Why Sabra Can't Sell Online

Sabra makes a hummus that is just head and shoulder's above the competition's. It has a better consistency and the different flavors are well differentiated. It's kind of a specialty product and it's priced a bit higher than the competition's. I would love it if I could buy in bulk directly from Sabra online. Sabra would probably love it too because they wouldn't have to pay the retailer anything.

Unfortunately, I will probably never be able to get my Sabra directly from the source.

Why? Because the retailers will be most unhappy with Sabra. They might not discontinue selling it, but they might take retaliation against Sabra trying to compete with them. Sabra might get worse shelving space, orders might get screwed up more often, etc.

Sabra did the right thing in launching a website to see if they would get enough traffic to the website to warrant selling online, but they really probably didn't. So I will probably never be able to get my Sabra online. It's a sad fact of reality.

Penn's Senior Class Gift Drive Video

What a great tribute to Penn. Warning: "Great '08" may get stuck in your head.

The Contribute Button on YouTube

Google has recently integrated YouTube and their Google Checkout function in the form of a "Contribute" button on candidate videos.

This move makes me start to realize why Google has been pushing so hard on adoption of Google Checkout. When you add a money processing to many of their other services, the value of those services increases dramatically.

What happens when people start to be able to sell some merchandise right off their YouTube page? Or how about selling pictures to people on your Picasa page? User-generated content becomes monetized, and Google gets to take their cut.

Right now I don't think that the Contribute buttom is available to the general public, and of course I don't know the legal issues behind it, but I think it's going to end up being a big win for Google. I know that we were trying to use it for a donation drive at Penn, and I have no doubt that others would love to use it as well.

It's certainly thinking outside the box for how to monetize social networks, and I think that's exactly the kind of thinking that the Internet needs.

The Sunk Cost of Personal Relationships

One of the most useful concepts I learned about in school was the idea of the sunk cost. In business, a sunk cost is a cost that has already been incurred that you can't recoup. Since there is nothing you can do about this past expenditure, it should not enter into the equation of your decision-making For instance, if I buy a movie ticket and I am not liking a movie, I should leave because "getting my money's worth" doesn't make sense if it's an unenjoyable experience and I could be doing something better.



In interpersonal relationships, sunk costs occur along the way. Somebody messes up and spills milk that can't be unspilled. I realized that at that point, I always need to weigh the utility of reprimanding them. Will it in any way undo what they did? Is this a one-time event, or something that may happen again in the future? These are actually pretty important questions because the cost of reprimanding someone is their resentment, so it's important to make sure to only reprimand people for things that they can change in the future and keep the message about that change. It's difficult to avoid taking sunk costs into consideration because it tends to be emotional, but it's for the best.

Trial-sized Tubes of Wine

In one of my classes, we learned about the power of uncertainty for Purple Cow products. Purple Cow products are basically remarkable niche products that some people love and have to talk about. My professor posits that the reason Purple Cow products have become more salient in recent years is because there has been a proliferation of information through the Internet.

For example, some cases of beer go for $120. These are rare beers with distinct tastes. If I love extremely bitter beer, then I am willing to pay a high premium for it. But as soon as uncertainty enters the equation about whether this beer is actually the beer I'd like, then I will no longer pay for the beer. By reducing uncertainty, you substantially increase this segment's willingness to pay. That's why ratebeer.com makes microbreweries more successful - people can know with more certainty that the beer their getting is a beer they'll like.

Springwise covered a new product that allows wine companies to put their wines in trial-sized tubes. I thought this was brilliant because it gives wine companies a way to reduce uncertainty about the quality of their product. I would invest in a heartbeat.

Idea Ownership in a Group

In a group project, often the first step is coming up with an idea - brainstorming. The interesting thing I have found is that if I come into a group with an idea already in mind, the idea is less likely to be taken. Ideas that spontaneously come up in the course of conversation are more likely to be accepted by the group.

Obviously, by the idea coming up in a brainstorming session, the group feels as though it has more ownership in it. It's no longer the idea of the person who came up with it, but rather it's the groups idea because it came up on the group's time. I also found that the first idea brought up was least likely to be accepted.

But I am curious what the psychological principle that underlies this ownership and whether it's ever been proven in experiments. I wonder I could have an experiment where a certain idea came up as though preconceived versus during the brainstorming session and see if there was actually a statistical difference. Also, should someone bring in throw away ideas if they want one of their real ideas to be accepted? It's already been shown that the person who speaks most often is perceived to have more influence in a group.

I don't really have answers - only observations.

The Marshmallow Test

David Brooks wrote an interesting piece two years ago on a marshmallow test given to four year olds:

Around 1970, Walter Mischel launched a classic experiment. He left a
succession of 4-year-olds in a room with a bell and a marshmallow. If they rang
the bell, he would come back and they could eat the marshmallow. If, however,
they didn't ring the bell and waited for him to come back on his own, they could
then have two marshmallows.

In videos of the experiment, you can see the children squirming, kicking,
hiding their eyes — desperately trying to exercise self-control so they can wait
and get two marshmallows. Their performance varied widely. Some broke down and
rang the bell within a minute. Others lasted 15 minutes.

The children who waited longer went on to get higher SAT scores. They got
into better colleges and had, on average, better adult outcomes. The children
who rang the bell quickest were more likely to become bullies. They received
worse teacher and parental evaluations 10 years on and were more likely to have
drug problems at age 32.

And yet the Mischel experiments, along with everyday experience, tell us
that self-control is essential. Young people who can delay gratification can sit
through sometimes boring classes to get a degree. They can perform rote tasks in
order to, say, master a language. They can avoid drugs and alcohol.

For people without self-control skills, however, school is a series of
failed ordeals. No wonder they drop out. Life is a parade of foolish decisions:
teen pregnancy, drugs, gambling, truancy and crime.

I find this research to be pretty fascinating. My parents told me that when I applied to nursery school, they had two big parts of the interview. First, they talked to my parents to make sure that they were up to the socioeconomic expectations of a private school. The best way to find out what a three year old child will be like in 10 years is to look at their parents. The second part was just watching me listen to a story. Apparently I sat, listening intently, and that was good enough for them!

The Problem with Group Papers

Wharton students universally hate the group paper. A 20-page paper gets chopped up into little sections for the group members to write, and then it gets put back together like a Mr. Potatohead with all the appendages in the wrong place. On its first draft, the paper is rarely coherent with four or five different writing styles in the paper, and the main thesis is often lost.

I think a large part of the problem with group papers is the idea of equity that arises from a group of peers. Each person is expected to contribute equally - no more, no less. Groups, however, don't do well at writing a coherent paper, and so the vast majority of work lands on an individual.

This burden often falls in the form of being the integrator, where the group member has to take everyone's written sections and try to put them together. This job is remarkably tedious. The first run-through is dedicated to making sure the writing style is consistent. Then the integrator has to make sure all the points support the thesis is a logical and coherent flow. Often times, there are parts that need to be cut or rewritten, but the integrator really doesn't want to offend anyone by slashing or rewriting their part. Rewriting also takes a lot of time that the integrator might not have or want to dedicate to the project. As a result, the integrator might end up with a product that is coherent, but not the best quality.

But what happens to a group where the diffusion of responsibility takes hold. No one wants to step up to be the integrator? Sometimes groups I have worked on will do group proofreading where each part is passed to someone else in the group who proofreads it. This group proofreading also doesn't address the problem of the main thesis or the problem of not wanting to rewrite other people's parts. It does however make it so that there is no one group integrator.

The only thing I've seen that really works efficiently is having one writer. To make this work, the group needs to do away with the idea of equity: everyone does not need to contribute equally. The group brainstorms together, makes an outline together, and does research together, but it is the single writer who puts it all together into a coherent story. Although it would seem as though this task would take more time, I have actually found that it takes less time to write a paper once well than have to integrate and rewrite.

I am curious about what other people's experiences have been with group papers and how group papers get written in the business world

Spring Fling: The Crowd Pleasers

Jason Karsh, Jack Lowey, Jeff Russ, and Jason Toff rock out at Spring Fling 2008 at Penn.

Iran So Far Away

The Wharton Curve Explained and Examined

An administrator told me the other day that the school's official position was that the Wharton cuve didn't exist. I started to laugh, blurting, "Really?" The administrator looked back uncomfortably, "Really."

Where the Wharton Curve Happens
The Wharton Curve appears mostly in the core classes during the first two years at Wharton. Classes like intro to accounting, finance, and management are huge lecture class with 150+ students. On the first day, the professors tend to go over grading and say that about 30% of the class gets A's, 40% B's, and the rest get lower grades. If that's not a curve, I don't know what is.

Why The Curve Makes Sense
At the same time, this curve actually makes sense in larger classes. The professors can't get to know each student individually. They also have a large enough group that they can rank people statistically through these exams. If you were the professor, how would you do it?

Without this distribution, the grading becomes meaningless to the employers. If all students are getting out of Wharton with a high GPA, then the GPA doesn't help employers or grad schools differentiate the students. In addition, grade inflation means that students need to work harder and pay closer attention because they know that their relative efforts will make a difference. It forces students through incentives to pay closer attention to the material and learn more.

Why the Curve Doesn't Make Sense
While the above points are true, they are based on the assumptions that grades are a good thing that really should be paid attention too. In reality though, grades are actually one of the worse predictors of future success, as only 25% of job performance is affected by raw intelligence. Communication skills are a much better predictor of success.

If Wharton really did away with the Wharton Curve and increased grade inflation, it would force employers and graduate schools to focus more on the achievements of those students outside the classroom. People inevitably align with their incentives, and I think it would make students dedicate more time to their community groups or extracirricular projects. One of the administrators commented that student involvement has been dropping over the last 20 years at Penn as students care more about grades. Students care more about grades because employers and graduate schools care more about grades.

Finally, the Wharton Curve also means that Wharton students are less collaborative. When students are pitted against each other in grading, they automatically become more cutthroat. I think Wharton students would do better to learn collaboration in the business world than the cutthroat tactics of the Wharton Curve.


So overall am I a fan and supporter of the Wharton Curve? Not really. I think that college is more about the learning experiences outside the classroom than inside the classroom. I probably won't look back on college and remember too many of my classes, but I'll definitely look back and remember my leadership lessons.

If Wharton is going to have a curve, they shouldn't pretend like it's not there. Own up to it. Communicate that Wharton is about raising the bar and expectations for its students, and that the students push each other to succeed. People will respect that sort of rigor in the same way they automatically respect the rigor of the military. I would prefer my school to be authentic about the challenges than try to hide them.

The Un-Wharton is Moving to http://blog.stustein.com

Last night, at the height of egotism, I bought the domain name StuStein.com. Therefore, for the sake of alliteration, the Un-Wharton will be moving from StuartLStein.com to http://blog.stustein.com.

If you subscribe to the blog through an RSS reader like Google Reader, nothing should really change, but if you find that my blog posts suddenly stop, I promise you it's not because I have stopped blogging!

The State of Cell Phones in 2008

I sat down yesterday with Wharton freshman Josh Wais who is without a doubt a mobile phone phenom. He was hired by the Nextel president in high school to develop an application for them; he won a BlackBerry case competition for grad students; and he has started his own mobile business.

He gave me a brief run-down of the industry, and the rest of this post will be his characterization of the industry. For the moment, the carriers - Verizon, AT&T, Sprint, etc. - control the world of mobile. To be able to get to the user, you pretty much have to go through them at some poing.

Right now, these companies are competing on voice services. You can see it in their commercials - everything is about dropped calls or clarity. Data services is a secondary concern, as they try to meet Wall Street forecasts from voice. Of course, as they compete over voice, the prices on voice are rapidly decreasing as the industry matures, meaning that they will need to start competing on data.

As a result, cell phone applications are like the Wild West at the moment. Very few people download them or buy them because there's no eay way to sort through them. Additionally, half of the application fee is taken by the carriers, cutting the profitability of the people making the applications. If you thought programming for Internet Explorer versus Firefox versus Safari was bad, cell phone applications need to be programmed for about 20 different cell phones with different software platforms.

The cost structure for GPS is awful. Location-based services may be the future, but it's not cost effective at the moment. Every time a person uses the GPS function, it costs the company money to use it. The phone companies of course are taking their cut.

Advertising on the cell phone is actually pretty attractive at the moment. Josh mentioned that mobile advertising could be anywhere near $35 - $50 per thousand impressions. This is mostly because supply is so low due to the constraints in distribution of applications (I mean how many applications do you really use?). As the supply increases, I wouldn't be surprised to see the cost per thousand impressions to drop to just above online prices.

Regardless of all the difficulties, cell phone applications are being produced at the moment to solve many of these early problems. Josh also said that these small companies are putting increasing pressure on the carriers to start focusing on data services instead of voice services.

He encouraged me that the best way to really find out more about the mobile industry is just to jump in. When formulating your own application, you come into contact with the nitty gritty of how the industry works and you learn over time. I thought it was a remarkably insteresting conversation with a smart guy who has a passion for what he's doing.

99 Cent Sci-Fi Movies on Amazon Unbox

I got my second email today from Amazon promoting 99 cent sci-fi movie on Unbox. I thought this was a brilliant marketing push. Old sci fi movies are relatively cheap; yet, early adopters tend to be tech guys who like sci-fi's - ergo a big marketing promotion to sell sci-fi movies on Unbox.

Facebook Chat: Money in the Bank

I logged into Facebook today and they added a bar at the bottom for "Facebook Chat." I thought it was a brilliant move. From the users perspective, everyone who I have friended can automatically chat with me when I log in. I no longer have to add their screen name to AIM or email them from GChat because everyone I know well enough will have already friended me on Facebook.

From Facebook's perspective, they are going to have people logging into Facebook more and spending a longer time on Facebook chatting to their friends. Both of those facts mean more advertising dollars for Facebook.

Some users will of course be weirded out by the added complexity that Facebook has added. I already know many of my friends who have been turned off by the addition of applications, statuses, and the newsfeed, and Facebook keeps pushing them to adopt more and more new features. But even my friends who hate the complexity of Facebook still admit that it's a necessary evil. These people may very well turn off the Facebook chat.

I think overall this is a brilliant move for Facebook, and they will probably be tweaking it along the way. They need to figure out how to:

• Let users see and engage in multiple conversations at the same time
• Sort through the friends that are online. Right now, I have 60 friends online, and I'm certainly not close enough to talk to all of them.
• Keep the buddy list loaded. Every time I reload the page, it has to reload too!

Recruitment is the Lifeblood of an Organization

If not a single cell survives from the day you're born to the day you die, how can you still be you?

If a fraternity has totally different members every four years, how can it still be the same fraternity?

Big change does not tend to be something that's instantaneous. Old members tend to cling to the old ideas, traditions, and procedures. They're outlook on the world is set. Big change happens over generations as new members because new members are more comfortable with new ways of looking at the world.

Recruitment is the lifeblood of the organization because the leadership of the organization tomorrow is based on the recruits of the organization today. Making sure the people get off to the right start is critically important.

Speak with Passion

Note to self: if you're going to give a speech, speak with passion - speak with emotion. Your audience will mirror you. If you want to excite, be excited. If you want to inspire, feel inspired.

Gaining Access to Top Executives

I have one professor who fills his lectures with stories about advising prominent businessmen and leaders - president of Unilever, joint cheifs of staff, founders of Capital One. I told him that one day I would like to be able to affect business leaders in the same sort of way, and I asked him how he did it.

He told me there are two main parts to it 1) having something to say and 2) having a pulpit to say it from.

1) Having Something to Say. He said: "Whenver you don't understand something, investigate." He emphasized finding patterns and challenging assumptions. If monitoring costs were prohibitive for outsourcing, what would happen if the monitoring costs were brought down by technology?

2) Have a Pulpit to Say It From. He said that at one point being a professor would have been good enough to get him lunch with the president of Unilever. Not any more. He said that if I really wanted to advise the top dogs, the best way would be to go to the big three consulting firms and become a partner. Executives will listen. More and more the Harvard Business Review is filled with company published articles, rather than professors, because of the perception that the companies are at least seeing the "real world."

The Lack of Purpose

My professor in the Literature of Success today said that there is a lack of purpose in the world, and the people that inject others with a strong purpose invariably get strong followers.

It made me re-evaluate how I lead. The other night during a new member selection process, the members of my group had prolonged conversations about what qualities a person needed to have to join the group. People had different conceptions. I realized that it was because I hadn't articulated a strong enough vision for where the group was going and what the standards were for people to live up to.

Vision isn't something a leader talks about once; vision is something that a leader constantly revisits to inspire and lead.

Why Read Biographies

I am reading the biography of the founder of the management consulting industry and McKinsey, Marvin Bower. For the first time, I understand why I should read biographies. In reading about a great people's lives, the great people become so vivid that they make me try to live my life to a higher standard - their standard. Great people have great expectations of the people they touch.

Phone Companies May Be Sitting on a Gold Mine

What if phone companies entered the credit card industry?

Not in the traditional way of branding a credit card as AT&T, but rather, the phone companies started acting like credit card companies, collecting money for other businesses and charging high interest for late payments.

Phone companies already do this to some extent. If I were a business that wanted to charge you through your phone bill, it would cost me around half my revenues for the phone company to collect from the phone user and give it to me.

With the booming cellular industry, phone companies like Verizon and AT&T may be sitting on a gold mine that they don't even know about. If they lowered the cost to other businesses to charge through the cell phone bill, the number of businesses who collect through the phone company would increase. At the same time, they could start acting like a credit card company, charging high finance fees for late payments for all non-phone bill charges incurred.

Once the cost got low enough, we could use our phones to take the subway as they do in Japan or pay for tolls without having to get EasyPass. It would be an entirely new revenue stream for the phone companies and spur innovation.

Just thinking out loud.