Archive for August, 2008

Bathroom entrepreneurship

August 30, 2008

Low hanging fruit in the bathroom:

  1. Toilet paper holders (the metal kind with spring inside) should be designed not come apart in if mishandled (they should be all one piece)
  2. Flush petals would make more sense than handles, especially considering the activity immediately preceding flush
  3. Event venues should design larger bathroom space for women than men given typical lines
  4. And of course, all urinals should have a target, for diversion and cleanliness!
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You should floss! (or should you… ?)

August 27, 2008

If you are like me, this conversation has played out exactly the same way every 6 months for as long as you can remember:

Dental Hygienist: Are you flossing?
Me: Uh … probably not as much as I should
Hygienist: Well .. how often?
Me: Uhhh ..  once or twice
Hygienist: Per week?
Me:
Hygienist: You really need to floss!
Me: Starting today, every day ma’am!

And then you/I go home, floss that night and never again until the next appointment. When I was younger there was some measure of guilt associated with this. But now that I am old enough to rationalize myself into or out of about anything (as Nic points out), I’m free of my guilt fetters.

Why floss: Because there’s a chance that not flossing can lead to expensive and painful surgery down the road. But it certainly won’t kill you (will it?).

Why not floss: Because it costs money, takes time and may not end up actually preventing aforementioned painful/costly surgery.

LET’S RUN THE NUMBERS:

Why not floss:

$3 container of floss x replacement every 4 months x 50 years of flossing life until surgery = $450

3 minutes per day * 50 years of flossing * $20 per hour (approx average wage in US) = $18, 250

Total cost of flossing = $18,700

Why floss:

Cost of surgery / recovery – Who knows? Let’s call it $10,000.

Painfulness of surgery – Let’s call it 50% of the dollar cost = $5000 (you’d endure the pain of surgery for 5 grand, right?)

Chances of surgery coming to pass –

Chance you  live until age of surgery (let’s call it 60 years) = 85%
X
Chance that you need the surgery if you live to 60  = don’t know .. let’s call it 50%

($ Cost + Pain) * Probability =$6,375 cost of not flossing

The weigh-in

Expected cost of flossing = $18, 700
Expected cost of not flossing = $6,375

No need to even bring PVs into this… QED

Flossing. Consider yourself rationalized out of my life. Feel free to bring this printout to the dentist next time he/she gives you shit.

Marketing – myths of origin

August 25, 2008

If they brought it from elsewhere, it must be good. Consider:

  1. Häagen-Dazs is owned by General Mills and the name was made up to make Americans think it was Scandinavian
  2. London Consulting Group is a firm based in Monterrey, Mexico, with operations all over Latin America – but an English motto (“Get more from your business!”)
  3. Bavaria is a Costa Rican beer distributed in Costa Rica
  4. Cerveza Polar is a Venezuelan beer distributed in Venezuela – with a Polar Bear printed on the label
  5. Fiji water… well okay, that actually comes from Fiji islands, but they have H2O in delicious form in Vermont for God sakes; also in less glamorous locations like… Minnesota

I agree with Phil that the local food craze is a bit screwy, but it’s not more irrational than many other powerful marketing influences – such as the foreign food craze.

Can any of the locavores please explain to me…

August 19, 2008

… that given the environmental impact of consuming locally grown food is, at best, insignificant, how it is morally defensible to take business away from a poor developing-world farmer and give it to an middle class farmer in upstate New York?

“Local food is fresher / tastes better” is a fine answer, but then let’s call a spade a spade: A vanilla consumer desire for a higher quality product, not a “lifestyle” and certainly not anything to get self-righteous about.

Chicken please

August 10, 2008

My liberal Boston high school used to hold an annual Oxfam “hunger banquet” to raise money and awareness for world hunger. Everyone in the school would draw a ticket to determine which meal they got:

  1. 15% get a normal cafeteria meal
  2. 35% get rice with a bit of gravy or beans
  3. 50% get a small portion of rice

Perhaps it’s time for Oxfam to change the game to reflect a changing world. Today’s middle class constitutes 30% of the world population, and that figure will rise to 52% by 2020 (see FP article). The growth will come in large part from developing countries (China, India).

This is great news for poor people, but also means increases in commodity prices (fixed supply on earth, rising demand). In addition, I can think of several big-picture economic implications:

  1. American hegemony will slowly recede as populations in other countries have increased access to education and military resources
  2. The new economic winners will no longer be those who use technology developed in rich nations to exploit natural resources or labor in poor nations (as during colonization, oil exploration, banana plantations, etc)
  3. The new economic winners will invent or apply technologies allowing fixed natural resources to meet growing consumer demand or otherwise increasing efficiency in peoples’ lives

The last of these suggests we should pay more attention to the Hand’s tech expert (here here here).

Endeavor in The Economist

August 6, 2008

Read it here.

Quite complimentary.

Previous Hand posts on Endeavor and entrepreneurship in emerging markets:

On Endeavor: Here and Here

On Endeavor Entrepreneurs: Here and Here

On (the struggles of) entrepreneurship in emerging economies: Here and Here and Here

Hostage Valuation: Gmail’s worth $10 billion

August 3, 2008

Forget your DCF. I want to propose a new way to value internet properties: The Hostage Valuation.

Is Facebook worth $15 billion or $3 billion. Who knows? But here’s a decent way to test that. (Other thoughts from Sam here)

Suppose Facebook decides to holds its user’s content hostage and demand a ransom. “Pay me X dollars or you can never use the service again and we’ll delete your account.” How much would you pay? Most wouldn’t cough up a single cent. But some would. And a few would cough up quite a bit.

Google, of course, would never do this because it has a brand to protect with a range of products. But just for fun, let’s do a back-of-the-envelope Hostage Valuation for Gmail.

Number of users: ~100 million.
Number of active users: Let’s call it 50 million.

Let’s try to figure out if held hostage how much ransom each of those 50 million users would pay for continued access to their inboxes/outboxes.

Starting with me: Certainly above $1000, but probably less than $10,000. As a certified email addict, would guess that I’m in the top 5% in propensity to pay, but probably not the top 0.5%. Based off of that datapoint I propose the following assumptions (open for debate):

Percentiles 0 – 75% : Flick off Google and don’t pay anything
Percentiles 75 – 95%: Willing to cough up $100
Percentiles 95 – 99%: Willing to pay $2000
Top 1%: Willing to pay $10,000 on average (probably a few rich, email-holics willing to pay $1 million raising that average)

That yields an Hostage Valuation of Gmail of $10 billion. Sound reasonable?

Couple notes:
1) Assumes that Google is able to price discriminate well. My guess is they could. Base it off usage stats and demographic estimation from data mining.
2) Notice how the top 1% of users is worth as much as the other 99%. That’s the Long Tail.
3) Any ideas under what conditions the hostage valuation is greater than or less than a standard valuation?