Biz

Business and entrepreneurship

Why You're All Wrong About the Insurance Debate!

I’ve always kept this blog as something of a geek-only site, but the current situation with the insurance overhaul is driving me nuts. The government is being accused of death panels, care rationing, raising our taxes, and more — even though these are EXACTLY the same things our private insurers are ALREADY DOING! So I’m taking my own little stand and sharing my thoughts with both of my readers.

iPhone Users Aren't Cheapskates

I keep hearing developers complain that "iPhone users are cheapskates who won't pay for a quality application."


Most iPhone users have spent over $200 and around $100/month for a telephone. Why can't you sell a high tech piece of software to someone with a $1,500/year gadget habit?

My guess: They're too distracted by all the cheap/free gadgets they can get. If what they want is the gadget, and not productivity, that may be very hard to break through.

At the same time, there are app users like me who are more than willing to shell out for a quality piece of software. I use Jaadu VNC almost every day, and was happy to pay $25 for trouble free VNC, even though there were cheap remote control and free VNC clients available. Likewise, I paid plenty for OmniFocus on the iPhone, and for the desktop as well. I get more than $100 worth of productivity from it.

In both cases, I had a recommendation from a trusted source. OmniFocus was built by one of my favorite software houses, and was recommended by many people I'd met while exploring Kinkless GTD. Jaadu was recommended by my geek-buddy, Aaron.

Again, it's marketing outside of the app store. What does it take for your app to get that precious recommendation?

Your iPhone App is a 99¢ Lawnmower

Vlasic, one of the world's top pickle producers, delivered a top selling item to Walmart — a gallon of pickles for about $3. It was huge, Walmart shoppers went pickle crazy, and bought them by, well, the gallon. The only problem was that the gallon jugs of brine were only minimally profitable — picklers make their real money on cut and prepared pickles. But Walmart and Vlasic were caught up in the pickle-fever, and Vlasic ignored the shrinking margins as their business shifted from premium gherkins to dime-a-dozen salted cucumbers. Finally, Walmart's continued pressure to lower the cost of a gallon of pickles, and the total loss of more profitable business, forced Vlasic into bankruptcy.

Simplicity Manufacturing, a premium lawnmower manufacturer, was offered the opportunity to become Walmart's house brand of lawnmowers, guaranteeing millions of sales. But that would have watered down Simplicity, forced them to lower their standards, and to reduce their profit margins. Ultimately, they said "no," and continue selling high priced and high quality lawnmowers today. They haven't filed for Chapter 11.

Your iPhone application is a shiny red lawnmower, and you're selling it for 99¢ a gallon.

It would be flattering to call the App Store Walmart on Black Friday. Sure, it generates a ton of traffic, but that traffic is a bunch of sweaty bargain hunters digging through endless shelves of games and applications, guided by $1 flashlight applications, haphazard search and vague and untrustworthy reviews. It's a great place to sell if you're willing to sell your app at the absolute lowest possible price (quality be damned!), and be in cutthroat competition with the next guy who can give the Walton family some pickles for half a cent less per gallon. Unless you're as good at the low price game as Walmart, you'll be in a race to the bottom.

Remember Simplicity and their shiny red lawnmowers? Not only are they unavailable at Walmart, they're also nowhere to be found on Amazon, or at Sears, or most anywhere else. They're sold exclusively through certified dealers, each of which is equipped to be a full service support shop for the mower. There are two such dealers within 100 miles of my house. But that's all right, because if I'm going to spend over three grand on a lawnmower, I'm happy to make the trip.

You've got this great application that's well worth a premium price. Why are you trying to draw people in who are window shopping at Walmart's app store? It's time to to quit bitching and build your dealer network.

Start with your own storefront — make it a killer website with the sort of depth and trustworthiness that makes people happy to shell out a thousand bucks to upgrade their copy ofAdobe Creative Suite. Heck, make ten killer websites, each targeted at a specific market segment or use for your app. Or give away a thousand copies of your app as coupons in MacHeist-like promotions to get the word out. Put a quarter of your money into advertising and search marketing. Get endorsements from the people in your very particular market niche telling other enthusiasts and professionals how critical your app is to their lives. And keep investing in quality, design, and support, the last thing you can afford is customers who feel cheated. 

Yes, this costs money, and time, and has huge risks. Welcome to the world of business. And seriously, what's the alternative…?

Pickles, that's what.

Who says print is dead?

Well, I may be leaving Penton just in time. On-demand printing has hit the publishing business. Hello, MagCloud.

Or then again, maybe not. A single issue of Windows IT Pro, published via MagCloud, would cost a subscriber $18.20! (84 pages, including front/back cover, at 20¢ per page and $1.40 shipping) And that’s with no markup/profit for the publisher.

Still, it’s a full color magazine, printed on an HP Indigo, so it is probably quite high quality. Full color, and I’m guessing that it’s printed on better paper than the toilet paper most magazines are printed on these days. (We can’t all be National Geographic)

Could be just the ticket for a quarterly journal or other high value publication. But for the low-budget ‘zine-type publisher, you’re still better off investing in a copy machine and a saddle stapler.

Community and Independent Developers

This morning, I posted an article that was highly critical of Matthew Drayton’s management of the Interarchy file transfer application since he, as Nolobe, purchased it from the original developer. Specifically, I was frustrated with the lack of communication and shutting of communication channels between the big 9.0 release and the much-needed 9.01 bug fix which just came out.

Only a few hours after I posted this article, Matthew contacted me to apologize for the release and also to explain the circumstances which made a timely release of 9.01 impossible. As my criticism was both public and unjustified, I’ll apologize here, publicly, for this criticism. I have also unpublished that article.

However, beyond the specific criticism, it does demonstrate the importance of maintaining open communication with your customers. While most customers respond favorably to open communication, I think it’s especially important for small and independent companies, including independent software developers. This is probably even more important for independent developers who sell exclusively online, since their customers are much more likely to be part of the blogging/forum posting/twittering crowd.

People who purchase from independent developers act like grass roots supporters of a political campaign. Whether or not it’s justified, they feel that they are on a first-name basis with their favorite software’s developer, and they tend to especially watch new products from the same company.

This relationship is based on trust and communication. Those developers who actively maintain blogs, participate in forums, or who simply email quickly and responsively to requests can generate very passionate users. (Even if their software isn’t terribly high quality!)

Of course, those supporting customers come to count on this open communication. If it breaks down, it can leave customers feeling abandoned, and make them lose faith in the developer and their software. It can cause them to cease upgrading or even to defect to other programs. And, of course, there’s the beatings that an unresponsive developer can face on forums such as VersionTracker and MacUpdate.

What some developers overlook (and, again, I am not picking on Matthew here) is that this intimacy is a two way street. Just as the open communication helps users learn to use their software better, it is also a fantastic tool for priming the market for new updates and new products. And, perhaps even more importantly, it creates opportunities for the developer to get their users’ aid when they need it. Whether that’s a request for patience on an overdue update, advice on where to move web hosting to, or to gather a group of volunteer beta testers or even contributors. (documentation wiki, anyone?)

When Nolobe went “dark,” and stopped posting to blogs and pulled its forums, I lost confidence in the company and the software. I hadn’t upgraded to Interarchy 9 and was still using 8 until a less buggy version was available. Even though the developer was doing his utmost to get that 9.01 update out the door, it took a few months.

In the grand scheme of things, that isn’t much.

On the other hand, I’ve been using Interarchy (well, Anarchie and then Interarchy) for more than ten years. Seeing it change owners and then become unreliable on the next update is something else entirely.

Should Matthew have posted, at a minimum, a blog entry saying “It’ll come out later, please be patient?” It couldn’t have hurt. When a favorite restaurant is closed, you at least expect a sign saying when they’ll be open again — whether that’s tomorrow morning and you just caught them outside of business hours, or if it’s in a few weeks while they renovate.

Sometimes a person doesn’t even have the time or energy to even do that much. But for the users, the faithful supporters of a business, that note can mean everything.

Want proof? I just purchased the Interarchy 9 upgrade I’d been holding off on.

I didn’t buy it by way of apology for my undue critique. I bought it for two reasons: It fixed the bugs that made me hold off on the upgrade in the first place; and Matthew’s prompt and charitable email, even after my harsh criticism of Matthew himself — not just his software or his company. This email restored my faith in Matthew and Nolobe as stewards of one my mainstay programs. After all, what could be more personal and intimate than that personal email?

You either need backups or lawyers, maybe both

They say that a big part of creating a backup system is testing its ability to recover your files if there’s a failure. Well, Business 2.0 learned a valuable lesson when they lost their magazine’s latest issue and found their backup system wasn’t up to the task of recovering it. Luckily, the lawyers had a copy of every article (presumably to approve every use of the term “nappy”) and saved the day.

I’ll refrain from any lawyer jokes.

Google directory assistance and SEO

I tried 1-800-GOOG-411 for the first time today and was blown away with the results. It’s directory assistance powered by Google’s local/maps search. I got the info I wanted faster and easier than I would from T-Mobile, and the cost was nearly infinitely lower.

In this world of ubiquitous search, I’m amazed that T-Mobile, Qwest and their ilk can still get away with charging more than a quarter for this service, let alone $1.50. Way to go, Google!

Sleazy

Apparently Best Buy has been running a shadow copy of their website so that people looking for online prices while shopping in the brick and mortar stores will be unable to find the lower online prices.

…even when one informs a salesperson of the Internet price, customers have been shown the intranet site, which looks identical to the Internet site, but does not always show the lowest price.

From The Hartford Courant

Remember: These come from trees

Testing shows a “These Come From Trees” sticker on a paper towel dispenser reduces paper towel consumption by ~15%

Pretty impressive for a sticker. And the right way to do activism. Encourage good behavior in the Big Guys (business owners) by offering to save them a few hundred bucks worth of paper towels every year. Meantime you give the potentially moral schlub a little reminder to see if you can get some better behavior.

The genius of Disco (or Buying Buggy Betas)

John Gruber ran an excellent article, ‘Beta’ is Not an Excuse, dissecting the important difference between beta software and simply buggy, but released, software. His target: The much ballyhooed CD burning application, Disco. His point was simply that calling Disco “beta” is disingenuous, because as long as they’re selling the software, they have an obligation to their customers to create software that works.

Simple logic, but it misses the true genius of their approach: They’re using pre-sales as a means to gain investment capital to fund the final development of Disco!

Why wouldn't you want to be delievered to your customers?

I got the following message in my RSS feeds this morning:

Thanks for your interest in the Bastard Operator from Hell. Simon Travaglia, the author of BOFH, has asked us to remove links to his articles from our RSS feeds. We will not restore the BOFH RSS feeds without his permission.

BOFH (short for Bastard Operator From Hell) is one of many columns in The Register, an IT-related news site. I was a subscriber to a feed that only gave me the hilarious stories of the Bastard, and I enjoyed reading them.

Web optimization made easy (sort of)

A very, very, interesting new product from Google just launched: Google Website Optimizer

They boast that it can perform multivariate tests of landing page content in order to increase website conversions. In non-marketer speak, that means that you can send people to different versions of your website’s landing page, each with a different mix of text and graphics. You can then track whether or not you got a purchase/registration/subscription from each person who landed, and thus quantify the added benefit of each different combination of web page pieces.

Dreamhost gets customer service right

Dreamhost, the company which hosts this site, recently suffered some pretty major issues. A few of the files I host here got messed up, there was some downtime, etc… No big deal for me, since this site only gets about 1,000 visits a month, but pretty bad for folks running businesses at Dreamhost.

However, Dreamhost has done a great job dealing with this. They keep a blog letting you know what’s up with every server, and they’ve released a detailed accounting of what happened and how they’re resolving these problems and making sure they won’t happen again.

Fark's founder on new vs. old media and everything else...

Fark’s Drew Curtis doesn’t pull his punches as he takes on traditional media’s advertising model, web-based empire building, and pornography. You may not agree with him, but it’s well worth reading what he has to say. (From Ideagrove.com)

Consultants Ruin Management Fads for Everyone

Not surprisingly, management fads rarely fix the problems they intend to. The Wall Street Journal may have figured out why. The article, entitled Why Management Trends Quickly Fade Away, suggests that fad-chasing management consultants tend to be under-qualified, leading to sub-standard results, and finally to the dissolution of the fad.

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