OpenTable or TicketMaster. It isn't a general purpose e-commerce engine. But that is clearly in the future, if not from Siri, then from some other startup, and then, inevitably, from the big guys.
E-commerce is the killer app of the phone world. Anyone whose business is now based on advertising had better be prepared to link payment and fulfillment directly to search, making buying anything in the world into a one-click purchase. Real time payment from the phone is in your future.
Wednesday, January 27, 2010
Augmented Social Music? From Wired: Is the World Ready for the Successor of the MP3?
LONDON (Reuters) — A leading technology company is set to launch a new digital music file format that will embed additional content for fans including lyrics, news updates and images in what could be a successor to the ubiquitous MP3 file.
The music industry has been hammered by piracy in the last decade and is looking to develop new offerings to entice consumers to buy their music from legitimate sites, instead of taking it from illegal outlets.
The new proposal, which is called MusicDNA and has the backing of the original MP3 digital music file inventor, would allow fans to download an MP3 file on to their computer, which would carry with it additional content.
Music labels, bands or retailers could then also send updates to the music file every time they have something new to announce such as the dates of future tours, new interviews or updates to social network pages.
The user would receive as little or as much of the information as they want, every time they are online. However anyone who downloads the music file illegally would receive only a static file which would not receive any updates.
BACH Technology, the group behind the MusicDNA file, says it is looking to partner with retailers, music labels, rights holders and technology companies and is happy to provide its technology for others who could use it under their own brand. BACH is based in Norway, Germany and China and has Germany’s Fraunhofer Institute for Digital Media Technology as a partner.
“We are getting very good feedback and the fact we are looking to include everyone in this, and not competing against them, helps,” Chief Executive Stefan Kohlmeyer told Reuters.
The music files can play on any MP3 player including Apple’s iPod. The music player, or online music library, can also be adapted to suit the user and could, for example, be integrated into existing social networks.
Kohlmeyer said the service would hark back to the time when music fans enjoyed looking at the lyrics and artwork on an album almost as much as they enjoyed listening to the music itself.
“What we are bringing back to the end user is the entire emotional experience of music,” he said. “We think it got lost in the transition to the digital era. We think a beautiful piece of audio has been reduced to a number code. We want to enrich it again.”
BACH, which counts the inventor of the MP3 and a former chief executive of Sony Music Entertainment among its investors, is also hoping that software developers will create new applications and content for the MusicDNA player.
A beta version of the file will be available in the Spring and a full commercial rollout is expected by the summer. It also hopes to roll out a mobile version of the music player.
BACH has already signed up a host of partners across the industry and is in talks with the major record labels.
Rob Wells, the senior vice president of digital at Universal Music Group International, told Reuters he thought the new offering was exciting and said Universal could quite possibly work with the company, but said they still needed further commercial conversations.
“I think the music industry has got a great opportunity to open up completely new revenue streams,” Kohlmeyer said. “They haven’t contemplated in the past all the aspects of rich media.”
(Reporting by Kate Holton and Matt Cowan; Editing by Rupert Winchester )
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More From Reuters:
- Baidu sues domain provider after hacker attack
- U.S. has met with China on Internet freedom
- Google/China spat may hurt Motorola’s Android push
- U.S. counterterror agency lacks “Google-like” search
- Egypt’s mufti says Koran ringtones inappropriate
More from Wired.com:
Guys, do you agree? From Scientific American: Men Won't Ask for Shopping Directions Either
January 25, 2010 | 7 comments
Men Won't Ask for Shopping Directions Either
A study in the Journal of Consumer Marketing finds that men are less likely than women to ask for expert advice when shopping, in this case for wine. Karen Hopkin reports
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They say that men don’t like to ask for directions. Well, that reluctance to seek expert advice may extend to the shopping cart. Because a study in the Journal of Consumer Marketing finds that guys also will likely avoid asking salespeople for suggestions about wine.
Researchers from the University of New Hampshire set their sights on vino because lots of people drink the stuff, so lots of people purchase it. And choosing which wine to bring to a party or to offer the boss is one of those things that can induce different degrees of anxiety, depending on one’s experience and general level of snobbishness, I’m sorry, confidence.
The scientists surveyed more than 500 participants, asking whether and where they might turn for advice when selecting a wine for themselves or for others. And they found that women tend to talk to friends, family, or the guy stocking the shelves, before making a purchase. Whereas guys are more likely to go it alone or to rely on information they’d found online or next to the register. So wine merchants take heed. Ads seem to work on guys. Now all they have to do is find their way to the liquor store.
—Karen Hopkin
[The above text is an exact transcript of this podcast.]
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Wednesday, January 20, 2010
These days, geting info's easy - using it's the challenge. From HBR: 5 Keys to Creating an Info Advantage
The value of having superior information has been true throughout human history. I believe that in addition to the analytics movement, which my friend Tom Davenport has so beautifully documented, an information advantage actually derives from a more comprehensive set of principles — great analytics being one of them. Let's take a look at the case of a scion of the legendary Rothschild family.
Mayer Amschel Rothschild (1744-1812) developed a small fortune lending money and handling the shipment of bullion during the Napoleonic Wars (1799-1815). As his wealth grew, he dispatched his five sons to different cities throughout Europe (London, Paris, Frankfurt, Naples and Vienna) and set up a pan-European network of messengers and carrier pigeons so they could quickly gather information that might affect their investments. Rothschild ran a decentralized empire, but with tight controls. Each son was allowed to make the optimal decisions regarding investments in his country, but information was kept tightly within the company by the family bonds and arranged marriages with close relatives.
Just as investors watch Warren Buffet to see what they can learn, the Rothschilds developed a reputation for being in the know and were carefully tracked by speculators looking for where to place their bets. During the Battle of Waterloo, the stakes were particularly high. Speculators knew that if the Seventh Coalition (consisting of Britian, Russia, Prussia, Sweden, Austria, The Netherlands and a number of German states) won, the era of uncertainty caused by Napoleon's expansion would be over. Britain would become the dominant force in European politics, and the ensuing political stability would drive up financial markets and the value of investments throughout Europe. The Rothschilds knew this, too.
Shortly after the battle ended, and long before anyone else knew the outcome, Rothschild began selling stocks. Speculators and traders assumed this meant Napoleon had won the battle at Waterloo, which started a mass sell-off. When prices crashed, Rothschild used his agents to buy up everything they could and he turned his small fortune into a colossal one. Although the SEC might not have approved of his innovative tactics, Rothschild demonstrated the power of asymmetric information — having knowledge that no one else has yet.
Rothschild used five tactics to get his information advantage:
- He created a network of data gathering that allowed him to possess data others lacked;
- He used the best technology (pigeons) in a new way to help in the data gathering;
- He analyzed the implications of the data with insight and precision;
- Once analyzed, he considered how to best use these insights to his advantage — in this case, he knew the market would be watching for his movement — and therefore used his information first to drive down prices, first, before buying. If he had simply bought in, his advantage would not have been maximized.
- He had great timing and execution.
Today, Wal-Mart has a superior data network that allows them to sense and respond to the marketplace in a way that is impossible for others to replicate. The investment banks who perform high frequency trading use their access and analysis to create massive profits. UPS moves about 6% of the US GDP and if they were willing to use their data for investing purposes — which they are not — they could make a fortune.
The reason that an information advantage is becoming more important in today's world is that information about your customers, your market and your suppliers is one of the few proprietary assets that are available to you. Talent, capital, intellectual property, resources, can all be purchased. Distinctive competencies, patents, and customer knowledge are among the few defensible advantages over the long term.
Yet many organizations don't spend the time and effort to turn their data into dollars. They don't look at their network of relationships as a way to gather new and interesting information about the market and their customers. Those few who do, enjoy higher margins, more agility, and less volatility — because they can react faster and better.
Where will this go in the future? I believe that with the three clouds of computing (which I have written about before) there will be more opportunity to create an information advantage. For instance, AT&T developed an iPhone app that allows customers to tell them where the network is weak or strong. Soon, every product and service will have constant feedback from customers — online, and on their mobile devices. Those firms that can make sense of these emerging patterns, consider the best way to use the information, and execute flawlessly will win in the marketplace.
My question for senior executives is: Have you learned the lessons of Rothschild? Do you:
- Have a proprietary way to collect vital data?
- Use the best technology to gather and amplify it?
- Analyze it in a timely manner?
- Consider how to best use it for advantage?
- And do you execute with timing and flawless precision?
Monday, January 11, 2010
This should extend to ALL mass media. From the NYT. Smartphones Helping Magazines Become Interactive
Print may be a flat medium, but that has not stopped magazine publishers from trying to add dimension to their pages. For at least a decade, they have been experimenting with bar codes and icons that could take readers to Web sites, trying to add a bit of Internetlike interactivity to their pages.
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Black-and-white codes on a page from the March issue of Esquire can link Web-enabled phones to styling advice for items in the magazine.
But the average consumer did not own a bar-code reader — until now. With the sudden ubiquity of smartphones, which have apps that can read bar codes, and cameraphones, which can easily snap pictures of icons, magazines like Esquire and InStyle are adding interactive graphics to their articles, while Entertainment Weekly and Star are including them in ads.
Meanwhile, publishers using text-messaging programs to try to enliven their pages are packing information into the messages and using reader responses to calibrate their coverage.
The idea is not new. Back in 2000, a company called Digital:Convergence introduced a product called the :CueCat. The premise was advanced, but simple. Pages could be printed with bar codes, which readers could scan, and then be connected to specific Internet sites. That would help them find the shirt being advertised, or specs on the Ford truck they liked.
But the technology was clunky. Publications using the :CueCat, including Forbes and Wired, had to mail a hand-held scanner and a CD-Rom with :CueCat software to their subscribers. The subscribers had to install the software, then attach the device to their computer and wave it over the printed bar codes. It wasn’t portable or easy, and, in most cases, it was more trouble than doing a search or typing in a lengthy Web address. That’s a major reason the :CueCat disappeared.
Today, though, consumers don’t need a :CueCat — they have a cellphone.
“This idea is basically the same — it’s just everyone has a scanner in their pocket,” said Jonathan B. Bulkeley, the chief executive of Scanbuy, which is working on a mobile program with Esquire, among other publications.
Of course, 10 years later, some concerns remain. Publishers can print bar codes to their hearts’ content, but getting consumers to understand and use them is another matter. While bar codes are integrated into everyday life in countries like Japan — people get nutrition information from bar codes on McDonald’s hamburger wrappers — American consumers have never quite picked up the habit. And now that search engines are fast and accurate, advertisers and publishers will most likely need to offer something spectacular, not just a plain Web page, to get people to bother scanning anything.
In its March issue, Esquire will print Scanbuy codes in a spread on “The Esquire Collection” — “the 30 items a man would need to get through life,” said David Granger, editor in chief. Printed near each item will be a small code that looks like a group of black and white squares. Readers scan the code into an Internet-enabled phone, and the code takes them to a mobile menu that provides Esquire’s styling advice for the item and information on where to buy it.
An application called ScanLife, widely available online as a free download, turns a phone into a bar-code reader. Versions exist for the iPhone and BlackBerry as well as Android-based handsets, and the app comes preloaded on many Sprint phones in the United States. ScanLife can also read many standard bar codes on many phones, so it can perform price comparisons, for example.
“We kept hearing about different technologies that enabled people to close the gap between the inspiration of seeing something in a magazine and then going to do something about it,” Mr. Granger said.
Though Esquire will be giving readers information about stores where they can buy items, Mr. Granger said, for now the magazine would not be seeking a percentage of sales resulting from use of the technology.
“I’m not sure we have a smooth way of getting a cut yet,” he said, “but it would be nice if this takes off.” Mr. Granger added, however, that Esquire would need to carefully consider questions about editorial integrity raised by such technology.
Mr. Bulkeley said that Esquire’s choice to introduce Scanbuy with its editorial pages, rather than with ads, made sense. “I think advertisers will see that and say, ‘Hey, can we do that too?’ But it is important for editorial to lead, to show advertisers they are supporting it, because there is an educational component necessary,” he said.
Levi’s Dockers khaki pants are among the items featured in the Esquire spread. Jennifer Sey, vice president for global marketing for Dockers, said the company was interested to see how readers respond, adding that running ads containing a code “is a really interesting idea — it’s certainly something that we would consider.”
Rather than running a printed code on its pages, InStyle is using photographs of clothes as the key that links print and online.
In its March issue, InStyle will run a “clothes we love” article, and will direct readers to hold up the pages featuring each of six items, like a miniskirt and a safari jacket, to their Web cameras. The browser will then open related three-dimensional videos.
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Recommend More Articles in Business » A version of this article appeared in print on January 11, 2010, on page B1 of the New York edition.
Monday, January 04, 2010
KYC. Know Your Customer. From the NYT. Unboxed - A Data Explosion Is Remaking Retailing
MOST people think of the grand challenges in computing as big science projects, like simulating nuclear explosions or protein folding. But with the holiday shopping season just ended, consider another: retail marketing.
Retailing is emerging as a real-world incubator for testing how computer firepower and smart software can be applied to social science — in this case, how variables like household economics and human behavior affect shopping.
To be sure, major retailers like Wal-Mart Stores have long been sifting through in-store sales and demographic information to aim goods at different stores and to tightly manage supplies.
But what is changing, experts say, is the rapid surge in the amount and types of digital data that retailers can now tap, and the improved computing tools to try to make sense of it. The data explosion spans internal sources including point-of-sale and shipment-tracking information, as well as census data and syndicated services. Companies also track online visitors to Web commerce sites, members of social networks like Facebook and browsers using smartphones.
The better tools, they say, are ever cheaper and faster computers and so-called business intelligence or analytic software for finding useful information and patterns in that data.
Retailers are increasingly mining vast troves of digital information to improve the decisions they make about pricing, shelf-stocking and product offerings. “This huge and growing ecosystem of data is an asset that some retailers are really beginning to exploit for competitive advantage,” said Thomas H. Davenport, a professor of information technology and management at Babson College. “It brings more science into the business. Relying on gut feel is yesterday’s strategy in retailing.”
Mountains of data and whiz-bang technology are no cure for tight-fisted shoppers, of course. And this was a challenging holiday season for most retailers. Even computing enthusiasts acknowledge that the technology is far better at fine-tuning decisions on pricing, product assortments and shipments than the basic merchandising judgments about what goods to make and buy from suppliers.
“In the world of retail merchandising, there will always be a mix of art and science,” said Lori J. Schafer, a retail expert at SAS Institute, which specializes in analytic software. “But the more you can get into customers’ heads, the better off you are.”
That is certainly the strategy at Wet Seal, a 500-store specialty retailer of clothing, mainly for teenage girls. Wet Seal is a so-called fast-fashion retailer, meaning that trends in its market change quickly and the company needs little time — as few as three weeks — to put its clothes, shoes and accessories into stores after its buyers make their decisions. Staying in tune with the shifting tastes among young women is crucial, said Edmond S. Thomas, the C.E.O.
Its stores account for more than 80 percent of Wet Seal’s sales, but the company’s presence on the Web is growing, using its site as a source of market insights as well as revenue. Last year, Wet Seal introduced a Web feature called Outfitter, which allows users to put together their own outfits online.
The virtual outfits are posted, and users can browse through them, comment and exchange recommendations. So far, more than 300,000 user-generated outfits have been designed, generating millions of page views.
“We can get a read on where our customer is headed faster than ever before,” Mr. Thomas said. The user designs, he said, helped the company see early signs of a recent trend toward more informal outfits — dressy tops, but casual bottoms, usually jeans.
In October, Wet Seal created its own iPhone application, called iRunway. With it, a customer in a store can tap in an item’s ticket number — bar code recognition comes later this year — and see how it has been used in outfits that other customers have created online.
The user-generated product selections and recommendations, combined with mobile phone access, build a community of customers that should increase sales, Mr. Thomas predicts. “We’re at the very initial stages, but that will be the wave of the future in fashion retailing,” he said.
At 1-800-Flowers.com, Christopher G. McCann, the president, agrees that “social mobile” retailing will be a major venue for sales and marketing. The company also has apps for the iPhone, the BlackBerry and phones using Android software.
Most of the company’s more than $700 million in sales of flowers and gift baskets are online, so it can quickly change prices and offerings on its Web site — often hourly. The company has used analytics software for years to tweak its online store and marketing. In the last six months, Mr. McCann said, 1-800-Flowers.com has improved the conversion rate — browsers to buyers — on its Web site by 20 percent, with more finely targeted pages and e-mail promotions.
The company also uses analytics software to optimize operations — including marketing, shipping, distribution and manufacturing.
The technology, Mr. McCann says, helped cut costs by $50 million last year.
Nihad Aytaman, a senior technology manager at Elie Tahari, a private $500 million-a-year maker of designer clothes for women and men, is an enthusiastic proponent of analytics technology. The information housed in the company’s data warehouse has grown fivefold in the last three years, and is constantly mined for sales trends and to orchestrate supplies and shipping.
“It takes all this data and makes it visible and meaningful, so you can make sense of it and act on it,” said Mr. Aytaman, an engineer with an M.B.A. “But you’re not creating something that wasn’t there. Designers and merchandisers have to go with their gut if they are making something new.
“No computer can mimic human intuition,” he said.
Next Article in Business (18 of 43) » A version of this article appeared in print on January 3, 2010, on page BU3 of the New York edition.
Saturday, January 02, 2010
Thanks for the tip to this article, @guykawasaki. From the WSJ. New Graduates Create Their Own Jobs
By TODDI GUTNER
Andrew Levine knew he wouldn't find a job in investment banking when he graduated with an M.B.A. from the University of Miami in 2008. Wall Street was in the midst of a financial collapse. So instead the 24-year-old focused his efforts on launching a start-up. "I figured that starting my own company was the best use of my time while I waited for the market to thaw," says Mr. Levine.
Faced with an unemployment rate of 16% for 20- to 24-year-olds, a growing number of recent college and grad-school graduates are launching their own companies, according to anecdotal evidence from colleges, universities and entrepreneurship programs around the U.S.
For his part, Mr. Levine built upon a business plan for a niche social-networking company he had created for an entrepreneurship class the prior year. He showed the plan to the father of a college friend who was an angel investor and got $40,000 in seed money in exchange for an equity stake in the business.
Armed with start-up cash, Mr. Levine created audimated.com, an online social-networking site for musicians and their followers. It serves as a forum for the independent music community—both fans and musicians—to discover and promote new music. The site is in beta testing now with a launch expected in January.
This push toward entrepreneurship among young people is likely to continue as employers plan to hire 7% fewer graduates from the class of 2010 than they hired from the class of 2009, which saw a nearly 22% drop in hiring from the class before, according to a recent report from National Association of Colleges and Employers. The annual average percentage of all job seekers starting their own businesses increased to 9% through the third quarter of 2009, according to Challenger, Gray and Christmas, a global outplacement consultancy. That's compared with 5% at the end of 2008.
"Given the state of the economy, and the state of the job market, many young people are getting the push they needed to become entrepreneurs," says Bo Fishback, vice president of entrepreneurship at the Kauffman Foundation, a nonprofit that promotes entrepreneurs. "It's a lot easier to decide to launch your own company when there aren't a lot of jobs out there."
School career-service officials say it makes sense for new grads to go the start-up route. Young adults are often well-suited to put up with the long hours start-ups demand. They don't have the responsibilities and financial obligations that burden older adults. What's more, these graduates grew up on the latest technology and easily adapt to technological improvements.
Of course, young entrepreneurs also are likely to face their own hurdles. "Having the skill set to become an entrepreneur is different than any thing you learn in school," says Susan Amat, the executive director of the Launch Pad at the University of Miami, an entrepreneurship-support program based out of the campus career center.
To that end, it's important for young entrepreneurs to seek the necessary help to get started. For current students or recent graduates, it might be easiest to reach out for assistance on campus. Many schools have campus incubators or offer start-up competitions, like Babson College's annual Entrepreneurship Forum, which offers cash, consulting, legal and Web services to winning business plans. Other schools have business incubators that help students—and sometimes outsiders—hone business ideas and, in some cases, support them financially or with other resources.
Mr. Levine turned to the Launch Pad before he sought out an investor to him sharpen his business plan and investor presentation The program also gave him guidance for creating a revenue strategy and trademarking the site's logo.
A boot-camp training program or organized group for aspiring business owners also can help. The Kauffman Foundation's FastTrac, a 10-week boot camp offered throughout the country, trains aspiring entrepreneurs. And Y Combinator of Mountain View, Calif., and TechStars in Boulder, Colo., offer cash and mentoring to young founders.
The biggest challenge, though, might be convincing investors and customers that a young 20-something has the experience needed to deliver on a plan. One way to clear that hurdle is with strong advisers. "Recruit the right advisers who will vouch for you, who are experts in your field, will let you use their name and are beyond refute," says Mr. Fishback.
Brooks Morgan, a 2009 graduate of University of Kansas, did just that. Mr. Morgan wanted to work in venture capital, but jobs were scarce, so he found work on the other side—at a start-up. As vice president of business development for Infegy, a start-up enterprise social-media analytics company, Mr. Morgan's first order of business was to attract advisers. His last two years in college, he had worked part-time with Richard Caruso, a venture capitalist , who introduced the three Infegy principals to people who could help them land deals with corporations.
"Because we were passionate about what we were doing, [our advisers] were excited to be with and help the younger generation," says Mr. Morgan. Infegy was launched earlier this year and has 20 employees and several Fortune 500 clients.
Printed in The Wall Street Journal, page D5
Solid Selection! From TechCrunch. 2010: My Fifth Annual List Of The Tech Products I Love And Use Every Day
It’s time for my annual list of technology products that I love and use every day. This is the (wow) fifth year I’ve done this. Here are my previous lists: 2009, 2008, 2007 and 2006. The scope of the list has changed over time. In 2006 it was just about websites. Now the list includes other web services, some desktop software and even a few gadgets.
These aren’t necessarily newly launched products (see Daniel Raffel’s post yesterday for a solid list of great new products). This is a simple list of the tech products that are an integral part of my day – work or play. Some have withstood the test of time and I just can’t live without. Others are newcomers that have captured my imagination.
I use most of them every day, or nearly every day, and I would not be as productive or happy without all of them. There are now 24 products on the list.
Just three of these products have been on the list all five years: TechMeme, Skype and Wordpress. As I said last year, TechMeme continues to be the news aggregator I check multiple times per day to keep up on tech news (although Google News is becoming more important over time). Skype is the instant messaging and VoIP platform that I use most often at work and with friends. And Wordpress software powers all of our blogs.
I’ve added 13 new products to last year’s list: Android, Apple Magic Mouse, Dropbox, Evernote, Foursquare/Loopt/Gowalla, Google Docs, Google Voice, Kodak Zi8, MOG, Skitch and Spotify.
I’ve removed seven products from the 2009 list: 1-800-Free-411, Digg, Friendfeed, Google Reader, iPhone, MySpace Music and Zoho.
There are lot of products that I use daily that aren’t on the list for various reasons. My iMac and MacBook Pro and Droid phone, for example, aren’t on the list specifically even though all three products are exceptional. I don’t really have a browser preference, although I suspect Chrome will be on the list next year. And there are lots of websites and services, like Posterous and Amie Street, that I use regularly but just didn’t make my arbitrary cut. We also use Bit.ly extensively on the site for URL shortening, and EventBrite and Amiando for event ticketing.
Here’s my 2010 list of tech products that I love and use every day:
Android
I gave up the iPhone this year and switched to Android mobile phones. First the MyTouch, then the Droid. I’ll soon be upgrading again. What I like best about Android is the deep integration with Google Voice, which I talk about below. These two products go hand in hand.
Website: android.com Location: Palo Alto, California, United States Acquired: August, 2005 by Google In July 2005, Google acquired Android, a small startup company based in Palo Alto, CA. Android’s co-founders who went to work at Google included… Learn More
Information provided by CrunchBaseAnimoto
I first put Animoto on the list last year. The service makes beautiful slide shows of photos, and this year they added videos (here’s one I made). Their iPhone application continues to impress. This company is now profitable and my guess is someone like Apple will acquire them in the next year.
Website: animoto.com Location: New York, New York, United States Founded: August, 2006 Funding: $5M Animoto generates custom, professional-looking slideshows from user-uploaded music and photos. Their “patent-pending Cinematic Artificial Intelligence technology and high-end motion design” drives the web app. They say the Cinematic A.I. analyzes… Learn More
Information provided by CrunchBaseApple Magic Mouse
The Apple Magic Mouse is the best computer pointing device ever made. It functions as a normal mouse but also has multitouch on top. Once you use it you’ll never be happy with an old mouse or touchpad again.
Website: apple.com Location: Cupertino, California, United States Founded: April 1, 1976 IPO: 1980 Started by Steve Jobs, Steve Wozniak, and Ronald Wayne, Apple has expanded from computer maker to include consumer electronics over the last 30 years, officially changing their name from… Learn More
Information provided by CrunchBaseDelicious
Delicious, the social bookmarking workhorse, has been on my list every year except 2007. It’s not perfect but it’s better than anything else out there.
Website: delicious.com Location: Sunnyvale, California, United States Founded: November 1, 2003 Acquired: December 1, 2005 by Yahoo! Delicious is a social bookmarking website – the primary use of Delicious is to store your bookmarks online, which allows you to access the same bookmarks from any computer and add bookmarks from anywhere, too. On Delicious, you can use tags to… Learn More
Information provided by CrunchBaseDropbox
Dropbox is a new addition to the list this year. It’s just dead simple file syncing across all your computers, mobile devices and the cloud. It’s also a great way to privately share big files. Dropbox is now one of my must-have productivity tools. I just wish Google offered something similar so that I could have an integrated dashboard for my Google Docs files and Dropbox stuff.
Website: dropbox.com Location: San Francisco, California, United States Funding: $7.2M Dropbox is a software product that makes it easy to securely share files with other people, sync them across multiple computers, access them from anywhere, and keep them safe.
Dropbox was founded by Drew Houston and Arash Ferdowsi in 2007, and… Learn More
Information provided by CrunchBaseEvernote
Evernote is also a new addition this year. Like Dropbox it is an amazing productivity tool that lets you capture, organize, and find information across multiple platforms. You can take notes, clip webpages, snap photos using their mobile phones, create to-dos, and record audio. All data is synchronized with the Evernote web service and made available to clients on Windows, Mac, Web, and mobile devices. Additionally, the Evernote web service performs image recognition on all incoming notes, making printed or handwritten text found within images searchable.
Website: evernote.com Location: Mountain View, California, United States Funding: $25.5M Evernote allows users to capture, organize, and find information across multiple platforms. Users can take notes, clip webpages, snap photos using their mobile phones, create to-dos, and record audio. All data is synchronized with the Evernote web… Learn More
Information provided by CrunchBaseThis is the third year in a row that Facebook has been on the list. Facebook has won the social wars, and even the biggest companies are now surrendering to them. Facebook Connect is turning into the defacto online identity solution for tens of millions of people.
Website: facebook.com Location: Palo Alto, California, United States Founded: February 1, 2004 Funding: $716M Facebook is the world’s largest social network, with over 350 million users.
Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for Harvard… Learn More
Information provided by CrunchBaseFoursquare, Loopt and Gowalla
These three startups (Foursquare, Loopt and Gowalla), among others, are battling to control mobile social networking. They all have variations of the check-in model, where users are encouraged to note where they are for their friends to see. Foursquare has all the early adopter momentum, But Loopt has millions of users and Gowalla has a compelling product. All three are likely to win.
Website: foursquare.com Founded: 2009 Funding: $1.35M Foursquare is a location based social network that incorporates gaming elements. Learn More
Website: loopt.com Location: Mountain View, California, United States Founded: January 1, 2005 Funding: $13.3M Loopt is a mobile social mapping application. Using cell phones and mobile devices, it displays the locations of a user’s friends along with their presence status (available, away, etc) visually on maps or on lists. Based on GPS and related data,… Learn More
Website: gowalla.com Location: Austin, Texas, United States Founded: August 28, 2007 Funding: $10.3M Gowalla, also known as Alamofire, creates games and game-like experiences for the social web.
Gowalla is a location-based social networking game launched as a public beta in March 2009. Gowalla uses a large catalog of virtual goods to encourage… Learn More
Information provided by CrunchBaseGmail
This is the fourth year in a row for Gmail. It’s the best webmail out there, and I appreciate the free imap support and forwarding. Enough said.
Company: Website: gmail.com Launch Date: April 1, 2004 Gmail, also known as Google Mail, is a free email service with innovative features like “conversation view” email threads, search-oriented interface and plenty of free storage (almost 7GB). Gmail opened in… Learn More
Information provided by CrunchBaseGoogle Docs
This is a new addition for me this year. I never bothered installing Office on my new laptop, and find that Google Docs has all the functionality I need, plus easy sharing with others and storage in the cloud. I may never install Office again. I previously had Zoho on the list, a competitor, and removed it only because I find that centralizing as many services as possible at Google makes things easier for me as a user.
Company: Website: docs.google.com Launch Date: October, 2006 Google Docs is Google’s free web-based word processor, spreadsheet, and presentation application. The online app allows users to easily share documents and collaboratively work on them in real-time.
On March 31st, 2008, the Google Docs team… Learn More
Information provided by CrunchBaseGoogle Voice
This has been a big year for Google Voice, previously called Grand Central. The mobile apps let Google Voice completely take over Android phones. I’ve ported my mobile number to Google Voice and now any time someone calls that number I can direct it to any phone I like based on where I am, who’s calling and when. It has changed my life, and I will never use a mobile phone that doesn’t have deep integration with the service.
Company: Website: google.com/googlevoice/about.html Google Voice is a free Internet service that uses VoIP technology to link phone numbers together. GrandCentral was relaunched as Google Voice on March 11, 2009 with new features, including voicemail transcriptions and SMS managing.
Users of… Learn More
Information provided by CrunchBaseHulu
This is the second year in a row for Hulu. I’d love for them to add a paid model and let me watch HBO shows or pay per view new release movies. And I wish they could secure rights to archived libraries of shows, but even as it currently exists, Hulu is a great entertainment service.
Website: https://www.hulu.com Location: Los Angeles, California, United States Founded: March 1, 2007 Funding: $100M Hulu is an online video provider held by NBC Universal, News Corporation, and, as of April 2009, Disney. The site focuses exclusively on… Learn More
Information provided by CrunchBaseKodak Zi8
This digital video camera beats the pants off the current Flip models. The best feature is the ability to add a microphone. Flip doesn’t have this, and the audio quality is often terrible. The Zi8 is a full generation ahead.
Location: Rochester, New York, United States With the slogan “you press the button, we do the rest,” George Eastman put the first simple camera into the hands of a world of consumers in 1888. In so doing, he made a cumbersome and complicated process easy to use and accessible to nearly… Learn More
Information provided by CrunchBaseMOG, Pandora and Spotify
MOG and Spotify are new this year. Pandora has been on every year except 2008, and with hindsight I should have added them that year, too. These are three streaming music services that are awesome. MOG, which is $5/month, is the best music experience on the Internet. Spotify, a desktop streaming service that hasn’t launched in the U.S. yet, lacks the radio and social features of MOG but is currently free. And we hear it will launch on a limited basis in the U.S. very shortly. Pandora is still a very cool place to just sign in and listen to music that I love quickly and easily.
Website: mog.com Location: Berkeley, California, United States Founded: June 1, 2005 Funding: $12M MOG is a place for people to publish thoughts about music, as well as a place to share the names of the songs they play on their computers (using a downloadable program called MOG-O-MATIC that runs in the background and automatically detects songs no… Learn More
Website: Pandora.com Location: Oakland, California, United States Founded: January 1, 2000 Funding: $56.3M Born out of a love for music with 99% of its employees at one time or another working as musicians, Pandora is truly a company wholly dedicated to music. With a database of more than 600 thousand songs, each digitally annotated with musical… Learn More
Website: spotify.com Location: Luxembourg, Luxembourg Founded: December 26, 2009 Funding: €71.6M Spotify has created a lightweight software application that users will simply download and then log onto their service enabling on demand streaming of music. Learn More
Information provided by CrunchBaseScribd and Docstoc
Scribd and Docstoc, two services that let you upload office files like PDFs and Word documents and then embed them on sites, are very useful to bloggers like us. When we have a document that we want to share with readers, we use one of these services and embed it into the post. Both services were also on the list last year.
Website: docstoc.com Location: Santa Monica , California, United States Founded: August 1, 2007 Funding: $4M Docstoc is the premier online community to find and share professional documents. Docstoc provides the platform for users and businesses to upload and share their documents with all the world, and serves as a vast repository of documents in variety… Learn More
Website: scribd.com Location: San Francisco, California, United States Founded: March, 2007 Funding: $12.8M Scribd is a social publishing site where people upload and share creative writing and various documents, regardless of file format. The company claims more than 55 million unique users to the network each month and well-known users such as Barack… Learn More
Information provided by CrunchBaseSkitch
I’ve been using Skitch for years. It’s Mac software that makes basic image manipulation a breeze – sort of a very light version of Photoshop. For 90% of our images, Skitch works just fine. It’s easy to add text, resize and crop images, etc. And it automatically uploads them to the website for you, too.
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