Does the long tail affect me? (Part 1)

This post will be a brief and non-academic introduction to the long tail. We will then look into how it affects you.

Nerdy definition (thanks of course to wikipedia).

The phrase The Long Tail (as a proper noun with capitalized letters) was first coined by Chris Anderson in a 2004 article in Wired magazine [1] to describe certain business and economic models such as Amazon.com or Netflix. The term long tail is also generally used in statistics, often applied in relation to wealth distributions or vocabulary use.

It is a soft corollary to the pareto distribution. In simpler terms, if you think of the x-axis on the graph above as representing the different products and the y-axis as quantities of the product sold. The long tail says that the products in the brown portion of the curve sell a lot and the products in the yellow portion of the curve sell very small individual quantities. What is interesting is that the yellow portion extends for a while (a long while). If we can keep selling products from the yellow portion cheaply, the cumulative revenue from the yellow portion will eventually start to match and rival the revenue from the brown portion of the curve.

In other words, hot wheels are amongst the top 10 hottest selling toys in terms of revenue. On the other hand you also have the "The Gauss Rifle" (i am not even sure if this technically a toy). I am guessing you are lucky if you can sell 5 of these a year. The challenge till recently was how to make a profitable business selling stuff like the gauss rifle.

In other words till recently (amazon, netflix, ebay.. came along) we did not know how to develop, market and distribute the long tail end of the product space without incurring losses.

Then came rss, peer production, blogging and as we all know by now a means for the mavens and connectors to reach widely and make their influence felt in a powerful way. Highly recommend reading Malcolm Gladwell's tipping point for more on how mavens and connectors are changing the world.

Quick definitions:

maven: A maven (also mavin or mayvin) is an expert in a particular field, usually one who is self-appointed and who seeks to pass his knowledge on to others.
connectors: Those with wide social circles. They are the "hubs" of the human social network and responsible for the small world phenomenon.

So, now we have an easy way to search for information, publish information and spread expertise in a cost effective manner that was not possible before. This is mainly thanks to the community effect which brings economies of scale to a long tail marketplace.

So the main costs now are manufacturing costs, support and shipping costs. Companies like Amazon, eBay are making the storage costs negligible using economies of scale. With marketing costs continuing to go down, the possibility that a viable business can be established using the long tail is starting to look more and more likely.

So what next,

1. Think about this and send me your comments. These are thoughts of mine and obviously not scientifc thesis. Think about what this means to your life (social and professional). I will talk about how it affects my life in the next post.
   
2. If you want a more detailed thought provoking academic treatment of the subject, read Umair Haque's latest entry.
   

The genius of these models is that they tap the space where expertise and heterogeneous production preferences intersect - something that almost never happens in firms, despite big bonuses, nasty bosses, and the other nice things about the rat race.

If the above statement looks like something that makes you get excited about the future, read the entire post and get rolling. Have a great weekend, I am going to be here !!

Customer Service: Learn by living

I stopped by my usual breakfast taco joint en route to work this morning. I was distracted, peeved (some _dude_ cut me off in traffic) and lost in thought as I walked up to the sales counter. The young man behind it goes "Morning Amar, your day of to a good start?". It shook me up in a good way, I was honestly pleased that some one who knew me by name cared enough to ask me how I was doing. It was enough to change my disposition and make me smile. What was strange was that I did not know his name and I normally know the names of the sales people I interact with. It is simple basic stuff, that we all know about but that we so often forget.



(Thanks to leilei2006 for making this photo public on flickr.)

On the other hand, I have to get my car inspected from my insurance so they can give me an estimate on the hail damage done to my car. As I was setting up an appointment, the claims person says "you know there is more hail forecasted for tonight". It just occurred to me, wouldn't it be cool if you can sms all your clients this information before hand so I can find a safe spot for my car and save both of us money. The technology is there, if airlines can sms flight info. to me, my insurance company can sms weather warning to me. That would be a neat way to differentiate yourself from your competition. So why not do it?

It is because not all companies are like Toyota. It is because once a company reaches a certain size ideas are squashed under process and paper work. It is because ennui and adhering to standards replace innovation and true customer satisfaction. How is your company doing? What are you doing to change it? Oh yes process is not always bad.

p.s I recently read a post about Toyota's management style where production line workers are given lots of freedom to innovate and how it is considered an honour if an engineer can spend time on the production line. If you know what I am talking about, please consider sending me the link :)

Repeat and then tatoo on your forehead

This little nugget is from one of Seth Godin's recent blog posts. It is worth repeating every morning.

This is scary. It's really scary to turn down most (the average) of what comes your way and hold out for the remarkable opportunities. Scary to quit your job at an average company doing average work just because you know that if you stay, you'll end up just like them. Scary to go way out on an edge and intentionally make what you do unattractive to some.

Which is why it's such a great opportunity.

I am struggling through this and I think it is normal to struggle. We veer away from average, we veer away from the cliched and move towards the edge because we realize that something within us is pushing us to take the risk. Something that clearly states that life is worth pursuing not just plain existing, worth making a difference and worth taking the risks to really find out what it looks like to pursue your dreams if failure was removed from the set of outcomes.

The reality sets in, we crave security, dependability, purchasing power, status and comfort and..... We forget that we decided that all of those were open to negotiation when we walked away from average. It is good to read statements like the above and remember why you set out to do what you are doing (assuming you have walked away from average).

In the sermon today, the senior pastor at my church was talking about "suffering with contentment" and that really struck a chord. No one promised that following (the right) dreams will be easy or necessarily rewarding but the promise is that it will be fulfilling. Where are you at?

If you are not offended by Hugh Macleod's cards, this one is dead on :) link

The story of the project management tool

It began with this young man whose dream was to work in a Florida orange grove. When he got his job at the orange grove, he was amazed at the sophistication and complexity there. Since it was a fairly large grove providing fresh oranges to large corporations such as Tropicannot they had lot of automating and processes.

They used big project management tools that were supposed to help stay on top of everything orangey. The seeding, planting, nurturing, harvesting, packaging, shipping, invoicing, customer satisfaction, inventory management, selling more oranges, raising the price of oranges, hiring the folks passionate about orange, seeing if oranges were help make money, etc. You get the idea.

Now obviously the project management tool did not actually do any of these tasks. What it did was give a way of staying on top what tasks needed to done and if anybody was ever going to get around to doing them. Then there were the smart people who had the scary ABM degrees and whose specialty was using these tools. They knew nothing about oranges and lot of them did not even drink orange juice or grape fruit juice (gasp!), they drank perrier but here they were.

Eventually the young man got disillusioned with the giant orange farming industry. He also noticed that a lot of these project management tools took so much time that it was hard to say if the shipment to Tropicannot was not delayed because of the time spent on the cumbersome project management tools.

He was lost for a while. Then he ran into some friends who were running a small family farm. They had clear goals of supplying to the local community and helping people eat healthy organic food. Most importantly they were passionate about their farm and enjoyed each others company. The young man started working with them. Over time their produce caught the attention on a broader scale and they had to start thinking about growing their farming operation to meet the demand. They looked towards the young man and said, you have experience from the large orange grove. You can take care of it.

And so here we are... a lot of the project management tools do not care about the needs or the size or the current status of the farm and cannot start small/simple and grow as the farm's needs grow. They all assume you want to solve giant problems and have lots of people with AMB's to look busy with the complicated tools. The young man searched a bit and found a few tools that he hopes will help out. This is the beginning of his story.
...to be continued....

oh and the tools so far are

1. basecamp (not working out for us r.i.p basecamp *sniff*)
   
2. fogbugz
3. projectpipe
   

about the "staying small" part in the title

what I mean is

• This by seth godin and

• This interview with Fred Wilson.

  Technologica: Union Square Ventures is a small VC firm however you’ve made first class investments. Is small the new big?

  Fred Wilson: i think so. it’s hard to do VC in a big way.

• This book by Patrick Lencioni.
• The global microbrand.

and so on, etc. In other words, I am not against success. If these links don't make sense, drop me a comment and we can talk.

noteworthy

Interesting observation/comment from umair haque on the present U.S job situation. For those of you not familiar with him, his political bias is pretty clear in his posts. So apply your own filter. This line in his commentary caught my attention,

It's difficult to see a future for the middle and working classes.

Note that most of this is a classic case of saving capitalism from the capitalists. The gains in this case (as has been very nicely documented in the last year or so) are being appropriated not just by capital, but by the few at the very top of the capital food chain - most of whom see absolutely nothing wrong with this picture.

Hysterical reaction aside, there is some value in looking at the numbers and pondering them. Read more about umair's comments here and the actual news item here.

I will keep my blog posts clear of political bias by choice. So these posts are meant to be purely informational in nature.

What is in a name

Apparently a lot more than is obvious. Google recently went from being "doggy"/"old hound" in China to "Gu Ge" (pronounced "goo-guh") which is translated as "song of the harvest of grain". CNN money speculates that Baidu was getting more market share in China because Chinese people don't like to consult "doggy" for questions. Maybe the song of harvest will change things...

Moral of the story: People don't like to ask doggy questions. If you were looking for a more profound revelation on naming strategies, read Seth Godin's blog :).

How much will you pay to kiss your S.O

My fiance agreed to pay the 15$ that the Indian government will impose on us if we are found kissing in public. So I guess I am safe after all ;-)

Kim and I were in India a few weeks back visiting my parents in Madras and my mom was insistent that we try to curb our PDA (Public Display of Affection). I thought she was exaggerating.
Apparently she wasn't according to this news item.

would you like to rent clothes for day trips

I have always wondered if I can make a business renting business (casual) outfits to business travellers. I remember from my consultant days that the prospect of flying with just my laptop and no baggage for a day/two day trip sounded like heaven.
Very much like hertz but instead you rent outfits on your way out of the airport and drop them back in on the way back. Assume that all the usual jazz is thrown in, your profile is available and you have to place your order 24 hrs in advance, etc. I figured that clothing is too personal and people would be uncomfortable "borrowing" clothes. (apart from the basic issues such as is it economically viable to be able to use clothes like this, etc).

But recently I was at a wedding and complemented a friend of mine on the slacks he was wearing. It turns out that he got those on eBay. Today i came across this article on "car sharing" in Europe.

Maybe it is not such a bad idea after all....

p.s springwise and its sister website are very cool portals. enjoy and No! i am not a fan of bright orange suits.

how do you market a new form of marketing

Just read an Interesting thread on how hard changing archetypes is (thanks to Seth Godin for the post on archetypes). This is about how Tara offended an independant artist while trying to plug pinko marketing. :Thread here:

why am I switching free blog providers.

I have a blog on wordpress and I am not happy with my blog on wordpress. I think I have learnt from my mistakes so hopefully things will be more focused this time. My main challenge was around picking the "categories" I want to blog on, naming them appropriately and having the discipline to stick with them. I came across a israeli vc's blog today and in the introduction to it she clearly stated the categories she will be blogging on and I felt it was time to take another shot.
The other reason being that wordpress is very flexible but also overly complicated and I could not control the rendering and the face of my blog and it frustrated me.

So here we go, my take on the categories I want to be posting on

1. entrepreneurship and technology.
2. Education. I recently started working with an educational startup.
   
3. Blogging, pinko marketing, impact of progress on our life.
4. Getting things done related stuff.
5. ajax, blogging and web2.0 related changes.
   
6. Thoughts on simplifying life.

This is not to say I am great at any of this stuff. These items occupy a lot of my time so it is fair that I spend time talking about these. If you want to read up on these items, I recommend the following blogs:

• lifehacker
• creating passionate users
• pinko marketing
• joel on software
• personal productivity stuff
• feld thoughts
• fred wilson
• techcrunch
• alarm:clock
• delicious
  
• bubbleshare
• organizers

Phew, a long list :). I still keep my old blog here. At least until blogger lets me import old posts.