Monday, May 26, 2008

Get in! Get out! Get on with your life!

Web surfers are getting more practical and impatient. A new report that measured user web surf metrics shows that people are not biting the tactics that are designed t keep the user longer or subscribe to a service.

The annual report into web habits by usability guru Jakob Nielsen shows people are becoming much less patient when they go online.

Instead of dawdling on websites many users want simply to reach a site quickly, complete a task and leave.


Most of the time people enter the site in the middle, through a search engine, and not through your home page. So every page should be designed as a landing page to service the viewer else they are off. They are not going to spend time drilling down the pages. The other truth about reaching through search engines is that the domain name does not matter. It does not have to be memorable or catchy, users are going to find the site increasingly through search engines.

Dr. Nielson's next point makes me wonder if I should get rid of widgets like Newreel and slide shows from this blog.

Web users were also getting very frustrated with all the extras, such as widgets and applications, being added to sites to make them more friendly.

Such extras are only serving to make pages take longer to load, said Dr Nielsen.

Conservative Chair at CU

Does the person who runs the Boulder Net have to be a Boulderite?
Does the person who is running the Conservative chair at CU Boulder have to be a conservative?

Here is The New York Times blog article on the CU conservative chair:

[Chancellor G.P.Peterson] acknowledged that the professor of conservative thought didn’t have to be an actual conservative, and pointed out that many teachers of French “aren’t necessarily French.”

Thursday, May 22, 2008

Foreclosure Hotspot

The Wall Street Journal finds foreclosure hotspot in Colorado along I-25 and I-70 corridor. The thesis attributes the causes to not only the buyer behaviors but also the builder's bet that people would be willing to live far away from where they work if they can afford their independent house.


Many of these homebuyers are underwater not just because they bought more house than their incomes could support, and not just because prices are falling. They were also betting on commute patterns and demographic expectations that are proving invalid.

These were bets on location, location, location – premised on the idea that people would be willing to live hours from anywhere for a chance to own a single-family home they could actually afford.

Thursday, May 15, 2008

Do you LinkedIn?

I do not say this pejoratively, from my experience I have seen a consistent pattern in LinkedIn activities that can be tied to people's planned career moves or their expectation that something is not right at their current company. I did not do controlled experiments nor do I have hard data, but I have seen flurry of activities during layoff times. People update their profile, start making many new connections and seek out endorsements.

One thing I would say is to have your resume, LinkedIn profile and connections updated constantly and not in reaction to external events. The time to start networking is not when you need the job but when you already have one and is really looking to build a network that is not based on quid pro quo. It is very hard to make a withdrawal right away from a network. It takes time to nurture it.

So do not wait to network until you need it. In fact, the macroeconomic studies of unemployment numbers state that people who already have a job are more likely to find other jobs than those who are unemployed. This is attributed to exposure to other professionals the job provides and the stigma associated with being unemployed. When you reach out to others when you already have a job there is a higher probability of cementing a relationship because others are less worried about the give and take of the relationship.

You cannot cram an year worth of profile and network updates in a month, so pace yourself and do it more regularly.

Mutual Endorsements

If you and your colleague write recommendations to each other in your LinkedIn profiles, do both of these cancel out each other?

Perhaps a little, but mostly it does not matter. For one thing no one is going to dig deep to follow the link to see the list of your recommendations. Secondly, I do not believe the recommendations add any more value than simple signal that you are not making it all up in your profile.

I would like to believe I add some value to others with my recommendations. So I do not display in my profile recommendations from people who I had endorsed. In fact I do not display any of the endorsements I received.

My LinkedIn profile is perennially incomplete.

I wonder if my recommendations of others tell something about me and my people management skills.

LinkedIn Endorsements

LinkedIn has a feature that allows you to endorse your connections or to receive endorsement from them. LinkedIn encourages people to get recommendations by indicating that your profile is only 80% complete, add four more recommendations and it will be 100% complete. This is a nice marketing message, people usually react to this positively.

Do these endorsements matter?
By definition you only accept positive endorsements and hence all of these are positive. So how can one make any judgment based on all positive endorsements? Even though these are all glowing and positive, the fact that someone has taken time to write you one is a positive sign.

Some recruiters who post on LinkedIn say in their posting, "you need to have endorsements if you want to apply for this job". I bet they are not going to make their decisions on the text in the endorsement as much as the presence of it. Their logic probably is, "if you cannot even get your closest colleagues to endorse you, I do not want to look at your resume".

My conclusion is endorsements add value only as a signal to the reviewer that they can spend more time in your profile/resume. After that initial screening, the endorsements don't matter much.

Looking for a Career Change?

It has been said in many articles and books on career change and job searches, that the time to start looking for a new job is when you don't need one and not when you are forced into one. It does not help our cause when we have a short time period to find a new job and under stress from the drastic changes in our current work, including layoffs.

Searching for a new job when you are doing very well in your current one, does not come naturally. We all love what we do and feel complacent, sometimes justifiably so, and sometimes we feel that we are too buys to add on this task. But when you search for a long before you need a new job you have time on your side and will be in a better negotiating position with the new offer. You will have less competition from your peers in your current organization than when the market is flooded with freshly laid off workers.

The first lesson in strategy is, companies that shape their future and not react to it stand to win. The same is true for personal growth. When you start early, you shape your future and not react to the unforeseen thrown your way.

I had a VP in my past career who said this when he quit,

"There are three stages to your career in any organization. In the first third you are learning as fast as you can and trying to become valuable, in the middle third you add value and make impact on the organization's performance, finally you get ready to move on, either within or outside the organization, and start handing off your responsibilities to the next in line."


These days the total length of these three stages is getting shorter and shorter, it stands at about three years. The first part is getting much shorter and corporations expect you to add value from day one and the third stage starts at about the same time as the first, with all three running in parallel.

Are you prepared?

Wednesday, May 14, 2008

Wild Oats Rent Does Not Stop

Whole Foods announced its fiscal second quarter earnings yesterday. The acquisition and integration costs of Wild Oats are still eating into Whole Foods' earnings. Wild Oats home office at Boulder is still a big part of the expenses, at $4.3 million. Whole Foods has been reducing staff in the Boulder office, it reported 27 employees at the end of second quarter (April 13th) and a current number of 5 employees and expect this to drop to 0 by the end of third quarter.

Even when the labor charges drop, their 8-K says rent payments do not stop yet. The rent payments are $2-$3 million per quarter and they do not indicate how long this would continue.

An interesting calculation is to see how much Whole Foods accounted for the staff . Assuming the higher end of their rent, $3 million, they spent $1.3 million on 27 employees.

Housing Prices

The National Association of Realtors numbers that came out yesterday point to median prices increasing in only one-third of the 149 metropolitan areas.

The Boulder and Denver-Aurora fell in the other two-third. Home prices fell by 4% and in Denver-Aurora prices fell by 6.6% from the last year prices.

Does this mean it is time to buy in these areas?

Tuesday, May 13, 2008

Chair of Conservative Studies at CU

WSJ writes on CU's quest for creating a Conservative Chair:

Boulder is far from the only campus to recognize a leftward tilt to the ivory tower. National surveys have repeatedly shown that liberals dominate faculties at most four-year colleges. And conservative activists have grown more aggressive in demanding balance. A group called the Leadership Institute now sends field workers to scores of campuses each fall to train right-wing students to speak up. College administrators are beginning to respond.


The possible candidates?:
  1. Robert Kagan
  2. William Kristol
  3. Thomas Nechyba
  4. Condy Rice
  5. George Will
  6. Philips Zelikow.

Monday, May 12, 2008

More Homes For Sale than Jobs?

Google AdWords allows you has a nice feature to determine the cost estimate for a given position in the Ad listing. Higher the position in the listing, higher the cost. Between two different keywords, higher the cost for the same position means higher the demand, that is more people are bidding on the same keywords.

For example, keywords like "boulder homes for sale" cost you $1-2 for a position of 4-6 in the Ad listing. For $2.5 to $3 you get positions 1-3.

The keywords "boulder jobs" cost $1 for position 1-3.

Does this mean there are more homes for sale than jobs?

Are these two data points related?
For a detailed explanation of how auctions set the Ad prices, see this Google blog post.

I Love My Idea. You should too ...

An important driving force behind every entrepreneur is their passion and their unadulterated love for their idea. Without this passion there won't be a company based on it. But the same passion and falling in love with one's own idea leads to belief that everyone else will see this and will lead to automatic success. Success in the market place depends not on the idea but on the value proposition to the customer segments being targeted and how you execute the strategy better than the competitors.

Let us look at this from the prospects of a low tech business franchise, "meal-assembly". Forbes magazine has a well researched report on this industry. Sean Kelley of FranchisePick.com wrote this on the "Assemble your meals in our kitchen" franchises:

A common new business pitfall is the entrepreneurial tendency to become enamored so with a “solution” that one forgets to make sure it’s preceded by an actual need… and a need great enough to support multiple competitors who are also enamored with said solution.
Let us do some market analysis on this concept and whether it is attractive to invest in:
  1. There are absolutely no barriers to entry. Anyone with a cookbook could enter. This leads to extreme fragmentation.
  2. There is no differentiation among the multiple offerings. The brands did not have solid footing and did not connect with the customers.
  3. The targeted segment is very narrow (if not non-existent): mostly women who are busy to do their own groceries and cleanup after cooking but would like to serve "home cooked" meal to their family.
  4. A typical franchise gets about 50,000 people area franchisees of competing brands do operate in this market, limiting the available share.
  5. The value proposition is not well defined. It saves the women grocery shopping and cleanup but they still have to book a time and drive to these places to cook. But people cannot avoid trips to grocery stores for everything else.
  6. How much are the customers willing to pay for the convenience? The prices these places charge are higher for the value they add, a 2-3 serving of Chicken Lasagna costs $14.
  7. This concept requires behavior change in customers, which is the most difficult thing to achieve. One brand tries to train the customer with messages like " We are not a luxury, we are a necessity". That does not ring true with customers.
  8. Their fixed costs are high and takes about $25000-$30000 sales per month to break even. When supplies costs go up, as they do now, they further eat into the margins.
  9. The customers are very fickle and had no switching costs. While those inspired by Food Network might try these for experience, they will not generate repeat revenue.
  10. There are many substitutions, pre-cooked and pre-prepared meals are now available in stores like Whole Foods and other grocery chains. People can order groceries and some pre-prepared meals online for home delivery.
This idea sounds neat but does not have merit. The same can be said about many high tech ideas that sound extremely cool. Instead of creating value, the ventures based just on the idea end up destroying value for the founders, the investors and the employees.

Love your idea but do some analysis before betting on it.

Simply Hired

One of my classmates in a Web2.0 class works as a Product Manager for a new job search site SimplyHired.com. This site serves as a job listing aggregator, it gets job listing from all popular sites and make it available in one place.

We search thousands of job sites and companies, just so you don't have to. We eat, sleep and breathe job search, to help you find that dream job.
You still need to sign up with those multiple job sites if you want to apply to these jobs that are listed only on those sites. There is one important value add from SimplyHired, it has a nice feature that lets you search for insiders in these companies from your LinkedIn network.


Other features include:
  1. Lets you subscribe to job search results as an RSS feed. (hotjobs does as well)
  2. Provides you salary information based on posted jobs
  3. Works great for local jobs. (see side bar jobs listing)
  4. Compare locales for job growth.
  5. It is free. They make revenue from the Google Ads serves on the sidebar.

Five Tips from Monster.com CEO for Job Search

In an interview with The Wall Street Journal, Mr. Sal Iannuzzi, CEO of Monser.com, gives five tips for job search in this difficult labor market:

5 TIPS
From Sal Iannuzzi for Finding a Job in a Tough Market:
Stay focused on what you want to do and the type of position you are looking for.
Seek jobs that are relevant and build onto your long-term goals.
Cast a wide net; your dream job may be hiding in a company or industry you never considered before.
Be diverse, as jobs with different responsibilities provide valuable experiences.
Keep building on those experiences. Eventually, you'll be able to apply what you've learned to just about anything and be successful.

Sunday, May 11, 2008

Six Tips for Coping with higher Commodity prices

How a bread maker is coping with higher wheat and gas costs gives useful insights for all small business owners:

  1. Are you doing your pricing right? Make sure you are pricing at what the customers are willing to pay (value based pricing) vs. pricing based on your cost (cost based pricing).
  2. Find more ways to sell your products.
  3. Achieve Operational Efficiency. Whether are not you sell premium products, continuously driving your costs down helps you overcome shocks.
  4. Partner with other small business owners to share costs and to cross-sell to your customers.
  5. Hold on to your trained employees, they are essential to keep your total costs down despite high labor costs.
  6. Be not afraid to improve prices.


Saturday, May 10, 2008

Featured: UniqueThink

Bethany Siegler, a Boulder Net member runs, UniqueThink, her full service marketing firm from Boulder CO. She showcases some really neat web redesigns she has done for her clients. There really is no excuse for mediocre web presence. Bethany says in her website,

“My goal is to continue to work on campaigns that make a constructive difference in people’s lives. Seeing a project or company grow as we build their online presence, is inspiring.”

Her expansive marketing knowledge, combined with her ever-increasing skill set, is here to help your next campaign think unique.



If you are looking to improve your marketing communication, especially through the web channel and want a local firm, you should checkout UniqueThink.

Friday, May 9, 2008

Negotiations

See my questions and response from Boulder Realty Blogger Osman of The Silver Fern on the topic of Negotiations.

In a typical real estate transaction there are 4 parties. The buyers and sellers have direct interests and emotional investment in the outcome and their agents not as much.

What is the right role in the negotiating process for the agents?


Unlike the buyer and sellers who most likely will never do business with each other in the future, the two agents are bound to meet and the reputation and track record is key since the news about tactics spread quickly.


Should they leave all negotiations to the principals? Do they?

Another Boulder Realtor Blog

This is another great blog by a Boulder realtor, Neil Kearney. Just like the Silver Fern blog, Neil is trying to add value without selling right away. More than his bar charts of metrics (which I guess are meant to say housing market is still good ...) I like the trail maps and descriptions.

I am glad to see that realtors recognize that bidding for Google ads is not enough or nor even the right thing if they want to build a relationship based business.

Prespiring Virtue

Florence Williams in The New York Times:
This town practically perspires virtue.
...
Let's get one thing straight: Boulder is not for everybody. Some conservatives hate the place. The New York Times columnist David Brooks has made immense fun of it as a latte town of bourgeois bohemians with their in-your-jowls liberalism and an uncanny ability to accrue wealth while pretending to care only about following their creative visions. According to American City Business Journals, Boulder has a higher percentage of college and postcollege graduates than anywhere else in
the country.

Thursday, May 8, 2008

How Crocs made its first Million in sales

The May issue of Inc magazine talks to CEO Ron Snyder of Crocs, Niwot Colorado, about how they made their first $1 million in sales.

With only one factory, in Canada, Crocs lacked the capacity to ramp up its production from 30,000 to 300,000 pairs of shoes a month. "There was no chance we could fulfill the order," Snyder says. Fortunately, he had a few contacts in Asia and was able to find a contractor in about a month. Soon, Crocs was shipping thousands of pairs of shoes. "Saying no never occurred to us,"
Since this first million they have come a long way and their stocks was hovering around $75 before falling to $10-$12. Crocs made revenues of $194 million just in the first quarter of 2008. Interestingly, the very first factory in Canada they had used to supply their sales is what they are shutting down now. Is there more room for Crocs' earning growth?

Crocs Earnings Report Deserves a Closer Look

Just a day before Niwot, Colorado based Crocs reported its 2008Q1 earnings (SEC filing) I wrote about its practice of capitalizing software development costs. Yesterday after Crocs (CROX 11.81, +1.85, +18.6%) reported a loss including one time charges for closing down operations in Canada, its shares jumped almost 20%. WSJ blog also predicted a high stock volatility.

For the quarterly earnings we do not have much insight into the components but some of the components do deserve a closer look before predicting a stock turnaround.

  1. The Cost of Sales grew faster than revenues, leading to a significant erosion in gross margin. This leads to questions, whether they increased sales by slashing prices and extending higher commissions. How far can they go to increase sales further?
  2. They use FIFO (First in First out) for inventories. The higher cost of sales is accounted for by the increasing raw material costs. The current cost of sales in the income statement represent the cost of materials when they acquired them, may be an year or two ago. Since then costs have been on the increase due to run up in oil prices. Their gross margin is bound to go down more.
  3. Cash position is weak as they generated no operating cash flow and ate into the cash reserves.
  4. Their SG&A is also on the rise indicating a higher fixed cost that is independent of sales.
  5. They indicate to us that the $12.1 million ($20 million total for the year) after tax charge on closing down Canadian operations is one time charge. In GAAP terms, this is still above the line but most companies tend to signal this to investors who also agree with this one time classification. But we need to find out whether the company is taking a big bath, adding many costs to the restructuring that are usually not one time charges. We do not have data to say either way.
  6. Capitalizing Software development costs. We need to see if some of these costs get written off as part of the one time charges.
Before rushing to buy the stocks at current levels, investors do need to ask these questions.

Wednesday, May 7, 2008

Boulder Realtor Blog

Realtors are recognizing the need to market themselves and the need to build credibility and relationship long before the client approaches them. The transactional business model is very tempting, after all no one is going to buy or sell a house that frequently. But the customers can generate more leads if the realtor develops a relationship that involves more than sending simple newsletters. A relationship requires two way conversation and spamming the customer with email newsletters or glossy printouts of listings is not a conversation.

Conversations with customers start long before they are customers and continues whether or not they hired the realtor, made the transaction or not. Conversations are not direct sales pitches or requests like "would you tell your friend about me?". Conversations work when they add value without selling and allow the customers to participate. In the age if social media, a blog as a conversation tool is a no brainer. But how many realtors invest in conversations?

I found one realtor blog , The Silver Fern, a blog with little or no direct sales pitches and tries and succeeds in adding value. A quick review of articles show pointers to article in The Economist on Negotiations, market updates, meth contaminations. Great.

They are aggregating content and producing original content to help people make decisions. That is value added.

They allow comments in all their posts, that is conversation.

This is marketing and relationship building done right.

They give credit to all photos they use (I guess Flickr) in the blog. That is uncommon.

The sales leads will come later.


(I do not know the folks at Silver Fern nor have I done any business with them)

Tuesday, May 6, 2008

Crocs Capitalizing Software Development Costs


The Niwot based company's stock is trading at $10, more than 85% below its highs set in November 2007. There is one aspect in their 10-K is nagging. Crocs has invoked the GAAP that allows companies to capitalize software development costs after the feasibility period. In other words instead of expensing all of the development costs and taking a hit in income statement, Crocs capitalized the cost into assets that are amortized over 7 year period.

Capitalized Software—The Company capitalizes certain internal and external software acquisition and development costs that benefit future years in accordance with SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.
The carrying amount increased from $5.5 million to $24 million from 2006 to 2007. That is close to 10% of the net income reported for 2007.

The SOP 98-1 makes perfect sense for software companies with high fixed cost of software development and low marginal costs and can track the revenues directly to the particular software.

Why is a footwear manufacturer capitalizing software that is used for its operations and has no market value?

Monday, May 5, 2008

Google Boulder Helps Autism Patients

This is a great example of practical CSR, finding a great non-profit use as part of for profit operation. The Daily Camera reports

Project Spectrum was developed as a way for people on the autism
spectrum to use SketchUp -- 3-D design software utilized by architects
-- as a way for their visual and spatial talents to flourish, says Tom
Wyman, business development manager for Google's SketchUp team.

Sunday, May 4, 2008

Startup Exits

Andrew Hyde of Startup Weekend wrote about three Boulder startups that shutdown last week.
Good people, strong business models, and brilliant marketing, and still, no tomorrow for them. Nau, Organica and Falling Fruit.
A clothing line, coffee shop and audio production company. Seems like startups are bellying up at a rapid pace this week.
It is not fun to see people with so much passion start something only to shut these down to cut losses. It is better to shutdown when the prospects are dim than be hung up on the sunk costs.



Andrew asks what did these do wrong? Let us look a quick look at these three.

Nau: It placed corporate social responsibility above profitability, "We Believe that companies have a broader responsibility than simply generating profit". I disagree. It is not a corporation role to engage in CSR activities. As Robert Reich said in his book Supercapitalism, this rests with the Government. For a startup wanting to attract customers and capital this non-profit motive is not a viable business model. To quote Milton Friedman, "The business of business is business". Their product still has to serve the purpose it is designed for and every unit they sell must contribute to amortize the total cost. It is a case of optimistic predictions of product uptake and sales projections.

Organica: It is a coffee shop. It entered a crowded market that has no barriers to entry, little differentiation, fickle customers and high operational costs. By staying small they limited their volume, an essential component to amortize the high fixed costs. It is indeed hard to see investors lose their money but they should have seen the cash flow problem.


Falling Fruit: Another content creator distributor with Ad based business model. There is limited market, people have limited hours and can only read or listen only a few media sources. They tried to position themselves against TV, that is trying to change people's behavior. Their value proposition is "connect people who understand the importance of making positive changes in their lives and in the world". There are already big competitors in this arena, a big one is Religion. They had no unique offering and a very narrow customer segment. This is once again not a surprise.

Location does not matter in a Flat World Economy

IBM Boulder executive Larry Longseth writes about the talent pool in Boulder and how Boulder can leverage this to run globally-integrated businesses. In an all connected world, when the same outsourcing options are available to all cities and the supply-chain advantage from global suppliers is no more a strategic advantage, why does Longseth think "Boulder, perhaps more than any other U.S. city, is extremely well
suited to take advantage of the substantial opportunities that
globalization affords savvy businesses."

It is arguable that one city is more suited than the rest, but Longseth has a valid explanation:

While other cities must first face hurdles like improving economic
conditions and quality of life before they can even begin thinking
about competing on a global scale, Boulder is ready today.

Thinking of a Career Change?

Thinking of a big career change, like starting a venture, going to full time graduate school or take up non-profit work? The book by Herminia Ibarra, Working Identity: Unconventional Strategies for Reinventing Your Career, is an essential read.

Ibarra calls as the biggest mistake, people jumping ships without plan or practice. The best way to make the transition is to to start by doing some of the activities of the new career even when you are in your current job, as Ibarra calls it, "test possible selves without compromising our current jobs"

Straddling is not a good business strategy. Businesses that don't focus their scant resources on specific opportunities and instead spread them across multiple projects show no strategy at all. Career change is one case where temporary straddling works. In our personal lives time is the most important scant resource and to try out our multiple "working identities" simultaneously will strain us to the hilt. But the alternative to jump first and learn to swim later is a recipe for guaranteed failure.

Even if you are not thinking of a big change, start with Ibarra's book.

Saturday, May 3, 2008

Entrepreneur's Optimism Does Not Go Home With Them

Nicole writes in her blog about the need for entrepreneurs to treat their spouse as the most important investor in their venture.
Yet the tendency is to come home and unload on your spouse. “We can’t
make payroll this week”, “We lost the biggest deal, I’m not sure we’re
going to make it now”, “That stupid employee….” the list goes on and
on. What that does essentially paint a very poor picture for your
biggest investor, which will in turn cause significant doubt on his/her
part that you can succeed
It is not surprising in some way. As several studies have shown, entrepreneurs exude unbridled optimism about their prospects and pitch the positive options to their employees, vendors, customers and investors and most importantly to themselves. A study by Wharton professor showed,
"It's been shown in many studies that people are overly optimistic.
Individuals form an inside view forecast by focusing on the specifics
of the case, the details of the plan that exists and obstacles to its
completion, and by constructing scenarios of future progress."
Unfortunately it is hard to keep up when they go home to their most trusted partner.

One thing I recommend is to have an objective advisory group that is not easily awed by your bubbly optimism or rosy projections and hence will protect you from going down the wrong path in the first place.


Friday, May 2, 2008