I attended Core77′s Design 2.0 Conference in San Francisco today, and it was a blast. I took copious notes, so expect a series of posts about this event over the coming days.
Update: the writeup is now complete!
* Introduction
* Diego Rodriguez
* Steve Portigal
* Robyn Waters
* Peter Rojas
* Q&A
* Closing thoughts
The last talk of the conference was Perry Klebahn’s account of his experience founding Atlas Snowshoes. Perry was a student in the Stanford Mechanical Engineering program in the early 90s, and for a final project he invented a much better snowshoe. It was a revolutionary improvement: lighter, more comfortable, easier to use, fully assembled and without need for service.
He decide to commercialize it after graduating… and then discovered that snowshoes were in fact a dead category. Outdoors stores didn’t sell them, no one was interested in buying them, and very few people ever snowshoed. Even though he had a brilliant product, Perry realized he would have to manufacture a trend! Although it was not obvious to him from the start, with hindsight he realized that he achieved success through three actions: enable, evangelize and legitimize.
To enable snowshoeing, he organized on-snow demos, but this wasn’t nearly effective enough, as only a few dozen people would try the new product over a day of efforts. What worked better was to associate himself with other interesting events and venues, for example a Ben and Jerry’s moonlight snowshoe walk.
As far as evangelizing the product went, Perry realized that you had to win the sales staff. In order to do this, he offered all salespeople incredibly good pro deal… but never free products. If someone pays for something, even just a symbolic sum, they are much more likely to recommend it because it involved an actual decision. Furthermore, he organized events with NOLs courses and Outward Bound.
Perry tried to legitimize the product through all possible channels. He first tried creating a snowshoe handbook, a guide wih instructions and trails. Unfortunately, no one knew about Atlas Snowshoes, and so the guides had little credibility. Magazines were a much better source; despite what might be the common opinion on the internet, the printed word still carries more credibility and popular magazines have extremely high circulation. He managed to organize a couple of events with Burton – while the events themselves were small, he could then use the Burton name on his brochures. He started a number of large scale winter fitness events and snowshoeing competitions. He expanded his product line with a mountaineering model, which although it had practically no sales reinforced the image of snowshoeing as something fun and intense to be doing.
His real breakthrough however was the opening of the McCoy SnowShoe Park in Vail in 1994. Vail was expanding quickly and wanted the reputation of accommodating all winter sports, even the most obscure. They created a beautiful set of trails at the top of the mountain that really demonstrated the pleasure of snowshoeing. But most importantly, they added an element of safety and security that Atals would have had a hard time creating on their own: if Vail endorsed the sport, it must be okay. An added bonus was that tickets were cheap (less than $10) and a new pair of snow shoes came with free passes.
All in all, Perry’s talk was extremely enjoyable. It demonstrated that sometimes a great product won’t be successful if the market isn’t ready for it, but also that low market recognition isn’t necessarily the end of it. Through perseverance and creative marketing, Perry managed to create a new and fun category of winter sport that is still growing fast!
The core message of Paul’s talk was to be DATA driven. In his mind, the key to a successful business was understanding the data of how users actually use your product. In order to do this well, you must use all tools available:
- logs
- availability and response time
-usability
-analytics
-mixed method research
-scaleable customer experience management solution
Yahoo generates roughly 10TB of data every day, and has 4 Petabytes of collected data!
Once you have the data, the trick is to be flexible enough as an organization to adapt to the insights gained. Interestingly, Paul suggested that you are better off overstaffing for flexibility. This way you are ready for growth and won’t be caught by surprise if you are successful. You should organize for capacity, resource allocation and decision making. I’m skeptical as to how applicable this is for a startup, as keeping costs low is a crucial priority and doesn’t mesh that well with overstaffing, but the need for flexibility is certainly real whether big or small.
Steve began his talk by pointing out that viral marketing is different from regular word of mouth in that it has an involuntary component. Ideally, you share it even if you hate it. As an example, he offered Hotmail viral strategy. Hotmail apparently began as a database company, and their mail client was supposed to be a proof of concept, a demo. They decided to add a footer to every email sent offering users to “Get your free private email at hotmail.com”.
The growth was exponential – at a certain point they were adding 250k new users per day. Students were the best vectors, since they had a need to communicate over long distances when they were away from home. After only 4 months, they were the largest email provider in Sweden without any advertising there whatsoever. There were 4 Hotmail accounts for every modem in India!
Two aspects of the Hotmail technique were particularly clever. First of all, the footer was an implied endorsement by a friend: the email must have been sent by someone who used the service. Second, it was a proof point for the new product category of free email: receiving the email actually meant that the service work, which reduced perceived risk.
The net result was a spread so quick that no other company could catch up for the next few years. The nature of exponentials meant that a company starting a few months later might grow at the same rate but still see the user gap increasingly widening – which is why Microsoft ended up buying them. There was simply no way to compete. Interestingly, you can see the same exact trends in other products: ICQ, Kazaa, and Skype.
Steve also spoke about the two laws that govern networks: Metcalfe’s Law (the value of a network is proportional to the number of connections in the network – think Hotmail, Skype) and the more powerful Reed’s Law (the value is proportional to the number of groups in a network – think MySpace, Flickr). In an attempt to model the effect of viral marketing, he proposed a simple formula of:
USERS = (1 + fanout) ^ time
which he then expanded into:
USERS = [(1+fanout*conversion)*retention]^(frequency*time)
Counteracting this effect are the decay effects of novelty loss and saturation, which slow the process. Of course these sorts of formulas are oversimplifications, but they can help us think of the different factors of a good viral marketing campaign.
In closing, Steve gave a number of recommendations for a product hoping to spread virally:
a) internationalize quickly so you can spread globally
b) ensure platform homogeneity, so users can participate regardless of their device
c) tie your product to social activities, preferably targetting weak social ties (acquaintances rather than friends)
d) lower the friction to adoption (for example by making the signup process easy… or even non-existent)
e) create retention hooks that make people want to come back
f) leave visible traces
g) add communication
h) focus on involved non-purchasers: the people who participate but not yet fully
During the interlude, Mike Dearing gave some thoughts on the emerging themes of the conference.
Negative effects of infectious action was clearly a prominent topic, and he suggested that there are three ways to deal with this: rules (which miust be enforced), pricing (make bad behavior expensive) or sunshine. This last solution is interesting, in that it simply consists of exposing the misbehavior, making it public. Often this is sufficient to prevent people from engaging in it… although of course I can see this backfiring if people are proud of their antisocial behavior (ie. trolls)
In response to a question during Peter’s talk as to whether Wikipedia was truly infectious action as such a small percentage of users contribute to it, Mike pointed out that concentration in production is okay. As long as all users have the option to participate, it makes the system feel more democratic. He also agreed with Peter that the concept of human bandwidth is a really big deal.
Favorite quote:
Never forget that capital is heartless, impatient and optimistic
Coming from the medical real, Jamie had some interesting insights into the negative effects of infectious action. First of all, she talked about medications that grew too quickly, most infamously Vioxx. Vioxx was very appealing to physicians because it in theory targetted only the areas that needed help. Even after research began showing that it raised the risk of a heart attack, it took several years for Merck to pull it. There are numerous other examples, including hydosteroids for spinal cord injuries, where new drugs were very aggresively promoted but ended up being only marginal better than previous ones, and sometimes had serious negative side effects. Yet Jamie didn’t solely blame pharmaceutical companies for this: according to her, the fact that people want things to work and think is new is better helped Vioxx go on for longer than it should have.
The second topic Jamie addressed was the role of media exposure in the medical world. First of all, celebrities often raise the profile disease. This is good in that it heightens awareness of a specific illness and might increase funding, but it also leads to a lot of unecessary testing and wasted resources (‘Doctor, are you sure it isn’t such and such illness?’). Second, medical shows such as ER and more recently Grey’s Anatomy give a heavily distorted view of what happens in an emergency room. This can lead to false expectations: rescussitation is successful 90% of time on TV, but only 5% in real life!
Finally, Jamie talked about some of the positive ways infectious action can contribute to the medical realm. A constant challenge is changing people’s behavior when it comes habits such as alcohol and drug abuse. Here infectious action might be effectively used to promote positive change. Obesity is another good example of an epidemic that could use some positive viral marketing!
Peter’s talk centered around successful online communities, in particular Wikipedia, World of Warcraft and Second Life. For the latter two, he cited as elements of success: new identities, entertainment, interaction and collaboration, self-expression, the ability to build your own world, and finally the possibility of making real money.
He also described his idea of web 2.0, defined by Emotion/Creation/Collaboration vs. Logic/Information/Consumption for web 1.0. With this new dynamic, the key to building a successful application is to not only link information but also link lives – ie social networks.
Favorite insight: our most precious asset going forward is TIME. The companies that realize this and help us manage this resource are the ones that stand to gain big.
Paul’s talk centered around the S-Curve, which describes how a company’s progression towards success is not uniform but accelerates rather dramatically once it reaches a certain critical point (for the lucky ones, that is).
His first point was that many people underestimate the initial horizontal section, which is often closer to 20 years than the 20 weeks that may be wished for by the aspiring entrepreneur.
Next he talked about a number of technologies that saw a very quick rise, but then an equally quick fall – from hula-hoops to tulips in the 1600s. The lesson to be learnt here is to always keep in mind what happens when your product catches on, or else you might end up being yet another fad.
Finally, he pointed out that there is also a negative side to infectious action, when things spread without us being able to stop them. He mentioned that a lot of companies spend time establishing a standard, but this can be dangerous if the standard ends up being a bad one. Another example was the unstoppable spread of UFO conspiracy theories, spurred by an overly clever air-force report intended to cover-up for air-balloon experiments… in Roswell, New Mexico!
Favorite quote:
Never mistake a clear view for a short distance.
Last Thursday I attended the Creating Infectious Action mini-conference co-organized by Diego Rodriguez at Stanford. Diego and Bob Sutton, who teach a class on that very same topic, invited a variety of speakers to the dschool for an afternoon of discussion. It was a great event, and I’ve written up summaries of the various talks:
Paul Saffo, Institute for the Future
Peter Ebert, SAP
Dr. Jamie Shandro, Stanford ER
Mike Dearing, Ebay
Steve Jurvetson, Draper Fisher Jurvetson
Paul Moore, Yahoo!
Perry Klebahn, Atlas Snowshoes
Last Friday, I had the chance to attend a talk at the Stanford D-School. As part of the Liu Memorial Lecture Series in Design, Maggie Orth made a presentation on her work with electronic textiles. Maggie, who has a PhD from MIT’s Media Lab, founded her company International Fashion Machines in 2001 to explore the intersection of electronics and fabrics.
She is currently working on a number of interesting projects. On the artsy side, her electric plaid textile panels use conductive weaves to change the color of thermo-chromic inks. They are quite pretty and can display quite a wide variety of patterns – although as she insisted, they aren’t meant to be as versatile as a screen. She discussed some other limitations of the technology, including the ink’s fairly slow rate of change and the fragility of the weaves over repeated heating/cooling cycles. On the product side, she has some fun PomPom Dimmers, light switches in the form of pompoms which you squeeze to activate.
The most interesting part of the talk was her take on electronics and the fashion industry. Apparently, she is frequently approached by fashion companies wishing to integrate electronics, but none of them are able to justify the investment. The issue is that R&D for electronics is fairly expensive, and you therefore need high volume to recoup your development costs. Unfortunately, clothing designs are usually produced in quantities of a few thousand or less. For this reason, electronics in clothing have mostly been limited to one-off, conceptual models by big firms such as Nike. Maggie suggested that one way to circumvent this limitation was to leverage an already existing piece of hardware, and cited the success of Burton’s iPod jackets as an example.
Overall, this was a very interesting talk. I would have liked to see some more concrete applications of her experiments, but Maggie’s work definitely has the potential to lead to some very cool products in the coming years.
PS: This is the first time I’ve posted a longer feature on this blog. I hope to do this more often over time, as I get more involved with the Bay Area design community and have more original material to write about.
