Ideuhs

Innovation, Not Immediate Perfection

Last night the MIT/Stanford Venture Lab (VLAB) put on a great panel discussion on innovation with Marissa Mayer of Google, Tim Brown of IDEO, and Randy Komisar of Kleiner Perkins. VLAB is a forum for entrepreneurs to connect with each other and investors and discuss how to grow high-tech ventures. For people like me in the marketing field, VLAB meetings and events present a rare opportunity to get a glimpse of future technologies and meet people who are working to create the next big thing.

The theme of the panel was "pivoting to success" through iteration. If success is defined as user acceptance of your product, the idea of iteration is to expose your product early through user testing or beta releases and, in the words of Mayer, "let users tell you where to go." She compared it to sailing, where instead of making a straight line towards your goal, you generally need to tack to the left and right until you get there.

Mayer shared some lucid insights into past Google product launches. With the first release of Google News, a launch postponement gave the team a few extra days, which the team decided would give them enough time to add either search by date or search by location. Since they couldn't agree, they left the decision to user response. The day of launch, they received 300 emails asking for search by date, vs. 3 requesting search by location. While in retrospect search by date now seems a no-brainer, Mayer shared a very sane perspective on product development: "It's innovation, not instant perfection."

The advantage of releasing early and iterating until you've reached the level of acceptance you desire is that you'll tend to stick closer to your desired trajectory. The risk of developing your product behind the curtain, and waiting to release until you feel it's perfect, is that during the interim, you may find out you are very far from what users want, and end up with a dud. Everyone seemed to agree that Apple's culture of keeping products tightly under wraps is the old-school outlier, and their success relies on the uncanny instincts of Steve Jobs.

Randy Komisar stressed the importance of investing in research. He told the story of one company he had invested in who requested $9MM in development funding. Instead, he have them $3MM for prototyping and research. The first round cost $1MM and revealed that users were uninterested in most of the original features except for one. The second $1MM revealed another flawed assumption. Using the last $1MM for a final round, they found their sweet spot and the path to profitability.

When each of the panelists was asked to sum up their points in six words, Komisar seemed to sum it up best: "Investing in iteration immensely improves innovation."

Another attendee has posted a more detailed recap of the discussion. See the interesting blog Womennovation. I suppose one thing to keep in mind is that the panelists for the most part were referring to interactive products, where it is relatively easy to test out pieces and iterate as you go. As Tim Brown pointed out, however, IDEO has mastered the art of rapid prototyping physical products as well. For those of us who work for advertising agencies, the idea of iterating through a campaign launch bumps up against the wall of client acceptance and limited advertising budgets. For clients who can afford test markets, however, this is a viable path.

As a blogger, I took some encouragement from Marissa Mayer's insight, which bears repeating: It's innovation, not immediate perfection. We all want the perfect blog right away, but most of us have to experiment as we go, and see what works.

The Surprising Truth About What Motivates Us

Last Friday afternoon I watched a really cool video illustration of Dan Pink’s Drive: The Surprising Truth About What Motivates Us. Dan Pink is a former speechwriter for Al Gore and aide to Labor Secretary Robert Reich who has become a best-selling writer on, as he puts it, “the changing world of work.”

The idea behind Drive is that workers are more motivated by Autonomy, Mastery, and Purpose than by performance-based financial incentives. What's interesting is not so much the general idea, but rather the counter-intuitive evidence Pink uses to suggest that in some cases, incentives actually have the opposite effect you would imagine.

I found this video as I was psychologically girding myself for a phone conference, via this tweet from @LEVELStudios: RT @bigspaceship: WOW: The surprising truth about what motivates us http://post.ly/jCz0.

Which led me to the blog of Michael Lebowitz, of Brooklyn digital agency Big Spaceship. You can see the video there, or at Dan Pink’s blog, although the easiest thing for you to do is to just watch it here, and then by all means visit the other blogs I mention.

For students of effective tweeting, I think it was the WOW that hooked me. I guess I’m a sucker for WOW. And then, of course, “surprising” is a compelling word choice. “The surprising truth about what motivates us” seemed a worthwhile thing to look into.

So I clicked on the link, and about 30 seconds into the video I thought, “WOW. This is really cool.” I’m a big fan of well-done info-graphics – and this video is an excellent example of info-graphics in motion.

This whiteboard animation is set against a portion of a talk given by Pink at the RSA (Royal Society for the Arts), who commissioned British visual communication agency Cognitive Media to capture it in cartoon images.  Cognitive Media has done a number of these for the RSA.

Now, here’s the funny thing. I first watched Dan Pink present his ideas on a YouTube clip of his TED Talk that Garr Reynolds posted on Presentation Zen, and then sort of forgot about it. So I went back to Garr’s blog to check out the original live presentation (which you can see below) and I actually found it more persuasive than the animated video. That may have been because it was now the third time I’d absorbed the message (and typically a person needs to see a message three times before it really sinks in), or because the live presentation is more complete, or simply because a live presentation delivered well is more effective. It’s worth watching both videos a few times, and visiting the post on Presentation Zen will provide some additional perspective.

I think what it comes down to is that great info-graphics can play a powerful role in sparking interest and giving us a panoramic view of complex ideas, but that inevitably we need to go to the source.

Taxes and Voting

Another inebriated debate with my Libertarian friend about tax policy.  Not much of a debate, really.  I had a loose command of facts and figures.  The sad fact is I haven’t really examined Obama’s tax plan.  So here it is in a nutshell: http://www.barackobama.com/taxes/.  You can link from this page to a PDF of Obama’s full tax plan.  I think part of the (my) problem is I have very little faith that any candidate’s tax plan is necessarily going to meet with reality once they get into office.  For example, “According to the Tax Policy Center, the Obama plan would reduce taxes as a share of the economy to less than 18.2 percent – the level of taxes that prevailed under President Ronald Reagan.  The Obama plan pays for these tax cuts by cutting spending overall.”  OK – there is a huge assumption right there, considering the $700B and counting that is being shelled out to stabilize the financial system already.  Nevertheless, I find myself agreeing with Obama directionally.  That is, I fundamentally agree that the idea of rolling back tax increases on the top five percent of earners – note this really is a rollback, not an unprecedented tax hike – while reducing the burden on the remaining 95% makes sense.  My Libertarian friend thinks this will tank the economy (even further) by disincentivising entrepreneurs from creating jobs, causing corporations to pass on increased tax costs to consumer prices, etc.  Joe the Plumber got dragged into it of course, and there was some confusion about individual income taxes and taxes on small businesses. 

 

So now let me look at some numbers.  This is going to take several blog posts to sort out – if it is ever sorted out – but at least let’s take a stab at this.

 

I was asked if I would be willing to accept an increase in my taxes should my wife’s and my joint income exceed $250,000.  (Oh! Would it were true!)  I said yes, and my friend said I was crazy.  He said he would make sure to cap his income at $249,999.  I stuck to my guns – I would be willing to sacrifice for the greater good.  My wife was like, oh yeah, at the cut-off point you get screwed, but people figure out how to manipulate that number to their benefit eventually. Mly wife also astutely pointed out that while federal income taxes have gone down, state and local taxes have gone up because the burden was shifted to them.  (Note: Obama's plan includes subsidy-style relief at the state and local level.) Every tax structure has transitional points where someone is at a disadvantage.  Personally, I feel that in general people want to earn more money, even if at some point their taxes are increased.  There are other benefits to earning a higher salary – for example, enhanced qualification for loans, or even a sense of status – that may balance out a tax increase.

 

First of all, let me confess that I am irresponsibly ignorant of what actual tax brackets are.  I’ve been calculating the top tax bracket at 36%, but when I did a search I found it is 35%.  I’m sure someone can set me straight on this, but I’m working with 36% for now.

 

So let’s say you earn $250K now and are taxed at 36%.  Your tax is $90,000 and your net income is $160,000.  Increase that rate to 39% and you are paying $97,500, netting $152,500.  You are paying an additional $7,500 in taxes.  To get back to netting $160K, you would need to raise your income to $262.5K. 

 

Tactically, if I were in the position of being offered a raise that would put us over $250K, I might tell my employer, Why don’t we keep it just under that for now.  But I would do so with the expectation that at some point in the future I might receive another raise that might, say, put me at $260K – still within in the screwable zone.  I would take that hit to maintain the upward trajectory, banking on the dream that I would eventually surpass that break-even point, and take some practical action to minimize the tax increase.  For example, while until recently I had been contributing the max to my 401K, I haven’t put any money in Roth IRAs for years.  Theoretically, I could offset that $7,500 tax increase by $4,000 in deferred investment.  The remaining $3,500 I would eat or try to make up with some other source of income.  Perhaps it is a sales commission, or a translation job.  This is the alternative economy after all.  In any case, if I’m making $250K, I’m not complaining.

 

Now let’s look at this small business owner situation.  I did a little digging around and as I suspected, an increase in the tax rate for small business owners earning over $250K is not going to crush the American Dream.  Here are a few figures:

 

Less than 20% of small business owners earn more than $100,000, and the median is somewhere around $50,000. (Guardian: “Courting Joe the Plumber”)

 

These numbers are close to figures for individual earnings overall as reported by the US Census Bureau for 2007: About 20% earn more than $100,000, while the median is $50,223.  (Newsweek: “Sorry, Pal, You’re Rich”)  According to this article, which discusses incomes in expensive urban areas, 2.245 million Americans earned more than $250K, or 1.9% of the population.

 

According to factcheck.org, McCain’s claim that Obama would raise tax rates for 23 million small business owners is complete BS.  23 million is the total pool of small business owners – as of a 2002 US Census report.  The actual pool is larger, of course, but the vast majority neither earns close to $250 nor employ any workers at all.

 

According to ABC (“Which Candidate’s Plan Helps Small Business”), the actual number of small businesses is 27.2 million, out of which 6 million, or 22% have any employees. It reports that the National Federation of Independent Business found that only 14% earn more than $200K.

 

An interesting article on Gather.com (“Who Makes $250,000 a Year? Not Small Business Owners”) categorizes those who might earn more than $250K and very few of these are necessarily directly employing workers in a business.  For example, corporate executives and marketing or sales people are not small business employers – they work for companies.  High-earning professionals such as doctors and lawyers are generally affiliated with larger organizations such as law firms and hospitals.  And so on. 

Where is this leading me?  Based on the above, I am guesstimating that maybe 10% of small business owners - that would be some 2.7 million entrepreneurs - earn more than  $250K and have employees.  The missing number would be how many employees we are talking about here. I suppose I'll have to do a little more digging.

 
My Libertarian friend insists that Obama will actually increase the tax rate for top earners to 50%.  I did not know where he pulled that number but poking around I have seen commentary that the combination of income tax and social security tax would make this so.  But I can’t get my head around that now so that will be for another blog.

Pathetic

John McCain: "There's a lot of things that have been shouted out at your campaigns that I haven't been too happy about either."
Me: "Such as?"
Well, OK, Stephanie Miller has been calling him Grampy McSane.
McCain: "Let me say categorically that I am proud of the people who come to my rallies. I am not going to stand for anybody saying that the people who come to or rallies are anything other than patriotic citizens."
He mentioned something about not standing for Obama insulting the decorated veterans who appear at his rallies. I never heard Obama do that.
That was fairly typical of the self-righteousness and condescension coming from McCain this evening. In general, I felt that the tone and manner of his performance tonight made it apparent that he is simply running on distortion, and hoping that if he contradicts the facts frequently enough, the uninformed will just believe him.

They're at it again...

It is well-known that Republicans are quite skilled at turning Democratic candidates strengths into weaknesses.  Or, conversely, taking their own weaknesses and labeling their opponents with them.

The paradigmatic examples of the former strategy are Lee Atwater's commercials for George H.W. Bush, turning Michael Dukakis' solid record as governor of Massachusetts into a liability.  As Thom Hartmann writes in Cracking The Code, Dukakis had "reduced the unemployment rate in his state from 11 to 4 percent, balanced his state's budget, cut taxes, and improved programs to care for society's most vulnerable and fragile citizens." He was running "on a campaign of 'doing for America what he did for Massachusetts.'" Atwater turned that formulation on its head with a series of prison ads, beginning with the infamous Willie Horton ad. Willie Horton was a murderer who committed rape and murder when let out on a weekend furlough. Of course, the weekend furlough program had been put in place by Dukakis' Republican predecessor, and Dukakis abolished it. But Willie Horton had been let out before it was abolished and Atwater, with that and the "Revolving Door" ad made it appear to be Dukakis' policy. "Now Michael Dukakis says he wants to do for America what he's done for Massachusetts."

Or, take John Kerry. Here is a man running on his military strengths. Bush and Cheney, both draft dodgers responsible for getting us into the biggest military fiasco of our generation, manage to parlay their weakness into strength by attacking Kerry's own military credentials. Part of the reason this worked is that Kerry actually had a military record, and the Bush campaign, with the help of Swift Boat Veterans for Truth, was able to exploit a specfic narrative and turn it into a Rashomon-like haze of uncertainty that in the end called Kerry's trustworthiness into question.

Republican communications strategists have developed a mastery of addressing people's fears. As Hartmann notes in his book, which merits multiple readings in order to grasp the logic of kinesthetic communications strategies and learn how to work with them, feeling comes before thinking in our perception. The reptilian brain with it's fight or flight reflex, will tend to win out against the rational brain unless arguments are skillfully coded to neutralize the fear response. As Churchill said, "The only thing to fear is fear itself."

Unfortunately, capable Democrats like Gore and Kerry tended to go straight for the logical argument. And, let's face it, those two guys came off as incredibly pedantic. It is always irritating to hear Republicans label Democrats as "elitist," but they sort of asked for it. (Today's irritant came in the particularly galling form of a Democratic Hillary-backer, the ultra-rich Lynn Forester de Rothschild, calling Obama an elitist.  As Alex Koppelman observed on Salon.com, "Got that? He's an elitist. This coming from someone whose last name is Rothschild.")

Before that, of course, McCain labeled Obama an elitist in the aftermath of his well-intentioned if poorly-conceived remark about the good people of western Pennsylvania. Palin has called Obama an elitist on one occasion. But it is more the general conservative radio/blogosphere that swells up with this line of attack. Karl Rove, months ago, described Obama as "the guy at the country club with the beautiful date, holding a martini, and making snide comments about everyone who passes by." Yes, I always associate Obama with country clubs...that's a very bizarre construction.

Now, a McCain TV ad has made an Obama backed initiative to warn kindergartners away from potential sexual predators into a comprehensive sex education class, while another subtly plays on racial fear by calling Obama "disrespectful" in his polite-to-a-fault criticisms of Palin. Happily, some of the press is finally doing it's job by calling the more blatant distortions what they are: umm...distortions. OK, at least the ladies of The View called them lies.

So far, Obama has appeared somewhat weak in the face of all this. For many, it has seemed as if the Clinton prophecy has come true, that he was not quite prepared to fight a dirty war. But it seems that a recent Obama ad "Honor" is making an attempt to strike at McCain's strengths of military honor. Will it work? Other attempts to counter McCain strengths, such as "No Maverick," have probably not been successful as they use the negative assertion too frequently. (As Hartmann notes, the "negative code" rarely work as people will fail to process the "not.")

I doubt anyone in the Obama campaign wants to start Swift Boating John McCain's Hanoi Hilton stories. And unfortunately pointing out that McCain doesn't know how many houses he owns, or the fact that Cindy McCain wore $30,000 in clothing at the convention, or even hammering on McCain's assertion that the fundamentals of our economy are strong don't seem to gain much traction.

Perhaps the lesson is that you need a specific narrative episode to attack.  For Bush I it was Willie Horton. For Bush II, it was the swift boat stories. For Clinton, it was the reports about Bush not knowing the cost of a gallon of milk, and his bizarre reaction to the miracle of technology in a supermarket bar-code scanner. Where is the episode the opens a chink in the Honor armor of McCain? The Keating 5?

 

I'm so disgusted I don't even know what to say

I have to give credit to John McCain for stealing Obama's thunder. Of course he had the advantage of having the last word, with the Republican convention following the Democratic after an unusually brief interval. But he did play his hand masterfully, albeit in the kind of desperate, Hail-Mary manner that - well, unfortunately for us Democrats - sometimes makes for a game-changer. Am I mixing metaphors?

The fact that he met Palin once says something both about McCain's recklessness and his crazy instincts. Are we headed for another administration that "thinks from the gut"?  I'm the kind of person who, like John Stewart, actually liked McCain until it suddenly became possible that he might be president. Sure, I would have preferred him over Bush back in 1999, but hell, I would have preferred ME over Bush. Curse you! - Al Gore - for woodenly affecting the high road. 

Back to Palin. She wasn't McCain's first or second choice - unless he is just that much of a crazy genius. I'm sorry, but we do not want her to be that close to the presidency. I think we'll have to give her credit for being a great instinctual politician, however. The Bridge to Nowhere? She was for it before she was against it. "Thanks, but no thanks"? Yes, that was after it had already been pulled, and then she kept the money. She charged the state of Alaska some $17K for working from home. I'm being irresponsible for not providing a lot of links here. But, hey, who's reading anyway?  You can just visit the New York Times. I'll just include this one, from the New York Times: Once Elected, Palin Hired Friends and Lashed Foes. So, she fired everyone who didn't agree with her nutty ultra-right theocratic ideas and hired unqualified pals from high school. All I can say is, "You're doing a helluva job, Brownie."

A rational choice?

Last night, in another slightly inebriated discussion with my libertarian friend, I was challenged to provide examples of Obama's actual accomplishments.  My friend is of the view that, compared with McCain, Obama is completely inexperienced, that he is going to tank the economy, and that those like me who support him do so out of white guilt.  I continue to take offense at the idea, as he expressed it, that Obama "wouldn't be where he is today if he weren't black."  I noted that Hillary Clinton would not have been where she was had she not been a woman and the wife of an ex-president, nor would McCain be where he was had he not been shot down and tortured by the Vietnamese.  Lord knows George W. Bush would not be president were he not the scion of a political dynasty.  I would venture to say that circumstances of birth and the caprices of fortune are catalysts for any politician's ascent to power.  The best politicians are masters of story and narrative.

Nevertheless, I found myself unable to come up with much in the way of rational explanation for my faith in his judgment or examples of his achievements aside from lamely offering up that he had started as a community organizer.  I do believe the fact that he turned away from clerkship and private practice and instead chose this unconventional route speaks to his perspective as well as his success.  I believe in some way that community organizing put him in closer contact with real people than most politicians.  I believe that community organizing provided the tactical underpinnings of his successful campaign, and indeed represents the continuation of a paradigm shift initiated  by Howard Dean (I have always been a fan of the Fifty State Strategy).  And I believe that a local community view of global issues is in fact a realistic approach to workable solutions.  Do I have a ton of research to back up why this is so?  No.  It is basically a gut theory.  To my friend, this is evidence of an emotionally-based decision.

When asked "But what did he actually do as a community organizer?" I admit to coming up blank.  I obviously have some homework to do.  Happily, I found this article, Barack Obama: Community Organizer, which gives a great overview of his early career and a nice digest of relevant links, saving me the trouble of including them here.  Ironically, this post was made to a blog called The Confluence, which seems to be the bastion of some still-disgruntled Hillary supporters.  Nice blog, anyway.

Oil and the Dollar

Seems like nothing makes me want to blog like reading about oil. Prices continue to rise despite last week's Saudi promise to increase production.

Today, the AP reports "Oil near $143 on view dollar will keep falling".

The market now believes the Federal Reserve is unlikely to raise interest rates in the near future; since higher rates tend to strengthen the dollar, traders are anticipating that it will continue to fall and, consequently, that investors will keep turning to commodities including oil as a hedge against inflation.

Oil is fast becoming today's Big Tobacco, according to the recent Harris Interactive poll reported in Advertising Age, America Has Spoken: In Google We Trust. What interested me about this article was only partly that Google is one of the most trusted companies in America (that could be the subject of a whole other post) but that the major oil companies inhabit the bottom of the list.

On a related note, The Independent reports this summer there is a 50/50 chance the North Pole will melt completely.

In Conclusion

I think I need to "cap" this drilling discussion. Let's just think it through for a moment. There is no imminent shortage of supply, nothing precipitated in the last several months to create a price spike, short of speculation. Unused drilling leases do exist. Unused leases are credits on a companies balance sheet. The conclusion seems to be that oil companies are using the illusion of a shortage to grab additional land leases. Question is: what exactly is causing the speculative bubble? I'm certainly open to suggestions.

Oily Coverage

Offshore Drilling really has become one of this week's top stories - albeit one that may be eclipsed by either Obama's forgoing of public financing or the House compromise on corporate wiretapping. Just today, The New York Times published at least three articles on the subject. The first, which actually appeared late last night, Dearth of Deep-Sea Drilling Ships Hinders Offshore Oil Search raised the issue that not much is going to happen anyway for practical purposes. (So them, what's the hurry?) First thing this morning, my Blackberry informed me, Idea of Offshore Drilling Seems to be Spreading. Hey - this offshore oil thing is catching on! Why, a lot of Florida Republican have started getting behind it! Finally, Bush Calls for End to Ban on Offshore Oil Drilling.Typically, I found myself wishing for just one, high-quality, investigative article that asks WHY? Why aren't oil companies using existing leases?