Box It Up

28 02 2011

Why does it seem like all the really hot tech start-ups are by college drop-outs? Bill Gates and Microsoft. Sergey Brin and Larry Page with Google. Mark Zuckerberg and Facebook. And now Aaron Levie with

Yeah, it just makes my job that much harder. I try to convince my students to stay in school, that they will regret their decision many years later. The temptation of success can be hard to shrug off. Heck, in the late-90s, one of my Marketing students dropped out in his junior year to join the pro rodeo circuit. He never looked back. Last year he earned more money than I will in 4 or 5 years. And I doubt he knows what a desk is.

So listen up kiddies…we profs may not always have all the right answers. We just think we do.

It’s difficult for these budding superstars when they know, deep inside, that they have a business idea that must be done right now. It is hard to rationalize another year or two of schooling when destiny is calling. Of course, if all students had the ambitions and skills of Gates, et al, we may as well close up shop and go home. These wunderkinds are but a small subset, but they are a powerful one. But they are rare.

In the case of Levie, he has now raised $80 million to build, an online secure file storage and sharing site.

And everyone in the know immediately chimed in, “Hey, that’s just cloud computing!”

Exactly. I have been preaching about cloud computing for a few years now, telling my students that this is something we are all going to embrace in a big way. We have already bought into the idea when we use online photo storage sites. We already do it with Google Docs, albeit at a fairly simple level. And for Apple devotees, for $99 a year there’s MobileMe doing the same thing.

But is better in that it has complete Office functionality, and is free for users storing less than 5GB. Download the apps and you have access via smartphones and iPads. Plug in a projector, and that iPad becomes your presentation tool for the next big meeting.

Of course, there isn’s a whole lot of money in free. is banking on selling its storage services as enterprise solutions in the corporate realm. And while alarmists will raise the security flag over this, consider that it is probably riskier trying to keep your own server farms secure than it is to outsource it.

Cloud computing is finally starting to gain traction in academia as well. At WT, all office computers will be replaced over a few years with a small device made by Wyse. Peripherals will connect by standard cable or wirelessly, but there will be no on-board hard drive. Everything will be stored on the university servers. Personal files and applications can be accessed from anywhere on the network.

While this is still only an internal cloud, it is a big move in the direction of true cloud computing. I can see us one day moving to an off-premise solution. We are already doing it in my department with our Qualtrics account; all of our survey research and data are stored on the Qualtrics site.

Tablet devices and also the MacBook Air are designed to leverage the cloud. I love the idea of my backpack getting thinner and thinner. Books, CDs and DVDs are gone. Now I can get rid of external hard drives. Losing weight has never been easier.

And if any of my students are gestating The Next Big Thing, I strongly advise you to seek the wise counsel of your Marketing professor. Maybe…um…you need a partner in this enterprise?

Dr “Still In My First Rodeo” Gerlich


Wall Of Fame

27 02 2011

One of the great things about innovation is that it often begets secondary and tertiary product and service markets in its wake. Take, for example, the iPhone. Apple intentionally left the aftermarket to companies like Griffin and Belkin, who have provided us with dozens of products to help make our smartphone experience even better. Cases. Chargers. Car converters. You name it. In fact, you could make a good argument that the real money is in all of the accessories.

So it should come as no surprise that someone is now capitalizing handsomely on our Facebook addiction. No, I do not mean online gaming company Zynga (think: Farmville and all the other “-illes”). No, it’s SocialPrintshop, the start-up whose first product is a poster of your Facebook Wall.

Yes, now you can look at all of your FB friends’ mugs on one handy wall covering. Same goes for Twitter (both your followers and who you are following), as well as Tumblr. They’ll even commit your FB photo albums to poster.

Now if this has you thinking this is the moast egotistical thing a person could do, you are probably right. Think about it. The FB newbie with six friends (whose pics would fit on a handbill) might feel inadequate entering the home of a person with hundreds, yea thousands, of friends. And to make this point perfectly clear, SocialPrintshop is papering the walls over at Mashable, featuring the smiling faces of over 500,000 adoring fans.

Never mind that the poster will be out of date by the time you receive it. You friend new people; others unfriend you. All manner of social unease could occur when guests come over. “Yeah, that was my friend list circa November 2010. But I would need a much larger poster now. I may have to move this Monet.”

Personally, I wish that Facebook would hide that number showing how many friends we all have. I have no problem with me (or you) perusing your (my) friends, but the quantity is irrelevant. It’s almost as if that number is our social media net worth. I don’t want my retirement account value plastered on my faculty webpage either, or how many articles I have published.

But from a purely business standpoint, this is freakin’ genius. Some folks collect friends like I collect Pez: I grab them whenever I see one I don’t have. Critics have scoffed that the FB era is the culture of narcissism writ large, and they may be right. I may also be guilty of playing hard on the social graph, but I want my friends to know that I value the connection far more than the count.

I seriously doubt I will be buying one of these suitable-for-framing prints, but I also seriously applaud the effort. I know there will no doubt be lots of takers, folks who want (need?) to be reminded of their popularity. This could be a huge money-maker.

But I am far more interested in reading the story of your life than seeing your countenance on my wall (along with everyone else). No, it is when you open your mind and let your fingers do the talking that receive the most gratification of our friendship. Better yet is when people from disparate chapters and pages of my life all meet on the same thread, interacting on a multidimensional plane impossible in any other realm (save a blissful heavenly afterlife). A photo collage may be nice, but a meeting of the minds trumps a poster every time.

And you can print that.

Dr “Picture Imperfect” Gerlich

Group Think

26 02 2011

Quick: What’s the fastest growing company in America right now?

Nope. Not Facebook. Not Amazon. Not Google.

It’s Groupon, the Chicago-based company that blossomed from 400 employees and $33 million in 2009 revenues to 4000 employees and $760 million revenues in 2010.

Yeah, that’s fast.

And if you have never heard of Groupon, you really do need to leave your cave a little more often.

The Groupon business model includes all of the big buzz words of the 20-teens: Group. Coupon. Social. Viral. Cheap.

Yep, cheap. We’re still in a recession, remember?

In case you aren’t already a Groupon Groupie, here’s the plan: You sign up at the Groupon site to receive a daily deal by email. The offers primarily feature local businesses, but occasionally a national firm will slip in. Customers are enticed with deals that range from 50-80% off normal list price. Groupon’s commission on the sale is 50% of that heavily discounted price, leaving the company with, at most, 25% of retail. Each vendor associated with a daily deal sets the minimum number of sales that must be reached in order for the Groupon to tip. Once that magic number (different every day) is reached, the deal proceeds.

And if you are really sharp, you will quickly realize that the whole idea is to get new customers in the door, to try out something they might not otherwise have tried out. At a ridiculously cheap price.

Naturally, Groupon is not without wannabe competitors, the biggest of which is LivingSocial. There are other smaller deal providers. Locally, the arrival of Groupon has awakened the sleeping media outlets, who have all been mobilized to hit the streets in search of stores and service providers to offer similar deals…but keep the revenue all here in Amarillo.

To be honest, I really do not care who facilitates the bargain. The main point is that, since Groupon came to town, the deals have been flying. And it is consumers who are the winners in this transaction.

Naturally, not all types of businesses work with the Groupon model. Wherever margins are slim, it makes little point to participate, because you will end up selling for a loss. Thus, either high-margin sellers or service providers are the best fit, and really only if the customer is new, not a deal-prone regular. Wherever there is some degree of wiggle room, heavily discounted couponing to induce trial makes perfect sense. But because Groupon built in the social and viral aspects of this (you would want to tell your friends, wouldn’t you?), it has become insanely successful. It’s is yet another example of crowdsourcing.

And since everyone loves a sale with no limits, we love it. We don’t have to push, shove, fight, claw with other shoppers vying for a finite amount of merchandise. Rather, it is incumbent upon else to help recruit ever more people, so that today’s deal tips.

I can see why local media outlets are nervous. Groupon is an enormous threat, because they can easily siphon off local advertising dollars (in exchange for the Groupon) that would have otherwise gone to these local media outlets. The battle is on to beat the Groupon rep to the next untapped business.

I’ll step back while the locals and the wannabes try to figure out how to do battle with Groupon. In the mean time, I’m just watching the daily bargains, and pouncing like a pack of coyotes at meal time.

Because that’s the group I hang with.

Dr “Sorry About That Dangling Preposition” Gerlich

I’d Like To Thank The Academy

25 02 2011

If The Super Bowl may be the holiest of days for marketers, but the Academy Awards is no slouch. With TV ads grabbing $1.75 million for 30 seconds of our ever-fleeting attention, this is no minor league event.

And like the Super Bowl, advertisers are busy crafting every possible tie-in to social media to complement their broadcast fare. The primary difference this time is that, while the Super Bowl attracts a decidedly male audience, the Academy Awards is likely to attract more females.

But if the marketers play their cards right, it could be a touchdown either way.

Brands like P&G, Unilever and JCPenney are in the line-up, as is Best Buy, which offered fans a chance to script an alternate ending to the popular Justin Bieber ad that ran during the Super Bowl.

I’m running with Ozzy on this one.

For the most part, the brands that have anted up the big bucks are promoting products that correlate nicely to the target audience. And, given that a recent study showed women to be the more dominant gender on the social graph, this all makes perfect sense.

So what am I planning to do this Sunday evening? Not watch the Academy Awards, that’s for sure. I’ve got more interesting things to do. besides, I can read all about it the next day, as well as watch The Today Show cast wax poetic over who wore what, and why someone didn’t win. People Magazine will no doubt further analyze the daylights out of it a week later.

The only Oscars I’m interested in are their burrito shacks in Amarillo and Canyon. There…I just went social with that, and it didn’s cost anyone a dime, much less $1.75 million.

That’s a touchdown on my scoreboard.

Dr “And Now For The Extra Point” Gerlich


24 02 2011

Google must have a bad case of the itches, for it seems like they are itching to get into anything and everything that might turn a profit. In most case, they have been successful (think Google Docs, Google Maps, Google Earth, Picasa, etc.), but when it comes to social media, they have landed with a thud (think Google Buzz and Google Wave). Overall, not bad for a company whose stock has been hovering around the $600 mark.

Streaming video is the latest thing to land on Google’s radar. When they bought YouTube for $1.65 billion in 2006, they basically allowed it to run as a video commons for the world, supported exclusively by advertising. Anyone with a video camera could become a YouTube star, and the site single-handedly ushered in the era of user generated content (UGC) now almost cliche in consumer advertising.

But Netflix, Hulu and Amazon are doing more with video than YouTube has been able to do, which is provide professional content. Google wants to raise the bar by leaving archived content behind in favor of streaming live sports events. It recently began airing live cricket matches (unlikely to gain many US eyeballs), and announced yesterday they are in negotiations with the NBA and NHL to deliver basketball and hockey games as they happen.

If Google is able to pull this off, it has huge implications for their recent Google TV venture. It means that fans can watch their fave teams on any device, from an Android or iPhone all the way up to big-screen TVs.

And for free.

Of course, it will all be advertiser-supported. In case you haven’t noticed, there has been a significant increase in the number of ads we must endure before we can view our selected video clips. Those ads keep YouTube in operation.

The only thing missing from this news is even a hint of a premium pricing model to more fully monetize hosting live sporting events. Google has dropped this hint in the past year (but with undefined parameters). I am not sure that Google could sell enough advertising in the long run to pay the major sports leagues for rights to stream games.

In other words, I see Google trying to slip its foot in the door, but I fully expect it to be a free trial period for users, followed by a subscription model. Given the sub-$10/month pricing of the other three, I doubt it will be much, despite the fact that Google’s entry with live programming is vastly different from competitors.

At the macro level, though, Google’s efforts to offer live events could open the flood gates, thereby signaling the imminent demise of cable and satellite TV providers. What if CNN, The Weather Channel, MSNBC, Fox, et al became available via YouTube? I would have little reason to keep paying Dish $100 every month. For under $25 per month I already get Netflix, Hulu Plus and Amazon streaming through all of my devices. There are only a few live stations that currently keep me from completely severing my relationship with Dish.

And as long as advertisers can reach us, regardless of the medium, they probably couldn’t care less who provides the pipe. This is a slam dunk as far as I’m concerned.

Dr “Three Points From Downtown!” Gerlich

Across The Divide

23 02 2011

There are two groups of people in the US: The Haves and the Have Nots. Although this bifurcation may be an over-simplification of our reality, it is a truism we must all accept. Equality exists on paper as a noble ideal, but in reality it only exists, at best, in the realm of fundamental civil rights. Everything else is up for grabs.

Fair? That’s your call. I may not like the fact that I am only 5’8″ and can neither shoot, run, jump or dribble, but that’s the DNA I was dealt. It probably explains why I chose a sport (cycling) that favors short, lightweight folks.

But most of the discussion about these two groups tends to center on things like money, possessions and access to services society deems important. For example, in the late-1990s, the big brouhaha was over the pervasive digital divide surrounding computer usage. The axes of this divide were many at the time, including age, gender, income, race and education. In other words, the more male, youthful, white, smart and rich you were, the more likely you were to own and use a computer.

Today, there is a still a digital divide, but it centers more on smartphones than computers. There is still an advantage for wealthier people using both computers and mobile devices, particularly the latter. There is much concern at present regarding this gap, especially given the proliferation of mobile devices of all kinds, as well as the exploding use of QR codes. There is fear that the Digital Have Nots of 2011 won’t be able to partake of these soon-to-be-ubiquitous boxy codes. It is estimated that about 50% of USAmericans will own a smartphone by Christmas 2011, hardly a mandate for their usage.

Those fears may be true, at least for now, but there are optimists who foresee a future in which even all children K-12 will eliminate the digital divide because prices and data plans are getting cheaper. Maybe so, but until then , if all you have is what is known as a “feature phone,” you just can’t begin to appreciate how much better the Digital Haves have it.

But as Jesus said in Mark 14:7, “The poor you will always have with you, and you can help them any time you want.” (NIV) I’m not sure if that means we need to provide all of those kids (or their feature-phone parents) a new iPhone. I’ll leave that point for you to ponder.

The fact remains, though, no matter how much we try to level the playing field, no matter how much prices drop, there will continue to be Digital Divides. Why? Because technology is not a lumbering turtle. It is a sprinting cheetah. And the people who live on the bleeding edge of tech will always be among the first to adopt the new gadgets. It will take time for a proletariat drift to occur in which the masses can join the party.

In the mean time, marketers must keep apace of the changes around us, even if it means leaving some folks wondering how in the heck to order their hamburgers on the iPads the Stacked chain provides. Sure, we must be cognizant to not just leave them standing in the cold, yet be ever diligent in exploring new ways to do old things, leveraging the latest technological innovations of the day.

To them I say, “Have at it!” I welcome the change, and will meet them on the other side of the divide.

Dr “I May Be Short, But I’m Fast” Gerlich

Ready For Prime Time

22 02 2011

I love a good price war.

When I was a young lad in the late-60s, I remember watching to my Dad the Accountant savoring gas price wars. On one particular trip from Chicago to Amarillo along Route 66, I recall us stopping in Joplin for gas. Dealers were at war, with attendants out front armed with numbers to manually change the signage in response to the guy across the street.

Oh, to get gas to 25 cents a gallon again. You couldn’t fill a soda can for 25 cents now.

But price wars continue in many avenues of retail. Like movies.

It was just one month ago that Amazon bought LoveFilm, Europe’s version of Netflix. It quickly became apparent that Amazon was digging in its heels, albeit on a different continent. The battle for movie supremacy ratcheted up. Sabers rattled; strategic missiles were readied and aimed.

But now Amazon has decided to take on Netflix within the US. The Amazon site now greets visitors with a letter from Jeff Bezos, Founder and CEO, in which he announces all Amazon Prime members will have unlimited streaming access to 5000 movies and TV shows.

Amazon Prime costs $79 per year, and is designed for regular customers. Unlimited two-day shipping is included in the price. But now members will have access to a fairly impressive amount of streaming video content as well.

In comparison, Netflix charges $7.99 per month (its most basic membership), which includes DVD rentals one at a time, as well as access to 11,565 streaming movies and shows. This amounts to about $96 per year.

But there is one huge difference between the two offers: When you are done watching a movie on Netflix, there is nothing left to do or buy. On Amazon you can go shopping.

And therein lies the sheer genius of this move. Whereas Amazon Prime may have only appealed to frequent customers in the past, suddenly $79 becomes a lot more palatable. Even if you only come for the movies, it’s a bargain. Add in free shipping and the tea starts to taste pretty sweet.

You might be wondering where some of the other big players are in all of this. Apparently nowhere to be found. Walmart is silent, its own e-commerce portal a joke (I gave up trying to buy something there a year ago, never to return). Perhaps if you consider the primary target market for Walmart (even looked at, the answer is obvious.

But Target is also missing. Regional player Hastings is mum. And Blockbuster…well, let’s just say they’re trying to decide whether proper burial or cremation is in order. All of these companies have much at stake in the sale and/or rental of movies.

If anything, the emergence and success of relative newcomers like Amazon (1995) and Netflix (1997) points to the fact that no company or industry is immune to change, and that mom-and-pop businesses can still be born like chicks from eggs. Old-economy companies are left wondering what hit them, while the two young bucks are sprinting ahead with nary a look over their shoulders.

Like my Dad, I am almost giddy at watching this price war play out. Amazon will no doubt increase the number of streaming titles, and perhaps Netflix will lower its price even more (it has already dropped $1 in the past three months). I can picture their programmers sitting at terminals, ready to change prices like gas station attendants some 40 years ago.

And I kinda like the view.

Dr “Fill ‘Er Up!” Gerlich