Tag Archives: Steve Jobs

Are the eyeballs back?

shutterstock_110934842 line_600pxThe other day New York Times had an interesting article about 1 Billion dollar (Internet) startups. The piece opened up by saying:

The number of privately held Silicon Valley start-ups that are worth more than $1 billion shocks even the executives running those companies.

That kind of gives a flashback of the Dot Com Hype, doesn’t it? Do you remember the “eyeball logic” i.e. the acquired companies had no business model, no assets, but only data of people come came to their site.

Maybe it is different this time? Or, like Gordon Gekko in Wall Street: Money Never Sleeps, looks different but is still the same.

Let’s start answering that by asking is Billion dollars a lot of money? Of course it is. But in relative terms and as an investment? For comparison, the beer company Anheuser-Busch paid 20 Billion to get their hands on Corona, and their competitor SAB Miller paid 10.2 Billion for Australian Foster’s.

And all that is, paraphrasing the late Steve Jobs, not really changing the world, but just mixing barley with water.

Okay, okay.  Fair enough. Those acquisition pricetags surely cover more than just the brand goodwill and the customer base. There must be “hardware” involved. Bottling plants, distribution, exclusive contracts and so on. I am definitively not an expert, but, apart from the time it takes to replicate those, how valuable is all that really? So I am sure the math still contains big numbers for the brand and customer base value that make “investing 1 Billion to acquire a household Internet brand(s)” to sound more reasonable.

A billion here or there, but somehow the the get-rich-with-internet story may not feel that glorious. Could feel more like luck, gold-digging or opportunistic. People can picture how the blue collar beer makers brewed and bottled beer in the farmhouse, with the family helping, to meet the increasing demand, as the grapevine spread the news about the awesome, differentiated product. And, in comparison, the Internet entrepreneur did what? Sat at Starbucks hacking some code to his Mac, while making sure none of the Asian subcontractors were using child labor?

None of this matters. The valuation is what it is, because somebody built a product line or a customer base that Big Corporations need, but wouldn’t, or couldn’t, build organically.

And, unlike some of the beer companies going directly to the acquisition mode, most technology companies have first tried to build the new things themselves. Because that coding at Starbucks was supposed to be easy, remember? But it turned out to be everything but, their build-it-from-scratch efforts failing miserably. And often failing for so many different reasons, nothing to do with technology, but more with business model conflict and leadership culture. So companies are willing to pay the big bucks for the acquisition so that they don’t need to go through those self-inflicted failures again.

So in a way, yes, “eyeball acquisition business logic” is back.

But there is one major difference to the Dot Com era. Today’s Internet is no longer an experimentation of the early adopters, but the necessity of the Main Street (how do you think most people would answer: “Which one, and only one, would you take to a deserted island? A case of Corona or the Internet?”). Unlike ten years ago, people are quite much more willing to pay for, or truly engage with, services. And stick with them. Yes, people might switch away from Spotify or Dropbox, like they could switch away from Corona or Foster’s. But that churn probably can be estimated way better than 10 years ago. So good are many of these services, and so high is the user engagement. Which, in turn, means the investment banker estimates for the net present value of those eyeballs is more reliable.

The M&A excels aside, at the end, the payback of any acquisition is largely defined by what the Big Corporation does with the new stuff it owns.  In 2000, a major global conglomerate acquired a known-but-not-yet-mega-known, unconventiontal ice cream brand for USD 326 Million. It continued to let the brand do its thing, perhaps learning also something about its culture along the way. And now everyone knows Ben and Jerry ice cream, owned by Unilever, which by the way recorded its all-time high share price.

Maybe one day the price tags go down, as big corporations learn to innovate better themselves. It just may take some more ten-year cycles.

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Product guy – dream living other people’s lives

shutterstock_95792512 dreaming 600pxDoes Product Guy need to be of the target audience? Can a bald guy sell shampoo? Does the baby food product manager need to wear a bib at breakfast? But on the other hand, should golf companies only hire lousy golfers as product managers to ensure they really know how their hacker customers feel after pulling two identical hooks to the wrong fairway?

Tough ones. No wonder that in the post-Steve Jobs era, there is no clear-cut answer to this eternal question that was perhaps the most asked one, when I collected input for this Product Guy series.

What matters is the passion for the product and the people who use it. That passion can come from within one’s own life, but interestingly, it can equally arise from having the imagination and the curiosity about other people’s lives (note: If this feels too creepy or outer space now, take a breather and read something tangible, like Facebook Graph API documentation)

So when the life is too short to develop a new skill – like a consistent golf swing – Product Guy should focus on trying to understand how it feels for those who have it.

The ultimate stage of dreaming to live other people’s lives is what happened to Jesse Eisenberg. He went to see basketball in London Olympics and was introduced in the TV broadcast as Mark Zuckerberg. And he probably can’t code at all.

For the record, I am so rooting for Ashton Kutcher to be able to pull off the same.

*****

Happened in the previous episodes of Product Guy series:

Stay tuned for the next episode: Product guy – understand your levers

 

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Jolla – the Finnish homebrew

Like many mobile gadget enthusiasts, I did watch the Jolla Sailfish OS webcast (note!  I am still suffering from the conference-itis that I got during the Nokia years so I didn’t even attempt to get near the Cable Factory venue).

The presentation had a quite inward-looking and homemade feel to it, and I am not sure how well it got the job done, outside the fanbois. Note that I am so much rooting for Jolla to succeed that this is the nicest I can put it. So please don’t troll me that I don’t get that it’s a movement, not a product or a OS. I do.

But still I guess we can agree that it definitively was not the kind of step-by-step-rehearsed dog & pony propaganda show we’ve all been spoiled with lately. Not sure if it fares well even in comparison with time. I tried to remember the first product intro I ever attended. My calendar trail doesn’t go that far, but I guessed it must have been some Nokia mobile phone launch in CeBIT 1997.  Even though back then Nokia was just an up-and-coming company, the rules of Marketing 101 were in full use. Even if the power of the presentations revolved around the different ways Anssi Vanjoki could use superlatives.

But what was to be expected? The Planet Earth, especially the Asia corner of it, has a lot of mobile phone companies, and most of them are really small. It is already a marketing achievement in itself for a company of Jolla’s size and market share and to cleverly use the Rocky Balboa & Ivan Drago drama around Nokia strategy to cut through to be even mentioned.

Further, I’ve seen very close how massive efforts the stevejobsian & stephenelopian grade of product intros are. Humongous. Just humongous.  So Jolla investing their scarce resources to flying cameras, smoke machines or bringing Jessica Alba’s sister to the stage would have been worrying.

Jolla is coming from the right angle. Like I wrote in my state-of-the-mobile-phone-market megapost, Android can be dethroned by taking their openness game even further. But Jolla has chosen a big mountain to climb (for quite a matter-of-fact analysis, read Richard Windsor’s post). So it will require a mind-bogglingly great implementation even to get to the start line.

And some luck too. Especially in China where the Android success is intertwined with the economic agenda of having a mass market open platform for Chinese innovation.

But what’s the worst that can happen? Time spent with another failed OS. A lot of people have survived that (see e.g. this, this and this). So I can see why talented people are trying. And I wish them all the best.

Ed.Note! Despite having worked closely and proudly with Maemo, I have no involvement with Jolla whatsoever. I am not an investor, advisor, advocate or employee. I am just a fan who’ll do his share by promising to buy the product, if it’s as great and polished as e.g. N9 was, even if I didn’t really need another smartphone.

Picture credit. Flickr user hansenit. Under Creative Commons.

 

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