Prediction: Online Network TV Gets Smarter

I like watching TV online, and not just for the shows. I like watching the networks trying to figure out how to do TV on the internet - it's like watching primitive cavemen figure out how to light a fire.

It's easy to tell that online TV is in its infancy, and they've only begun to experiment with it. For instance, I went onto the Family Guy website to look for a clip from the show. They had about a dozen "Classic Clips" to check out, but no descriptions or way to search them - only a screenshot.

I think the Internet could turn out to be the saving grace of network television. Traditional television viewers are dropping, and the number of people who watch commercials are even lower with DVRs. But with the internet, many of these problems disappear.

The number of people watching a show increases with the Internet. I don't have to stay up until 1:30 AM to watch Conan O'Brien anymore. I can watch it at my leisure, so I'll never fall behind on a TV show. At the same time, there's no way to skip over commericials, and they even have the opportunity to let me interact with the commercials in a way traditional TV would have never permitted. Additionally, the shows can upsell me TV merchandise or DVDs when I'm only a click away.

But the networks haven't figured all this out yet. They are still trying to build the medium. They are trying to figure out the optimal number of commercials in an online show and the best intervals. If I show two commercials per break, will people turn away? How many breaks can I put in? They also are still building their inventories. Some of the networks show the same commercial at every break because they simply don't have enough. They still need to demonstrate to marketers that online video advertising is effective, providing the enough reach and frequency.

They haven't quite figured it out, but they will. Online TV is going to get a whole lot more sophisticated in the coming years.

Going Above and Beyond

It only takes going above and beyond the call of duty to impress someone.

Today, I emailed my game theory professor, Prof. Steve Kimbrough, if I could come in for office hours before Tuesday. He told me he was going out of town, but I could talk to him on the phone or over videoconference if I wanted. It was a small gesture, but it impressed me. He really loves teaching.

Colonoscopy - Endings Matter

From Penn Professor Martin Seligman's book, Authentic Happiness:

Daniel Kahneman, a distinguished professor of psychology at Princeton and the world's leading authority on hedonics, has made a career of demonstrating the many violations of simple hedonic theory. One technique he uses to test hedonic theory is the colonoscopy, in which a scope on a tube is inserted funcomfortably into the rectum and moved up and down the bowels for what seems lik ean eternity, but is actually only a few minutes. In one of Kahneman's experiments, 682 patients were randomly assigned to either the usual colonoscopy or to a procedure in which one extra minute was added on at the end, but with the colonoscope not moving. A stationary colonoscope provides a less comfortable final minute than what went before, but it does add one extra minute of discomfrot. The added minute means, of course, that this group gets more total pain than the routine group. Because their experience ends relatively well, however, their memory of this episode is much rosier and, astonishingly, they are more willing to undergo the procedure again than the routine group.

In your own life, you should take particular care with endings, for thier color will forever tinge your memory of the entire relationship and your willingness to reenter it.

The Secrets to Success and Fulfillment in One Post

I am taking a class called the Literature of Success this semester, and yes, it's a Wharton course. Professor Shell, the negotiations guru, teaches the course, and it's a more personal course that pushes the students to find their own definition of success.

I recently read two quotes that together I think may be my guiding principle of success.

The first is called the Hedgehog Concept, which is from Jim Collins book Good to Great:

Suppose you were able to construct a work life that meets the following three tests:

First, you are doing work for which you have a genetic or God-given talent, and perhaps you could become one of the best in the world in applying that talent. (“I feel I was just born to be doing this.”)

Second, you are well paid for what you do. (“I get paid to do this? Am I dreaming?”)

Third, you are doing work you are passionate about and absolutely love to do, enjoying the actual process for its own sake. (“I look forward to getting up and throwing myself into my daily work, and I really believe in what I'm doing.”)

Combine that quote, with this quote from Authentic Happiness by Penn Professor Martin Seligman.

[I gave my class an assignment to] engage in one pleasurable activity and one philanthropic activity, and write about both.

The results were life-changing. The afterglow of the “pleasurable” activity (hanging out with friends, or watching a movie, or eating a hot fudge sundae) paled in comparison with the effects of the kind action. When philanthropic acts were spontaneous and called upon personal strengths, the whole day went better.

Why do I combine these two quotes? Because I think for me, the highest level of fulfillment comes from using my God-given abilities to help other people on projects I get passionate about. In that case, getting paid well is a bonus. It certainly creates an interesting intersection.

Interactive Advertising Online (cont'd)

After my lecture today, I am only more convinced that display advertising online is totally wrong. The Internet is a social medium, and websites Facebook should be treating it as such. If I can rate an ad, up or down, then the advertiser gets the extra metric of how many people rated (or interacted) with that ad. Additionally, Facebook knows which ad I like so that it can serve me and serve people like me better.

What if there were a "Review This Ad" button on every advertisement?
What if I could change the color of the car in a Toyota ad?
What if I could tell an advertiser that I wasn't interested?

I know that advertisers are stuck in the one-way messaging of the past, but the Internet is a new environment with new properties, and the advertising needs to reflect that.

Juicy Campus: Bathroom Wall Gone Digital

The DP wrote a story today about JuicyCampus.com, a website where students can post anonymous gossip. While everyone is morally outraged by the site (and I too think that it's nothing more than an online bathroom wall), I am interested in why it has been catching on.

There have been other sites that allow people to post anonymously online, like a site called boredatvanpelt.com. It's the same idea - different name. In this case, there's a lot to the name. The name of the site literally frames the kinds of discussions that will happen on the site. BoredAtVanPelt has no prompt - only that bored people should come check it out. And if you're bored, then you're boring.

Juicy Campus, on the other hand, tells people to gossip. Although I have no interest in the crap that's posted on the site, apparently other people do. It's like a tabloid except for people you know, and even Ivy League students are secretly interested. People are keenly interested in their fellow man.

Pepperdine student government has tried to ban the website from school computers, which achieves the opposite effect. It makes JuicyCampus.com even more popular because it's the thing you shouldn't be going to.

Juicy Campus has done well because of its name, its focus on other students, and the bad press.

Making Online Advertising Work

For class tomorrow, we had to read about monetizing social networking and how advertising hasn't been very effective on social networks.

To me, the beautiful thing about the internet that hasn't been taken advantage of by advertisers is that is an interactive medium. That means that I'm not just being flashed a message as I would on TV, billboard, magazine, or newspaper. Instead, I can fool around with the advertiser as I see fit.

In the online world, the user is in charge, and so I'm dying to see advertisements be more interactive online. I think the "Smack the Monkey" is only an early (and annoying) version of this kind of interactivity.

I think that if people could post a comment right under the advertisement, maybe rate the ad, or some way interact with the ad, then ads would be getting a much better response rate. The advertiser would not only have the metric of how many people played with the advertisement, but the number of people who interacted in some way by posting a comment, rating, or endorsement.

The Internet is not a passive medium, and neither should the ads!

Creating a Purple Cow

I read Seth Godin's book, The Purple Cow, a while back and it was an interesting concept. The idea was that products that were fundamentally different, unique, and remarkable would sell exponentially better than average products.

The problem was that he didn't explain why this shift to remarkable products was happening now, the conditions you needed for a Purple Cow to work, and how to make one.


But that's actually what I learned in one of my Wharton classes this week. My Operations and Information Management (OPIM) teacher, Prof. Eric Clemons, wrote a number of papers on the subject to put it in more academic terms. He likes talking about the subjects he's written about, so that's what one of our classes was about.


He termed the phenomenon of the Purple Cow to be hyperdifferentiation paired with resonate marketing. Hyperdifferentiation (instead of differentiation) is creating a product that is incredibly unique - not just a line extension. He gives the example of Hop Devil beer which is an unusually bitter beer. No traditional beer manufacturer would make this beer because it's too big of a risk and perceived to be too small of a market (especially since big companies think from economies of scale - it's what they're good at).


To make something unique for the sake of uniqueness, though, doesn't always equal a good product. Resonate marketing is the ideal that this hyperdifferentiated product is so unique that it strongly resonates with a small group of customers. In the case of Hop Devil beer, there is a small group of customers who LOVE the beer.


Note that they love it, not like it. Just "liking" it is death. They need to be willing to come from far and wide to buy and taste the beer. These people who love the beer are also willing to pay a significantly higher price (3-4X the price of a case of Bud), which is why these smaller companies can make up for the scale that larger companies have. These Lover are then the ones that go out and talk about the product, which is really the advertising strategy in resonate marketing.


All of this is covered in the Purple Cow though.


What's not covered is the question: why now? Clemons believes that it is the increased diffusion of information (largely driven by the internet). Before the internet, a product like Hop Devil would have only been able to reach a local population that would have been unable to sustain the beer. The internet, though, reaches a far wider range of people.


The key of the internet was not the increased size of market available to the distributor, but rather a site called ratebeer.com. On this site, people from across the world could rate various beers. Before ratebeer.com, a product like Hop Devil beer was an uncertainty to the customer. It could as easily be a horrible beer for me as it could be a wonderful beer. But now that it's rated by beer lovers across the world, I can find reviews and reviewers that match my taste. Therefore, a hyperdifferentiated product like Hop Devil beer finally has a market and credibility.


Clemons says that the implication for large companies like Budweiser is not that Bud will suddenly disappear. Instead, all of these fringe beers will add up to take away market share from the mass market Budweiser.


Clemons suggests that large companies should start to diversify from a few mass market products to a portfolio of hyperdifferentiated products. Coke is an example of this, as they've been acquiring alternative beverages to Coke (although the tendency is to pay too much for acquisitions). As the mass market shrinks, the larger companies will be able to capitalize on the higher margins on their more finely targeted products.

Searching the Grocery Store on Mobile

I was in the supermarket the other day trying to figure out where the vanilla extract was located in the store. Fresh Grocer (the supermarket I was at) is notorious for its poor service and small selection, and so the chance of me finding what I needed seemed slim. After briefly looking, I gave up.

With the rise of smart phones, though, it would have been great for me to be able to log into the Fresh Grocer website, enter my zip code, and search their inventory to find out what aisle the vanilla extract would be in. If the vanilla extract wasn't in inventory, perhaps it could tell me when it was going to come in stock, another location for me to buy it, or how I could order it online.

Established companies have difficulty figuring out how new technologies fit with previous product offerings. Grocery stores could really capitalize on the power of internet search and mobile technology to help customers sort through their myriad of customers

Shortening the Line at the Wharton Au Bon Pain

If you've been to Au Bon Pain (ABP) in Wharton at lunch time, you know it's a madhouse. Even though it's vastly overpriced, it's got the best location for Wharton students to conveniently get lunch on their way to class. The lines are monsterous and take a while.

I was talking to my friend Ben who suggested that ABP install self checkout machines and then just have someone at the door to mark off your receipt as you leave. I thought it was brilliant. At the moment, stealing from ABP would be really easy, since the place is packed and no one would notice, so it's already run on an honor system. Self-checkouts would cut down on the lines and some of the madness. I would also suggest they get rid of most of the tables in there because there aren't enough for people to sit comfortably and it just sort of clutters the restaurant.

ABP is a place to get food to-go, and they should design their layout for it as well.

Democrats Start to Brand McCain

The Democrats have been notoriously bad at branding. The Republicans seem to always get there first. They branded John Kerry a flip flopper before he could brand himself. They branded Al Gore "boring" before he could brand himself.

Well, this time around, the Democrats are starting to brand McCain before the head-to-head contest even begins. This video, a take-off on the Yes, We Can video, starts portraying McCain as an irrational war-monger. This is great branding because it exaggerates a true fact that people already believe.

I think the most interesting part about it is that this isn't the Democratic establishment doing the branding. Instead, every day Democrats are coming into their "political own" and doing the branding. YouTube is powerfully affecting the way politicians advertise themselves, because it's not just a one-way message from the candidate to the people. The people are defining the candidates. Hillary found out this affect when she spent millions on broadcasting her town meeting on network television before Super Tuesday, when Obama got free publicity and millions of views from the Yes, We Can video.

What this shift means for both politicians and companies is that the customers define the message on the products and people that really matter to them. For those companies and candidates that understand how to communicate through YouTube and create grassroots supporters, the messages will get out stronger and faster.


[Thanks to Brett Thalmann for sending me this video.]

BuySAFE: Preventing an eBay Market Collapse

What happens on eBay when you can't tell the difference between real Tiffany's and fake Tiffany's? You stop buying Tiffany's on eBay.

What happens when you buy a stereo on eBay, it comes damaged, but neither PayPal nor the seller pay for it? You stop buying electronics on eBay.

eBay has been struggling lately as its growth has leveled off. One theory is because people are trusting these secondary markets less and less.

It's mainly an information assymetry problem. If I buy something on eBay, and send the seller money, I am taking a risk at what the real quality of the product is going to be that I receive. I only have limited protection from PayPal, which only occasionally refunds money for a product that doesn't come "as advertised." And it's often too difficult to go after the individual who sold the product.

There isn't enough credibility online.

The CEO of a company called BuySAFE came to talk my class. BuySAFE is a company that screens merchants and offers to guarentee any product of the merchant for a cut of the merchant's money. BuySAFE then puts their emblem on the merchant's product listing so that buyers know that no matter what, they can get their money back from BuySAFE.

This company reverses the information asymmetry, and it's a cheap way for merchants to create consumer confidence in their products. If the merchant gets too many violations (and BuySAFE has to pay for it), BuySAFE will kick the merchant out of the club.

The BuySAFE seal is also hard to get and hard to fake. If you see a BuySAFE seal, you only have to click on it to verify it's authenticity. This is unlike the TRUSTe emblem or HackSafe emblem, which is easy to forge and now denotes a cheap or unsafe website.

I thought it was brilliant because BuySAFE is trying to be the S&P and Moody's of the online world. In fact they're branching out to search with the buySAFE emblem next to search results, and they are making a merchant portal where you can search through all BuySAFE merchants.

Does a Black Eyed Peas Endorsement Help Obama?

From time to time, celebrities endorse political candidates. Earlier this year, for example, Chuck Norris endorsed Mike Huckabee. Sometimes these endorsements make a lot of sense, but sometimes they actually hurt the political campaign. SNL, for instance, had a skit around the 2004 election about John Kerry telling Al Gore that Gore didn't have to strain himself by endorsing Kerry. Just like in advertising a product, the candidates need to use celebrities wisely.

will.i.am, the lead singer of Black Eyed Peas, along with a gaggle of other celebrities put together a song about the Obama concession speech after New Hampshire. I thought it was brilliant. The song was absolutely congruent with Obama's brand of inspiration. At the same time, the musician and celebs were not explicitly endorsing the candidate, but rather doing what they did best - entertain; in doing so, they were endorsing Obama. Unlike Live Earth, though, the content of the song was powerful, and they had a call to action at the end. Watch for yourself:

If I were Penn's New Dean of Admissions ...

Former Dean of Admissions Lee Stetson put Penn on the admissions map through an innovative program called early admission. He wanted to segment the applicant pool into those who definitely wanted to go to Penn and those that weren't sure, and by doing that, he could increase Penn's acceptance rate.

Penn now has a new Dean of Admissions, and the question is: how can he take Penn admissions to the next level?

If I were him, I would make Penn admissions a pioneer in the internet space. Other admissions offices are slow to move online, and Penn's admission could create a competitive advantage online.

How would I do that?

1. Start an E-Newsletter. The Admissions Office should be starting the conversation with students early. Let people put down their email address to receive emails about Penn's admissions. Make the email box clearly visible on the front page. Then, make sure that you're sending out interesting and inciteful information to these students - DO NOT SPAM THEM! This takes a lot of effort in understanding what kids would want to know and hear from a newsletter, but start building that asset. Get in these kids inboxes.

2. Send Email Training Materials to College Counselors. Start a conversation with the college counselors about what Penn is really looking for. Have online tutorials about the admissions process. These counselors are the ones who influence students. Start becoming a good friend to them and a helpful resource.

3. Use YouTube. From the online site, perspective students should be able to get a feel for what Penn is like through videos. Make sure the videos are short, interesting, inspiring, and helpful.

4. Use Facebook. Create a facebook group or Penn as a product so that people can start joining the group or being a fan of the product. Collect these potential students so that you can talk to them quickly and easily.

5. Keep updating your content. The best way for Penn to become a leader online is to have a constant stream of new and interesting content. It will make Penn more searchable on Google and it's the only real way to keep traffic coming through the website.

These of course are only a few ideas, but I think it's worthwile for the admissions office to pursue as a competitive advantage. You make it a sustainable competitive advantage by having it be the most helpful resource on the web about getting into Penn and college admissions in general.

Everything I Know About Universal Healthcare

I don't fully grasp the implications of universal healthcare, and I wonder how many people actually do. I wonder:

1. Would the quality of healthcare go down? My parents lived in England for several years where they have national healthcare. They said the difference between the US and England is that in the US, if you have neck problems, the doctors will do all these tests on you. In the UK, they'd tell you to come back in two weeks.
2. Would taxes go up dramatically?. It would be delusional to think that we can simply have Iraq money pay for it. It's going to cost us, and we are going to have to accept that increase in taxes if we want to have the system.
3. Would healthcare innovation decline? I'm not sure how this one works or whether it's true, but I'm under the impression that the US is on the leading edge of medicine because there is a free market for health care that will support leading edge products. Universal healthcare might slow that development down?

One of my professors recently said that healthcare is pretty much a basic need that we should cover as a society. If someone gets sick and they aren't treated, then they'll spread it to the rest of the society, so it'll be good for public health if everyone's covered.

I am not sure what the right answer is or how I feel about it. I just think that we really need to understand the tradeoffs that will occur because it really will be a dramatically different system with dramatically different consequences.

A Great Trick for Getting Attention Is...

Leaving thoughts unfinished.

The other day I was giving a presentation, and I told the audience that there were five tips and I would share the four tips that were relevant to the audience and then I would tell them about the fifth tip. I got through telling them about the four tips, and the first question to pop up was "What's the fifth tip?"

Unfinished thoughts, or "open loops," as I've heard them called, are great tools for getting and keeping attention.

The TV show 24 and Lost both usually end on a cliff hanger, an unfinished thought, so that people will tune in the next week. People have a need for closure, and in the week in between, they will try to fill in the blanks.

Microsoft to buy Yahoo

Great post by Fred Wilson, giving his perspective on the Yahoo-Microsoft deal:

We all knew this was coming. Yahoo! was cheap. Too cheap. And a mess. Rats
were leaving the sinking ship en masse. It was not sustainable. Something had to
happen.

And so the most logical thing has now happened. Microsoft has swooped
in with a $44.6bn offer to buy Yahoo!...

The price offered is an ~70% premium to the closing price last night. This deal will happen unless another strategic wants it (News Corp?). Because at that price, no financial buyer can make the deal work, particularly in this financing environment.