me*dia*or

Pop Goes The Pivot | Fast Company

What do The Beastie Boys, Katy Perry, and PayPal have in common? They all pivoted.

When the Beastie Boys formed in 1979, they were a hardcore punk band that dabbled in performance art, a fixture at clubs like CBGBs and Max’s Kansas City. Their first full-length album, Poly Wog Stew, with bombastic minute-and-a-half paroxysms like “Transit Cop,” “Jimi,” and “Holy Snappers,” owed as much to the Sex Pistols as it did Dadaism. Always on the prowl for the absurd, they started rapping in rehearsals, mainly as a joke. But when they tried it during performances something magical happened: Audiences liked it better than the punk.

So in Eric Ries’ parlance, The Beastie Boys performed a “zoom-in pivot,” turning a feature of their product into their main offering. In 1983, they recorded “Cooky Puss,” their first track that incorporated elements of hip-hop, using a prank call to Carvel Ice Cream as inspiration. It quickly became an underground hit in nightclubs, so they added a DJ and layered hip-hop into their sets, until they had mastered a sound all their own.

Three decades and 40 million records sold later, the group was inducted into the Rock And Roll Hall Of Fame. Although the late Adam Yauch (MCA), along with Mike Diamond (Mike D) and Adam Horovitz (Ad-Rock) were and are prodigiously talented, it’s likely we never would have heard of the Beastie Boys if they hadn’t pivoted to hip-hop.

Now, pivoting is usually reserved for businesses that do a triple axel into a new business strategy, but Patrick Vlaskovits and Brant Cooper, authors of The Entrepreneur’s Guide to Customer Development and the forthcoming Lean Entrepreneur, say it can apply it to whole raft of disciplines. In fact, many Lean Startup methodologies—pivots, minimal viable products, product-market fit—can be used as an analysis tool for consumer-packaged goods, finance and investment, social entrepreneurship, art—anywhere there is innovation. Pivots and the like are as relevant to musicians and artists as they are for startups.

The speed of today’s well-funded startups is brutal.

But what’s the difference between a pivot and, say, an “iteration” or “reset”? For an apt analogy they say you should turn your radio dial. “If you’re twisting the dial to tune into a new station, going from 98.5 FM to 93.1 FM, then you’re pivoting,” they say. “If you’re trying to tune into a strong signal, and switching from 98.7 FM to 98.5 FM, then it’s an iteration. A reset is a ‘leap’ to a new business model, and that change is not based on real validation or learning.”

That last part is key. Pivoting has to be evolutionary, based on sifting through the appropriate data. It’s at the heart of the “fail fast” concept. The sooner you realize a hypothesis is wrong, the faster you can update and retest it. “It’s paramount to understand that a pivot isn’t simply a change in one element of the business model,” they add, “but rather a change precipitated by something the founder has learned and validated to be true or untrue about a hypothesis she has tested.”

This, of course, is exactly what Adam Yauch and his Beastie bros did. They market-tested punk and when customers gravitated to a specific feature of the product (hip-hop) they pivoted to that. And they aren’t the only ones. Pop music and artist development are clearly domains where artists can be viewed as startups trying to find product-market fit. Vlaskovitz and Cooper, who say they’re working with L.A.-based music producers on how to apply these principles to artist development, point to Katy Perry as an example. She began her career as Katy Hudson, a Christian gospel singer, releasing an album aimed specifically at specific audience, and the album didn’t make the charts.

What did she do? She underwent a “customer segment pivot,” repositioning herself to reach a different audience by altering multiple elements of her business model, including:

It wasn’t a smooth road. Between her first album and second, she was dropped by two record labels. Nevertheless, she persisted (like any good entrepreneur) and went from her Christian-themed debut album praising Jesus to “One of the Boys,” which featured the hit “I Kissed a Girl,” as well as three other Top 40 singles. The album, which boasts some explicit lyrics and themes, went on to sell more than 5 million copies.

Vlaskovits and Cooper are even willing to stretch Lean Startup methodology to Picasso, who, they say, pivoted from work that was photo-realistic to cubism and the distortion of the human form. They also see clear connections between musicians/artists and technology startups. Both innovate in uncertainty and endure financiers: Musicians have record labels and startup entrepreneurs have VCs, with both historically playing the roles of arbiters of good ideas. And because of digital technology, it’s cheaper than ever to record and distribute music and launch a startup.

“Musicians can and do build Minimal Viable Products starring themselves,” they say. “This allows for faster and better market feedback on how to inform their ultimate vision for success.”

In other words, while the odds may be stacked against her, that guitarist croaking Adele’s “To Make You Feel My Love” on the subway platform could be the next PayPal, which, like Katy Perry, performed a customer segment pivot that also paid off.

Adam L. Penenberg is a journalism professor at NYU and a contributing writer to Fast Company. Follow him on Twitter: @penenberg.

[Images: ReadySetRocket]

Hey Shopaholics, This Little Birdy Will Keep An Eye On What You Are Spending | Fast Company

The busy personal finance tracking space has yet more company. The Birdy, a cutesy, emoticon-happy service, aims to stop you from busting your budget. But The Birdy’s emailed chirps don’t mean you must always be cheap.

If there’s a hole in your pocket, Corey Maass wants to help. His startup, TheBirdy.com, sends daily email reminders to subscribers to keep them aware of what they are spending and where. Those shoppers then record daily purchases, slotting them into categories—food, entertainment, transportation, clothes––to see their progress on a graph. Like a feathered friend sitting on your shoulder, The Birdy is supposed to help you control spending so that you make better financial decisions and change habits. We spoke with the 35-year-old Brooklyn, New York-based entrepreneur to find out more about his fledgling business, who is really keeping an eye on spending, and why it sometimes feels so damn good to splurge.FAST COMPANY: What inspired you to create a company to help people track their spending?COREY MAASS: I started out as a musician, composing electronic dance music. Fifteen years ago, I taught myself to build a website to promote my work. The Birdy.com is my third startup and 12th product. My day job to support my projects now is freelance programming. I’ve struggled for years with cash flow issues. It’s hard to manage inconsistent income. I rent space at WeWork Labs, a co-working place for early stage startups. Other entrepreneurs there are working on uses for email, because we all have to deal with it. It’s part of our daily workflow. And instead of visiting a website, now people reach for their phones because there’s an app. But I’ve always wanted sites to be more interactive, so I started thinking about how to integrate email better instead of relying on a web interface for a product. Also, I’m a productivity nerd. I love Lifehacker.com. So I started looking for tips to be better with money and then it all came together. I thought, “What if a request for data came to you? Maybe you could track your spending with daily email content.”Who’s signing up for The Birdy?Mostly young professionals, because the mid- to late 20s and early 30s are usually when people set out on their own, earn income, have expenses, and realize they have to keep on top of that. I get a lot of newlyweds, mostly wives saying they’ve been tasked with handling the budget. What about shopaholics? There’s a little shopaholic in all of us. Lots of people do shopping therapy and I’ve struggled to have less stuff, not more. We can justify buying something any number of ways. It feels great to splurge. There’s psychology behind hearing the cash register ding, so digital ones still make that sound because it’s associated with getting the prize. And there are eye-level products in stores and other ways marketers work hard to get you. I’m targeting the middle of the bell curve—the majority, who are aware of their consumerism and admit spending more than they should, even if they live comfortably. Shopaholics are an extreme at one end of the bell curve and need intervention. I’d love if I could help, but I don’t know that The Birdy would do it for them. At the other end of the curve are people who use a spreadsheet to watch their money. Great. They’re disciplined enough. I say, “Good for you. Just keep the momentum going.”For the others, I have to make it seamless and easy for them to track spending. My number one goal is not to make people feel guilty because you’re not going to not buy. You’re going to start not telling The Birdy what you bought. How do you keep people from feeling guilty?I spend a lot of time and effort making the site feel casual, conversational, personal, easy-going. I use lots of exclamation marks and emoticons. I want it to feel light and casual at all times because I’m trying to help people. Honey versus vinegar.On your site you admit you were terrible with money, so your users don’t feel judged. Yes. And they email me daily to share their stories, partially because I shared mine. And that feels great. What’s your favorite story?A woman wrote that she had been looking for something like this for years. She said, “I’m a little older. This helped me a lot. I just wanted to say thanks.” I wrote back encouraging her to tell me more. She said she has grandchildren and spends most of her money on gifts for them, so she might not be saving enough for retirement. I said, “If you buy enough gifts, they’ll let you live with them when you retire because they’ll love you so much.” You know, tongue in cheek. It was fun because as hard as I try to get out of my own head, I’m not the epitome of my customers. This woman, probably in her 50s or 60s, using The Birdy––that was absolutely priceless.You’ve been in business for nine months. How’s it going?

I’ve had 13,000 sign-ups. Ten percent used The Birdy for longer than a week. Last month, I introduced “freemium,” so users can pay $4.95 a month for extra features, like setting budgets and tracking income. A few dozen have signed up so far.Besides getting more paying members, I hope to sell anonymized data for targeted marketing, advertising, coupons, or partnering with other companies. Companies like Starbucks are interested in people who mention buying there often––that X number of people in a metro area spend Y amount daily on their coffee. Isn’t Mint.com going after the same business?

With Mint.com you plug in all your bank account numbers and loan information. The Birdy just has your email address and name. I take security precautions, but the only information The Birdy has is what you give—that you spend too much money at the movies or drink lots of coffee. I recommend just tracking one thing at first—whatever you’re concerned about. You do as much or as little as you want. One subscriber broke down his grocery list into three-dozen items to track how much he was spending on healthy and not healthy food. So The Birdy is very adaptable. Some people want to be asked three times a day what they bought, which is counterintuitive. Why? Because that’s closer to the time when they spent the money and can better remember it?Exactly. And people reply to emails right away. When they get a reminder at the end of the day, they have to think and remember what they bought, which is psychologically a huge hurdle. The advantage to more reminders is that even though they’re a little disruptive, they keep spending at the top of your mind. While you’re walking around during the day, you think, “Do I really want to buy this? Because I’ll have to tell The Birdy.” Or, “The Birdy is going to email me, and I’m going to have to report this.”What do you think is the threshold? Three reminders might be okay, but five might be nagging.I don’t know yet. What’s next for The Birdy? In the next few weeks, subscribers will be able to receive texts and request the number of texts or emails they want daily. Apps for the iPhone and Android are under development and should be out in a month or two. In the next few months I want to get into the mommy blog industry, which is huge and booming, because a lot of new moms, or soon-to-be moms, or ongoing moms, are looking at ways to be more productive, help their kids, and have less stress in their lives.What challenges does The Birdy face?

The biggest challenge for the product is to battle apathy—people giving up on tracking spending. As a business, the biggest challenge is numbers. When I get to a million users, more will stick around and pay so revenue will increase, of course. So far, it’s been a pretty good trajectory, given that I’ve done no marketing and am trying to do all this myself. And I’m still focusing on building a better product so that people are more likely to stay. This interview has been condensed and edited.

[Top image: Flickr user spatulated]

Follow @KarenAFrankel, and @FastCompany, too.

Everyme And Social Networking’s Future | Fast Company

Everyme attracted nearly half a million users in their first month of operation. Here’s why they jumped to the web and Android so quickly—and why Facebook’s success is good news for other social networking services.

Everyme, a heavily funded social networking service, made it big last week when they unveiled web and Android versions of their previously iPhone-only app. The social networking service restricts itself to users’ friends and families, and has a series of sophisticated algorithms that automatically determine how contacts know Everyme users. Everyme isn’t just high-tech: It’s also an early peak at the post-Facebook future of specialized social networks.

The California-based social networking service’s secret source is a series of algorithms that go through a user’s phonebook/contact list and automatically sort contacts into coworkers, family members, friends, neighbors, work contacts and other sublists—with a surprisingly high success rate. In a phone conversation with Fast Company, CEO Oliver Cameron explained that the algorithms were designed to understand the relationships between end users and their contacts. More importantly, Everyme was only able to provide their service with the advent of cloud computing—by using Amazon Web Services (AWS), the company was able to get the computer brainpower their sophisticated algorithms require.

Everyme, of course, is well funded and has prominent backers. The Y Combinator graduate recently raised $1.5 million in seed funding from a team of Silicon Valley A-listers including Andreessen-Horowitz, Crunchfund, and Greylock Partners. Since launching in April 2012, Everyme has attracted over 400,000 users—a staggering growth rate. Everyme’s backers hope that the company will continue to attract similar numbers of new users over the next few months.

Social networking in 2012 is an odd game. The old Facebook-MySpace-Friendster (remember those?) wars are over and Mark Zuckerberg’s creation is the Internet’s de facto user directory in much of the world. Facebook attempts to be all things to all people. But while Facebook is ubiquitous, it also fails at niches. Spotify unites music lovers. Path caters to close circles of friends. Foodspotting caters to foodies. Goodreads is for readers. Instagram’s for photo geeks. The list goes on and on—with the notable exception of LinkedIn, Twitter, and Tumblr, the only three truly successful non-Facebook social networking sites that exist in private ecosystems.

Like Spotify, Foodspotting, Goodreads, and Instagram, Everyme is also integrated with Facebook. Users can share Facebook status updates with circles of contacts via Everyme. Interestingly, Everyme has no option at all for public sharing: All content posted through the service goes directly to restricted circles of contacts.

Everyme’s default social circles include Family, Friends, Co-workers, and “Sweethearts.” Users can easily customize social circles and all content is self-contained; stories, photos, and files posted to Everyme cannot be republished on sites like Facebook. However, Everyme does allow users to share content from Facebook, Instagram, and others on their site.

Ironically, Facebook’s popularity makes it possible for other social networking sites to flourish. Facebook’s Achilles heel is their awful mobile product, which makes it possible for smartphone-centric services like Everyme, Path, and Instagram to thrive (and, ironically, competitor Google+). More importantly, Facebook offers a massive list of services it provides to users. Most of these services work well, but none of them work great. This leaves space for more specialized social networking services to operate and, of course, make a profit. And if Everyme doesn’t work, hey, at least users will still have one heck of an address book organizer.

For more stories like this, follow @fastcompany on Twitter. Email Neal Ungerleider, the author of this article, here or find him on Twitter and Google+.

[Image: Everyme]

Derrick Ashong On Going Viral, Again and Again | Fast Company

Whether in the role of front man for world-music band Soulfege, hosting an award-winning TV show, or creating a better business model for independent artists, Derrick Ashong is just trying to communicate

Derrick Ashong has a knack for being in the right place at the right time—and for seizing the moment. He became a YouTube sensation during the 2008 presidential campaign, as an unusually passionate and articulate “man in the street” supporting Barack Obama. No stronger to a spotlight—Ashong has fronted a touring band since the late 1990s and scored a part in Steven Spielberg’s Amistad—he parlayed the attention into high-profile gigs hosting programs on Oprah Radio on SiriusXM and on the Al Jazeera English TV network. Now, with his group’s Million Download campaign, he is trying to crack the model for monetizing an open-source model of music distribution. Here, he discusses the evolution of social media, guerilla self-marketing, and the importance of embracing the unexpected.

FAST COMPANY: What do you say when people ask what you do?

DERRICK ASHONG: People say, you do all these different things, but what I’m doing is communicating. Everything I do is about leveraging new ways to reach people. I started as an artist, a musician specifically—trying to interpret the world around me and communicate that in a way to get at some kind of truth or beauty—but that’s evolved into what I call “music plus,” where now I’m exploring open-source music and the kind of business models we can build in a new era of music.

The music industry has gone through a massive shake-up over the past decade or so. Has anyone really figured out the new model for making a living as a musician yet?

Lots of people have figured out lots of different things, but no one has figured out an easily replicable model and can comfortably say, “This is the new way of doing things.” With the Million Download Campaign, we’re trying to get 1 million people all over the world to download Soulfege’s latest album, Afropolitan, free. Partly, this is a promotional tool for the band—in the first four months, we got 50,000 downloads. That’s more than a lot of artists do in four years. We encourage people to take the music, remix it, and share it with people in their own language. We’ve had volunteers translate the Million Download blog into 10 languages so far. That’s one of the benefits of open-source culture—I can’t do that on my own.

In our February 2012 issue Fast Company Editor Robert Safian identified a diverse set of innovators who embrace instability, tolerate—and even enjoy—recalibrating careers, business models, and assumptions. People like author/Onion digital media maverick Baratunde Thurston, Greylock Data Scientist DJ Patil, Microsoft Senior Researcher danah boyd, and GE’s Beth Comstock. This series continues to explore the new values of GenFlux. Find more Fluxers here. And tweet your contributions using #GenFlux.

So how do you start to monetize that?

Everyone knows artists don’t make money on records; record labels do. I want to expose the fact that that’s not where the opportunity is. What artists need to do is leverage present-day technology to enhance and build their brand. Every artist is paid —whether that’s in tickets, T-shirts, or endorsements—in proportion to the perceived value of their brand. Jay-Z is making more from Rocawear than from Roc-A-Fella. An independent artist doesn’t have the engine to do that kind manufacturing, but we do have the technology that makes it easy to share music, to share and build the business. The high cost of entry used to be a big barrier in music. It’s not anymore.

Sounds sort of like the Grateful Dead model of making the music free and making money from playing shows. But what about when you’re older and don’t want to have to play live all the time? How do you make a living then?

I think you take time when you can and build the opportunity around the brand so you can make money in a variety of ways. There are a couple of interesting things artists can do. Companies pay people a ton of money to represent their brands. You can get Lady Gaga, or get someone you’ve never heard of, like the Progressive Insurance woman. I think there’s an opportunity in the middle, where you can have someone who has a relationship with the target audience, who is a known quantity, but not well known. You can start out as a middle-class artist, not a superstar.

As an independent artist you have to think more creatively—no one has a systematized a way of doing that. If I give away a million free downloads, I can start building deep relationships with partners and build different revenue streams. By empowering people to spread the word guerilla-style, we’ve had all kinds of unexpected things happen. Lufthansa wanted to license a song of ours because somebody emailed our link to someone, who emailed someone, who emailed someone at Lufthansa who liked it. We’ve given ourselves two years to identify a funding model that’s viable, and if we can do that, maybe I won’t have to go on tour to pay rent went I’m 50. We’re hoping to get other artists involved, too.

You became sort of a YouTube star during the 2008 Presidential campaign when a clip of you spontaneously talking about your reasons for supporting Obama went viral. Now there are professional marketers now whose job it is to make things go viral on social media—do you think this is still an authentic way of communicating with people?

Now everyone wants a piece of the power of social media. The cool stuff will still go viral, but there’s a lot more out there that is programmed to succeed. Four or five years ago, a higher proportion of content that went viral was organically distributed. Some of the professional stuff is cool and interesting, too, but once professional marketers take over using a certain tool it does gets harder for underground elements. You have to keep finding other tools for getting stuff out there.

You recently finished up about a year hosting The Stream, a new show on Al Jazeera that looked at events like the Arab Spring through a social-media lens. What did you learn from the experience, and why did you move on?

I had a great time doing it. It was an offer I couldn’t refuse—to do something that’s never been done before, at the intersection of broadcast and new media, for millions of viewers worldwide. It was exciting every day to go to work and have to kick ass because you know the world is watching and a lot of people want to see it fail. We won a Webby award, a Royal Television Society award in England for most innovative program. It was arguably on the most critically acclaimed shows on Al Jazeera. When they decided they wanted to move the show to Doha, Qatar, where Al Jazeera’s headquarters are, I thought about it—I grew up in Ghana and know Doha—but I’m not that company man. I believe in this day and age, you really need to build your business. So I decided to focus on that.

Did moving around a lot growing up help make you more adaptable? Did it make you more confident jumping into new challenges in your career so far?

I lived in Ghana till I was almost four, then in Brooklyn, then Cambridge, Saudi Arabia, Qatar, and back to New Jersey. I didn’t have the expectations of stability that a lot of people have. There’s a false perception about the world some people have that if you do certain things, you get to go onto this or that. When those expectations aren’t met, it’s like, Oh my god. I don’t see things that way. I used to go to school with a gas mask. I don’t believe the world is operating according to some beneficent order. You have to hustle, be smart, and be honorable. Integrity is something you can control.

If you recognize that change is a constant and you’re keeping your eyes on a higher prize, it’s cool even when stuff shifts and doesn’t go the way you expect. I’m not that brave, but when I’d achieved what I thought I could doing a radio show on Oprah’s satellite station, I wasn’t afraid to leave it and try something else. But people couldn’t believe I’d do that. The Stream was in planning in fall of 2010, long before the Arab Spring—I’m not so wise that I saw that opportunity coming, but I was open enough that I saw a way a show like that could work.

[Image: Flickr user crystaltopmusic]

5 Ways To Smarter Ideas From Atari Founder Nolan Bushnell | Fast Company

At the celebration of Mindshare 50th networking event in Los Angeles, Nolan Bushnell said improving intelligence doesn’t require state-of-the-art gadgets or mind-altering medication—just a pair of skis and some yoga pants.

Since 2006, the monthly networking event Mindshare has brought together some of Los Angeles’ smartest entrepreneurs, artists, and inventors with the promise of cheap booze, local music, and often mind-blowing presentations. Described by founder Doug Campbell of Syyn Labs as the lovechild of TED and Burning Man (without the self-seriousness of either of those events), Mindshare commemorated its 50th consecutive month over the weekend with a three-day celebration of art, music, and technology. In addition to featuring curiosities like a giant Jenga tower and musical cacti, the event’s impressive crop of speakers explored “what comes next” in fields like space exploration, game design, and health, not to mention more mysterious arts like bio-fashion and something called digital vasectomy or “scrotoscoping” (which isn’t actually as frightening as it sounds).

Check out more photos from Mindshare by following FastCompany on Instagram.

But the real showstopper came when Atari founder/serial innovator Nolan Bushnell took the stage to impart some of the wisdom he’s learned over his 40-year career as an inventor and innovator. Considering his tech-crazed audience, and the fact that Bushnell was arguably the prototype for the modern tech entrepreneur, his advice for the new technorati was surprisingly and refreshingly analog:

“You wanna build your IQ higher in the next two years? Be uncomfortable. That means, learn something where you have a beginner’s mind. I like to play chess. So it turns out, the neurogenesis (the birth of new brain cells) of chess, for me, is over. My brain grew a great deal when I was first learning, but once I really got it down, it’s very, very incremental. So if you want to do it right, learn how to ski. And then once you feel like you’re kind of under control, learn how to snowboard. And then learn how to rollerblade, then do tai chi, then do yoga. Stay on the uncomfortable path and you will find that you can get smarter.”

“Walk to work, even if it’s four miles. Ride a bike to work. Drive a different way. On your way there, try to find beauty. You’d be surprised how much more of the neighborhood you can perceive and experience when you’re looking for unique spots of beauty. When you get to work, you’ll find that you have a better attitude, you’re more content, and you can put away your Zoloft.”

“Exercise aggressively. Twenty minutes. Thirty minutes. Get your heart rate to 80% of your ability, and then for the next three hours, just learn something. It turns out that when you are exercising aggressively, your brain is creating BDNF (brain-derived neurotrophic factor), ‘Miracle-Gro for your brain.’ That is a precursor protein for dendrite formation (dendrites are branched extensions of nerve cells). You’re putting in hardware for the software.”

“Remember that we can only in our forebrains handle 5-7 items. Our backbrains can handle massive amounts. So when you’re given a problem, think about it before you go sleep, and chances are you can solve it by the next morning. What’s happening is, your background processing is going on with many many more synapses, and you’d be surprised by the capability you’re able to unlock.”

“Innovation almost has zero constituency. For example, if I showed you this left-handed purple widget, maybe no one thinks it’s a good idea, yet it’s clearly innovative. And so, when Steve Jobs and I used to hang out, one of the things we used to talk about is innovation, and I told him, ‘Steve, if you believe in something, and you go into a room and there are 50 people there, and all 50 of them tell you that you’re crazy, stick with it. Stick with your project.’”

“Innovation is hard. It really is. Because most people don’t get it. Remember, the automobile, the airplane, the telephone, these were all considered toys at their introduction because they had no constituency. They were too new. And what you’re working on right now may in fact fall right into that. And if you see clearly, the pathway to the future, stick to it.”

[Top Image: Flickr user x-ray delta one]

American Express Leverages Spending History, Location For Mobile Deals You Actually Care About | Fast Company

My Offers taps what AmEx calls the “spend graph” to give cardmembers access to deals and discounts at nearby merchants. And it knows your mom couldn’t care less about getting 50% off tickets to a three-day electro-fest.

When 1-800-Flowers fails and the local bakery is out of cupcakes, desperate, last-minute Mother’s Day shoppers turn to the one bastion of hope left: Groupon, LivingSocial, Google Offers, and any other daily deal service accessible in one click. There’s just one problem: The deals are rarely, if ever, relevant. No, my mom does not need Taekwondo lessons, paintball reservations, Lasik eye surgery, or tickets to a three-day electronic music festival.

To address this pain point, American Express is launching later today its own mobile offers engine to give cardmembers access to deals and discounts at nearby merchants. The engine, called My Offers, will tap into AmEx user spending histories and location data—what the company refers to as the “spend graph”—to rank offers by relevance. “In an increasingly crowded marketplace, where consumers are bombarded with daily deals, we saw an opportunity to help…by curating meaningful offers,” Josh Silverman, AmEx president of U.S. consumer services, said in a statement.

Through the company’s mobile app, cardholders will have access to a dashboard of offers that will look familiar to AmEx users who have already synced their cards with Foursquare, Facebook, and Twitter. Deals can be added to one’s card with a single click, and redeemed without friction. For example, if you spend $10 at Dunkin Donuts, you could get $5 back through a statement credit.

But what could really separate AmEx’s offers is the data it has to make relevant recommendations. Spending history provides incredibly valuable data—everything from first-time purchases to geo-location to repeat transactions—and AmEx has fed this data into its engine. The company has created “similarity scores” for merchants on the network to boost relevancy.

“Trillions of comparisons have been made,” says Luke Gebb, VP of global network marketing. “As an example, think about a town where there are two restaurants right next to each other. One restaurant attracts customers from far and wide because it’s renowned; the other restaurant is a local diner. These two restaurants will not be considered very similar in similarity score: That local diner may actually look more similar to a hardware store that mostly serves the local population, whereas even if you live 10 miles away from the town, that restaurant that attracts people from where you live is going to be much higher ranked.”

In the same way that Seamless learns what types of food and meals you most enjoy, AmEx will be able to learn from your transactions and the offers you most often redeem. It will also be able to pull data from the offers you found through its social partners—Facebook, Foursquare, Twitter—which will make the service especially powerful going forward.

To keep up with the data, however, AmEx will need more merchant offers to keep recommendations relevant and fresh. Baskin Robbins and FedEx are some of the national brands signed up for the program, but “we’re now going into the local markets now,” says Ed Gilligan, vice chairman of AmEx. Nearly a dozen offers from local bars and restaurants in New York and Los Angeles will be available at launch.

“You can look at our app now and see all the offers you have regardless of where you’ve synced your card,” Gilligan adds. “That not only makes it simple for cardmembers to know what offers they have, but makes it easy for merchants to come to one place and let us help do their digital marketing for them.”

[Image: Flickr user Kamshots]

Why Tech’s Hunger For Overnight Hits Is Bad For Business | Fast Company

Tech is becoming a hits-driven business. This isn’t a good thing.

illustration by stephan walter

No one waited in line to buy the first iPod. It took a year and a half for Apple’s shiny, pricey music player to hit its millionth sale, and nothing about its trajectory (2002 sales, for example, were a Zune-like 40,000 a month) suggested that success lay ahead. Plot the device’s early numbers alongside the blockbuster years to come—in 2008, Apple sold 56 million iPods—and you’d need a retina display to see the few pixels representing 2001, 2002, and 2003.

As digital culture has become mainstream culture—pushed along by, yes, Apple and its now masterfully calibrated launch events—the iPod’s slow start would make it a dud today, the TouchPad of music players (remember HP’s ill-fated tablet? Me neither). Tech has now become about hits, not unlike Hollywood movies. And the numbers for what defines a smash are only growing: In 2010, Microsoft’s Kinect motion-gaming add-on sold 8 million units in 60 days, earning it a Guinness world record. A year later, Apple sold 33 million iPhone 4S’s in its first 78 days. The Instagram photo-sharing app attracted 7 million users in its first nine months; this spring, the Draw Something app wooed 35 million people in its first six weeks, prompting Zynga to buy it for a reported $180 million. On the flip side, slow starters are being kicked to the curb. The recommendation app Oink, backed by a Silicon Valley Who’s Who, didn’t pop and shut down after a few months, the John Carter of the App Store.

These megahits present a danger for the tech business. The iPod’s early years suggest that the industry will lose something in the rush to kill off products that don’t catch fire immediately. “There’s a subsection of people in the Valley who think the only way to be successful is to create a viral overnight hit,” says Dave Morin, CEO of the social-networking app Path, which attracted nearly a million registered users in its first year. That’s a more modest start than, say, Pinterest, but Morin points out that Facebook, Flickr, LinkedIn, and Twitter all took years to gain millions of users.

He’s right: New technology isn’t like a movie, a finished product that you either like or you don’t. High-quality tech products take time—after they’re released. It’s relatively easy to get a lot of people to check out your new thing: see MySpace, Chatroulette, or any number of Zynga games. But it takes more determined work, more trial and error, to keep them using your product. Look at all of Facebook’s redesigns, missteps, and reorganizations on the path to winning big.

Lasting technologies also need an ecosystem of complementary products. In 2005, when Sonos launched its amazing wireless home speaker system, people didn’t have access to apps-enabled smartphones with which to control Sonos’s gear. The company had to create its own expensive controller. There were also few music services like Spotify for users. Most consequentially, “listening to music at home had largely gone away,” says CEO John MacFarlane. “We had to get people to rediscover it.” Sonos sold 20,000 units its first year, but as the ecosystem took root, it reached its one-millionth home in 2011.

Finally, users need to be ready for the innovations on offer. Morin noticed that of the million people who registered for Path’s app in its first year, only a tiny percentage were using it every day. Facebook sufficed. Last fall, Path launched a more streamlined app that improved what appealed to its daily loyal users. It reminded many people of what Facebook was before it became so big, and Path’s usage jumped by a factor of 30. Morin thinks of the second Path as “an attempt to create a more pure version of the original vision,” The Godfather: Part II of apps. If the tech industry lets insta-hits warp its iterative genius, too many promising but slow-starting products will sleep with the fishes.

A version of this article appears in the June 2012 issue of Fast Company.

The Discovery Economy: Why Sharing Your Identity Is A Good Thing | Fast Company

One of the worries about near field communication-enabled tech is that private data could be remotely snooped and used for evil. But the truth is that we may be volunteering info by NFC soon enough. And in the process, we’ll find things we never knew we wanted.

At last month’s Coachella a lot more went down than grooving in the fields of Indio. The hot-ticket festival’s organizers tested out smart radio chip-embedded armbands that let music lovers automatically verify their ticket by “checking in” at digital gates. But those armbands were much more than hard-to-fake entry passes: They were Coachella showing us a near future where we voluntarily share a touch of personal information, your digital DNA if you like, to discover a whole raft of new information and experiences.

Apps, gadgets, and ideas for turning exploration into business Previous story: The Tech’s The Least Interesting Part Of Nokia’s New Augmented Reality

About 30,000 people used their radio-chip-embedded armbands to check in (or “Live Click”) all around Coachella and automatically update their Facebook status and post updates to their various social media about what they were doing and who they were seeing perform. For Coachella, it meant the online audience grew exponentially—to more than 30 million people, festival organizers announced. The armbands were just an experiment, and the plan is to perhaps expand their powers and let them act as cashless payment systems in the future.

The radio-chip pass has been tried before, on a much smaller scale at a Belgian music festival where NFC-embedded festival passes let fans make Facebook friends simply by holding their passes over a check-in portal. There were also games, unlockable digital media bonuses, and even a group photo booth.

[vimeo 22432033]

And this weekend Tagstand, a Y Combinator-funded forerunner in the real-world NFC “tagging” game, is supplying its tech to 3,500 attendees of a black tie bash in New York where partygoers will be able to use their NFC wristbands to tap on a portal to send a tweet, post photos to Facebook, and even register their NFC “check-in” for the cocktails they’re drinking, in order to get the ingredients sent to them afterwards.

This all adds up to far more than just a way to digitally say, “Yes, I’ve got a valid Coachella ticket” or “Please send a tweet for me saying I’m listening to Pulp play ‘Common People,’” or even “Yes, this is my credit card number.” It’s a key to discover more information.

Tagstand’s trick of sharing cocktail ingredients is a great example. By saying “Yes, I’d like to know,” you’re sharing your personal information with the venue: You’re associating your digital profile with a particular choice, which will help the organization understand what its patrons prefer—that’s one reason why events, stores, banks, and others want to get access to your data in the future. The trade-off being offered is additional information that you didn’t know before—discovery.

We’re not talking about a privacy-violating sharing experience—giving away your entire identity, SSN, kids’ names, and inside-leg measurement. It’ll be similar to data you volunteer for marketing purposes nowadays—perhaps an email address, or a phone number in most cases, or a social media handle for media-rich sharing purposes. Eventually, for entities that you trust, you’ll give away a few more personal details or data on your preferences.

Picture a music festival in five years’ time when instead of a wristband you’ll wave your smartphone at a wireless portal, and an app you’ve pre-set to share particular pieces of personal info (perhaps age, gender, and so on) communicates with the festival’s computer. In return it sends a promotional tweet and you’ll get a free ringtone to promote the upcoming single of the band you’re listening to or an invite to a streaming music service where the band has created a playlist of artists you might like.

Then think about social events, or perhaps even technology conferences, where attendees will voluntarily check in using their NFC ID and share even more information (perhaps a contact email address or Twitter ID) in order to “unlock” suggestions about talks to attend, supported by adverts, or even a suggestion of interesting people they may find it useful to talk to—along with a general suggestion of their location.

A music festival, being inherently a shared experience, is an obvious first stop for this kind of tech. Things will get interesting when we see it in other venues—and discover that the beat just goes on.

[Image: Flickr user DeepBluC]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

Billy Chasen’s $2 Million Pivot From QR Codes To Turntable.fm | Fast Company

After raising millions in venture capital to launch a QR code technology called Sticky Bits, Chasen pirouetted—some would say rebooted—to a whole new concept, and thus was born the social music service Turntable.fm.

[twistage b8f15c4307baa]

Everybody deserves a second chance, right? And that is the theme of the 2nd installment in our pivot series.

The speed of today’s well-funded startups is brutal.

Billy Chasen and his cofounder Seth Goldstein had an intriguing idea: To create an app that could meld the physical world with the virtual realm so that users could leave digital stickers in the form of QR codes on physical objects. These would then link to photos, video articles, and blog posts on the web. After raising $2 million in venture capital they launched Sticky Bits, an idea that big brands adored but users never warmed to. Undeterred, they pirouetted—some would say rebooted—to a whole new concept, and thus was born Turntable.fm: a social music service that lets you hang out with friends in chat rooms and act as DJs. After an initial rush, Turntable.fm has maintained a committed core group of users, although no one can predict how the company’s finale will play out. In fact, some say that turntable.fm might be too much fun: Now that’s a problem many startups wish they had.

[Image: Aliaksei Lasevich via ShutterStock]

Learning From Zynga’s “Draw Something” Debacle | Fast Company

In pop culture, when something gets really hot, it can be classified as either “the next big thing” or a simple fad. If last month’s numbers are any indication, Draw Something falls into the latter category.

Six weeks after Zynga plopped down $200 million to acquire Draw Something developer OMGPOP, there are reports that number of daily active users has fallen by nearly 5 million, around one-third of the total. Was it a fad? Does it have anything to do with the CEO tweeting ungraciously about an employee? Will Zynga regret their decision?

The answer to all of these questions is “yes,” and it does not speak well for a company that recently launched a $1 billion IPO that has been underperforming. What lessons can businesses learn from this debacle?

There’s a difference between making decisions based upon the latest trends and being led by them. Great leaders in business know that it’s important to stay on top of what’s happening now and how it will affect what’s going to happen in the future.

Following trends is different from chasing them. The wild popularity that Draw Something was gaining was likely perceived as a threat to Zynga. Here was a game that had come out of nowhere to top the charts; Zynga is not used to seeing names other than their own making that type of run.

While hindsight is 20/20, many were saying that it was a premature move from the beginning. The trending growth was strong, but that was it. There was no evidence that it would sustain. It did not have a revenue model. It was hot, but there wasn’t even much in the way of user feedback through which to base a decision.

It was hype, and that’s what led Zynga’s decision. It wanted to own it before it got too big to buy. There are times when companies are forced to take such risks, but they rarely end well and they should never be taken by a company that isn’t doing badly. Desperation is only suitable when warranted.

The best ideas for generating revenue for a business are often born from innovations within any given industry. Google innovated the advertising game in search and turned it into tens of billions of dollars a year. Apple did the same thing with the music industry, then again with the phone industry, then again with the tablet market.

The difference between what these companies did and what Zynga did is that they spent months, even years researching and developing a model through which to make their money.

Zynga had a good idea. Not great, but good. Most of their games rely on in-game purchases of virtual goods to drive revenue. Some games rely on in-game advertising, but this has yet to prove to be reliable. Zynga decided to insert the advertisers into the game itself by having people draw “Cheetohs” or The Avengers. It was a good idea. It might even work (or, it could ruin the experience and result in some really bad art). 

The problem is that they decided to test the model on a new product that required a $200 million payout before the testing could even begin. Perhaps they felt that if they started testing the model elsewhere before making the purchase, that OMGPOP would take the idea for itself and make Draw Something too profitable to sell.

If that had been the case, there would have been regrets, but not nearly as big as the regrets of paying that kind of money for a game that’s already in its decline before hitting the mainstream.

Again, it comes down to being smart versus being desperate. It’s one thing to be aggressive. It’s another thing altogether to jump into something that has an upside but that’s also associated with tremendous risks.

Draw Something is not like Farmville. It’s not like Angry Birds. It doesn’t evolve and change based upon growth or updates. In Draw Something, you literally draw something. Then, you do it again. And again.

It was very clear to Zynga that the game didn’t have the staying power of other gaming successes. Angry Birds has been innovated four times already with the latest variation, Angry Birds Space, turning the game on its head by adjusting the physics that propel a bird launched from a slingshot into the various gravitational pulls of round space objects.

Farmville and the like are growth-based. Someone can get on a build something that continuously needs to be tended to and improved. There is a world within the world that makes the games addicting and continuous.

Draw Something is one dimensional and Zynga knew it. Their hope was that it would spread indefinitely at the pace it was spreading when they bought it, that it would reach a tipping point of popularity that didn’t depend on daily use. 300 million occasional users is better than 30 million daily users.

In reality, it could have happened. Technically, it still could, though the numbers aren’t encouraging. They bought OMGPOP based upon the possible scenario that it would grow beyond the need for passionate users.

They should have decided to not buy OMGPOP based upon the potential that it could be viewed as mundane before hitting the tipping point.

When a company is not in a position of desperation, it shouldn’t make big bets based upon potential. In poker, you become more aggressive when you have a “short stack” of chips or when you feel you have the winning hand. Zynga had a big stack and they had a decent hand, but they got too aggressive for what they had to play.

It should have folded this hand and either built a clone or waited a couple of months to see more data.

Apple Rumor Patrol: The Next iPhone Is Coming Soon—And It’s Skinnier Than Don Draper’s Tie | Fast Company

Which is pretty darn skinny. Here’s what else we know—and think—about the freshest Apple intel.

The Next iPhone: A New Look

Leaked information about the next iPhone has reached the web from a source considered reliable—because he correctly predicted many of the subtle changes of the iPad 3 having held one just before its launch. The chap in question is Jeremy Horowitz, editor of iLounge.com. He says the new phone will indeed be a radical overhaul in design, sporting a taller chassis and being skinnier in depth with an overall size of 125mm by 58.5mm by 7.4mm—a centimeter longer and 2mm thinner than the current one, which is about a 20% drop. It’ll have Gorilla Glass 2 to protect its larger 4-inch screen that’ll have a new aspect ratio. It’ll have a flat metal back plate, and Apple will abandon the legacy iPod dock connector for a new smaller rounded port.

So…do we believe Horowitz has the goods? A bigger screen has been long predicted, and the skinniness is also plausible (see below). A size ratio change would annoy developers, but would represent a sensible move if the screen was to be bigger. The longer chassis then goes with the screen, and also allows for more space for a bigger battery. Gorilla Glass 2 is basically a given. And via PatentlyApple.com we know Apple recently patented a new thinner connector (which looks very well developed in the patent drawings). 

The metal back? We’ve long suspected this and it would be a solution to smashed iPhone 4 woes. It could even be made of liquid metal. The person who invented this tech, exclusively licensed to Apple in 2010, has been in the news this week saying Apple would need a lot of money and time—at least a couple more years—to develop the tech to build a phone chassis from his invention (which has huge advantages in strength and weight over glass and steel). But a simple flat back to save space, weight and improve strength? That’s possible. And it would again let Apple outclass its peers in terms of design progress built on clever supply-chain management.

We’re about 75% behind this rumor, though the liquid metal aspect is much less likely.

The Secret To The Next iPhone’s Skinny Size

It isn’t a secret actually, but it’s clever on two fronts: Apple’s said to be using new “in-screen” touch sensors for the next iPhone’s touchscreen. Currently it uses a bonded layer system where the touch sensors have their own substrate that has to be perfectly glued to the LCD unit—a complex process that can result in low yield and extra thickness. An in-screen sensor array means there’s no need for an extra layer, so it can be much thinner and the screen production yield would rise—meaning Apple could either soak up the profits or actually drop the price. And the thinner screen depth allows for a smaller chassis, as well as bringing pixels closer to the surface for an even more impressive look to the user’s eye.

We’re 90% confident in this.

When We’ll See The Next iPhone

October. There’s a bit of chatter that Apple will reveal it at the WWDC in June, but that’s just 8 months since the iPhone 4S arrived and would mean Apple’s Chinese manufacturers were in rapid scale-up production right about now. There are not enough leaks to support this idea.

iPhone 6 Or Just… iPhone?

We’re calling this based on a guess, and some history: The iPhone for 2012 will be just called iPhone. Like the new “iPad,” and all the Macs.

Apple Television

No idea, no leaks, no extra information has surfaced. But an analyst at J.P. Morgan has said his firm’s research doesn’t support any supply-chain efforts to produce an Apple television set at this time. In his thinking the market won’t be ready for an Apple television until at least 2013 or 2014. 

This is plausible. But as we’ve noted before, analysts seem unable to move beyond their constrained fiscal thinking and understand Apple and its technological advances from a technical point of view. So while it’s probably true that there’s as yet no hint of production, it wouldn’t take Apple long to rapidly scale up a prototype to a full device.

Apple Macs

Yes, these are due a refresh and they were likely awaiting the new Intel Ivy Bridge chips, now available. It seems likely we can expect several design cues from the highly successful MacBook Air to arrive in the updated machines. And the chatter is that Apple may well phase out the 17-inch MacBook Pro, which is both expensive and generally appeals to a very limited kind of customer—designers and music professionals. Would Apple abandon these prized customers, though? Stay tuned (not to your Apple TV).

[Image: via Kit Eaton and iLounge.com]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

Wahooly Leverages Your Social Rep For A Piece Of The Next Instagram | Fast Company

Wahooly is part Kickstarter, part Y Combinator. It turns everyday people into social ambassadors for startups. But is it creating a new order of micro-angels or inflating a giant bubble?

So far, $200 million dollars has been pledged toward Kickstarter projects from 2 million backers, not to mention the money raised by competitors like Indiegogo and RocketHub. But what if instead of donating money, people devoted their social capital? And instead of scoring quaint prizes in return for their support, backers received an actual stake in the company’s success?

That’s the model behind Wahooly, an online accelerator that gives everyday people the opportunity to invest in startups without putting anything more than their reputations on the line. Today, Wahooly announced it had finalized $750,000 in seed funding. Joe Kalfa, the lead investor, says, “It’s unlike anything I’ve seen before. Wahooly has solved a real problem (on both sides of the coin) in an extremely disruptive way. I predict that Wahooly will shift the way companies look at going to market.”

Here’s how it works: Wahooly presents Groupon-like offers to its social-savvy users (all of whom are required to have a Klout score of 35 or higher) to hold a stake in startups that apply to the Wahooly accelerator program. Participants then receive points for not only promoting the startup within their social circles, but also for using the company’s product and providing feedback on how to make it better. In return, the startup gives Wahooly around 6-8% of its equity. After a year, Wahooly cashes in on its investment and gives about half of whatever it earns back to its users based on how many points they earned.

“I was writing a weekly blog called StartMeUp [Ed. note: and writing for Fast Company] covering technology-based startups, and I did over 70 interviews with emergent companies over about a year-and-a-half timeframe,” says Wahooly CEO and cofounder Dana Severson. “One of the things that I would ask is, ‘What challenges are you facing?’ And to some degree or another there was always this issue with gaining traction and momentum.” Severson describes a chicken-or-the-egg problem where companies need social buzz to get funding, but are often unable to generate that without money. “Really good companies were falling under the radar.”

That’s when Severson got the inspiration to take social influence measurement and apply it to something more than just advertising (or vanity). “People who track social influence really don’t have the ability to close the loop. They don’t have the ability to follow it all the way through to conversion. Klout (which has now partnered with Wahooly) is stopping at the retweets and the replies. But influence is not necessarily getting people to respond to the things that you’re saying. Influence is actually getting somebody to make a decision, influencing them to sign up for something or purchase something or download something.”

Severson is aware that the traction generated by his social investors might be viewed as artificial, but says his model is no different than the Angel investment market. “We’re emulating the things that Angels do for their investments that help improve growth. We’re just doing it on a much larger scale in a different way. All we’re asking them to do is protect their investment.” In addition, Wahoolys users are doing more than simply drumming up support then exiting after a year (a practice some fear is causing another tech bubble like the one we saw in 1999). They are also rewarded for providing feedback and experimenting with the product, so the startup will have more to show for its Wahooly experience than just short-term traction: It might also have a better product, which is good for the company, consumers, and the tech industry in general.

Wahooly currently has four startups under its wing, including RAVN, an event-discovery app, Cull TV, a web-based music video channel, tweetTV, a social TV platform, and Valu Valu, a personal investment tool. Because Wahooly’s business model is so new, it’s difficult for Severson to predict exactly how it will scale, but by 2015, he hopes to have 3,000 startups using his service. Already, Wahooly’s startups have experienced the benefits of being a part of the organization. “TweetTV raised $750,000 in a seed round as a result of being on the Wahooly platform, which was a really proud moment for us.”

But ultimately the benefit of Wahooly is as much to the users as it is to the startups. “98% of the population has not been able to participate in private equity,” Severson says. “Government regulations say if you’re not an accredited investor, you cannot invest in private companies (on paper, Wahooly is the sole shareholder with its users benefiting by proxy). Screw their approach, we’re gonna start our own approach and say that social influence is worth something.”

Why Target Would Want To Kick Amazon Out | Fast Company

According to a leaked memo acquired by The Verge, retailer Target is instructing its staff to remove Amazon own-branded hardware from its shelves. That means the Kindle suite.

Target’s memo says simply that it’s reviewed its product lineup and decided not to carry any further Amazon hardware. Stock will be replenished through May 13th, Mother’s Day, and the memo notes that the Kindle Touch will be in an ad campaign for the week of May 6th. Staff are instructed to follow best practices to “remerchandise” remaining stock, and to explain to customers who ask that it’s all just part of the normal flow of business, continually evaluating products they stock and so on.

A swift and decisive halt, then, carried out even as the store tries to maximize customer interest and, of course, its revenues by popping the Touch on an ad promotion just before Mother’s Day. The Internet has a pretty clear idea of why Target is doing this, and it comes from Target’s own words: The move is due to a “conflict of interest.” That conflict is Apple.

Target and Apple got all chummy with each other recently to launch some of those in-store “mini” Apple stores—also seen in other U.S. retailers and big-box vendors elsewhere around the world. No matter that Amazon’s Kindle Fire has snapped up over 50% of the Android market in the U.S., Apple products are selling like crazy right now—and for higher price tags. They also have an identifiable cachet which will attract customers to Target stores where—whadya know?—they may spend a little extra cash on other items too. That is to say: any one of the hundreds of iPhone, iPad, iPod and Mac accessories. Ironically, Target’s keeping Amazon-compatible accessories on its shelves for exactly this reason: They may be impulse purchases, ensuring stores like Target get a steady dribble of cash from low-value items sold in bulk.

Would Apple have insisted, though, that Target only sell Apple’s tablet devices (and other hardware) because Amazon is aiming squarely at Apple’s markets in tablets, music, video, and so on? It’s not beyond the pale. Apple does, after all, have a thing about controlling the market space.

As an interesting counterpoint, it’s common in Europe to see an in-store mini Apple store right alongside a shelf of rival tablet PCs from competitors, which could be a hole in this logic. But the Kindle isn’t really a presence among these devices because Amazon’s taking ages getting its international thinking straight, and while there are a ton of peer tablets, none is quite as much a “threat” as the Kindle (at least, right now).

And if it is an Apple dictate that Kindles don’t get sold alongside its precious tablets, then there’s one very good reason Target could be persuaded to go along with it. It’s because Apple isn’t a threat to Target’s business model in quite the same way that Amazon is. Amazon has oft been credited with the death of the physical bookstore, and nowadays sells all sorts of equipment and hardware that are typical Target stock. So much pressure on prices and convenience is exerted by Amazon that it may be one of the main factors behind Target rival Best Buy’s decision to close many big-box stores and totally alter its strategy. And while Amazon just needs efficient, low-staff distribution centers, Target needs a whole infrastructure, sales staff, and space. It can’t afford to “pile it high and sell it cheap” in the same digital way Amazon does.

Target’s just trying to avoid Best Buy’s fate. Or perhaps it also thinks e-readers aren’t the wave of the future.

[Image: Flickr users Team Traveller, Tony Buser]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

Why You Should Start A Company In… Oakland, California | Fast Company

Gertrude Stein once famously said of Oakland, “There is no there there.” Nancy Pfund, of the VC firm DBL Investors, makes a case for how modern Oakland is proving Stein wrong.

It used to be, if you were serious about starting a tech company, you went to Silicon Valley. But emerging entrepreneurial hubs around the country are giving startups new options. In this series, we talk to leading figures in those communities about what makes them tick.

CLICK HERE to see how innovation takes many forms

Most urban centers like to describe themselves as “a city of contrasts”—but few actually clinch that description like Oakland, California. A sleepy tidal town whose redwoods were logged to build nearby San Francisco, Oakland’s fortunes accelerated in the mid-1800s, first as a supply depot for the California Gold Rush and then as the western terminal of the Transcontinental Railroad. The 1906 San Francisco earthquake and the city’s port fed Oakland’s immigrant boom until brisk drug trafficking rendered Oakland a violent-crime center and, more recently, the nation’s unofficial headquarters of the Occupy movement.

Now for the “city of contrasts” part: despite persistent crime and its homely sister status to the more glittering cities on the Bay, Oakland boasts world-class sports teams, rich urban culture (music acts born here include Sly and the Family Stone and Tupac Shakur), all at a sweet discount to pricy San Franicsco.

Business prospects are surprisingly rosy in Oakland, too. Home to Kaiser Permanente, Wells Fargo, and Clorox, the city ranks consistently among America’s most sustainable cities and as a result lures green-energy startups galore. Startups thriving on the East Bay include streaming-music site Pandora (whose IPO was a roaring success, even in 2011), First Solar, Sungevity, and other green-energy, tech, and life-science plays. We talked with Nancy Pfund of DBL Investors, a local VC firm with five Oakland startups in its portfolio, including Pandora. Here, she shares five things you need to know about starting a business in Oakland.

Oakland is hella’ green.

Oakland offers unusually deep support for startups in green tech. DBL co-sponsors StartupOakland, an annual event hosted in a freshly renovated Art Deco landmark, the stunning Fox Theater. Stop Waste helps local environmentally friendly startups get funding and other support.

There’s obvious synergy to be found when your neighbors intuitively understand the green thing. Among Oakland’s companies is another DBL firm, BrightSource Energy, a solar thermal energy provider whose galloping growth recently hit a snag as it abruptly dropped its IPO plans. Other Oakland green-energy plays include Solar Millennium, biodiesel producer Sirona Fuels, and EarthSource Forest Products, a sustainable timber firm.

Pfund lists other Oakland players ready to support startups of any industry. Nonprofit Inner City Advisors offers small businesses guidance from business plan development to funding. One PacificCoast Bank is a community-development bank committed to funding Oakland-based ventures. And then, of course, you can always hop on B.A.R.T. and wow some San Francisco backers.

The City’s New Office of Economic Development is another theoretical resource, although remember: California has a famously catawampus state government, now underfunded to a record degree. Proceed with caution.

Oakland lets you rub shoulders with the world’s best engineering talent.

“UC Berkeley and CalTech are up the street from Oakland. It also isn’t very far from Stanford or UCSF in the city,” Pfund says. “Wtihin ten miles of Oakland you’ll find a lot of horsepower.”

Although a lot of recent grads flock to San Jose for tech or San Francisco for life sciences, many others stay put in the Oakland-Berkeley area. According to Pfund, Oakland is (slowly) materializing as a talent mecca.

It’s easier to get to places in San Francisco from Oakland than it is from San Francisco itself.

Oakland grew up as a transportation hub, with a bustling international airport and the nation’s fifth largest port. Its position east of San Francisco and proximity to Highway 880 are all advantages. But Oakland also kills with its frequent ferries and B.A.R.T. (cummuter train) hubs.

Pfund drops a much-cited point in Oakland’s favor: “It’s easier to get to most places in San Francisco from Oakland than it is from San Francisco itself,” she says. Not just attractive to reverse-commuters, Oakland makes sense for residents of Berkeley, Marin County, and the peninsula. Bedroom communities east of Oakland, like Piedmont and Danville, are booming with formerly fed-up commuters whose travel-times are eased by Oakland’s outstanding connectivity. “Look at Google and Facebook,” Pfund says. “They offer vans because people don’t want to live in the Valley, and they don’t want to drive [and there’s no public transit]. If your workers want a rich urban experience, Oakland is a great choice.”

One of DBL’s portfolio companies, Revolution Foods, makes healthy, affordable lunches for public schools. Oakland’s centrality helped them grow rapidly; today, they deliver 120,000 meals delivered daily. “Whole Foods’ distribution center is nearby, which is a great help,” Pfund adds. “It’s useful to be near a freeway to transport the meals to the schools.“ (Revolution Foods ranked among our 50 Most Innovative Companies in the World in Food in 2012.)

Now for the caveat: Oakland is a tougher sell to diehard Palo Altans and residents of San Jose. Those two original epicenters of the tech boom still attract workers who need to live and work right on top of the action. However, for more seasoned (and commute-weary) tech workers settled in areas near Oakland, locating your headquarters in Oakland may actually come as a relief to the talent.

“Affordable San Fran” isn’t an oxymoron.

The numbers don’t lie: residential real estate in San Francisco proper runs as high as $1,000 per square foot in premium spots. In Oakland prices top out at $500 to $700 per square foot. Office real estate prices follow suit—if anything, the comparison is even sweeter. Grubb & Ellis rates Oakland as the seventh best office market in the U.S. and No. 3 for industrial office space.

Buy a bike (but don’t get too attached to it).

Oakland’s manageably hilly landscape and warmer weather (it’s consistently 10 degrees hotter than San Francsico) make it “a biking mecca,” Pfund says. That said, this is a city known for sky-high crimes—No. 1 in violent crimes in California in 2011. Guard your property and person accordingly, particularly in the dicey West and East Oakland areas.

Still, if you keep your wits about you and invest in bulletproof locks, Oakland can indeed beguile. The city has some great restaurants that won’t break the bank like more famous establishments in San Francisco. “So many great restaurants in Oakland have spawned from chefs leaving Chez Panisse [and others] up in Berkeley,” Pfund say. Imagine savoring buttermilk fried chicken at Brown Sugar, the sun warming you up for a day of gentle biking, water views flashing from every hilltop: not too shabby a way to recharge.

Follow the conversation on Twitter using the tag #USInnovation.

[Image: Flickr user Jeff Rosen]

The Simplicity Thesis | Fast Company

The only companies or products that will succeed now are the ones offering the lowest possible level of complexity for the maximum amount of value.

A fascinating trend is consuming Silicon Valley and beginning to eat away at rest of the world: the radical simplification of everything.

Want to spot the next great technology or business opportunity? Just look for any market that lacks a minimally complex solution to a sufficiently large problem.

Take book publishing, for instance. Or website hosting. Jeff Bezos put these and other industries on notice in his annual shareholder letter, which included a self-service rallying cry against gatekeepers that perpetuate complexity and block innovation. After all, what could be simpler than provisioning servers in seconds with just a credit card and an API? But this call extends beyond Amazon’s empire to all ecosystems and products.

Any market where unnecessary middlemen stand between customers and their successful use of a solution is about to be disrupted. Any service putting the burden on end users to string together multiple applications to produce the final working solution should consider its days numbered. Any product with an interface that slows people down is ripe for extinction. And any category where a disproportionate number of customers are subsidizing their vendor’s inefficiency is on the verge of revolution.

Ultimately, any market that doesn’t have a leader in simplicity soon will. And if your company doesn’t play that role, another will lead the charge.

If you’re not the simplest solution, you’re the target of one.

In the ’90s and into the 2000s, an early wave of Internet services focused on simplicity through disintermediation: Amazon for shopping, eBay for selling, Google for searching. But these nascent players were limited in their approach. Sure, self-serve Internet services inevitably required some level of simplicity, but everything was just so damn new that experience didn’t meaningfully help companies differentiate. At least at first. But then companies like Yahoo and Microsoft grew into monstrosities, producing bloated technology empires.

Today, things are different. Putting up a website is no longer novel. A clunky consumer device simply won’t be adopted when alternatives from Apple exist. And as more and more of the hard work of building infrastructure, managing computing, and installing and monetizing applications is abstracted from what necessarily goes into launching a company today, differentiation is going to come from solutions that create the best (read: simplest) experience.

This should be a red flag for any product or solution, whether digital or analog, that isn’t minimally complex. If you’re making the customer do any extra amount of work, no matter what industry you call home, you’re now a target for disruption. Because of the Internet’s scale and the speed of change in the world, the Innovator’s Dilemma has mutated over the years into a pernicious, methodically destructive force, leaving any company that is even the slightest bit more cumbersome, costly, or inefficient to be beat out by a newer, more streamlined competitor.

At Box, our enterprise customers are experiencing this revolution firsthand. Across organizations of every size, CIOs—generally not an aesthetics-driven group—are increasingly obsessed with implementing the simplest technology in their organizations. For years, enterprise solutions purchased for their feature checklists were later forgotten about post-deployment, underutilized, or frankly intolerable for end users. With tens of billions of dollars spent every year across infrastructure management, security, business intelligence, or analytics, it’s not surprising that a crop of simpler players are emerging, like OpsCode, Okta, Domo and GoodData, respectively. And they will inherently have a huge advantage over any of their more complex predecessors.

But while enterprise software is in dire need of a revolution, it represents just a fraction of what will be disrupted by radical simplification. Instagram’s billion-dollar acquisition and rise to 40 million users can mostly be attributed to the creation of the cleanest, most elegant, and simplest way to share photos on mobile devices. It could do this by focusing solely on nailing a brilliant experience on a single platform, while leveraging the scale and distribution offered by iPhones. SolveBio, a startup aimed at bio-scientists, is building a trivially simple solution that advances DNA and medical research, enabled by the infinite computing resources of Amazon. Spotify, arguably the fastest-growing music service today, reduced the friction of getting to unlimited music from any device down to nothing. By stepping back and questioning every assumption in music licensing and software, Spotify has built an unparalleled product and experience.

These are all examples of solutions that have hit, for today, the lowest possible level of complexity for the maximum amount of value. And that’s what makes them so disruptive to traditional players. But there are near infinite areas to attack. Particularly as problems get harder and more analog in their nature (coordinating loan applications, applying for colleges, dealing with health care providers, handling payroll) immense opportunities await the startup ecosystem.

So what do you do about it?

Whether you’re the incumbent or a startup, how do you build sufficiently simple solutions to complex problems? By abstracting as much of the work that’s actually going on from what’s required of the consumer, and maniacally slashing any process or barrier that prevents consumers from getting the best possible experience. It’s all about reducing choices and unnecessary steps, narrowing clutter, and adding a touch of class to boot.

Now, this isn’t an excuse for solutions to accomplish less. The irony of simplicity is that it invariably lets you do more. Simplicity isn’t about giving up any value—it’s a movement around designing technology or products thoughtfully to make them substantially more useful and attainable. Some of the simplest solutions on the market are equally the most advanced—Square beats out any other form of retail payment service; Nest offers the most compelling and powerful thermostat ever invented.

Here are just a few ways to get started in achieving minimum complexity:

The next thing to understand is that simplicity is a relative, moving target. The accelerating speed of innovation ensures that you’re never the simplest solution for long. Any delay in staying ahead of the curve can give way to a new disruptor that brings new efficiencies or creates new elegance because of an enabling technology or social change. Original category simplifiers like PayPal and Intuit have fallen prey to more nimble and disruptive competitors that have taken advantage of their current complexity and weaknesses.

Companies that will win in the long term are those that can continue to simplify experience while simultaneously tackling harder and harder problems. Sure, it’s novel and powerful that Square can accept payments for a 10-person retail store, but when they start to do it for Gap, the game is radically changed. Amazon succeeds by continuing to charge into all areas of infrastructure delivery—consistently launching new tools and platforms that would otherwise cost developers an arm and a server closet, all with the same focus on abstraction and simplification.

When technology was inherently and unavoidably complex, it was forgivable that solutions weren’t elegant and simple. It was at one time understandable that finding and visiting a new doctor could take weeks, or searching for enterprise information wasn’t successful. But with a myriad of elegant and simple solutions entering the market, users are learning to expect far more from their products. Simplicity has become a virus that will either destroy you or catapult you to the front of the market.

—Author Aaron Levie is the CEO and cofounder of Box.

Related: To Create Something Exceptional, Do Sweat The Small Stuff

[Image: Flickr user Gane Kumaraswamy]