Ken Nelson

What are new customers worth?  What are loyal, repeat, customers worth?  These are the questions cogently raised by Rocky Agrawal’s dissection of the Groupon Business Model.

I’ve either built, or played a key role in building, three successful business ventures. And I’m in the process of making another one.    I learned early on that a customer I already have is worth WAY more than one I don’t. have yet.  An easy reminder of that is the $7K just sent me via electronic purchase order by a long time customer.  By my rough gauge that is 1 of 5 orders given me today from folks I’ve done business with for years.  Combined with a couple orders from new customers it was a good day.  And  just another pleasant reminder that that hard work we did for them 5 years ago is still paying off.

Bootstrapping a startup that lacks loyal customers is hard, frustrating and thirsty work.   In the beginning, all customers are new (and expensive to acquire).    My approach is to find strategic customers and make them partners.  I give them a great deal, free in most cases, in exchange for feedback and their assistance and referrals.  Will it work? Time will tell.  If it were easy, everybody would do it!

One thing I won’t be doing is randomly letting price focused customers exploit my offerings without a loyalty / feedback relationship.  That’s what Groupon provides.  Groupon customers remind me of the folks who visit yard sales before the stated opening times. They want bargains but it is better to wait the day out and work with those who arrive when you are packing it in, or to give a great deal on an item that isn’t selling to somebody who just bought your big screen TV and agreed to haul it off for you.

This lack of loyalty is also why I delayed and delayed and regretted putting in a Yellow Page ad for a successful photo business I had through much of the last decade. It was a part-time venture, but it ended up being among the largest (and likely most profitable) photo businesses in my region. Why?   I spent time pleasing customers and making money, not answering phone calls from people asking about pricing.  90% of my business was referral based from customers who would think of using no other photographer for their family, wedding, or business.

That’s why when I decided to start a mobile software company my concept focused around customer loyalty apps.  I wanted to provide a way to help businesses foster, keep, and expand a reciprocal relationship with customers that are loyal to them. Oh… and keep to my other simple formula – value, value, value, and the best support they have ever received ever period. Simple!

We are 5 months into the project, and perhaps a month or so off from the launch of about 20 apps for companies I’m loyal to, or that I think are strategic for feedback, market exposure, and yes… more feedback!

I wish Groupon the best. But I’m pretty sure it will fade as folks realize that the grass isn’t always greener on the other side of the fence, and that they really should be nice to the girl that accompanied them to the dance.

Watson, the Jeopardy playing computer, crashed multiple times and the 1/2 hour show’s taping took FOUR hours to complete due to the crashes.

Another Perfectly Designed Jeopardy Contestant

Q:  This species, formerly dominant on Earth, was not algorithm based.

The last two nights, Jeopardy has featured two humans and a computer from IBM named Watson. 

Watson finished the first game of a two-game match with $35,734 in winnings, far ahead of runner-up Brad Rutter, who earned $10,400. Ken Jennings trailed with $4,800.

Watson uses natural language analysis, custom algorithms built for the Jeopardy competition,  terabytes of storage, 90 servers, and thousands of POWER 7 computing cores to attack problems in parallel.   On a single core it could take 2 hours to generate an answer, but by dividing the problem among thousands of processors it answers essentially instantly.

Impressive. But… somebody brought it to the stage, and will take it home. So perhaps not that impressive.

If I were Jeopardy producers, I’d be looking very hard at questions with multiple attributes in their answers, to give the humans a chance.

For instance, the Final Jeopardy question, which Watson missed, required knowing what a “large” airport was.

I found this piece, by Mordechai (Moti) Ben-Ari, at the Weizmann Institute in Israel to be pretty much on target. His topic… “Non-Myths About Programming”.

The non-myths… like Programming is Boring (it can be), or You Work in front of a computer (who doesn’t) are, indeed, non-myths.   He points out that most professions have their issues, and their rewards.

If you want to be a programmer… give it a read.

http://www.defectivebydesign.org/

They won’t until forced by competitive pressures, and they will scrap and fight retreating actions til the bitter end.

The “No installing apps from the web” is what really gets my goat.

Summary:  Super easy. I’m making better presentations, quicker, and spiffier.

Details:

I’ve tried various free options for building presentations on the Mac, including Google Presentation, and Apple’s Keynote.

They were both adequate, but barely so.  So I picked up a copy of Microsoft’s Powerpoint for the Mac 2011 the other day.

It uses the Mac interface well, and they’ve really simplified handling transitions, especially of text.  I like to hide my bullets so people do get ahead.

I’ll try the remote sharing tomorrow night at a class I’m giving to our local ACM chapter.

Wish me luck!

I forget what it cost, somewhere south of $100. It was well worth the money.

Well, after a month of long nights and Saturday’s, we submitted our first app to the iPhone App Store the other day.

Today it was rejected.

This came as a HUGE surprise.  The app was developed primarily by an experienced iPhone developer, and shown to several very experienced iPhone developers along the way.  Everybody thought it was slick, well crafted and very cool.  Nobody had any concerns about rejection.

There are objective standards in the App Store approval process. Things like “don’t’ crash”, “too big”, “and uses an unapproved API”.  I don’t mind being held to those standards, for the most part.   We got dinged under a “subjective” rule:

The app shall not be primarily marketing material or advertising.

First off.. do you really believe that is evenly applied?  How about the Target app? Or the Disney app? The list goes on.

I read that “rule” to mean that direct clones of marketing material or ads should not be turned into an app. For instance, bundling a PDF of your catalog into an APP form.  Even that interpretation of the rule doesn’t make any sense to me, but I didn’t think we were anywhere near it.

App Reviewers must review 80 apps per day. Giving our app, that we spent a month on, about 6 minutes of review.   We then got a form e-mail.

We appealed, which generated another form e-mail.

The thing is, even if I win, how can I possibly invest in a system like that?   Our next step involved serious development, and hiring of engineers to do it.  That’s hundreds of thousands of dollars held hostage by 6 minutes of a person who may not understand our app, language, or business model.  We planned on having hundreds of customers, whose investment would then be put at Apple’s whim.

I ain’t gonna do it.

Android and Windows Mobile are PLENTY big enough for me. In fact, combined they are much larger than Apple’s iPhone market share.

If Apple can’t convince me that their business is safe for investment, I won’t do it.

Do they care?  Probably not. But the only power I have is my choice, and I intend to use it.

Update: They approved the app, unchanged after our appeal. This happened late Monday, so within one working day.  As far as appeals goes, this seems rather fast and I suspect it reflects that the first reviewer did make an error that was pretty obvious.

Rapid approval upon appeal does take the sting out a bit. But my concerns remain… do I want a big investment made in an ecosystem where one entity can kill it at anytime?

At a minimum it means I’ll probaby lead with our Droid offerings.

I don’t like computer games. But I like Angry Birds. It fascinates, distracts, occupies, and frustrates.  It is a simple game, but designed precisely for the strengths and limits of mobile devices like the iPad, iTouch and Android.

Congratulations Angry Birds for being the #1 paid app in the iPhone App Store. You were quite possibly the best $5 bucks I spent in 2010.

To get Angry Birds, just search “angry” in the App Store or in the Android Market. Enjoy!

$100K for an air horn iphone app…

In our post roughly 10 weeks ago we detailed Air Horn (Free!)‘s 8-day stay in the coveted #1 spot in the App Store. We promised to follow up and provide additional data and further insights. This simple app turned any iOS device into a loud and obnoxious air horn and netted Simpaddico, the app’s developer, $20K in 8 days. We were quite surprised when the app stayed in the Top 25 for the next 5 weeks, receiving over 3.5MM downloads in that period and netting Simpaddico over $100K. At its peak, Air Horn was getting over 188K downloads per day and never fewer than 30K downloads per day.

It is a free app – they made most of the money off ads, the rest off an in app upgrade purchase to more sounds and no ads.

Alas, virtually all apps lose money.

A New Tool for Mac Developers

The Android is going to kill the iPad/iPhone.  And iPod sales are already flat.  But today Apple really stepped in it for their future…

They are trying to make Mac development like iPad/iPhone development, in that they are launching a Mac “App Store’, where apps will have to be approved by Apple and where I, the developer, will have to give Apple 30% of my sale.

Sorry. No sale!

I’m sure they will change this once developers say “nope” and jump ship.  They have increasing market share, but they need to incent developers to develop for the Mac, not punish them.s

Microsoft should be 8, 9, or maybe even 10 different companies. Instead it is one company that doesn’t grow much and that while very profitable could be more profitable and more agile if mind numbing bureaucracy didn’t stunt its operations.

They have released a new Phone OS – Windows Phone 7.  I’m sure it works fine. It may even be better, technically, than Android or iOs (iPhone).  But does that matter?  From a user perspective what matters is apps. Application breadth and quantity how DOS and then Windows achieved hegemony in the early 80’s and 90’s.

My company is currently working on a mobile app for Android and iPhone. Why would I also develop for Windows Phone 7?

Money talks. Give me a better cut (Apple takes 30%). Or flat out pay for apps. You’ve got the money.

Today is a big day… Halo: Reach is available. Get it quick!  It is getting good reviews as the “definitive Halo experience”.

I’ve never played Halo. My son, and pretty much every other boy or man under the age of 30 has.  But I have read Halo book spinoffs from the game. Early in my son’s reading career, when he was an advanced reader, but not advanced in age, I had to read grownup books first to make sure they were appropriate for him.  The Halo ones were appropriate (if killing aliens is okay with you), and I found them very interesting and enjoyable reads.

Here is something you may not know… Video games make more than movies now. It’s true. There is a whole common cultural experience out there driven by games, such as older folks might have experienced with a popular sitcom in the 80’s.  Hey… did you see that Seinfeld last night???  Well our juniors have the same experience, but with obstacles or problems in their games.   Any kids I chauffer around soon lapse into “game talk”  that I know nothing of.

As a software engineer/computer scientists I’m impressed with the reality and speed of these modern games. Game writing is the siren song of young software engineers, they are drawn to it through love of playing the games, but find out that making them is a huge team project involving millions of little “details”, and thus often not as fun as it seemed when playing the actual game.

70% of iPhone apps cost money. About the same percent of Android apps are free.

So as a professional developer… where should I invest my company’s resources?

Oddly… when I consider mobile projects, I lean towards the Android. Why? It is easier to program, and I don’t have to get Apple’s permission. Plus, I think the iPhone’s glory days are nearly ended.

The acid test will be the DroidPad, which I think will kick the snot out of the iPad both on price and features.

In the near future Apple will be hard pressed to be as totalitarian as they have been and I expect longer term that the iPhone will be marginalized like the BlackBerry rapidly has become.  Since phone turnover is extremely rapid, this can happen quicker than you think.

The Oatmeal almost pegs it:

http://theoatmeal.com/blog/apps

But it isn’t the cost of apps that gets people down, it is the risk of being made a fool when it turns out to be a worthless piece of crap that you never use.  Apple should have a system for returning crappy apps, or for trying apps for a day or so before having to buy them.

This would make Apple more, as app prices would rise, as would willingness to try apps.

Alas, investment in software and equipment is at a 50 year low. Pent up demand? This blogger hopes so… (-:

Via http://econompicdata.blogspot.com/