One way to create demand

An ad from the early 1900's, with the opening paragraphs excerpted below:

Milly caught the bride's bouquet but everybody present knew that nothing would come of it...that she wouldn't be the next to marry by a long ways...and they knew the reason why, too.
 
People with halitosis (unpleasant breath) simply don't get by. It is the unforgivable social fault.
 
You never know when you have it—that's the insidious thing about it. Moreover, you are quite likely to have it, say dental authorities. Conditions present even in normal mouths constantly produce objections odors.
 
Don't take a chance
 
The one way to make sure that your breath does not offend others is to rinse the mouth with Listerine.
 

From How "Clean" Was Sold to America with Fake Science in Gizmodo. Worth a read if for nothing else than to see some of the photos of unbelievable ads about body odor. Even the use of the term “halitosis” to give bad breath a scientific term, as if it were some serious malady, is fiendishly clever. It's also shocking how the ads pictured are all targeted at women, reflecting the sexism of their times.

The tech industry has a lot to learn from consumer packaged goods companies about how to manufacture demand or consumer desire. The ads in this piece are negative and scare mongering, but companies like Procter & Gamble are just as good at generating desire with positive emotional triggers. It still feels like most tech brand advertising derives from viral stunts. One notable exception, of course, is Apple, most of whose ads now have more in common with fashion ads than technology ones.

World of Tomorrow

Don Hertzfeldt's latest animated short World of Tomorrow is available on Vimeo for $3.99 for 30 days. I know people have price anchors scattered all over the map when it comes to different products (which is why the argument that “it's just the price of a Frappucino!” doesn't work when it comes to mobile apps, for example), but World of Tomorrow is likely to be one of the best movies you see this year. Hard to put a price on that.

The rise of the intangible corporation

Justin Fox quotes Oxford business professor Colin Mayer riffing off of the seven age of man from Shakespeare's As You Like It.

At first the merchant trading company established by royal charter to undertake voyages of discovery and promote commerce around the world. 
 
Then the public corporation created by Acts of Parliament to engage in major public works and the building of canals and railways. 
 
Then with the freedom of incorporation in the 19th century, the private corporation -- the seedbed of the industrial revolution and the manufacturing corporation.
 
Next comes the service firm and the rise of the financial institution.
 
The fifth age is the transnational corporation putting a girdle around the world and running rings around national governments.
 
Last scene of all that ends this strange eventful history is the mindful corporation -- sans machines, sans man, sans money, sans everything.
 

Mayer uses WhatsApp as his canonical example of a company with no assets and very few employees and yet a huge market cap (given its $22 billion purchase by Facebook), but just a short while before that Silicon Valley was all abuzz about Instagram for the same reason, albeit a lower price in relative terms.

Just wait until VR goes mainstream. The most valued bricks and mortar and real estate of today are digital. It's a lot cheaper than the real thing, and a whole lot less regulated, too. Tech companies do love their degrees of freedom.

Amazon Dash Button

Announced today, Amazon Dash Button is a branded single-purpose button you stick somewhere to press when you need more of a specific product, like Charmin toilet paper or Tide detergent.

[Because it came out the day before April Fool's Day, many people thought it was a prank, one of those fictional products tech companies love to release each year on April 1. Wasn't it Arthur C. Clarke who said “Any sufficiently advanced technology is indistinguishable from a tech company's April Fool's joke”? Something like that. April 1 in the tech world is like the entertainment world's red carpet, a ritual of dog and pony show and savage critique. We all know our parts. It's already begun, it seems like 80% of them are from Google. 20% time may be dead, but even 1% time from some fraction of a lot of computer engineers is one of the more powerful matters on Earth.]

On the one hand, the Dash Button is built off of some of Amazon's strengths, much more so than others they've tried. It is dirt simple, almost like one of AWS's primitives but in hardware form, and it's meant to make shopping easier, something they've always tried to do, from reducing shipping prices to 1-click shopping and onwards. Short of having products magically order their own replacements when you're close to running out, it's about as easy as it can be to replace a frequently used consumable. It is exclusively for Amazon Prime members, another perk to throw under the umbrella of that subscription, and I'm a huge fan of subscriptions a business model.

Dash Button ties in to Amazon's customer experience strengths, bypassing its weaknesses. When many people say they don't like Amazon's UX, what they usually mean is Amazon's UI. And yes, I agree, Amazon could really use more design leadership and skill on that front. The Dash Button doesn't have any visible software UI, though. It's just a physical doohickey, and it looks okay. I can't speak to the sensation of the button as it depresses, but I look forward to a detailed discussion by John Siracusa on some future episode of ATP.

[Perhaps the greatest return on investment thing that Amazon could do, in my opinion, is hire a design expert, have that person report directly to Jeff, and give that person final say-so on all major UI decisions. I've often said that who reports directly to the CEO is a tell for what a company values, and as far as I know design doesn't have a seat in Amazon's C-suite.]

Beyond UI, though, are many often overlooked elements of UX, especially in retail, and on those matters Amazon is world class. Customer service, packing, shipping, payments, returns, replacements. No company more reliably and consistently ships you stuff you order as quickly or reliably. And, if something goes awry, you just know they'll make you whole, no questions asked, unlike many other companies. It's that repeated execution that's made them one of the most trusted brands in the world. The Dash Button plugs directly into that whole incredible logistics network.

I hate the term Internet of Things, it is just an awful piece of tech jargon, but the Dash Button is one of the more practical of the early entries into that space. I know customers are only supposed to be able to ask for faster horses, but that doesn't mean they want to pay $35 to change the lighting in the living room to purple from their smart phone. It means they just want to get places faster.

Or in this case, they want faster horses delivering their stuff. As Amazon knows better than almost any company, the customer demand elasticity curve is highly sensitive to shipping costs and shipping time. I thought Amazon was joking when Jeff went on 60 Minutes to unveil their early testing of drone delivery (I thought at the time that some other planned reveal fell through so they scrambled the drone experiment as a last minute replacement since the segment had already been teased in CBS promos), but their continued testing there shows how much they know that being able to ship products in near real time is the next rung in Maslow's retail hierarchy of needs. They are being attacked by horizontal players in that space (companies that just specialist in delivery, like Instacart and Postmates, for example), and they will continue to press forward with their vertically integrated strategy. May the best player win; I'll be on my sofa waiting.

On the flip side of the ledger, the Dash Button feels like an intermediate way station on the journey to some more elegant solution. I suppose it's possible this is the endpoint for shopping replenishment in the home, but I personally don't want a bunch of branded buttons stuck all over my apartment. I can see why a brand would love a button that locks a user into their product line, but it's possible for a technology to be too primitive, too low level.

What level of abstraction do you settle in at? That's always the trickiest of product decisions, and it depends a lot on the context. Screen size, how you input data, app launching modality, all of that matters. The app Yo was widely ridiculed released on the iPhone, but there's the germ of something fascinating there. On something like the Apple Watch, with its extremely limited screen size and input modality limitations, being able to send a slight vibration to your loved one's watch with one tap, perhaps with an accompanying sticker? Just to let someone know they're in your thoughts? Powerful. I will never underestimate the power of ambient intimacy. Loneliness is one of the two grand eternal problems in tech (the other is boredom).

My bet is still that some solution with a higher level of abstraction and functionality will win out in this replenishment shopping space, but for now, the Amazon Dash Button is an intriguing first crack at it. I just need one for Harmless Harvest Coconut Water. I'm always running out, and because it's not heat pasteurized it's perishable so I have to buy it locally (delivery services like Instacart don't deliver perishables). I but it from CostCo for the discount (that stuff is not cheap), but I hate fighting the madding crowds of CostCo. I brave that capitalist jungle, though, because I am as addicted to Harmless Harvest as most people are to coffee.

Give me a Harmless Harvest Dash Button, and, if you're really evil, program it to work only occasionally, on some random interval, and I'll be pressing that thing like a rat in a Skinner Box mashing on the response lever.

Universal banks losing out to specialists?

Although it dislikes the term, JPMorgan is a prime example of a universal bank. Others – Citigroup, Bank of America Merrill Lynch, Barclays, Deutsche Bank – also combine retail and investment banking but JPMorgan is the most prominent. 
 
And universal banks have been, to put it politely, a disappointment. JPMorgan produced a return on equity of 9.4 per cent last year. That is barely adequate but it is the best of a bad bunch. None of the others made it past 5 per cent. And last year was not out of the ordinary. Those five universal banks together have managed an average return on equity of 5 per cent over the past five years. There is always an excuse – fines, new rules, restructuring charges, tough conditions in one market or another – but these are all part and parcel of universal banking. 
 
Compare that with the specialists. Look at Wells Fargo, which is predominantly in the retail sector, with a 12 per cent five-year average ROE. Or even Goldman, a pure investment bank, with 11 per cent. 
 
The universal banking model is broken, a fact some banks have realised. UBS and RBS have moved. Others – Deutsche and Barclays, for example – have been less radical so far and need to go further. The US universal banks are the most wedded to the model, promising better returns in the future. But shares in almost all of them trade at a discount to specialists. The message from investors is clear.
 

Paywalled piece from The Financial Times, via The Browser (which, if you're into more than just technology news, is a great, short, curated daily list of links to interesting reading online; another artisanal service I happily subscribe to).

How does that legendary Jim Barksdale quote go? “There are only two ways to make money in business: One is to bundle; the other is unbundle.”

Certainly feels like times are ripe for an internet only financial services play. Our arcane financial system has held up longer in its current form than I expected. I know there have been a few, though I have not tried any of them, but this article is more evidence that a horizontal (or specialized) attack might be fruitful. I'd probably start by trying to actually own the customer's money/wealth/assets, then branch out into figuring out ways to sell them financial products for those (e.g. insurance, credit cards). Customer acquisition is such a bear, though, that it might be easier for a trusted and well-known company like an Amazon to tackle.