The power of trust in building a brand

Posted on July 10, 2019

A guarantee to boot

Outdoorsman Leon Bean was very familiar with the backwoods of Maine. Years of roaming the wilderness had given him ample experience with fishing and hunting and the gear needed for these activities. One item that left him wanting were his boots, which failed to keep his feet dry in the wet terrain. He decided to create an improved version that mated a leather upper to a rubber sole and would hold up better in the conditions.

Bean set up a company bearing his name to manufacture and sell this new shoe. He signaled trustworthiness by guaranteeing the product unconditionally. L.L.Bean was an early pioneer of a radical policy in retail: anything it sold could be returned, at any time, if it didn’t perform to the customer’s satisfaction. The definition of “satisfaction” was left to the buyer’s discretion, and proof of purchase was not required. This was in keeping with the sturdy ethos of the rural New England towns that shaped Bean’s upbringing, where reputations were built and maintained for the long term.

This approach initially turned out to be very costly. 90 of the first 100 pairs of boots he sold were sent back, revealing unexpected issues with the design that needed to be sorted out. Instead of abandoning the idea he absorbed the financial hit and learned from these mistakes, sending a redesigned version back into the market. Read more…

The boot still looms large in the company’s mythos, as well as its income statement. They have also become hot fashion items in certain circles, which would likely confuse the original Leon if he were alive to see his “Maine hunting shoes” used to get Instagram likes and not ducks. A “bootmobile” in the shape of the iconic product can even be seen driving around, a la Oscar Meyer’s Wienermobile. ↩
The brand unexpectedly became a cult favorite in Japan, which is the only country other than America that has its retail stores. ↩
As the meme says, this is why we can’t have nice things. ↩
And the thrift shop hackers who had developed a side business in reselling L.L.Bean merchandise credits they claimed in exchange old products. ↩
Bonobos claims to be the first to use the term ninja for its support reps, which has since become a trendy catchall job title for hip companies. ↩
The company was eventually bought by Walmart, whose associations with the hoi polloi mortify the trendsetters who supported the brand. ↩
Netflix’s expense policy is five words long: Act in Netflix’s best interests. ↩
The University of Virginia and its Honor System being one of the more noteworthy examples. ↩
One large services firm required employees and household members to first vet every prospective stock trade against a list of the firm’s clients. ↩

Valuing what your customers don’t

Understand the true model

Posted on July 3, 2019

Fly the friendly skies

By today’s standards, air travel across the United States in the 1960s and 70s was strangely luxurious. Planes had roomy couch-like seats and usually weren’t full, elaborate meal services were the norm even in economy class, and both passengers and crew were elegantly attired.1 Health and safety standards were different too: flyers strolled aboard with no more screening than would be needed to board a bus, and flight attendants were ready with cigarettes and a light once the no smoking sign went off. For those with sufficient means, flying was a noteworthy occasion.

But these service levels enjoyed by past travelers didn’t result from altruism. The amenities arms race took place because airlines were legally forbidden from competing on the most basic dimension—price.

This was because a federal agency known as the Civil Aeronautics Board set fares, approved routes, and tightly regulated the entry and exit of participants. As a result, they were forced to find other ways to distinguish themselves from the pack, and they did so by finding diverse and ostentatious ways to enhance the passenger experience. Read more…

On one 1200-mile flight, Delta Airlines even offered an 8-course first class meal. They were probably being generous in their definition of “course”, but still. ↩
If it were legal some passengers would probably travel in a crate in the cargo hold, if it meant saving a few euros. ↩
In the 1980s international economy class passengers on Pan Am received a gift box that included a razor, which while fascinating was of limited use to the children like me who received them. ↩
In between midair sales pitches for co-branded credit cards, delivered by flight attendants who aren’t sure this is what they signed up for. ↩
While most newspapers have done away with extensive stock sections a few shrunken listings remain, for those who can’t figure out the Google. ↩
Which would boggle the minds of early 20^th century transatlantic travelers, who had to spend 4 or 5 days in transit instead of the 7 or 8 hours it requires today. ↩
One school of thought is that some journalism may only work if its nonprofit, and that approach is being taken in a few areas. ↩
Much to the chagrin of many in old media, what they did care about was click-baity listicles. So goodbye to your Middle East bureau, hello to a millennial-friendly content farm in Brooklyn. ↩

Game shows and learning from unconventional strategy

Question the answers

Posted on June 26, 2019

Ready player won

Law student Chuck Forrest had been working on a disruptive new strategy, and now he would finally get to unleash it.

Forrest wasn’t in a typical competition. He was about to appear on the American game show Jeopardy, a now-iconic trivia program in which three players face a grid of clues, arranged by increasing dollar value along six themed categories. The contestant who rings in first and responds correctly gets to choose next. With the right answer and precise timing, anyone can take control and decide where to head on the game board.

The objective is simple: have the most money at the end of the game to win. Victors also get the chance to appear again the next day.1

Convention dictated that players start with the easiest, low-dollar clues at the top of the category and proceed downward to the more difficult ones. Games typically unfolded in predictable ways as contestants worked through clues sequentially. The show’s writers often built in a theme that revealed itself as a category was worked through, further reinforcing this approach. This style of play also made it easier for television viewers to track with the game.

A crucial fact is this pattern was not in any way enforced or required. It wasn’t part of the rules. Read more…

Prior to a rule change in the early 2000s players were retired after five consecutive wins. Lifting that restriction would open the door for the captivating streaks unleashed by several people in the last fifteen years. Also the show tapes five shows per day for efficiency’s sake, so a win means you get 20 minutes to change outfits before competing again. ↩
Like the NBA Playoffs, but for nerds. ↩
Only the player with the most money banked gets to keep that amount. The other two get small consolation checks unrelated to their final score. ↩
Until James Holzhauer came along, the highest one-day cash total was $77,000, and no one had come close to it for years. He broke this record a staggering sixteen times, resetting the record to $131,127. ↩
Even without that layer Teslas are still rather pricy for customers, and the company’s stock price woes show that a stable financial model has yet to be uncovered. ↩
When the next iPhone comes out priced at $1,000 just try offering $500 and see how the befuddled millennial salesperson at the Apple Store reacts. ↩
It wasn’t enough for Saturn, which ultimately disappeared from the market, collateral damage in the 2008 economic collapse and bailout of the U.S. automobile industry. ↩
When I played on Jeopardy, I had internalized the advantages of the Forrest Bounce and used it, but for some reason never considered Holzhauer’s money-maximizing clue selection. ↩

Work-life balance and seeing the fuller picture

Measuring what matters

Posted on June 12, 2019

On the mountaintop

Silicon Valley’s mythos is grounded in stories of scrappy entrepreneurs who upended their entire lives in pursuit of their mission. An archetypal example is Marissa Mayer, who started as employee number 20 at Google before rising through the leadership ranks, eventually moving to the top spot at Yahoo. She proudly notes that during the early years work demands would often keep her in the office overnight, as well as throughout weekends.1

This ethos of total dedication has influenced many other companies, and the image of the single-minded founder foregoing sleep, exercise, and personal attachments is a common one. This isn’t limited to the startup phase, as a similar mindset prevails in larger firms—those foosball tables and free cafés now de rigueur for the millennial-friendly organization might seem benevolent, but they are also a mechanism of further enfolding employees’ lives into the all-encompassing world of work.

The business world is not alone in valorizing such outsized dedication. British historian Niall Ferguson has received numerous accolades for his prodigious output of books, speeches, and television series unpacking topics in economics, finance, and international affairs. His academic career has included teaching and research at several of the world’s great universities. Measured by popular acclaim and impact he has reached the pinnacle of his profession. Read more…

She also tosses out a 130-hour figure for her work week, which simple math and basic human physiology doesn’t really support for any sustained period. Even working nonstop from six in the morning to midnight seven days a week doesn’t get you there. Prospective Navy SEALs going through the notorious Hell Week with about five hours of total sleep aren’t subject to such demands for weeks on end, for good reason. ↩
Including time with his young children, as he mentioned in another interview. ↩
His hobby involves the over 100 cars and motorcycles he owns, which are far more tolerant than children of being ignored for a few weeks at a time. ↩
Unless you’re paid in a currency experiencing hyperinflation, in which case comparisons quickly become impossible. ↩
Although the debt-fueled consumer credit economy allows people to live beyond their means for a while, that façade comes crashing down eventually. ↩
And given the current age of omnichannel media, Christensen’s brief article and talk on the matter was soon developed into a full book of the same name, in the same fashion as terminally-ill professor Randy Pausch’s viral “Last Lecture.” ↩
So don’t. ↩
A young Indian entrepreneur who established a global technology business in his teen years mentioned how it cost him a significant part of his childhood. While peers were playing and relating and exploring, he was grinding away in the office. ↩
To paraphrase a quote from Jesus, what good is it to gain the entire world if you lose your soul? ↩

Creating together and the Starbucks effect

May I take your order

Posted on June 5, 2019

Café society

The earliest menus of the cafe that would eventually become the modern-day Starbucks deliberately mimicked the 1980s-era Milanese establishments that inspired the concept. Coffee options were limited and described in plain language, which was designed to introduce Italian permutations of brewed coffee and milk to American consumers long before terms like macchiato and doppio entered the vernacular.

Sizing was simple, with a standard cup for espresso drinks and a slight upcharge for a bigger one, logically named a “tall”—which over time has become the default smallest size on a Starbucks menu.1 The proliferating array of flavorings and sweeteners were not available, and concoctions like the Frappucino had not yet been conceived.2

From this simple beginning the chain has expanded its offerings such that there are now tens of thousands of possible beverage variations, fine-tuned to the most idiosyncratic patron.3 The rotating menu boards spotlight only the tiniest fraction of these, leaving the majority of options unknown unless discovered during a customer’s past experiences.4 Read more…

The evolution of Starbucks’ sizes is a testament to expanding appetites. This original size is now known as a short, which although unlisted is still available on request. ↩
With its birthday cake-levels of sugar helping to keep sales brisk, the Frappucino generates somewhere around $2 billion in revenue yearly. ↩
The Starbucks website claims 87,000, though there are no supporting calculations to show for it. This means even the longest-lived person on earth could try a new variation every day of their life without coming close to exhausting the full range. ↩
Or when something social media-friendly like the rainbow-hued Unicorn Frappucino got Instagrammed. ↩
So for all of you venti half-caf sugar-free double vanilla pump no foam extra hot with a double cup and room for cream-types, just know that your uniqueness isn’t unique. Also being too precious with your order probably annoys the baristas. ↩
And a market capitalization around $100 billion. That caffeine jones is profitable. ↩
Even if you don’t know the POÄNG chair by name, you’ve probably seen it in a dorm room somewhere. ↩
The large courses that many institutions have put online are a good example of the reverse effect. Completion rates are significantly higher when students pay a nominal fee for an official certification instead of joining for free. ↩
An insight that underlies the Montessori model of education. ↩

Extreme risk, extreme achievement

Lessons from a historic climb

Posted on May 29, 2019

Because it’s there

Alex Honnold is a mountain climber, but such an unadorned description is akin to saying that Pele could play soccer, or Einstein dabbled in math. The term does not adequately capture the reality-defying nature of what he does.

Honnold is the world’s foremost practitioner of a climbing style known as free soloing, which eschews equipment that could aid in progress, with the added disadvantage of no ropes or harnesses for protection in case of a fall.1 With a small chalk bag worn around his waist and snug footwear as his only gear, he scrambles up rock faces with the deftness of a mountain goat.

On June 3, 2017, he single-handedly extended the boundaries of human possibility, climbing the legendary El Capitan in California’s Yosemite Valley, following a route that scaled 900 vertical meters (3000 feet) in one shot. He surmounted one of the most imposing rock formations on the planet, which attracts climbers from around the world looking to conquer a pinnacle of the sport.2 Read more…

Free soloing is not to be confused with free climbing, in which one ascends the mountain without using any assistive gear, but still using a harness and ropes for arresting a fall. These are both further distinguished from aid climbing, in which mechanical devices are used to augment one’s own strength and ability to maintain contact with the mountain surfaces. ↩
Pinnacle, because it’s a mountain. You see what I did there. ↩
Not to mention any number of events outside of his control, including stone that could flake off the wall without warning, or inclement weather, a spooked bird, rockfall, etc. ↩
Along with usual personal attachments like a fixed dwelling, he also sacrificed many normal human relationships and hobbies. Such single-minded devotion to a task may be necessary for some goals, but the personal toll is steep. ↩
Temporarily being the operative word, as the inexorable approach of death for everyone is a fact Honnold muses on philosophically when considering the risk involved. ↩
Granted, the achievement here is pretty arbitrary: Bannister covered a distance of 5,280 units derived through a messy process involving the size of Roman feet and British tax and regulatory policy, in 4/60 of 1/24 of the time that the earth takes to rotate on its axis, give or take. ↩
And yet new ones regularly open in that eternal triumph of hope over experience, which is a boon for those craving a cronut or whatever the next food fad might be. ↩

Move less to accomplish more

Motion versus effectiveness

Posted on May 22, 2019

Slow and steady

Not long after his debut in the top levels of soccer, Lionel Messi established himself as one of the most effective players in the world. He quickly gained renown for his tactical prowess, ball-handling skills, and playmaking abilities. His prolific scoring soon resulted in a slew of club championships and cup victories in Spain’s top league as well as in Europe-wide competitions.

His career has since been punctuated with numerous awards recognizing his performance as the top overall player and scorer of the season. When conversation turns to the best soccer players of all time his name is permanently on the shortlist. As an Argentine, he has assumed the mantle of the legendary Diego Maradona for a new generation of fans.1

Given the level of dominance he has achieved, it would be reasonable to assume that Messi is a workhorse on the pitch, running harder and faster and simply out-hustling other players to the ball when opportunities arise. One would expect him to demonstrate prodigious stamina during soccer’s long matches, where substitutions and breaks are minimal.

That assumption, while plausible, would be completely wrong. Read more…

One notable sore point in Messi’s career is Argentina’s lack of World Cup success with him at the helm. ↩
Who are not being paid nearly as much as the players they oversee, it’s safe to assume. ↩
Add in the fact that by virtue of his name a Buffett investment can swing markets, making it a self-fulfilling prophecy. ↩
As well as small personal armies of assistants, cooks, maids, drivers, pilots, yacht crews, etc. ↩
So if you’re the one who’s demanding yet another version of that analysis, remember the toll you’re imposing on your team. ↩
Excluding stoppage time, of course, which adds a vague buffer at the referee’s discretion, to the bewilderment of fans of other sports where the game clock is transparent and final. ↩

The advantage of the hard restart

Back to basics

Posted on May 15, 2019

Is this thing on

The world of stand-up comedy is known for its grueling circuit of obscure shows in small venues, where thousands of anonymous hopefuls work through their material with the aim of building a following and one day getting their name on a theater marquee. A select few who sit in the right intersection of talent, timing, perseverance, and luck can find themselves with a full-time career in the field. They often become known for a specific brand of humor.

Much like musicians with their hit songs, these comedians develop trademark bits or catchphrases that become core to their image. A sufficiently well-known artist can build a persona around them that is popular enough to sustain a long and reasonably stable career. These core routines can keep the crowds buying tickets throughout long tours. It makes sense to leverage what you’re known for—after all once you have a few hits, wouldn’t you want to milk them as much as possible?

Yet a select few commit to a more counterintuitive path. They periodically throw out all their existing content—which helped them achieve success—and rebuild their core set entirely from scratch. This appears foolhardy: why jettison the very thing that made you famous, likely honed over hundreds of laborious hours, in favor of content whose reception is uncertain? Read more…

It’s one of the reasons that comedy across language barriers is very difficult, as the rules of wordplay and punch lines can be very different across languages. ↩
Depending on how cultural norms evolve, groundbreaking comedy from just a few decades ago can be cringeworthy when viewed with modern sensibilities. ↩
Amazon has even named an office building Day 1, just as Facebook with its vaunted “hacker” ethos sits literally at 1 Hacker Way. Incidentally Apple resides at 1 Infinite Loop, which is a generally undesirable condition in computer programming, so not sure what the message is there. ↩
Post-crash it took Amazon’s stock price a decade to regain its peak 1999 level. During that time the success of Amazon’s strategy was not taken for granted by nervous investors. The company’s valuation is now dancing around the $1 trillion level. ↩
Including some notable misfires like the Fire Phone, which was perhaps more appropriate as a name for Samsung’s Galaxy Note 7, which had the unfortunate tendency to burst into flames. ↩
Or even literally—this is a reason why international rotations are so popular in large multinational organizations. There are some things that are very hard to understand unless seen and experienced firsthand. ↩
One airline CEO was known to periodically serve as a flight attendant, recognizing that pushing a drink cart through the aisles was far more representative of the company’s work than taking meetings in generic executive suites. ↩
Causing startups to alternately tremble at the prospect of being crushed by Amazon or salivate at the thought of becoming attractive enough for Amazon to acquire. ↩

Hard conversations and ensuring success

Feedback and forth

Posted on May 7, 2019

In the bubble

As Paul Wolfowitz stepped out of his suburban Washington home one spring morning in 2007, he was greeted by the unusual sight of journalists camped out on the curb. The past weeks had seen intensifying scrutiny of Wolfowitz and the actions he had taken shortly after assuming the presidency of the World Bank in 2005. Politicians and leaders from civil society had begun to weigh in on the situation, and it was unclear how the institution’s Board would respond.

Established in the aftermath of World War II, the Bank was designed to finance the rebuilding of countries devastated by the conflict, only later evolving to take on its current broad anti-poverty mission.1 From the beginning, tradition held that the government of the United States would choose its leader. When Wolfowitz was nominated by President George W. Bush it was expected that he would serve at least one standard five-year term, if not two.

But less than two years after he began, engulfed in ethical and policy controversies and facing mutinous sentiment from the Bank’s staff, Wolfowitz was forced to negotiate his resignation, bringing his tenure to an abrupt and inglorious end. Read more…

The World Bank and International Monetary Fund, known as the Bretton Woods institutions, were established during a conference that took place in a New Hampshire town of the same name. The latter is often called on to help countries facing financial crises, making it a higher-profile target for critics than the World Bank, which to the layperson is often presumed to be a purveyor of checking accounts. ↩
Despite its American location the Bank’s staff was heavily European, and many held unfavorable views of the Bush administration, of which Wolfowitz was formerly a part. ↩
A few months before his ouster Wolfowitz was found out to be wearing socks with holes in them, revealed unexpectedly when he removed his shoes to enter a mosque on an official visit. Instead of being admired for his thrift he was relentlessly mocked in the global press, an early sign that public sentiment was not on his side. ↩
Keep that in mind when you are tempted to write off something critical as inaccurate. ↩

The surprising backstory of an industry pioneer

Pivoting and jumping

Posted on May 1, 2019

Level up

The Japanese company had been in the business of making playing cards for over 75 years, but its core market had become stagnant as customer preferences changed. It had produced few significant innovations in recent decades, aside from the successful introduction of plastic cards, plus a licensing deal back in the 1950s that brought Disney characters to its children’s products.

Its leader clearly saw that without drastic change the future of his enterprise would be one of irrelevance or decline. To forestall this, his team experimented with scattershot forays into new markets as varied as taxi service and noodle soup. These and similarly implausible attempts went nowhere.

By the 1970s it was clear that analog objects like playing cards were being supplanted by new technology-driven devices, particularly those that took advantage of emerging digital capabilities to draw in younger users. The company’s connections in the toy and game industry were fortuitous, as it was well positioned to observe these new products and their distribution patterns. Read more…