Raja Jasti’s Blog - Renaissance Thinking

November 5, 2009

CEO of the decade

Filed under: Business — Raja @ 6:11 pm

Fortune Magazine says it is Steve Jobs. We have to agree.

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The past decade in business belongs to Jobs. What makes that simple statement even more remarkable is that barely a year ago it seemed likely that any review of his accomplishments would be valedictory. But by deeds and accounts, Jobs is back.

It’s as if his signature “one more thing” line now applies to him as well. After a six-month leave of absence in the early part of this year, during which he received a liver transplant, he is once again commanding a 34,000-strong corporate army that is as powerful, awe-inspiring, creative, secretive, bullying, arrogant — and yes, profitable — as at any time since he and his chum Steve Wozniak founded Apple (AAPL, Fortune 500) in 1976.

Superlatives have attached themselves to Jobs since he was a young man. Now that he’s 54, merely listing his achievements is sufficient explanation of why he’s Fortune’s CEO of the Decade (though the superlatives continue). In the past 10 years alone he has radically and lucratively reordered three markets — music, movies, and mobile telephones — and his impact on his original industry, computing, has only grown.

Remaking any one business is a career-defining achievement; four is unheard-of. Think about that for a moment. Henry Ford altered the course of the nascent auto industry. PanAm’s Juan Trippe invented the global airline. Conrad Hilton internationalized American hospitality.

In all instances, and many more like them, these entrepreneurs turned captains of industry defined a single market that had previously not been dominated by anyone. The industries that Jobs has turned topsy-turvy already existed when he focused on them.

He is the rare businessman with legitimate worldwide celebrity. (His quirks and predilections are such common knowledge that they were knowingly parodied on an episode of “The Simpsons.”) He pals around with U2’s Bono.

Consumers who have never picked up an annual report or even a business magazine gush about his design taste, his elegant retail stores, and his outside-the-box approach to advertising. (”Think different,” indeed.)

It’s often noted that he’s a showman, a born salesman, a magician who creates a famed reality-distortion field, a tyrannical perfectionist. It’s totally accurate, of course, and the descriptions contribute to his legend.

Yet for all his hanging out with copywriters and industrial designers and musicians — and despite his anticorporate attire — make no mistake: Jobs is all about business. He may not pay attention to customer research, but he works slavishly to make products customers will buy.

He’s a visionary, but he’s grounded in reality too, closely monitoring Apple’s various operational and market metrics. He isn’t motivated by money, says friend Larry Ellison, CEO of Oracle (ORCL, Fortune 500). Rather, Jobs is understandably driven by a visceral ardor for Apple, his first love (to which he returned after being spurned — proof that you can go home again) and the vehicle through which he can be both an arbiter of cool and a force for changing the world.

November 1, 2009

Startup lessons: $5 seed funding and 2 hours runway

Filed under: Entrepreneurship — Raja @ 9:27 pm

How much can you make if given $5 seed funding and two hours of time? This was the experiment run at my alma mater Stanford by a B (business) school professor at the D (design institute) school. The answers will surprise you.

You don’t need millions of dollars to create huge businesses. The biggest grossing movie of the past few weeks, paranormal activity, was made for $10K by a couple of amateurs. It has made $84M so far in its first 6 weeks.

As you can see you don’t need a lot to do a lot. So what are YOU going to do?

Here is the trick: Think out of the box and think big.

Cheaper than free?

Filed under: Business, Mobile, Trends — Raja @ 10:53 am

Bill Gurley has a fantastic blog post on how google is disrupting even the free business model with its android platform and free navigation service.

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Google’s free navigation feature announcement dealt a crushing blow to the GPS stocks. Garmin fell 16%. TomTom fell 21%. Imagine trying to maintain high royalty rates against this strategic move by Google. Android is not only a phone OS, it’s a CE OS. If Ford or BMW want to build an in-dash Android GPS, guess what? Google will give it to them for free. As we noted in our take on the free business model, “if a disruptive competitor can offer a product or service similar to yours for ‘free,’ and if they can make enough money to keep the lights on, then you likely have a problem.” It would be one thing if this were merely a mean-spirited play by Google to put an end to the GPS data duopoly. But it is not. There are multiple facets to this remarkably disruptive move.

While it is obvious that this maneuver creates a problem for the multi-billion dollar GPS market, it also poses real challenges for the leading smart phone players – RIM’s Blackberry and Apple’s iPhone. Without access to their own mapping data, these vendors now face an interesting dilemma. Do you risk flying naked without free navigation or do you suck it up and swallow the above average royalty fee for each and every handset? Neither option is stellar. This problem isn’t nearly as daunting as the one now faced by the Windows Mobile and Symbian teams.  As software providers, they are lucky to get a per unit royalty equal to that extracted by the GPS data guys. If they are now forced to integrate this data merely to keep their product competitive, their gross margin just went negative. Ouch!

This is not just incredible defense. Google is apt to believe that the geographic taxonomy is a wonderful skeleton for a geo-based ad network.  If your maps are distributed everywhere on the Internet and in every mobile device, you control that framework. Cash starved startups, building interesting and innovative mobile apps, will undoubtedly build on Google’s map API.  Its rich, it is easy to use, and quite frankly the price is right. In the future, if you want to advertise your local business to people with an interest in your local market, chances are you will look to Google for that access.

Introducing the “Less Than Free” Business Model

Google’s brilliance doesn’t stop there. It is hard not to have been surprised by the rapid rise in recent buzz surrounding the Google Android Smartphone OS. When I asked a mobile industry veteran why carriers were so willing to dance with Google, a company they once feared, he suggested that Google was the “lesser of two evils.” With Blackberry and iPhone grabbing more and more subs, the carriers were losing control of the customer UI, which undoubtedly represents power and future monetization opportunities. With Android, carriers could re-claim their customer “deck.” Additionally, because Google has created an open source version of Android, carriers believe they have an “out” if they part ways with Google in the future.

I then asked my friend, “so why would they ever use the Google (non open source) license version.”  Here was the big punch line – because Google will give you ad splits on search if you use that version!  That’s right; Google will pay you to use their mobile OS. I like to call this the “less than free” business model. This is a remarkable card to play. Because of its dominance in search, Google has ad rates that blow away the competition. To compete at an equally “less than free” price point, Symbian or windows mobile would need to subsidize. Double ouch!!

“Less than free” may not stop with the mobile phone. Google’s CEO Eric Schmidt has been quite outspoken about his support for the Google Chrome OS. And there is no reason to believe that the “less than free” business model will not be used here as well. If Sony or HP or Dell builds a netbook based on Chrome OS, they will make money on every search each user initiates. Google, eager to protect its search share and market volume, will gladly pay the ad splits. Microsoft, who already was forced to lower Windows netbook pricing to fend off Linux, will be dancing with a business model inversion of epic proportion – from “you pay me” to “I pay you.”  It’s really hard to build a compensation package for your sales team on those economics.

We are familiar with how microsoft used its bundling strategy to leverage its OS to crush competition. This is the new web version of that strategy. Use ‘free’ business model and leverage scale to disrupt everything digital and crush competition. It is difficult to compete with free.

Social Media Scams?

Filed under: Internet, Media, Trends — Tags: , — Raja @ 10:42 am

Social gaming is allegedly making a lot of money. Mmost of the data is private so difficult to confirm this, but estimates are the top 3 compnaies Zynga, Playdom and Playfish are doing  revenues of $300M per year. Companies such as offer pal media are powering the monetization of th these social gaming companies.

Mike Arrignton calls out Anu Shukla at a conference on what he calls unethical practices of these companies that is leading to a downward spiral of hell. Anu responds in kind calling his accusations ‘Shit, doubleshit and bullshit’. This has lead to a lot of discussion on the blogosphere.

I must say I see a lot of questionable to downright unethical type of games and offers on facebook. Many in my friends list fall for these tricks. This is an important issue that needs to be looked at. BTW, Mike is taking sides by calling Offerpal media and Zynga  bad guys while calling slide a good guy. He follows this space lot more closely than me, so he earns the right to call companies out. But I have seen questionable practices from slide too (they used to force people to invite friends when signing up for their apps). So I don’t think any company is innocent on this.

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