or “How to Throw Away Billions in Brand Equity Away Picking Up Pennies” *

Something has changed. Or maybe it has changed back. The customer is king.  Super brands are developing in markets big and small - brands with fanatical followings, unheard of loyalty, dedicated employees.  And brands that were only a few years ago considered “great” have the lost a great part of their luster.  Customers are becoming so much better informed about their options, and know how to reward companies that treat them right, and punish those that screw them over (see note about Netflix below).

There are objective measurements that try to assign value to brands by comparing the market valuation that a company should have based on the free cash flow it is generating (and other valuation models like P/E etc.) to the market capitalization it actually has.  The difference in the two values are attributed to the value of the pure brand.  There are other survey-based qualitative methods.  And hybrids of the two.

It’s not important to  bother with trying to actually quantify a brand value in dollars and cents unless you are working on an M&A transaction (or trying to sell marketing consulting contracts!).  What’s more important as an executive or manager is to understand the velocity of your brand’s value.  Are your current business practices creating or destroying brand value?

What not to do - Dell Inc.

While surfing the internet recently I found this article from ‘04 in which Dell is actually cited as an example of a world-class brand.  Certainly from ‘95 through ‘02 Dell was a juggernaut from a brand perspective, consistently ranking at the top of quantitative and qualitative brand value surveys.  By 2004 though, the Dell brand velocity was clearly negative.  They abandoned any brand levers except low price, which cut into margins and forced their hand in operations.  They moved to outsource their customer support to India, which was a disaster.  They started relying on making money with gimmicky financing packages.  They didn’t respond when the competition began redefining the form factor.  For the 2 years their competition has been personifying them as oafish buffoons all over the place, and they haven’t been able to respond.  This year the NY State attorney general got a judge to say this about them.

“Dell has engaged in repeated misleading, deceptive and unlawful business conduct, including false and deceptive advertising of financing promotions and the terms of warranties, fraudulent, misleading and deceptive practices in credit financing and failure to provide warranty service and rebates.” OUCH.

Simply put, if you are earning margins by tricking your customers, you are destroying your brand value.  Misrepresenting your level of customer service and whacking people with unseen service and financing charges have been OK in the past, but it won’t work anymore.  Your customers are way too well informed, and they have means of retribution for a bad customer experience that didn’t exist 10 years ago.

Building a brand right - Zappos

By any rational evaluation, building a company selling shoes (they also sell clothing any other accessories) online should be impossible.  Amazon sells shoes.  Shoes have to be tried on, you’ll get killed on the return rates.  There are a million other reasons why selling shoes online is a terrible business.  Zappos is making it happen by being slavishly devoted to building their brand by closely managing every aspect of customer interaction, which is really, really hard.  Do yourself a favor and buy your next pair of shoes from Zappos, and take note of the experience at every touch point.  Its amazing.

The only way to pull it off is to develop an entire corporate culture devoted to improving your consumer facing brand.  State your core values and let them inform everything you do as a company.  Offer trainees a bonus to quit.  Zappos are so confident in their employees they even encourage them to tweet, and aggregate their employees posts. (I follow their CEO and am finding out that they are featured on Nightline tonight).

The good news for my dear readers is that so many companies have negative brand velocity, and even the best brands are miles away from being able to capitalize on the latest technologies to constantly test and improve their brands.  Get out there and help them turn it around!

Brand Death Watch (companies with valuable brands that routinely screw their customers and provide shoddy customer service)

• DirecTV and cable TV companies (can’t wait to cancel my subscription forever)
• Wal*Mart (just say no to cheap crap)
• Starbucks (at least they know it)
• Netflix (mainly because they are killing multiple user queues per account Update:  Todd informs me that Netflix listened to their customers and reversed this decision.  Strong! This is why you leave comments turned on for your corporate blog.  I’m leaving them on the list because of their reliance on pop-unders for customer acquisition.  Everyone knows they are effective, but we stopped using them cause they are so damn annoying.  This is a bigger problem for Huffington Post and Boston Globe who are monetizing with pop-unders via Specific Media.)

Brands making it happen

• Apple (taking brick-and-mortar retail high-end for everyone)
• Amazon (I buy everything here, except shoes)
• Netflix (they do some things right see above)

Who am I missing?

Posted: July 7th, 2008 under social networking, work.
Comments: 1

Sometimes art and music makes you scratch your head   I didn’t think I much liked The Replacements all this time.  I even went to college in the midwest while they were still together in the late eighties and had lots of friends from the Twin Cities.  I bought their studio greatest hits compilation a bunch of years back and listened to it a few times and basically thought it was unremarkable.

Then last week I pulled a DownThemAll from Aquarium Drunkard straight to a playlist on my ipod for a flight to Denver last week. (Highly recommended quick iPod refresh technique - we can call it Raymonating your iPod).  Luckily for me it included the entire Shit, Shower and Shave compilation, which is a “long-traded compilation” from some live 1989 shows opening for Petty (which wikipedia calls a disastrous tour for an unknown reason).

Holy shit shower and shave, I’m a huge fan!  Sort of Springsteen everyman point of view (switch out Asbury Park for Sheboygan) with a Waits gift for turning a great metaphor, combined with a Drive-By Truckers brawling drunken coming straight at you live personality and a Ramones intensity.  I can’t get enough of it.  How did I miss these guys for so long?

Chalk up another victory for the mp3blog era - I will definitely be rounding out my collection from some timely reissues of their studio stuff - a positive activity music economy-wise the lousy label greatest hits compilation didn’t trigger 10 years ago.  But I’m preaching at the choir.

I’m not going to bother to rehost the tracks, head over to the AD if you want to check them out.

Posted: July 2nd, 2008 under digital music, live music, mp3blog, portable devices.
Comments: none

Jen and I are founding partners in LASVP, a really great group of people that are leading the way for a concept called venture philanthropy.  Simply put, rather than just writing a check to a charity and having little visibility into where your money goes, venture philanthropy entails taking a more active role - both in disbursing the money and in getting involved directly with the recipients. LASVP follows a model established in other cities - I think Seattle was the first, and there about 70 or so nationwide.

All of the partner units contribute a fixed annual amount to a 501c3 pool of dollars, and then have focused investment rounds where we solicit proposals in a specific area - in LA so far we have invested in Education and Environment.  An investment committee goes through a pretty detailed process of weeding through the porposals and determining who to fund and at what level.  After an investment has been made, the organization then works hand in hand to match the expertise of the partners with the human capital needs of the organization through the duration on the funding cycle.  Partners help in areas such as talent acquisition, governance, real estate, etc.  Its pretty cool.  All of the time commitment aspects are voluntary, you can scale them to the cycles of your own life (ex. maybe the year you have a third child or join a start-up you can just write a check).

I’ve got two reasons for the blog post - first, if you live in LA and find yourself looking for a way to plug into the community and give back, please ping me to find out more about LASVP.

Second, I received an email this week where one of our partner organizations (Kipp Academy of Opportunity) is looking to fund a high school scholarship for one of its graduates to attend a great private high school in LA - Vistamar.  Kipp is an AMAZING charter school in South Central LA - literally an island of opportunity in a pretty desolate place.  Its only a few years old (founded in 2003) - I’ve spent a little bit of time there and its literally mind blowing what they are accomplishing for the kids of LA.  Before Kipp opened its doors, its safe to say that ZERO, NONE, ZIP, ZILCH kids from that neighborhood would have ever been given an opportunity to attend a place like Vistamar.  It would have been an absolute impossibility. You can’t get there from here.  Now there are 3 kids who might make it in (and likely on to college after that), if they can find a few pesky $$$.  Others have already come forward, they just need a bit more.  Here’s more info.  Let me know if you’re feeling personally flush for whatever reason and want to cut a seriously cool check(for all or part, its a lot of money) and I’ll put you in touch.

Posted: June 24th, 2008 under philanthropy.
Comments: 2

Some fierce music by the Funky Meters off an album that is no longer for sale called The Funky Meters Jam.

The player is courtesy my old comrades at Yahoo, check it out here. You literally drop one line of code in your index file and it can play any mp3 files on your page.

Stretch Your Rubber Band

Groovy Lady

Come Together

photo from Flickr by companyofstorms

Groovy Lady (Single Version) on Amazon

Posted: June 11th, 2008 under mp3blog.
Comments: none

For the first time ever, I found myself hitting refresh on a liveblogging Jobsnote this morning. (Engadget blew away Techcrunch in the coverage, clearly). There was nothing surprising about what they announced (slightly different form factor, 3G, GPS, push Outlook) except for the we’re-ready-to-grab-market-share pricing. The phone’s only Achilles heel is that the keyboard doesn’t work as well as a berry’s. Its a calculated trade off versus slim form factor and big beautiful screen. Wonder if they are considering a flip keyboard form factor?

Some people are wondering, is the phone that they announced worthy of all the hype and fevered excitement it generated in “bubbleland”. Short answer: Yes, that phone rocks and tons of people are going to be lining up on July 11.

Longer answer: Apple consistantly proves that

The integrated solution wins when technology is imperfect.

Great consumer electronics products are not merely the sum of the feature set. If I had a nickle for every time a CE maker told me that their fill-in-the-blank mp3 player was better than the iPod because it had an FM tuner, I’d have at least a quarter. Damn iPod still doesn’t have an FM tuner. Even better example: GPS. Obvious that its a killer app for mobile phones - every phone will have it 5, 10 years from now max. I use the poor resolution triangulation version on the iPhone *all the time*, its awesome, I don’t know how I ever got along without it. GPS on the iPhone is probably reason enough for me to drop $300 on a new one. But before iPhone had it, phones that had it jammed in to their overloaded interfaces and subpar form factors, weren’t superior phones. They were inferior phones that had GPS.

Brand matters. Working on another blog post about that (TEASER ALERT!) but anybody who has ever owned an Apple product knows what I’m talking about. There isn’t another CE/Mobile/PC company in their class, not even close.

Don’t release a feature until it is rock solid. Supposedly (this is an unconfirmed rumor but it could be true) GPS was an iPhone 1.0 feature but they backed off because the battery drain was too great. They were right to wait a year and get it right.

Don’t move down market until the product is ready. Guess its ready.

Posted: June 10th, 2008 under digital entertainment, digital music, mobile, portable devices.
Comments: 1

If I were a gambling man (oh wait, I am), I’d wager on Obama winning the presidency in November. Right now Vegas has Obama at -194 or a little less than a 2 to 1 favorite. I can’t see how it will be close in the end. This election is shaping up to be similar to Clinton/Dole ‘96. One guy is young, energetic, smart, and full of vision. The other guy is old and crotchety. That’s a tough dynamic, irrespective of your political leanings or worldview. On top of that the Republicans have NO MOJO (negative mojo if thats possible) after 8 years of everything that could go wrong did go wrong. George Will on Charlie Rose last night thought that McCain’s only chance is if Obama fails to make the case that he had the gravitas to be president. After 5 months of speeches like this, I can’t imagine the electorate saying “No thanks, I’d like an old guy who’s just like Bush”.

Obama Victory Speech 6/3/08 in St. Paul Minnesota

Posted: June 4th, 2008 under politics.
Comments: none

One on One time with Alec, originally uploaded by steveray.

Jen and I are making an effort to spend time with the twins individually. Today Alec and I went hiking and then to the bowling alley while Jen and JJ shopped and went to LACMA. Good times! Tomorrow we’ll switch it up.

Posted: May 24th, 2008 under moblog.
Comments: none

My twitter circle is having a little tiff about suitability of twitter posts. Specifically, @emayoh has been bombarding everyone with Hype Machine updates for the last few weeks. So about every 2 or 3 hours during the day everyone who subscribes to him sees a text message on their phone saying

emayoh just loved Peter Presta - Set Sail (Scuola Furano Remix) http://hypem.com/track/469035

And some people who follow emayoh are starting to twitter back asking him to tone it down. Which of course is often the worst part about spam - all the stop spamming spam.

This reminds me of the spam wars I had to endure during the first few weeks at B-school. Every student in the school was on a list-serv from which they couldn’t unsubscribe and to which any other student could post. With over 600 full-time students on the list obviously a strict etiquette was required. The funny part was how fierce the (admittedly 99% type-A) student body was in mocking and calling out the poor souls who complained about prices at the coffee shop or otherwised spammed the high volume list. People got seriously called out, and once it almost came to blows. The community quickly figured it out, and the rudimentary social networking tool worked fairly well for the 2 years I was there.

Twitter is way more advanced, and the policing and self correcting that needs to take place on the network is orders of magnitude easier and all in your control.

1. Don’t have all the updates go to your phone (you can turn device notifications off on a user by user basis). Use Twhirl or Twitterific etc. to follow people who update too frequently or who’s twitter updates aren’t valuable to you on your phone. I do this for @nprpolitics and @techcrunch among others.
2. If #1 doesn’t work for you, stop following the person who is twittering too much for you.

Asking someone to twitter less so you can follow them is, by the mores of social networking, rude. Its like asking an author to write less or a photographer to take fewer photos. Twittering is self expression and works (like all social networks) because its opt-in. If a twitter user is interested in having a lot of people follow them, he/she will self moderate.

So @emayoh: Heart all you want on Hype Machine. I turned off device updates for you a few weeks ago. But every so often I check out your pick via a quick click on Twhirl.

PS: The group of people whom you follow (and who follow you) on Twitter need a name. Like a pride of lions or a covey of quail. What should it be called? I sort of like “my twique”, or “my tweeps”. But then again, those are really terrible names.

Posted: May 21st, 2008 under portable devices, social networking.
Comments: 6

The world’s food system is highly stressed. And it’s unhealthy for people. And cruel to livestock. Over the holidays while on vacation with my family I read Michael Pollan’s incredible book An Ominivore’s Dilemma. It was nformative and inspiring. The general thesis is that human beings in the 21st century have lost track of our food chain - we really don’t know what we’re eating most of the time. Where does it come from, who produces it, who processes it, at what cost?

It being the holidays, the subject of food was on my mind when it came time to formulate my 2008 resolutions. I’d never seriously confronted the idea of vegetarianism before. Lots of friends and family members are vegetarians, but seriously? In the words of Vincent Vega “Yeah, but pork chops taste good. And bacon tastes good“. I’m a foodie. Some of my favorite places and things are…. meaty. Making the leap all the way to vegetarianism just wasn’t realistic.

But I did want to do something. So I came up with 2 things that I thought could be personally meaningful.

1. Give up fast food. Pretty easy - sort of a no-brainer. Those places are really bad on so many levels. Hasn’t been hard.
2. Practice vegetarianism on Mondays.

I haven’t told too many people about the second one, and when I do, the usual reaction is nervous laughter. Like I’ve just told a not too funny joke that doesn’t really make sense. In fact for the first few months I didn’t really tell anyone - even Jen - probably because I thought it was somewhat nonsensical myself. My semi-coherent rationalization(s):

• If everyone in the US cut out 1/7 of their meat consumption, the environmental and societal impact would be radical.
• I’d probably enjoy the foodie challenge of learning to cook meatless.
• Most importantly, what I was searching for was a way to make a lifestyle change. Not to change the world, but to change my own personal behavior. Sometimes that requires baby steps.

After 4.5 months of keeping these resolutions, I have to report that I’m really, really, happy with the results. The biggest unintended consequence of the Monday plan is that I eat way less meat now every day of the week. Fewer meals contain meat, and the portions I eat are smaller. I crossed some psychological barrier I didn’t even know was there - every meal doesn’t have to have meat as a focus. Another outcome is that I have become a lot more curious about the provenance of the meat I do eat. Researching the food chain, buying the $15 chicken at the farmer’s market instead of the $5 Purdue broiler. Now the goat-cheese guy sells eggs and ducks too, not produced ag-biz style. And Candido the butcher is getting pasture-raised beeves from the Central Valley and calling me to see if he can put anything aside for me. It costs more, but I eat less. Changing the lifestyle.

Maybe “Meatless Monday” isn’t right for you. But read the books and articles, and find a realistic change. See where it takes you.

photo from Flickr by phitar

Posted: May 15th, 2008 under food.
Comments: 4

I’m really disappointed that I didn’t have this idea first. The blog not martha has some step by step directions for making salad bowls out of bacon. I am doing this for sure next chance I get.

Posted: February 28th, 2008 under food.
Comments: 1