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"Some entrepreneur ventures turn you inside out".
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Over Featured, Under Functioning
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Today the BABY wants to focus on one aspect of technology; namely, does technology make our life easier or harder?
Now the obvious answer is “yes,” but there is one aspect to technology which makes me crazy…namely “feature creep.” What this refers to is the trend for devices and services to give me more than I could ever want.
You see, the model says that in order to sell more of product “X,” you have to innovate. Usually innovation means adding more features, more bells, more whistles, more functionality --- and often those bells and whistles are sort of useless and meaningless to all but a very small segment of the population.
We find ourselves with digital cameras that have a hundred features we cannot program, book-length manuals written such that you need a PhD in math to understand them, and dashboard and sound systems in your car that are worthy of the space shuttle.
BMW tried iDrive – a feature that would give consumers unprecedented control of navigation, temperature and entertainment…but only Werner von Braun could work it. It has been described as “arguably the biggest corporate disaster since new Coke.”
I have a radio in my T-bird that gives me six different ways to adjust the speakers for sound -- from symphony hall to a rock concert to an intimate jazz club. I listen to talk radio on NPR or sports so I never have adjusted it and I wouldn’t know how if I wanted to.
This spiral of complexity costs consumers time and money; product returns in the U.S. cost $100 billion a year. A study by Elke Ouden from Philips Electronics found that at least half of the returned products have nothing wrong with them--the consumer just couldn’t figure out how to work the damn thing -- so he sent it back.
This feature creep problem stems from the fact that the program manager (that is the guy in a company who is charged with listening to what the customer really wants in the product) doesn’t listen.
Instead, he wanders down the hall and the tech genius says, “How about if I make a cell phone that can wake you up in the morning, start the coffee and then call the boss and tell him you are sick so you can take the day off – wouldn’t that be cool?”
More options can easily make a product less useable….
Look at Microsoft Word 2003 – it has 31 toolbars and more than 1,500 commands -- I’m lucky if I can find the key for indenting a paragraph.
Now, here’s the fishhook….the consumer who claims he wants usability really gets jazzed on features -- even if he will never, ever use them. In other words, the program manager is listening to a consumer who is lying to him; he says he wants features, but then he complains that he can’t figure the damn thing out.
In a study, more than 65% of consumers when confronted with three identical devices picked the one that had the most features. People are not good at predicting what will make them happy…I dare not go too far here…but think about the women in Playboy Magazine and then think about who you are happily married to.
My hat is off to Apple for the iPod and maybe he can do it again with the new iPhone…Steve Jobs is very smart and I would never bet against him. But as you think about your own entrepreneurial adventure, remember these words from my favorite Wisdom of Crowds author, James Surowiecki who says, “the strange truth about feature creep is that even when you give consumers what they want, they can still end up hating you for it.”
Which leads to Baby Billionaire Rule # 152 ---
Don’t be afraid to embrace the mantra – less can often be more--except in the case of Parmesan cheese on Caesar salad.
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Friendless...The Friendster Flop
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Today I want to tell a story about entrepreneurship and the risk one runs when you overlook the most basic of principles – namely customer service or in the case of the particular website in question – does the damn thing work?
So here is the story of Friendster.....with appropriate acknowledgement to Gary Rivlin of the New York Times who has chronicled this tale of arrogance, greed, stupidity and hubris....the four horsemen of the apocalypse when it comes to what is affectionately called web.2.0.
Friendster, in case you are not young, hip and plugged in, is a website that links people in what is known as social networking....creating a site where users could browse profiles posted by friends and then friends of friends in search of dates and playmates etc..
It was started by Jonathan Abrams in 2002 and one year after he launched he was offered 30 million dollars in Google stock to sell the site to the Google (remember this was 2002).
If he had taken the money, it would have done two things – aligned his website with a marketing powerhouse and it would have made him indecently rich, but it would not have done is make him famous in the valley....Silicon Valley where lots of people sell for 30 million – and maybe, just maybe Friendster was the billion dollar payoff......and Abrams wanted to grab the brass ring, not just wear a gold ring.
Remember the baby always asks....do you want to be king or do you want to be rich?
So Abrams was wined and dined by the biggest of the big in the VC world and he fell under their spell. Russ Sigelman from Kleiner Perkins, arguably the most famous venture firm in the world, offered to put up 10 million dollars and grow Friendster into the next Yahoo.
The fatal flaw in this deal will prove to be a combination of overreaching coupled with the simplest of lessons to be learned.....the website didn’t work.
The case of Friendster’s fall from grace has attracted much discussion and analysis, even to the point where it is used by a Harvard Business School professor in a case study.....professor Piskorski says “It is a power story, it is a status story...it is an ego story.. ...they had talent and they had connections but somehow they managed to piss it all away..."
The site was started for a simple reason – Jonathan Abrams wanted to meet girls.
And in the beginning , March 2003, Friendster was the hottest site on the Internet. It had 3 million registered users in 5 months. He was so hot that he had a guest appearance on Jimmey Kimmel Live.
Now you have to understand Silicon Valley.....being on late night television was better than a Porsche 911.....because everyone could buy a Porsche.
Like Lear and Hamlet and Macbeth, Mr. Abrams had a tragic flaw.....he was arrogant....and he was very interested in the social scene, beautiful models and private clubs.
But the website didn’t really work....it was slow.....it was clunky.....
Can you hear the echo from all the previous entrepreneurs who walked on that road – make sure the customer experience is a good one.....make sure the website works!
He had a nice little company when he started, but the sirens of the valley kept singing to him. They kept whispering that you could be big, really big....like Netscape or Yahoo or Google......
So he took the VC money and built a board of directors of the "who’s who" of Silicon Valley.....all monsters, killers who had taken little ideas and made them really big......but in this case, they were all white guys in their 50’s: all guys who didn’t social network, all guys who didn’t use the site, all guys who were totally wrong for the customer that Abrams was seeking to attract.
So what we have here is a classic example of a young entrepreneur who gets pushed around and ultimately pushed out by big shots who have been there and done that and therefore know more than he does – except that they had not been there done that – because this whole social network thing is driven by young people for young people and old farts like me BB, we simply do not get it.
The dynamic of these social networking sites is fluid and amorphous and depends a great deal on buzz, synchronicity and momentum.
If you upset the flow, the whole thing comes tumbling down. And oh, by the way, the website needs to work.
And so we come to the denouement of the story.....Abrams continued to be pressured to grow fast, move into China, Japan and Germany....maybe add VOIP to the site.....increase advertising ....but while the fancy board debated the latest move from Yahoo or Google, the website continued to be very, very slow.
It was easy for the board to plot strategy and contemplate the millions to be reaped, but the boys in the back room had a site that didn’t really work.
And one thing about the social networking community – they are impatient and speed is everything.....in other words, lack of speed kills.
Eventually, as is always the case, the board fired Abrams....he was out – his baby had been taken away from him and he was on virtual VC welfare. He was an owner but no longer a doer, no longer a decision maker......he was dead man walking.
The company then went through 4 more CEO’s in 18 months......and then the competitors arrived.....like Myspace and You Tube.
And then comes the infamous crash and burn.....Friendster had picked a closed system...users at Friendster could view only profiles of those on a relatively short chain of acquaintances......by contrast Myspace was the wild wild west ....the inmates ruled the prison and both the guards and the convicts liked it that way.
Today, Myspace has 50 times more visitors than Friendster.....Friendster has twice almost run out of money...and is being kept alive by the two VC’s who lured Abrams into the deal in the first place.....and when the VC’s tried to sell Friendster – hoping to cash in like You Tube when it sold for 1.6 billion dollars to Rupert Murdoch.....they found to their dismay that they could not even get 20 million dollars for it, having already put more than that into the deal.
There was a moment in time when Abrams could have sold (the stock he was offered in Google would have been worth slightly less than 1 billion dollars today) but he would only have been rich....he would not have been king.....he wore the crown for a while, but it was a very expensive reign.
Friendster is a great story of dreams denied by arrogance, greed, not knowing your customer, believing the gold plated resumes of the investors instead of the users....and finally, the pain of seeing a potentially multi billion dollar company reduced to rubble – because after all is said and done the site didn’t work. It was a lousy, slow experience.
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'Musseling' customers brings them back
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For those of you who follow I’m there for you baby regularly, you know that the Baby is pretty wound on the subject of customer service which is rule no. 289 in the Baby’s book on becoming a billionaire…..and a few weeks ago I told a story – the moral of which was painfully simple….a local sports club lost out on 14,000 dollars because they insisted on charging 25 dollars for a duplicate admission card….
Well, we got emails and blogs on this – which has prompted me to tell a follow up story….
Me and the baby sitter went to dinner recently…this is a restaurant we eat at often – called Gemelli Italian Grill near Balboa Park…..we love the restaurant and the owner, Vince Busaclachi has never served us a bad meal……
Well the odds finally caught up a little….I ordered mussels, they weren’t very good and didn’t seem fresh…..I ate one and politely – key word here is politely --- sent them back – and told them no big deal, I did not need them to replace the order….just let it slide….
The waiter came back in 2 minutes and said that he understood what I said, but that the chef was deeply disturbed…..and insisted….insisted on making another batch as well as taking it off the bill…..
The second serving of mussels was perfect….the baby sitter and I ate them all…..and the item did not appear on the bill….
We left a giant tip and assured the owner on the way out that we would be back frequently…..
Simple story, customer service….nothing unique ---- one extra order of mussels at a cost to the restaurant of about 5 dollars…..assures that we will be back 15 more times, spending 100 dollars each time for dinner and wine….
Sometimes customer service is nothing more than simple math….
I’m Neil Senturia, and this is I’m There for You Baby, the Entrepreneur’s Guide to the Galaxy….
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Plastic policies: never underestimate the 'return' on customer service
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Welcome.
Baby believes in taking control of your own life and being the architect of your own vision…..and usually the next question that follows is – yeah, sounds great Neil….but don’t gives me that bullshit about vision, tell me how to make a few million dollars ---
well, ok dudes, here we go….lesson no. 289 in the Baby’s Book of Becoming a Billionaire……
No. 289 is the lesson called customer service…..and why it is important….ok, so you say, yeah, yeah customer service and what is say back to you is – yeah yeah, customer service is absolutely critical and is not easy to do well and needs to be practiced 24x7 and makes all the difference in the world and do not pooh pooh it because it is why Nordstrom is the number one clothing retailer in the world while the May company and 5 other large department store chains went out of business…..
So here we go, lesson 289 ---- a real world story…..
The facts are as follows…..
The Baby and the Babysitter own three cars…..a 2000 Lexus, a 2005 red BMW convertible which the baby sitter drives, and a 2001 T-bird convertible which the Baby bought to avoid the mid life crisis that leads to the mid-life divorce which leads to being broke once again --- which I would like to assiduously avoid……rule 319 is that time slows down as speed increases….that is Albert Einstein – but what it really means is that if you lose 50% of your assets in your mid-fifties, it will take you until your mid nineties to earn it back……you do not have the same benefit of time….
But, I digress….
Back to the cars…..
Factoid number two –
I work out at the La Jolla sports club, the one at the Hyatt Aventine Hotel complex…..nice place with good equipment and attractive customers……careful there of course, because that could lead you back to the mid life thing…..but anyway….
The infamous third car, the T-bird was lent to my secretary for a year – she is young, attractive, has red hair and a young daughter and she needed a convertible for a year…….so the Baby could not deny her…..
Which means that the little plastic card that gets you into the sports club, each time you go there, that card resided in the old Lexus which was just fine…….
When my lovely assistant returned the T-bird to the Baby – I decided to drive it to the sports club with the top down to work out ---- and lo and behold I found that I did not have a second plastic card to show……
But, and this is an important fact, before I went to the club, I got the old card from the other car to take with me…..I wanted to be sure they knew that I was a member….
So, I went to the front desk and I showed the first card and then I asked if I could get a second plastic card so that I could keep it in the second car, so that I would not have to think about switching cards and cars in order to keep the Baby in fighting trim….
And the nice lady behind the counter said that she could get me a new card, but that it would cost 25 dollars….
Are you kidding me – 25 dollars for a piece of plastic….
Whereupon she took a piece of paper and read to me…..sir, it says right here: “There is a 25 dollar charge for lost or stolen cards.”
Well, I said, that is no problem….because as you can see my card is not lost of stolen….all I want is a duplicate……
See, I have one card….I want a second one so that I can keep it in my second car….
She said, that will cost 25 dollars…….that is the charge for a lost or stolen cards…..I repeated that the card was not stolen or lost, you chucklehead….it is right here in my hand …..all I want is a duplicate ---
She looked at me and then looked at the paper and then she said, she had no policy on duplicates…..and that I could go upstairs to membership and make my request……
OK --- now the Baby is thinking --- principle no. 197 in the Baby’s Billionaire Book is -- in order to be an entrepreneurial organization it is important to push decision making down to the lowest levels in order to solve problems for the customer in as immediate way as possible….that is why stores like REI can make exchanges and adjustments right at the cash register…..
What is the point of having employees if you do not empower them to solve problems….if that is your mindset, it would be cheaper to hire robots….
So --- armed with my not lost and not stolen card, I went up stairs to see membership….whereupon I found another nice young lady who explained to me that it would cost 25 dollars to get me another card.,…..and I pointed out to her that my card was not lost or stolen….it was in my right there in my hand.
At this point the Baby was getting a bit testy……I could see that this organization needed some renovation and some motivation, whereupon I asked for her manager…….the manager of course was not in…….I pointed out to her that if I could not get a duplicate card for a modest fee…let’s say 1 dollar for the cost of the plastic --- then I would resign from the club.…..
She pointed out to me that the reason they charged 25 dollars was to prevent people from getting extra cards and then selling them on eBay…..I pointed out that I was not going to do that….and she pointed out that how could she be sure…
Now, before we go further --- we need to analyze the economics of this transaction….
I have been a member of the sports club for 16 years…..let’s do some math here folks….it cost 500 dollars to join I think….and the dues are 70 bucks a month approximately. So you have 16 years times 12 months times 70 dollars……I will make it easy for you – that comes to 13,440 dollars that I have paid them….
And I politely pointed out to the lady that by being so rigid, she is putting at risk the likelihood of receiving another 14,000 in exchange for getting 25 dollars for a piece of plastic….
She pointed out to me that she was not authorized to make that decision and that she would have her manager call me in the morning….that was 11 days ago….no call yet from the La Jolla Sports Club …
I even wrote down on the piece of paper my name, phone number and my intense desire to resolve this amicably otherwise I am outta here…..
Which it turns out is Baby Book lesson no. 81 --- there is always always a competitor coming around the bend….and in this case the competitor is another health club opening up in 4 months also in La Jolla……
and it might just be a bit more convenient……
Now, here is the core of the story……if the lady had said, non problemas, we can print you another card….give us a buck and enjoy your workout, the likelihood of my going to look for a competitor would have been zero….. Remember it is much much easier to keep a customer than it is to acquire one…..
Here was an organization that had a culture that pushed all the big decisions (like should we go this old man another card ) up to the senior management…..who, as is sometimes the case with senior management, never called back because they did not think it was a serious enough issue….
They have all these computers….they could look up the Baby’s file….see that he has paid 14,000 and say, hey give the old man a card and a free massage to thank him for loyal allegiance after all these years….
So ---- there you have the Baby’s Billionaire Book lesson of the week…..number 289 – customer service…..you cannot possibly ever underestimate how important it is….
End of story ---- I cancelled my wife and step daughter’s membership two days ago….and I have cancelled mine effective end of the month--- when I will move to another club while I wait for the fancy one to open in the late fall….
14,000 dollars gone because no one was authorized to make a duplicate card…..because duplicate was not a category in the book…there was lost, there was stolen….but there was no checkmark for duplicate….
And therein is the story of customer service…….
Lesson no. 132 next week……why you absolutely have to go to the meetings that you know will be a waste of time….
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