Thursday, April 06, 2006

Virtual Businesses, Real Opportunities

Virtual Businesses, Real Opportunities
I've been big fan of virtual worlds since starting this blog, but I'm not feeling lonely any more. Virtual worlds are going mainstream, and that is going to create a host of business opportunities for savvy entrepreneurs.

Take this story, for example, about a startup in DC that is charging corporate clients big money to help them set up shop in Linden Lab's Second Life.

Second Life has, as of tonight, 174,286 residents, who spent almost $200,000 of real money to buy virtual items or rent virtual land.

That's a medium-sized city, with great demographics, and some real spending.

Electric Sheep, the startup in the article, which cheekily tips its hat to Dick's classic "Do Androids Dream of Electric Sheep," offers content creation to big companies who want to market to this audience.

In a lot of ways, it reminds me of the early days of the Web, when Web designers were the cutting edge (rather than being outsourced to Pakistan for $0.50 per hour).

The fact is that you can think of virtual worlds as virgin territory for business. Millions of consumers in a commercially underdeveloped landscape, with explosive growth.

And best of all, you don't even need to create a new business model! People are making money as landlords, nightclub owners, and fashion designers.

What if you could create the McDonalds of virtual worlds? Or the Gap? Or the Best Buy?

What are you waiting for?

Don't Hate Me Because I'm Beautiful

Don't Hate Me Because I'm Beautiful

A new research paper from Wesleyan University reveals what is patently obvious to anyone with experience in the real world: Being good-looking is a major advantage.

More specifically, even when beauty has no impact on actual productivity, beautiful people are more confident about their abilities. Meanwhile, employers who evaluate beautiful people overestimate their productivity, especially after a face-to-face interview.

Thank goodness I'm so damn good-looking. Heck, I think I'm better looking than Ray Lane.

Of course, this also suggest an arbitrage opportunity--start a company that doesn't require face-to-face contact and hire ugly smart people!

Armed with the data from these experiments and surveys, the economists found several interesting results. It turned out that beautiful people were no better than ordinary people in solving mazes. But despite having the same productivity as others in this task, beautiful people were a lot more confident about their own abilities. Being good looking seems to be strongly associated with self-confidence, a trait that is apparently attractive to employers.

When employers evaluated employees only on the basis of résumés, physical appearance had no impact on their estimates, as one would expect. But all of the other treatments showed higher productivity estimates for beautiful people, with the face-to-face interviews yielding the largest numbers.

Interestingly, employers thought beautiful people were more productive even when their only interaction was via a telephone interview. It appears that the confidence that beautiful people have in themselves comes across over the phone as well as in person.

But even when the experimenters controlled for self-confidence, they found that employers overestimated the productivity of beautiful people. The economists estimated that about 15 to 20 percent of the beauty premium is a result of the self-confidence effect, while oral and visual communication each contribute about 40 percent.

It seems that good-looking people are good communicators as well, and their oral communication skills contribute about as much to employers' perceptions as their looks.
As the researchers put it, "Employers (wrongly) expect good-looking workers to perform better than their less-attractive counterparts under both visual and oral interaction, even after controlling for individual worker characteristics and worker confidence."

Adventures in Narrowcasting

Adventures in Narrowcasting

I ran across this fascinating story in one of my email newsletters. Unfortunately, the content is behind a registration firewall, so I will have to repost it in its entirety. It is well worth reading.

I've written before on how the friction of entrepreneurship has lessened. This article illustrates this with a vengeance. The New Jersey Wildcats (a women's soccer team) has realized that they can use today's new technologies to launch their own broadcast network, essentially for free. They're uploading broadcasts of their games, including embedded commercials, to Google Video. Their fans get a notice whenever a new broadcast is available, and can watch on their PCs or iPods at their convenience.

This is brilliant. They already have a brand and a strong audience, and this scheme allows them leverage both those assets at no cost to generate a new and potentially exciting revenue stream.

How can you do the same in your businesses? Where's the And1 network for streetball? Or the Tony Hawk network for skating? Heck, individual skate parks and streetball courts could launch their own networks. A Rucker Park network would be huge in the streetball community.

At a smaller level, if you're a high school or college, why not broadcast all your athletic contests?

That's the power of narrowcasting. Maybe the Olympics can't deliver the kind of monolithic ratings they once did, but I'll bet a niche play like the Women's Beach Volleyball channel could really kick some ass.

The possibilities are endless.

The New Jersey Wildcats--the top women's soccer team in North America--are launching a global broadcast network starting this May. Over the past few years, the team has been made up of a who's who in women's soccer, not only from America but also from around the world. In addition to American stars Heather O'Reilly and Cat Reddick, the Wildcats roster includes international superstars like England's Kelly Smith, considered the best player in the world; Canadian national team goalkeeper Karina LeBlanc; Chinese striker Ji Ting; Brazilian star Formiga--and the list goes on and on.

This summer every Wildcats game will be available on demand by anyone in the world who has a broadband connection by simply going to or Google Video. Within hours of the game finishing, a 35-minute version complete with pre-game show, first half highlights, halftime show, second half highlights, and post-game recap will be viewable and downloadable to iPods by Wildcats fans from all over the world.

Each game will have ten 30-second commercials and will be totally free to the end user. In past years the team attracted only local sponsors and advertisers but this year, by distributing games over IP Video, they will reach further. "National brands had no interest in even talking to us, let alone spending money," Wildcats co-owner Pat Ruta says. "Today the team is sponsored by Nike and is in discussions with Coke, Lowe's, Anheuser Busch, Unilever, Johnson & Johnson, Subway, Bristol Myers Squibb, Merrill Lynch, Horizon Blue Cross & Blue Shield, Canon, and many more."

"We don't want advertisers that just want to give us an ad and let us run it in our games," Ruta says. "We want advertisers that we can partner with [and] that want to work together so that we can drive sales. We have three types of fans--12 million girls ages 6-20 play soccer year round. That means 11-plus million soccer moms and 11-plus million soccer dads. Our fans live in the suburbs and have lots of disposable income. Our goal is to deliver 500,000+ viewers every game."

He might be onto something--more girls play soccer in this country than any other sport.
Ruta continues, "If we team up with POWERade vs. Gatorade or visa versa, then as a marketing partner we need to educate our 11+ million sport drink buying soccer moms not only which drink to buy, but we have to give them reasons as to why they should do that."
What may be most interesting about this particular IP Video play is that the team has opted for an "almost free" solution. There is no cost to serve IP Video over Google and a very low cost to serve the video from the NJ Wildcat's servers. They will "bake in" the ads (which, by definition, will have to be brand-oriented). Or, they will have to re-edit and re-encode the games to replace stale creative. That being said, it is a very, very economical solution with interesting repercussions for the broadband playout industry, private network VOD players, traditional cable, satellite and even broadcasters.

The NJ Wildcats are supposed to be the best soccer team in America, but this season, by juking the system and cleverly using a collection of free applications, they may be showing all of us how to score with narrowcasting!

Wednesday, April 05, 2006

An Eloquent Defense of Immigration

An Eloquent Defense of Immigration
I'm not sure whether Warren or I have a larger readership, but he really deserves to have more people following his blog.

Warren is an outspoken Libertarian in the best sense of the word, and he has been posting a lot on issues of immigration. The following is quoted from Warren's blog, Coyote Blog, and is an incredibly eloquent and searing argument against those who wish to close our borders:

Like the founders of this country, I believe that our individual rights exist by the very fact of our existance as thinking human beings, and that these rights are not the gift of kings or congressmen. Rights do not flow to us from government, but in fact governments are formed by men as an artificial construct to help us protect those rights, and well-constructed governments, like ours, are carefully limited in their powers to avoid stifling the rights we have inherently as human beings.

Do you see where this is going? The individual rights we hold dear are our rights as human beings, NOT as citizens. They flow from our very existence, not from our government. As human beings, we have the right to assemble with whomever we want and to speak our minds. We have the right to live free of force or physical coercion from other men. We have the right to make mutually beneficial arrangements with other men, arrangements that might involve exchanging goods, purchasing shelter, or paying another man an agreed upon rate for his work. We have these rights and more in nature, and have therefore chosen to form governments not to be the source of these rights (for they already existed in advance of governments) but to provide protection of these rights against other men who might try to violate these rights through force or fraud.

These rights of speech and assembly and commerce and property shouldn't, therefore, be contingent on "citizenship". I should be able, equally, to contract for service from David in New Jersey or Lars in Sweden. David or Lars, who are equally human beings, have the equal right to buy my property, if we can agree to terms. If he wants to get away from cold winters in Sweden, Lars can contract with a private airline to fly here, contract with another person to rent an apartment or buy housing, contract with a third person to provide his services in exchange for wages. But Lars can't do all these things today, and is excluded from these transactions just because he was born over some geographic line? To say that Lars or any other "foreign" resident has less of a right to engage in these decisions, behaviors, and transactions than a person born in the US is to imply that the US government is somehow the source of the right to pursue these activities, WHICH IT IS NOT.

Tuesday, April 04, 2006

Purpose and Integrity

Purpose and Integrity

This Hillary Johnson post got me thinking about my own definitions of purpose and integrity.

With thanks to Ambrose Bierce:

Purpose: Trying to achieve something that you think is worth achieving, even when there isn't anyone around to impress.

Integrity: Applying the same standards to yourself that you use to judge other people when they're not around to hear what you're saying about them.

Regardless of the humor value, I do believe in my definitions, and try to live up to them.

Friends Don't Let Friends Lose Data

Friends Don't Let Friends Lose Data
A couple of months ago, I started using a free backup service called Mozy. It automatically makes an offsite backup of my files each night. You get 1 GB of storage for free, 2 GB if you are willing to let them send you the occasional email (they haven't sent me any emails yet).

No one ever wants to lose their files, and everyone knows someone whose life ground to a halt because of a laptop crash. Mozy lets you stop worrying without having to pay anything.

Now why am I shilling for them? Well, I do love the service. Heck, I even wrote about them without any inducements. And now they've added a referral program so that for every 4 people you get to sign up, you get another 1 GB of free storage.

So if you don't already have an offsite backup solution, I strongly urge you to check out Mozy and to sign up with my referral code to thank me for pointing out this cool solution.

Monday, April 03, 2006

MBAs are not BS

MBAs are not BS
There seems to be a movement underway to say that MBAs are an antiquated and unnecessary. Josh Kaufmann's Personal MBA program offers the belief that one can achieve the same results by reading 40 great business books. Brad Feld says that an MBA is BS, and also cites the example of my old friend and classmate Chris Wand.

With all due respect to Josh and Brad (as well as Chris), their arguments may explain why the MBA isn't for everyone, but they do not mean that the MBA isn't for anyone.

Like parenting, there is no substitute for a top-tier MBA program. That doesn't mean everyone should go--most should not--but it does provide you with benefits you'll have a hard time getting elsewhere.

If you deconstruct the benefits of a Harvard MBA, they fall into several categories:

1. The brand
2. The network
3. The learning
4. The people
5. The opportunities

The brand is self-explanatory. Businesses are generally interested in talking with Harvard MBAs, and this is especially true in Venture Capital, where HBS grads represent 20% of the industry--a remarkable concentration. You don't need the brand to succeed--Bill Gates, Steve Jobs, and Michael Dell seem to have done just fine without even a college diploma--but that doesn't mean it can't help.

The network is incredibly powerful. I've been able to get Fortune 500 CEOs on the phone, simply because they were fellow HBS alumni. And with 80,000 living alumni, many of whom reside in the highest positions in business, this is a pretty strong benefit. Of course, you still have to be good, but it gets you in the door.

The learning is highly underrated. HBS teaches using the case study method. You have to conduct analyses, make decisions, and persuade others of your point of view. Sounds an awful lot like the core of being a business leader. You can't experience the same thing simply by reading books and commenting on a few message boards, especially when for a significant number of cases, the protagonist actually visits the classroom.

The people are incredible. Your fellow classmates are a remarkable bunch, and if you build relationships that last a lifetime, you'll always have friends and supporters. This is no different than the college experience. Many people still have a core group of their closest friends from their college days. The intensity of the experience creates bonds that are practically unbreakable. It's much harder to build such bonds on a message board.

The opportunities are helpful. If you go to a top-tier school, you will be heavily recruited by prestigious employers like McKinsey, Goldman Sachs, Microsoft, and so on. You could eat out at the finest restaurants for a month if you accepted every interview. It's like the sushi-boat version of a job search: mouthwatering delicacies simply flow past, and you're invited to partake of whatever suits your fancy.

Yet while this is often mentioned as the strongest selling point of B-school, to me this is the weakest, since it only affects your life once, when you decide on your first post-MBA job.

The bottom line is that an MBA has a lot of different benefits. Each person will place a different value on those benefits, which is why the MBA makes sense for some, but not others.

Ultimately, the arguments against getting an MBA are similar to the arguments against getting a college degree. After all, a college degree takes even longer, and costs even more, with fewer clear professional benefits.

You could easily obtain the reading lists for the core college curriculum, or even download the free courseware for almost any course you wish.

Yet few of the people who call for avoiding the MBA are also calling for an end to undergraduate education. Why?

I'll let them comment, but my intuition is that people are still uncomfortable with business as a subject of serious study. Politicians may call for more math and science grads, but not MBAs.

There's no question that MBAs have made a lot of mistakes over the years, but so did everyone else, and of the whole crop of bad apples, only Jeff Skilling of Enron holds an MBA. Dennis Koslowski, Ken Lay, Martha Stewart, Bernie Ebbers, not one of these jailbirds has an MBA.

Anti-MBA discrimination? It sounds absurd, but I think that an anti-MBA prejudice is just as bad as a pro-MBA prejudice.