Thinking About The Product Box Theory of Marketing

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A few weeks ago I wrote abut the single box theory of software design. I have another one I’d like to add: the product box theory of marketing.

Here’s how I believe each customer’s mind works: I need to do “x” so I need to go to this service to do it. I need to share files across computers so I need to put them in Dropbox. I need to exercise so I will go over to 24 Hour Fitness. I need to buy a book so I will go to Amazon.com. I need to buy soap so I will go to Target.

As humans we like to sort and categorize, we like to put things in little boxes. We know when we need to do “blah” we can go to that little box to get it done.

If your product doesn’t fit into a box then don’t ship until it does. And if your product doesn’t satisfy the entire box, don’t ship either.

We almost learned this the hard way. When developing powerOne calculator we realized that the customer says, “I need to do a calculation so I use powerOne.” But early on we considered leaving off the general-purpose calculator. It is a real pain to develop and maintain and the iPhone had one bundled. But after a couple of customer interviews it became clear quickly that the calculator needed to be there. The customer didn’t want to say when I need to calculate this I need powerOne but when I need to calculate this other thing I need the iPhone calculator. No, the customer wants to say I need to calculate and then grab powerOne.

This box is critical for success. Without it the customer will never really latch on to using your product or service.

Changing the Textbook Isn’t Enough. The Teacher-Student Relationship Must Change, Too.

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Education in the US is going to have to change drastically in the next few years. Just like Medicare, Social Security and just about everything else with the US economy, the costs are just not sustainable, whether we are talking public school or private school, primary, secondary or college education. Something has to give.

Matt Miller pointed out earlier this week that the cost of a public school college education has gone from 12% of the median wage in 1980 to 26% today. By the time my kids go to college 12 years from now that bill will be even higher. And as we all know state and federal public school budgets are being slashed. School districts across the country are considering laying off teachers, shuttering school days and closing schools to keep the budget in check.

Like so many things in this country right now, we need to completely rethink the way we are providing education. The Obama administration announced a plan to get all students on digital textbooks in the next five years. Personally, I find this disappointing, incrementalist thinking. The administration claims it will save $600 per student per year but that strikes me as some pretty fishy math predicated on wishful thinking (lower drop out rate, for instance).

While changing textbooks is a start (and Noah Millman wrote a fascinating article on the topic here — thanks Fred Wilson!), it is not the end-all-be-all to a revamped system that can support 21st century students and can bring costs under control.

Fundamentally I believe we need to change the way we think about the student and the teacher and their relationship to each other. Traditionally the teacher has been the holder of all knowledge, imparting it on her young and impressionable students. Thus why we need small class sizes. But in order for the relationship to be sustainable moving forward, I believe we need to move to a model where teachers are guiding the students through the learning experience, using internal and external resources to do so. This especially can happen as the students move into middle and high school.

By changing our approach and treating teachers as educational guides I believe we can accomplish two things:

  1. Increase class size without compromising learning integrity
  2. Make students responsible for their own education

This second part is critical. As a nation we need to move back to a mentality where we can all succeed if we try and the government’s job is to give us all a chance to succeed. Teaching us how to be self-sufficient, teaching us how to be responsible for our lives and actions, should be part of the experience.

And as all of us who run start-ups know, there is nothing more liberating than feeling like we have some control over our destinies.

The Mobile App Price of Free Is The Future

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Free and Low-Cost Apps

Writes David Barnard of App Cubby:

The pool of time users spend on smartphones is staggering and growing rapidly, but it is not infinite. The more time people spend with useful/entertaining free apps, the less need they have to actually pay for apps. That doesn’t mean people will never pay for apps — the market for paid apps has continued to grow alongside free and freemium apps — but users have been conditioned to expect more and more for less and less.

The entire article is very well done and aligns very closely with my own observations. The App Store environment is very hard on non-game apps, and even the gaming market is hard given how hit-driven it is.

Here is what we have done with powerOne, a top 10 iPad finance app and top 30 iPhone finance app, an app that has been featured by Apple on numerous occasions and participated in the iPad launch, and still doesn’t generate enough income to pay for two developers full-time at market wages:

  • Single product with compelling value proposition (100s of calculations for $4.99)
  • Free Lite version that is a top 100 iPad/iPhone utility app with promotion to paid version
  • Multiple versions designed for specific markets: mortgage, construction, medical, etc. ($.99-$4.99)

We are also in the process of developing a product with a partner and are exploring ways to make a little money off the Lite versions. I’m not interested in advertising so we have ruled that out.

But the fundamental conclusion I’ve come to is that developing *just* a mobile version is not good enough. People are using apps to connect to the larger world, to get something done while on the road. The question I have been exploring for the past year is how does our core capabilities help our customers do that? What do we do when they get back to the house or the office? And what can we build to help them?

In the end, getting off the device may be the only way to build sustainable revenues for productivity-style apps.

Cannibalism Rules Again As Cameras Die Just Like Pagers and Handhelds

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Sony, Too

John Gruber, on Daring Fireball, talking about the decline in camera sales:

Compare and contrast Sony’s approach to dealing with the decline in point-and-shoot camera sales with Apple’s approach to the decline in iPod sales. Apple is skating to where the puck is heading; Sony is skating to where the puck is at the moment.

He goes on to point out that he isn’t advocating Sony stop selling cameras. After all, Apple didn’t stop selling iPods. But it is a business in decline and the the future is clearly better cameras on phones.

This is a repeating theme in technology. A story of two companies, both coming of age at the same time. The first is a tech darling who defines the market for personal digital assistants and the second one who made pagers for a living. Both saw the coming age of smartphones and how that would decimate their existing businesses.

The first company (we’ll call it Palm) decided one random day that they would stop making and selling handhelds, laying off or reassigning everyone who worked on that business, throwing out a ton of knowledge and momentum in certain markets (like education). The second company (we’ll call it RIM) realized that it could marry its pager technology with cell phones and create addictive devices. RIM made the transition gradually; Palm did it abruptly. Palm died a horrible and ugly death while RIM, at least for a while, was the hottest smartphone company on the planet (until the market shifted on them again, this time from enterprise to consumer devices).

But at least both Palm and RIM realized the coming smartphone apocalypse would change their businesses and they’d need to adjust. Sony, Kodak, Canon and Nikon seem to have no answer to the transition at all.

Apparently I Won’t Be Watching Warner Brothers Movies

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Netflix Deal with Warner Brothers Includes Delay In Queues

In my on-going sequence of posts ridiculing Hollywood, we can add another chapter. Now you won’t even be able to add Warner Brothers movies to your Netflix queue until they have been released for purchase 28 days. Stupid.

For you movie executives who are paying attention, here is my process:

  1. Hear or read about a movie (see trailer, read Friday entertainment section of the paper, friend tells me, etc.)
  2. Add interesting movies to my Netflix queue
  3. Occasionally go to the theatre to see one of Netflix queue movies
  4. Wait for it to show up in my queue, make a buy/rent decision. If I saw it, I rate it and remove it.

My decision to buy your movie, rent your movie, even go to the theatre, is all predicated on my Netflix queue. It’s going to have to be really really really interesting for me to remember I want to go see it without it.

So, Warner Brothers, the odds of me ever seeing another one of your movies just approached zero.