The ‘I Wouldn’t Mind’ Heuristic

Most new business ideas will have a chicken-egg situation that needs to be solved for the idea to even exist in some shape. For example, no buyers will turn up unless there are sellers, but why will a seller list anything when there are no buyers? In many cases, if you can leverage an existing market factor to your benefit, you will have figured out a way to solve the chicken-egg problem. Here is an example of that.

So here is a new heuristic: look for areas where the consumer is paying nothing, or is already paying for something, and tell him he can actually make money out of that activity. In the example we just described, the consumer was paying nothing for receiving SMS messages. So when you tell him he can make money for doing that, ‘he wouldn’t mind’ doing that, with a positive bend – the possibility of making money. Add that reaction up across an entire population, and you have a very feasible idea in your hands.

Why is this a tricky heuristic? Remember those firms that said they will have an advertisement bar when you browse the internet and they will pay you money for doing that? What happened to those? Or, for example, why don’t we see cars wrapped in advertisements? The consumer did not mind. But they probably did not care as well. That matters.

In many ways, this is the opposite of the ‘Polarize People’ heuristic. That is precisely the reason you don’t see huge successes using this heuristic. But it might work to some scale. For example, we never knew how Mark’s bar would make money. Now it is making millions in profit.

The ‘I wouldn’t mind’ heuristic might work. As long as you don’t mind trying it.

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Focus On Your Strengths, Outsource Your Weaknesses

‘Improve on your weaknesses’ is probably the advice we all hear, particularly during the first 10-15 years. But if you look at the data around you, what you will realize is this: we should really be focusing on our strengths, become better at what we are good at – because that gives us a shot towards becoming the best at what we are good at.

What about our weaknesses? Well, we can outsource that – remember, there are people who are already good in those areas, and they would strive to be the best – and we, as the people writing the check, would have the opportunity to hire the best. Imagine that – now you have the best of everything, including where we are by definition weak, and no amount of effort would have taken us anywhere close to the best in those areas.

The impact of this would be felt in your rate of progress in your strong areas. You will become better in no time, and with persistence and added focus, you will become the best.

That advice that elders gave you when you were growing up – to identify your weaknesses and improve on those – that advice is basically wrong. This is from Scott Adams, the creator of Dilbert, via pmarca:

” But if you want something extraordinary, you have two paths:

Become the best at one specific thing.

Become very good (top 25%) at two or more things.

The first strategy is difficult to the point of near impossibility. Few people will ever play in the NBA or make a platinum album. I don’t recommend anyone even try.

The second strategy is fairly easy. Everyone has at least a few areas in which they could be in the top 25% with some effort. In my case, I can draw better than most people, but I’m hardly an artist. And I’m not any funnier than the average standup comedian who never makes it big, but I’m funnier than most people. The magic is that few people can draw well and write jokes. It’s the combination of the two that makes what I do so rare. And when you add in my business background, suddenly I had a topic that few cartoonists could hope to understand without living it.”

Focus On Your Strengths, Outsource Your Weaknesses. That will help you Just Finish Everything.

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Hit The Toughest Part First

The human mind is very good at dividing a problem into many parts. But there is an unintended consequence: the mind also knows that it needs to work hard to solve the tougher parts, so the default approach it takes, is to hit the easier ones first. As a result, the toughest part remains unsolved until the very last. As an example, how many of us have thought of a project idea, and registered a domain name as the first ‘execution step’? Why do you think we do that?

The problem with the ‘toughest part last’ approach is this: the toughest part, in most cases, will also be the most critical part. Which also means that the net progress made would be very less until the very end.

One effective solution to this problem is to train the mind to hit the toughest part first. It has to be a conscious effort, and it will take quite a while for this to become a habit. But if you get into the habit of hitting the toughest part first, you will soon be a very effective problem solver. Try it.

And of course, you should Just Finish Everything.

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Y-Combinator Statistics: 464 Startups Raise $1.5 Billion In Funding

Any discussion on YCombinator you need to consider the impact of Dropbox and AirBnB. (In this case, they have raised $257 million and $120 million respectively), we spotted today that the total funding raised by YC companies excluding the current batch, has reached $1.5 Billion. (Source)

How do we digest this stat? For scale, let us try this: in the year 2012, some 20.6 billion USDs have been raised by VC firms in the US. That clarifies the scale of the funding raised by YC companies.

Two additional points to keep in mind: the ‘just get out of YC and we will fund you with hundreds of thousands of dollars’ movement has an impact on these numbers. And obviously, the AirBnB and DropBox effect.

Reddit could have been much, much bigger from a millions and billions perspective, maybe they ended up selling early – and so they do not have a very significant impact on these numbers. We had spotted some Reddit stats in the past – Reddit is a giant on the Internet – it had more than 37 billion pageviews in 2012.

But even with such known misses, the impact of YC companies on the overall funding scenario is big. These companies have cleared two filers: the fact that they got into YC gets the ‘right team’ check taken care of, and the fact that they did YC gets the ‘make something people want’ check taken care of. The question that would remain, is if people want the product now – the famous marc andreessen point on ‘product-market fit’: the bet is that the product-market fit is not years away. That sounds like a reasonably safe bet.

But if VCs are looking for reasonably safe bets, who is looking at taking real risks? The definition of VC is changing, and we have seen the impact in numbers as well.

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Innovative Business Models Leveraging Local Factors

Innovative Business Models are interesting to spot. We’ll start with an example: In India, both receiving SMS, and all inbound calls are free for the consumer. Now this is a local factor, that many companies have leveraged. But this company called mGinger made a cool business out of it (and investments from DFJ and IndoUS as well). What is mGinger? Simply put, users register their mobile numbers with some details and ‘allow’ mGinger to send them advertisements, in exchange for monetary benefits. Since the carrier does not charge them for receiving SMS, it is effectively free money for them. And since mGinger gathers some information when you register, it is able to do ‘targeting’ on its ads – enough of a selling point for ‘spread-the-message’ advertisers. Add the capability to measure the effectiveness, and you got a new business model!

This innovation was clearly possible, due to a local factor, that receiving SMS was free. So the ‘What is in it for me’ was easy to solve – earn money by receiving SMS !

Do you know of other such innovative business models, that leverage any such local factor?

(We had written about India’s missed call economy, for example).

We also made this thought into a heuristic to solve the chicken-egg problems faced by startups – the ‘I wouldn’t mind heuristic’ – the basic idea being this: look for areas where the consumer is paying nothing, or is already paying for something, and tell him he can actually make money out of that activity. In the example we just described, the consumer was paying nothing for receiving SMS messages. So when you tell him he can make money for doing that, ‘he wouldn’t mind’ doing that, with a positive bend – the possibility of making money. Add that reaction up across an entire population, and you have a very feasible idea in your hands.

Such local factors should definitely exist in multiple places around the world – and smart people must have made nice businesses out of these factors (for example, in China, someone is making millions by selling CANNED AIR). Do you know of other such innovative business models, that leverage any such local factor?

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Facebook Profit Per Active User In Q4 2012: 5.8 Cents, LinkedIn – 7.1 Cents

‘Facebook profit’ and ‘LinkedIn profit’ are good numbers to compare and see how scale has an impact. These are obviously two different type of networks – one is a completely informal social network and the other is a professional social network. And for quite some time, it has been assumed that LinkedIn monetizes its users better than Facebook.

So the Q4 results gave us a good opportunity to compare these two networks purely from a monetization perspective – and here is what we spotted.

We have based our calculations on these numbers – Q4 results from LinkedIn and Facebook, and active users count: LinkedIn: 160 million (Source), Facebook: 1.1 billion (Source)

In Q4 2012, LinkedIn made a net profit of $11.5 million (Source) whereas Facebook made a net profit of $64 million (Source). That works out to a ‘profit per active user’ of 7.1 Cents fpr LinkedIn, and 5.8 Cents for Facebook.

Note: We have just used our brand new MBA curriculum to arrive at these conclusions. If we have missed something big, let us know in the comments.

We had always thought that LinkedIn was way more lucrative as a business than Facebook. We realized that while that statement is still true, Facebook is catching up, real fast. Of course, we had spotted some stats on Facebook’s rising ‘cost of revenue’ – but the fact remains, that while right now LinkedIn monetizes its active users better, Facebook is not far behind.

7.1 cents and 5.8 cents. Not much of a difference, you think? Wall Street looks at that, and says ‘An active LinkedIn user is 23 percent more profitable than an active Facebook user. There is a difference between working professionals and college kids’

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Apple Takes 72% Of All Handset Profits With Only 21.7% Of Sales

Apple profits can make you go silent with shock sometimes. This is a trend that we have followed very closely here at Statspotting – back in August, we had written an article on similar lines – ‘Apple: The Smart Smartphone Maker

When it comes to being profitable, Apple is a very smart company. (If you think that is an obvious statement, read The ‘Jeff Bezos Reality Distortion Field’. Imagine, Apple did not exist in the handset industry until mid-2007. Today, we spotted this stat, that with just 21.7 percent of sales, Apple makes a whopping 72 percent of overall profits in the handset industry. (Source)

And here is the other surprise: Samsung got the rest of the profits, and everyone else got nothing. NOTHING. Okay, we kind of knew that already.

We tried to spot other industry data points where we could say ‘With only x percent of sales, XYZ company makes y percent of profits’ where y is more than 2x. We could not spot any. Do you know of any such XYZ company?

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

iPad Stats: Every Fifth PC Shipped Is An iPad

iPad stats prove what we had written before, that the tablet is the defining device for this generation – there are numbers that can back up that claim in all ways. For example, this one we spotted today. If you define the PC market as a personal computing device market, here is an interesting stat: In the last three months of 2012, some 134 million PCs were shipped, of which Apple tablets (you will know them as iPads) accounted for some 27 million (Source)

So there it is – one in five decisions on personal computing devices goes the iPad way. Not very surprising, until you realize that the total number of iOS devices sold is huge. Really huge.

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Ads On Cars: Why Don’t We See Cars Wrapped In Advertisements?

Ads on cars were hyped us as the next big thing few years back – when everything is being sold as advertisement space, we were curious as to why we do not see lots of cars wrapped in ads – it is such an obvious candidate, that hundreds of people must have tried it. Right?

To an extent, yes. Google showed us that this was an idea that was tried multiple times during the internet boom of the late 90s when such ‘marketplaces’ could be conceived and rolled out in no time. And yes, most of them failed. For many reasons. We dug around further, and realized that there have been many models where as a driver you could pay some money and be part of some marketplace that gives you access to a list of advertisers who would pay you for driving around a car with their ads wrapped on it.

The issue boils down, as in most cases, to the guy writing the check. Why would an advertiser write a check for you to drive around a car wrapped in his ads? So the one reason why a marketplace like that does not exist (well, not very successful in any case) is this: the business case is really very very case specific – for example, your car’s ad space, based on your zipcode, car model, driving patterns etc is so specific to you, and you alone. That makes it extremely difficult for an advertiser to filter down to some ad space that will provide him value. The other issue, of course, is quantifying the benefits – but that is another story altogether.

So what is possible? We think that an etsy-like marketplace where you could ‘sell’ your specific ad space on your car – there is a possibility that one of that could exist. What do you think?

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Did You Feel Like An Idiot Today?

AirBnB founder Brian Chesky mentioned this in his (really) long interview with Sarah Lacy – that throughout the AirBnB journey, he has lived through this experience of ‘one moment you feel like you are a winner and then the next moment you feel like you are an idiot – the biggest idiot you have ever known’ (or something like that).

(Move to 1:13:00 in the interview)

Did You Feel Like An Idiot Today?

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Page 30 of 98« First...1020...2829303132...405060...Last »