Regarding the death of retail
Retail is dead.
It is not an earth-shattering idea to suggest retail as we know it is over. Blockbuster, Borders, and many other stores have declared bankruptcy in recent years.
I don’t believe that the number of physical retail locations will drop to zero in the future. I do strongly believe that retail in the United States will look vastly different in 5 or 10 years than it does today.
To illustrate why the landscape can, will, and is currently changing, it’s important to understand why many people remain doubtful that the death of retail is possible.
The 3 Factors
There are 3 factors that many historically believed would protect certain companies (drug/convenience stores, clothing stores, etc.) from following in path of the bankrupt companies listed above:
- Delivery speed - How quickly a consumer can get a product
- Size and fit - How that product wears/fits/feels
- Payment security - How comfortable that consumer is with online transactions
My hypothesis? These 3 roadblocks are no longer bottlenecks.
(The cost of retail space/holding inventory and the resulting affect on margins is also a huge driver of the downsizing of retail, but Jeff Jordan already covered that and more in this brilliant post.)
Let’s look again at the 3 historic roadblocks…
Bijan Sabet: People tagging
One of the most successful online social drugs is people tagging in Facebook photos. I can’t recall when this feature was first introduced but getting a message saying “you’ve been tagged in a photo” followed by a link was incredibly seductive. It still is.
And it isn’t link bait as the content…
Starting Up
I got an email the other day from a business school friend asking for advice on breaking into the start up scene.
“[insert city you live in] is great, I am loving it, just looking for a little change on the job front. Right now, I am working at [insert bulge bracket bank or consulting firm] in an [insert synonym for analyst level] program and it’s been just about [insert 1 - 5] years since I started. I am really hoping to move to a startup soon, and I knew you’d be a great person to contact since you’re so involved in that world.
Do you have any advice as I start to apply/ research companies? I am not looking a specific industry; what I am most excited about is the culture of startups. I want to work somewhere where I can be creative/interactive and work with interesting, passionate people. If you happen to know of any startups that are hiring in [insert city you live in] or anyone you think I should reach out to in general, please let me know.
First of all, glad to see you are thinking about crossing over to the dark side!
Early-Stage Tech Start Ups
Most of my experience both from Lightbank and from oBaz is in early-stage tech start ups. More specifically, internet tech start ups. The 90’s boom saw the rise of web 1.0 companies such as Amazon, Google, AOL and Yahoo, which created lots of efficiency in buying, connecting, exploring and searching as well as many extremely rich people. Today, web 2.0 companies are building on top of web 1.0 experiences with social, mobile, local and gaming elements to make even more efficiency (and yes, some wealth). I have recently been getting a lot of interest from people in learning how to participate in this opportunity, which is why I decided to post my response.
Roles at Tech Start Ups
Most (not all) early-stage tech start ups have 3 main roles.
-Founder/s
-Tech
-Sales / biz dev
Note: Founders can and will obviously have overlapping skills with either tech/sales expertise, but at the stage you could be joining (~5+ employees) most roles will loosely fit these buckets. This is early stage start ups, growth stage (raised $10m+ is a different story).
Personal Skills / Desires / Growth
What you have to do is decide which role you want.
Obviously, founder is the highest risk / reward, but requires you to actually think of a concept, pitch it, get funding/bootstrap and really run with it. This is VERY difficult to do, but can be worth it if it works out.
Tech is a little more difficult, because you need to have a background in computer science. If you do, stop here and email me (greg@obaz.com) and maybe I’ll give you a job :). If not, you can take some time to learn how to code, but you will be average at very best after lots of time / work / effort.
The last role is sales / biz dev. This role requires the least amount of expertise and the most persistence / positive attitude. This role can be EXTREMELY menial and requires you to put yourself out there and sell. The good news is that you don’t need to be the founder or have a technical background! The reward profile of an early sales person at a start up is similar to a lower level person at a bank / consulting firm, meaning if things go well you can expect to make a few hundred grand after a few years. There are Groupon sales people who have made literally millions of dollars (in commissions, not counting their equity ownership). Most of Google’s employees are on sales / biz dev / account management for their advertisers. Note: if the company doesn’t perform and a business isn’t well funded you might have huge issues there. Worst case, you have gained sales skills and can transition into a sales role at another start up that you believe in with a great experience under your belt.
This is also a great jumping off point to being a founder. Many great founders were once sales people at tech companies. The job requires you to really learn what customers want, which can lead you down the path of launching a product that will really fit their needs and take off!
Opportunities and Industries That You Believe In
If you really just want to work at a start up, I would think long and hard about two things - what opportunity are you most excited about (both in terms of company mission and financial potential) and where can you deliver the most value. i.e. if you join a start up that makes a utility for [insert consultants or bankers], you would be in a unique position to sell it because you know about the industry more than most. If I were you, I would first take time answering question one and decide an industry that you are excited about.
I am currently really excited about 3 industries - discovery / curated ecommerce, video online and point of sale. I think they all have huge amounts of growth potential in the next 5 years. You should think about an industry that is exciting to you for any reason then figure out which companies are attacking that problem / industry. If you are not geographically flexible, than hopefully there will be one or more in [insert city you are in] working on it.
Execution
1) Understand / Research the Company
Once you find your targets, I would do a TON of research on the company, founders and industry. I would read business insider / mashable / techcrunch to figure out what is going on in the industry and who the players are. I would check out all of their websites, including the about us page. I would write down ALL of the listed employees names and look them up on Google, Facebook, LinkedIn, Twitter and read their entire blog (if they have one). After you do this for a couple of companies, you will have a pretty good idea who the players are and which one you like.
2) Getting Intros
Once you are fully immersed, try to get an intro to the founder of the company you like. LinkedIn will for sure show you how to do that - all good founders have HUGE networks on linkedin. Find a mutual connection and ask for an intro or just reach out cold. Trust me, they are used to that, but if you take your time to write a well thought out email saying what you like about their company, background, and what you want to talk about, they will be responsive. Ask the founder if you can come and see their space - most founders prefer that to coffee because it only takes them the time you are there, not the two hours of leaving, meeting, having coffee and getting back - plus then you can get a feel for the culture. *DON’T wear a suit or anything nice - that makes the interaction seem businesslike and you want it casual. Think jeans and a button down or corresponding casual girl attire.
3) Add value in some way
Since you did a ton of research, you will know exactly how you can come in and help the company, probably by selling the shit out of their service to their customers. Make that very clear while you are there “seeing their space” and make sure to follow up that you would love the opportunity to work there. They will most likely tell you they aren’t hiring, but don’t let that stop you. Offer to do work for free at nights / weekends and actually do it. Once you are already kind of working for the company, they will hire you if they grow into affording you as long as you have demonstrated enough value and dedication as a part time free worker.
I am in no way guaranteeing this will work out, but in my experience, this would be my best advice for getting a job at a start up. Good luck!
Apple Should Buy Facebook
Today Apple announced a ton of Facebook integrations. This is a massive shift from their prior relationship with Twitter as the main social platform for IOS. With this new harmony between Apple and Facebook, Apple should seriously consider buying their new lover.
Facebook is now trading just above $26 / share, giving them a market cap of just over $50b. Apple has $28.5b in cash sitting on its balance sheet and spit off $53b of operating cash flow last year. Add these two together and they can buy FB for $75b in cash. Obviously this will require some short term debt, which wouldn’t be difficult for a company with their balance sheet and cashflows with currently NO debt.
From a cash perspective, Apple can obviously afford to buy facebook, but why should they? Synergy. If apple had a real social platform, it’s user experience in all of its properties could be improved.
Centralized Contacts and Communication:
Facebook is rumored to be making an operating system because they already have all of our contacts and connections. It would be so much easier to add somebody as a friend and have all of their contact information already in your phone book (powered by Facebook IDs) that they can update in real time when anything changes. Obviously communication through iMessage would be improved if it were cross platform (iphone to ipad to desktop) and filled out with social context from Facebook.
Social Recommendations:
Want better recommendations on your apple tv or in the app store? Want to see what apps your friends (or just one specific friend) downloaded? Want to recommend an app to a friend? Want recommendations on books based on your likes? Apple can actually unlock a lot of the social data Facebook touts as valuable but only tries to monetize through ads. It is most valuable as a utility for commerce, which is increasingly done through itunes. They already have begun this integration with likes, but it can get so much richer.
Advertising
Apple has failed repeatedly at building a meaningful advertising platform and Facebook has all of the pieces in place to be an ad network except an understanding of mobile. If apple served as the “last mile” to the actions on mobile, Facebook’s mobile ad platform (both on their apps and eventually partner apps a la google adsense) could be a massive business. Imagine a world where mobile ads could sell you something or let you book reservations with data that was already stored on your phone’s profile. You could have your name and credit card information as well as loyalty passed to the merchant and calendar event (including friend invites) automatically added and synced.
Search
Jay Yarrow just posted on Business Insider that Apple is Really Trying to Kill Google. Google’s main business is search and the only way to beat Google at search is to layer in social and the semantic web. Facebook owns search and with all of the sharing has the most semantic data out there. This could be used to build an incredibly powerful search engine. Microsoft is trying to do this with Bing, but they don’t have distribution. Apple could simply make their search engine the default on the iPhone and power Siri for massive scale at the flip of a switch! Facebook is already rumored to be making the search engine, which is not even priced into their shares - basically a huge chunk of engineering hours as an added freebie!
Vision
Steve Jobs is gone. Tim Cook is a brilliant operator and has done a great job streamlining production and minimizing costs. Apple needs a new young crazy visionary who can lead them into their next phase. Mark Zuckerberg just might be that guy.
Although I really love Google on the desktop internet, the potential of Apple and Facebook combining forces sounds like an incredible mobile world to live in! What do you think?
Exciting Future of Video Content
Ari Emanuel was interviewed yesterday at AllThingD’s D10 conference. He makes a very inflammatory statement about the future of content distribution. He basically says that a-la-carte channel consumption anytime / anywhere / any device can not support the $3m / episode cost to make a show and the chord cutting is not happening.
I think that not only can it, it has to. He makes a good point that people are not currently cutting the chord in mass, but that doesn’t mean that they won’t start to - and very soon! People are consuming more and more of their content, both video and otherwise, through the internet (netflix, roku, apple tv, ipad, mobile, desktop etc). This consumption is a direct substitute for television, which is reducing the perceived value of this service. Also, a large revenue driver for this programming is advertising, which DVR has allowed consumers to all but remove. With a diminishing value to consumers and an increasing dependance on subscription revenue, television as we know it will not be able to support the $3m per episode cost structure for programming.
A world without $3m episodes
What will the world look like without this type of programming? As Ari says, we won’t have high budget shows like Game of Thrones, unless they can find a way for people to pay for them. The only way to pay for a show like that is to have an extremely dedicated fanbase that is willing to pay a lot of money to create it or to have a massive audience that is willing to pay a little bit of money (or attention to advertisements) to watch it.
The New Normal for Building a Blockbuster
Currently, we are seeing a democratization of video production and distribution with the omnipresence of video recording devices, free advanced editing software and free hosting / distribution. Now, people can produce decent video content and publish it only using their smartphone! This is opening the floodgates on the content spigot and the masses are doing their job quickly filtering through this content to find the gems through social networks via sharing.
Once the good content is discovered, it quickly builds a following with all of these new tools. There is an immediate feedback loop for the creator of the content to understand what is working and what isn’t - views! This let’s content creators focus on what their audiences like and increase their bets on the good parts.
Creating and distributing content aren’t the only parts of the video eco-system that have been democratized - revenue has been too. Thanks to Youtube’s partner program, content creators get paid based on page views, which means that if a content creator does get some social love in views, they also get paid! They can pocket this money and move on with their lives, or they can use these new resources to increase their bets on creating more content that their following already loves. Theoretically, spending more money and time on similar content will lead to higher quality content, a bigger and more loyal following, and therefore even more resources to make even better content. I can see a day where a show begins as a budget concept of cats wearing medieval clothing with cheesy voices dubbed over and follows this feedback loop to become Game of Thrones (high budget and all) after enough time.
Distribution of the Future
Obviously, in the middle of this process the show will become a business and begin to change in other ways as well. Maybe it will consider moving off of youtube as a distribution and hosting platform. Maybe it will go behind a paywall and ask its fans to pay to access their content, which they will gladly do if the price is fair and they want to access the content. Maybe they will partner up with another distribution / monetization platform such as netflix, and ask their loyal fans to subscribe there to access their (and other) content. The point is that they need to first build an audience through an iterative testing and growing process and then they can decide which platform of distribution or monetization makes the most sense for them.
Creme of the Crop
No show will be guaranteed to make money like the shows that are subsidized with bundling in the current system. This is going to force filmmakers to be as entrepreneurial as tech founders today, which will probably lead to even better content and more resources for the content that is the best. There may be decent programming on tv right now, but I can promise that with this new system, the best will only get better! I’m excited .
