The World According To Rags

Amazon Prime: The Siren Call Of Free Shipping

Amazon's Prime program is where you can get unlimited 2-day shipping on Amazon products (as opposed to products sold by Amazon merchants) by paying a yearly fee of $79.  They recently offered me a one-month free trial and I have already made 3 - 4 purchase over the past couple of weeks. Granted, I have a lot of travel coming up (about which more later) for which I'm stocking up on things but there's no denying the lure of Prime!  Prime essentially makes the transaction costs feel free.  Yes, Amazon has Super-Saver shipping but that can take up to a week and you need to buy at least $25 worth of goods.  With Prime, the 2-day shipping shortens the gratification window and so I've been using it not just to make less commonplace purchases like a new digital camera, but also sundry items like razor blades.

Prime was introduced in '05 and investors hammered Amazon for it but the Company claims Prime is behind their latest revenue increases, which have boosted the share price.  I believe it.  It's happened to me.

Interestingly, Zappos is a big believer in free, overnight shipping and credits this with a lot of their success.  I read an article (forgetting which magazine), in which their CEO mentioned that they invest in free shipping and customer service (as opposed to advertising). 

Pavan Vaish Appointed CEO of IBM Daksh

My cousin, Pavan, was just appointed CEO of IBM Daksh.  IBM bought Daksh in 2004 and it has since become a key part of IBM's offshoring/BPO strategy.  They currently have 20,000 people in the division with various locations in India and Asia.  Pavan was a founder of Daksh and I still remember helping him proofread and edit the pitch they'd be giving to VCs to raise their Series A back in December 1999.  This was when they had 0 employees and it was just the 3 founders in a small office with a futon!

MBAs Heading for Energy, Health Care, China & India

I was talking to a 2nd year student at Harvard Business School, who mentioned that a disproportionate amount of the students seemed to be searching for jobs in the energy or health care sectors, or in China or India.  Those are the sexy sectors to be in these days.  Functionally, private equity/hedge funds also seem to attract many starry eyed grads looking to hit it big.  I remember the hot sector in the late 90s was joining internet companies or starting them up.  Of course, this is all anecdotal evidence - it would be nice to see empirical data on how industry sector preferences for b-school grads have (or have not) shifted over time, and see if any conclusions can be drawn as to whether MBAs are leading or trailing indicators of market trends.

Is VC Dead?

That is will be up for debate at this year's Venture Capital & Private Equity conference at HBS.  The keynote will involve a debate with Todd Dagres of Spark Capital speaking in favor of VC and Howard Anderson, founder of Battery, elaborating on his famous "Goodbye Venture Capital" letter, which as you can imagine caused a stir in the VC blog community.  Here, here and here, for example.  I've been helping the HBC VC/PE Club plan the event and I'm looking forward to it. 

In the past 6 months, I've heard mixed opinions about VC.  There are the stats on fund sizes, and how valuations have gone up due to the large supply of capital chasing relatively fewer great ideas/entrepreneurs.  Privately, a couple of friends in the industry have professed frustration.  One of them mentioned getting a deal done these days comes down to luck more than how hard or smart he works.  He'd been working a deal for a while and another firm swooped in with a silly valuation that the startup took. 

On the other hand, I know other VCs who are jazzed about where things are, the amount of innovation and disruption happening and how that spells opportunity for them.  They are confident that their approach, dealflow and/or investment theses will enable them to outperform their peers.

So it should be a good debate and, more broadly, a good conference.  It's on Feb. 4th at HBS.  Let me know if you can make it.  Hope to see you there.

Williams-Sonoma Rocks

I recently had a wonderful experience at Williams-Sonoma.  My wife and I were given a nice KitchenAid blender from Williams-Sonoma for our wedding a couple of years ago.  It worked great but, in the past few months, started making a funny noise and basically lost a lot of its blending power.  We called their customer service # and they told us that they stand by their products for life and that we should bring it into a store and they'll then send us a new one.  So I brought it into the nearest store.  Lo and behold the lady behind the counter exchanged my broken blender for a brand new blender on the spot.  No questions asked.   Although I had the receipt, she didn't even ask for it.  I just had to show an ID and she made the transaction happen.   That is remarkable service at both customer touch points and I will shop there again.

PS - Ironically, there was another customer that also had issues with their KitchenAid blender that day.

Downturn

There's much exictement and energy around technology-enabled businesses, whether web-services enabled or on the third screen.  I was talking with someone today about possible 'threats' to a particular business.  One of the ones I identified was macro-economic -- what if there's a downturn in the economy?

The '01 - '03 downturn was my first as a working professional, and it was frigid.  People just didn't want to do business, especially new business.  I heard stories of VCs and bankers going on sabattical -- there just weren't deals to be done.   

I've read the analyses pro and con around the US economy.  Something tells me that we're in for a recession by the end of the decade, and I'm not the only one with misgivings about where things are headed.  I don't know what will trigger it -- fuel prices, housing, interest rates, balance of trade, or some combination thereof.  If you think this will be true, raise more money than you think you'll need while the money is there for the taking. 

I hope I'm wrong.

The 7 Founding Sins

David Beisel lists the 7 Sins for would-be entrepreneurs.  Not sure I completely agree on point #1.  While entrepreneurs certainly need to be intimately familiar with the problems they're trying to solve, I also believe great entrepreneurs can search for great ideas.  The stuff that's come out of Bill Gross and his Idealab is probably Exhibit A here.  While they got a lot of flak during the dotcom boom and bust, what got lost in all of it was the great ideas (and companies) that they spawned: Goto (Overture) -- the idea of having sponsored search results was a bold one, Snap, Citysearch, and several others. 

I'd also add Control to the list.  While it's natural for early stage entrepreneurs to exert a great degree of control, it can make it hard to grow.  So surrounding oneself with great people who share your vision and trusting them seems a lot more scalable.

Bed Bath & Beyond's Supply Chain (Sucks)

There's a heat wave here in Cambridge.  We wanted to get another air conditioner for the place and so called the local Bed Bath & Beyond since their site didn't list any.  They told us that they're sold out for the season!

Think about this.  It's not even the end of July and they are probably turning people away by the droves due to lack of inventory (and that's assuming they haven't been sold out for weeks, which may well be the case).  If the shortage is nationwide, it could be millions of dollars they've left on the table.  And if there isn't a shortage, umm, why aren't they shipping inventory over to the Boston store?

Looks like I'm taking my business to Wal-Mart or Home Depot.