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Can Your Smartphone Replace your Eye Doctor?

September 30th, 2014

For most of the history of mankind, we have built specialized machines to do work: plows to attach to oxen, hoes to till the field, screwdrivers to turn screws, eye examination appartuses (I have no idea what they are actually called) for optometrists to, well, examine our eyes.

Over time, as these machines have become more sophisticated, we have found that they could work better if some of the manual tasks were performed by computer. Thus, telescopes gained computerized controls, cars gained computerized cruise control, eye exam machines (really, no idea) gained digital images and measurement.

At the same time, we have begun walking around with pretty powerful mini-computers in our pocket – our smartphones. As the computers on machines became more powerful – and, in many cases, more expensive – than the base machine itself, it became almost inevitable that smartphones with tools attached could replace some specialized machines with computers attached.

Entire professional-quality commercials have been shot using iPhones and some add-on lenses. Heart sensors are being added. Square and others offer credit card readers. The business of manufacturing many devices has moved from specialty equipment manufacturer to specialty smartphone add-on manufacturer.

Next in the target of change: eye exams.

Smart Vision Labs, a New York-based startup, has combined an add-on iPhone lens with software to do an entire optometry exam. The device – which is larger than the iPhone itself, but smaller than a professional camera lens – measures the retina and all parts of the eye, uses software to pull it together, and then is able to give a precise vision correction recommendation.

Will this replace the optometrist? If so, how; if not, then who? Assuming they succeed (big assumption):

First of all, specialized equipment costs will go up. Yes, your ophthalmologist will now need to pay more for his/her special eye exam machine. Whereas these manufacturers used to sell higher-end devices to ophthalmologists and middle- to lower-end to optometrists, much of their lower and middle market will dry up if devices like these succeed. Why pay a premium to manufacturers for some lenses and a specialized computer when you already have an even more powerful computer and software? With the move upmarket, manufacturers will have no choice but to have higher margins on a smaller market. The same effect happens when drugs come off patent: the generic costs much less than the protected name-brand used to, but the name-brand price goes up.

Second, some optometrists will see their businesses threatened. With consumers, insurers, employers and governments all looking to cut health care costs, automation of the eye exam process is like automation in every industry – replacement of highly-trained workers with a few machine operators. A properly automated eye exam, for the majority of use cases, can be done by a trained technician or nurse; no optometrist required.

Third, because of the above 2 factors, ophthalmologist services will cost more but be used less often, while eye exams will cost less and be used more frequently.

Finally, the founders’ dream of “bringing eye exams to the third world” may have some success, but primarily due to traveling doctors. People who cannot afford the $5 equivalent for an annual eye exam with the local optometrist equivalent most definitely do not have a $200 smartphone, let alone $650 iPhone. But “Medicins Sans Frontieres” and similar organization very well may.

 

Do Toy Companies Need Female CEOs?

September 29th, 2014

The other day, my wife forwarded me an article arguing that toy companies need more women at the top. Simply, toy companies have stagnated and reflect the mindsets of those who run them.

It is hard to argue this isn’t true… about any company. Companies always reflect some combination of the personalities of those who founded them and those who run them. When a founder runs a company for a long time, the cultural assumptions tend to be dominant.

So does Mattel need a female CEO? Does Lego need a few more women Directors?

They may; they may not. The beauty of the modern business system is that large incumbents are always vulnerable. You cannot topple them easily, but it can be done. If >50% of the children in your market are of a certain segment (race, ethnicity, culture, or in this case, gender), and they aren’t being served, that is an enormous potential market. Go out there, start a company, and see what happens. You are likely to get one of three results:

  1. You Fail: You have the wrong item, market it incorrectly, sell it wrong, or do any of one of 10,000 things that can bring a startup to its knees. This doesn’t disprove your theory; it just proves that you needed more help in management.
  2. You Succeed: Not only did you dislodge a major player, you helped a large number of children get the toys they wanted… and became wealthy on the way.
  3. You Are Rejected: It turned out that the majors were producing exactly what the market wanted. Girls didn’t want new Lego “made for girls”, or the female version of Teenage Mutant Ninja Turtles, or whatever else you had in mind.

And what if you are actually running the incumbent, or a part of it, and are concerned about potential competitors to underserved markets? Bring them in. Find people with different ideas – women included – and put them in charge of an R&D and early marketing team. Give them the autonomy to operate like they would as a startup. Let them, on their own, discover if they will fail, succeed or be rejected.

But never restrict them to the culture of the existing company. Give them the space they need to determine if it can be successful.

And if your company culture is too strong? Invest in them. Find someone interested, set up a startup for them or invest as a “strategic investor” in their startup. A prime reason large companies have venture investment arms is precisely to identify those advances that can either help or upend their markets, but they cannot invest in internally due to political, cultural or financial (short-term ROI requirements) constraints.

Either way, get up and upend them, or, if you are inside, find a way to upend yourself before others do it. But never sit on the sidelines.

Standards Are Better for Most, but Bad for Niche Players

September 23rd, 2014

Over time, all technologies migrate towards standardization. Sometimes this can be a boon for the first-to-market or owner of the standard that “wins”; most of the time, it forces them to find new grounds to differentiate and compete as suddenly everyone is using the same technology interfaces that they are.

As shown brilliantly by Simon Wardley’s mapping, all services start out as highly customized, and eventually move to standardized commodities. While these standards may not be 100% global, they do tend to standardize within an industry or a region. Here are 2 examples:

  1. Power: When the power generation business first came to the fore, every provider had his or her own format for providing power – current, voltage, and of course “plug”. While some of that continues in the differences between, say, a UK-style plug (type G) and US-style plug (type B), you are pretty much guaranteed that any refrigerator bought in North America can plug into any socket in North America. It doesn’t matter if your power provider is Consolidated Edison of New York, PSE&G or Hydro-Quebec, it will just work.
  2. Shipping: Fifty years ago, every package you shipped had to be custom fit to the boat on which it shipped. Every shipping involved a direct or almost-direct negotiation with a ship manager. As a result, shipping was expensive and slow. With the advent of standardized intermodal containers, the situation is dramatically different. Every shipbuilder builds boats to handle just standard container sizes and interlocks, and every shipper just fills a container. When you ship a large box from LA to Singapore, UPS just fills it into a container already planned to go. It knows precisely what percentage of space your box will take, and therefore what the relative cost of shipping your box is, without any need to to now go to Zim Lines and ask them if they have space for a 2′ x 2′ x 6′ box.

The same process is occurring continuously in the hardware and software space. Here are two examples.

Wired Connectivity

In the early days of computers, there were multiple dedicated cables for everything:

  • Coaxial – for television transmission
  • Coaxial – for early networking (and no, it couldn’t coexist with television)
  • Ethernet (RJ-45 connectors) – for later networking (still in use, in its 6th major iteration)
  • Telephone (RJ-11 connectors) – for telephones and the fax lines (and later modems) that ran on them
  • Serial (RS-232) – for connecting some computer peripherals
  • Parallel – for connecting some other peripherals, notably printers and scanners, that had “a lot of data to pass”
  • VGA – for monitor output
  • PS/2 – for keyboards and mice
  • AT – for other keyboards and mice

Given the above – each with its design, electrical requirements, and signalling – it is hardly surprising that even if we could have gotten core computer processing smaller, the machines still would have been huge, just to accommodate the many ports and interconnections.

Over time, many of these have consolidated down into simpler interfaces. Almost all peripherals are now USB; displays are rapidly moving to mini-DisplayPort or HDMI (still to be determined), and networking is rapidly becoming copper Ethernet cables everywhere, except for extremely high capacity or long distances, where fibre rules.

As a matter of fact, if you look at a modern laptop, the only connectors you are likely you see are:

  • 2-4 USB ports
  • Power
  • HDMI/mini-DisplayPort

It was inevitable that these would consolidate further. Apparently, the team behind DisplayPort and the team behind USB have agreed to 2-way audio and video over the newest version of USB 3.0. You would connect your TV and display the same way you connect a hard drive or mouse – via USB.

What does this mean for different constituencies?

  • Laptops: One fewer connection on each, which will be able to connect to just about every display out there, including, if they get on board, televisions.
  • Televisions: More and more, these are becoming monitors with lots of connectors and some digital smarts. Most of them already include USB ports, so it is almost inevitable that Samsung, LG and Vizio will start to manufacture TVs that can accepts digital data streams from USB, not just HDMI.
  • Adapters: Companies that make connector cables – DisplayPort to HDMI, USB to VGA, etc. – will see shrinking revenue from such adapters. Companies for whom it is a marginal side business – like Apple, despite their absurdly inflated prices on such items – will not care very much; they will more than make up for it with the lower cost of computer manufacture which will, paradoxically, allow them to charge more for more compact devices. Those for whom it is more of a core business, like Belkin, will see a more significant impact. Perhaps this is the reason that most online “cable adapter” sellers appear to be niche Chinese players rather than major companies.

Of course, this will not happen overnight, but it appears to be happening relatively quickly.

The net result is that businesses that “adapt” one incompatible market to another – whether DisplayPort to VGA or non-standard boxes to non-standard boat holds – are an important fabric in the early growth of an industry, but eventually put themselves out of business. Eventually the growth caused by matching creates a momentum to work without matching, whether to save space on laptop motherboards and cases or to ease shipping on boats, which eliminates the “matching” expertise in the first place.

Does Apple Pay Get Security Right?

September 11th, 2014

So we have yet another attempt to succeed at mobile payments, courtesy of Apple Pay. However, Apple has a very long history of taking inventions and putting them together in just the right way that they finally are usable, and take off. As Tim Cook said on Tuesday, “every other attempt looked at it from the perspective of the business model, rather than the user experience.”

Given the many high-profile security breaches over the last several years, I would like to take a look at the security implications. In short, did Apple get security right? Will using Apple Pay significantly reduce the exposure to credit card theft and breaches?

Unfortunately, as of this writing, no detailed architecture or design paper for Apple Pay has been released. What we do know is the following:

  • It uses Near-Field Communication (NFC) to share the purchase authorization, similar to many cards that have it
  • Apple has no information about the purchase, the amount or even the merchant
  • Apple does not share the credit card number with the merchant; actually, Apple may not even have the card stored at all, except for initial setup of each card
  • Apple Pay uses one-time “tokens” to authorize the payment

What does this mean? You go into a Duane Reade to buy a pack of tissues. Here is the before and after:

Today

  1. Clerk rings up the cost
  2. You take out your credit card and swipe it
  3. Point-of-Sale (POS) system reads your card number from the magnetic stripe
  4. POS transmits the amount and card number to the processor
  5. Processor approves

The obvious weak points here are #3 and #4. There are 2 major problems:

  • Any form if illegitimate software or hardware anyone between your card and the processor can steal your card information. In the Home Depot and target cases, the POS was compromised; in other breaches it was store wifi; in the Adobe case, it was the database that stored the cards.
  • Just having your card number is, ipso facto, authorization to take from your account.

Sure, over the years cards have added additional band-aids, like the infamous 3-4 digit security codes that are not on the stripe, but the core of the problem remains.

Now, let’s look at the apparent Apple approach.

Apple

  1. Clerk rins up the cost
  2. You take out your iPhone
  3. Your iPhone recognizes the NFC, and reads a request for the amount agreed, along with the merchant
  4. Your iPhone generates a unique one-time “card number” or “token”, which is valid only for this merchant and this amount. It may also only be valid for this date, which is how I would do it, although Apple has said nothing about it.
  5. Your iPhone transmits the token to the merchant POS, which then sends it to the processor for approval.

The major weak points have largely been eliminated. Even if the POS is awash with malware, all they can get is a token that is good for a single purchase, of a single amount, to a single merchant, possibly only for one day. If they tried to use that code elsewhere, it would fail. This, in turn, would reduce the security burden on the merchant, while decreasing the incentive for hackers to attempt to breach those systems.

Does this increase their incentive to breach bank and processor systems? Sure, but that incentive is there anyways. Any hacker would get far more in ill-gotten gains by hacking the Visa network or Chase than even Wal-Mart!

So Does It Work?

The answer is, it depends. If the actual architecture is done correctly – and we will only know that and have confidence if and when Apple releases whitepapers and architecture to the public – then, yes, this really could dramatically reduce both breaches and their impacts.

The latter is a big question though. Apple, from its very onset, has had a tight culture of secrecy. It doesn’t like to describe how the innards of its systems work, for fear of competition. Growing up in the Apple-Microsoft world, followed by the Apple-Google-Samsung love triangle, this is hardly surprising.

Nevertheless, security by obscurity is insecurity. The only way to truly be confident is for them to open Apple Pay up to external analysis, and let the chips fall where they may. I am positive there will be some horrible weaknesses, but every system has them. Publicity will allow them to be found, publicized and fixed, while those who work in obscurity will have similar weaknesses that will never be found… except by thieves.

Of course, in the end, I still strongly feel that this just exacerbates our “pull” system, where we give merchants something – a signed check, a credit card number, an Apple Pay token – to allow them to pull funds from your account. The best solution, one possible only in a fully connected world, is one where the merchant gives you their account number, and you send them the funds.

Not many systems work this way, but the preeminent one is… cash. The most famous second one is BitCoin. It is almost a pity it had to be a “counter-currency,” as it could solve many of the problems with push. But that is an article for another day.

Apple Goes for Shiny and New, but What About the Basics?

September 10th, 2014

Apple, arguably, had its most important launch event in years yesterday. Beyond putting its smartphones back in play with the iPhone 6 and 6 Plus, competing on specs with LG and Samsung, not to mention Motorola (Motorola? When did they come back from the dead?), it launched in 2 new categories:

  • Apple Pay – mobile payments, for which a follow-up article will be launched this week
  • Apple Watch – a more convenient extension to your phone on your wrist

Apple Pay has enormous potential, but depends entirely upon Apple’s iPhone business.

There is no doubt that Apple had to catch up. Despite having created the business in 2007 – it seems like a very long time ago, but it has only been 7 years – followed by the entire category of mobile apps and the App Store, it has fallen behind every major competitor on screen size, specs, processors, cameras, etc. It had to catch up and regain its “flash”, its “cachet”.

However, I find it troubling that Apple did not address the basics. Yes, Apple has a new processor, and cool games to show off, but day-to-day usage is, for the most part, not about ultra-high-power games.

Most smartphone users have 3 simple complaints and challenges when dealing with their phones. They either cause problems directly or cause people to be concerned about those problems.

  1. Battery Life
  2. Fragility
  3. Water sensitivity

Let’s look at each in turn.

Battery Life

Every smartphone user complains about battery life. To their credit – and Samsung’s, and Motorola’s, and Google’s, etc. – every one of them has spent significant resource in placing better batteries with a few percentage points of longer life; improving hardware to work more efficiently; reengineering its software to perform the same tasks with less energy.

But in the end, until some of the major physics and chemistry breakthroughs are sufficiently commercialized, everyone is playing on the margins. This means that how you charge your phone becomes at least as important as how your phone maintains its charge.

To compete, companies have adopted different solutions:

  • Most smartphone makers (other than Apple) use a micro-USB port, increasing the chances that you will find someone else to lend you a cord.
  • Some manufacturers support wireless or inductive charging, so you don’t even need a cord.
  • Motorola’s latest flagship Moto X has a form of “rapid charge,” that can give you 70% charge in 5 mins.

While all of this innovation is short-term stopgaps, these will matter greatly for the next 5 years. Since Apple’s mantra is that their stuff “just works,” it is surprising that Apple did not address it at all.

Anyone except the most dedicated brand die-hard (Apple or Android) will switch brands if they can get a materially similar device with 50% more battery life or, conversely, a really quick and easy way to recharge.

Fragility

Everyone has dropped their phone at least once, and said, “I probably just shattered the glass and will have to pay $50-100 and a day without it to repair it!” Whether or not it actually shattered, awareness of the fragility of the phones changes how we all operate.

Apple does claim to have “ion-hardened” (whatever that means) its screens on the iPhone 6 and 6 Plus, but those are just words. A video did leak a few weeks back showing someone bending a supposed iPhone 6 screen, as well as trying unsuccessfully to crack it with a hammer. However, if that was it, Apple did not promote it yesterday, suggesting the video was not genuine.

Water Sensitivity

Ever bring an iPhone/iPod/iPad in for repair? The first thing they do is look in the microphone jack for the little sticker that changes colour when exposed to water. Apple is spending significant sums buying special microscopes, adding the stickers to the manufacturing process, training their employees, and having them spend salaried time to examine for these little stickers.

As a result, everyone who has a phone hides it from the rain, runs back to pick it up off the kitchen counter, scrambles to grab it away from the spill on the table… and worries about their warranty.

It is entirely possible to waterproof it; just look at the Samsung Galaxy S5, or even Apple’s own Watch.

Putting Them Together

Imagine if you had a reasonably modern smartphone that:

  • You didn’t worry about water
  • You didn’t worry about dropping it
  • You didn’t worry about it running out of battery (or at least felt comfortable you only needed a few minutes to recharge it)

If this smartphone ran a modern operating system with modern specs – like the Samsung S5, LG G3, iPhone 6 or Moto X – how many would buy it in a heartbeat?

Apple is adding new sexiness to its iPhone, and entering new categories… but there is a whole world to (re)capture in its core smartphone category – redefining how you just use your smartphone. It requires “back to basics,” but would be a must-have across the board.

Pity.

Facebook Advertising and Sloppy Pricing

September 9th, 2014

As I mentioned in an earlier post, I had a poor experience attempting to pay Facebook for services I agreed to purchase. It wasn’t the acquiring process that was messed up… it was the actual payment. This is the absolute worst place to make things fall apart – when you want a customer’s money.

I did, however, discover one other serious mistake on Facebook’s part: sloppy pricing.

Let’s go back to my sample advertising campaign. I selected the article to “Boost” and the target audience, and then it gave me the prices. Since I was physically in Israel using an Israeli ISP (and hence IP address) at the time, the price offered was 180 Israeli shekels (NIS). On the other hand, since my business is US-based, I clicked on the “select currency” pull-down, switched to US dollars…. and got 180 USD! The current NIS:USD exchange rate is ~3.60:1 (it was worse, but the Bank of Israel lowered its rate by 25 basis points early last week), I could pay $180 USD or 180 NIS = $50 USD! Essentially, the price was 180, whatever currency you were in. Maybe, I should have tried Chinese Yuan, as the RMB:USD rate is around 6.14:1!

I could easily understand the same demographic in 2 different regions – US and Israel or UK and Hong Kong – with differential prices, but for the exact same demographic to cost the 3.6x less just because of a different currency? This is a classic arbitrage opportunity, and a big one at that. Even better, the 2 markets are run by the exact same company, in the very same window in front of the same customer! Facebook needs to be careful to manage its pricing much more carefully. Maybe I wouldn’t have paid $180 to advertise, but maybe I would have paid more than $50. Either way, to sell the exact same product, to the exact same audience, in the exact same packaging, for 2 different prices? Foolish.

It looks like Facebook has its internal technology figured out pretty well – they do some impressive stuff architecturally in order to scale to the 1BN+ users they have; the published documents and presentations are recommended reading for anyone designing technology systems – but they appear to be much weaker in terms of integration with external systems like PayPal, and especially in their own marketing and especially pricing. It appears they need some adult supervision at the helm. Sure, they did $2.02BN in revenue in Q3 of last year, but how much more are they leaving on the table?

 

Why I Won’t Advertise on Facebook

September 8th, 2014

If there is one rule that is more important than any other in business, it is this: make it easy for your customers to pay. Sure, “cash is king,” and “know your numbers,” and “the customer comes first,” and all of that. But all of those are just ways to get people to become and remain your customer, or to keep your business afloat. Much as the purpose of their being your customer is to service them, to deliver great value, if you are in business, then all of that is to get paid.

In other words, the absolute worst thing you could do is make it difficult for your customer to pay you. The moment a customer parts with their money is the moment when they are recognizing the (hopefully greater value) service you have provided them by allowing you tp pay your bills. This is the one point, more than any other, that should be 100% easy and frictionless. Web companies have spent untold billions to find ways to make checkout easier, payment easier, shopping cart abandonment lower.

And yet, the actual payment itself can sometimes be an afterthought. Last week, I came across a classic case of “payment doesn’t matter”.

I have never actually paid for an advertisement on Facebook. Sure, I have run some of the analytics, and helped companies with it, but I am a strong believer that the head of marketing should always be able to draw up the campaign herself, the CTO should be able to design the software himself, he VP finance should be able to calculate the ROI herself. There is simply no substitute for hands-on experience.

So I decided to have some fun. I logged onto Atomic’s Facebook account, and paid to promote one of my recent articles. I didn’t need the extra exposure – although it never hurts – but I wanted the experience; a few tens of dollars is a pretty cheap education. I finished the process, selected PayPal, and sent the campaign on its way.

Two days later, I received an email – not a Facebook message, which itself is suspicious, since companies that don’t use their own services are suspect – stating that the payment didn’t go through. I went back to the payment page, tried to pay again, and again had it fail. After multiple tries, I went to my PayPal account, and saw zero history of any attempt to set up a Facebook connection. Quite simply, Facebook had done something wrong on the integration, and hadn’t even bothered to catch it on their own or send a good message to the customer.

The next few days involved emails to Facebook – no way to call, of course – phone calls to PayPal, and insistences by Facebook that, “it is a problem on PayPal’s end,” without any more helpful detail than that. Miraculously, 24 hours after my insistence that the problem is Facebook’s but I would reach out to PayPal anyways – which I did, getting through on the first try and waiting fewer than three minutes on the phone – it suddenly worked.

I don’t mind spending time getting an ad campaign set up correctly, or tweaking a post, or a Website. But once I have agreed to pay, it should be seamless, and issues should be handled quickly and professionally by my vendor. Unless I absolutely must, I won’t be buying anything off Facebook for quite some time.

Real High-Tech is Vacuum Packs

September 4th, 2014

I love technology. I had an Apple II as a kid, did engineering projects in high school, and have worked in and out of the tech sector for years. But as cool as the technology is, it is the impact on a business, and organization, a society that matters. This is a lesson many engineers forget, focusing on the solution rather than the problem, but it is the reason any of these advances have value.

So here is an everyday technology that really is a high-value: vacuum packs.

For decades, there was only one way to buy tuna: canned. Parents and kids knew to pull that can of StarKist or Bumblebee Tuna out of the pantry, grab the can opener from the drawer, and open it up.  Cans are great: they don’t spill; they last pretty much forever; they are nearly impossible to break.

Along comes the vacuum pack. For the last few years, you can buy tuna in a vacuum-sealed bag. It looks and feels like extra-thick aluminum without the rough edges. It is rectangular in shape and nearly flat, with a slight V-shaped indentation near the top on each side, so you can literally rip it open like a paper bag.

Vacuum packed tuna is far more convenient. It can be opened without tools, making it ideal for lunches at school or in the office; it is lighter, making it easier to take on camping and day trips; it has no sharp edges once open, avoiding the often painful finger cuts.

Classic marketing teaches that when you sell something that has a higher value to your customer, it doesn’t matter what your cost is; sell it for more. A quick check on Amazon shows the following (I tried to pick packages with nearly the same net weight of tuna, to account for bulk pricing differences):

Apparently, the vacuum pack is not materially different in price than the cans. This could be a conscious choice by StarKist to promote sales of the vacuum packs, or it could be a sign of a more staid marketing department.

However, even at the same price, the vacuum packs are a big profit win… for StarKist.

StarKist’s profit is nothing more than its revenue minus its expenses. Let’s assume that the costs of acquiring and processing the tuna, as well as marketing, are identical for the same 6-oz of tuna, whether it ends up in a vacuum pack or a can. I have no insight into the packaging costs, but the sheer difference in weight between the 2 implies there is a lot less material going into the vacuum pack than the can. That leaves shipping and storage, which is where the difference is. Let’s compare the 2. I took them both from my own closet, weighed them on the same scale and measured them with the same tape measure:

  • 160-gr / 5.6-oz can of tuna. Gross weight 196-gr; radius of 4.25-cm, height of 3.6-cm
  • 181-gr / 6.4-oz vacuum packet of tuna. Gross weight of 183-gr; length of 14-cm, height of 18cm, width at thickest central point of 1-cm.

Remember that companies pay for shipping both by weight and by volume, whether it is the trucks/boats/airplanes, or whether it is the labour.

  1. Weight: Although the additional weight varies by size of package, the close examples above show that 18.4% of the shipped weight of a can is lost, while barely 1% of the shipped weight of a vacuum pack is lost. This is a huge benefit for StarKist.
  2. Volume: To properly calculate the volume, we need to remember that a can cannot simply be stored; it has to be packed with other round cans, creating lot of dead weight. If you have ever bought a 4-pack of tuna (or any other canned good), you have seen how they are packed together. Similarly, a vacuum pack of tuna may be thick only around the centre, but it has to be packed with all of them. Thus the shipping volume requirement of the 5.6-oz can above are 260.1 cubic cm, or 46.45 cubic cm per oz of net product, while the shipping requirements of the 6.4-oz vacuum packet are 252 cubic cm, or 39.38 cubic cm per oz of net product.

The vacuum-packed tuna requires 94.6% less shipping weight and 15% less shipping volume per oz of net product!

Vacuum-packed groceries is not something that will show up on VC radars, or make TechCrunch. Yet, in its own way, it has had a vastly larger impact than the latest “social-mobile-local” funded out of Silicon Valley, NYC or Tel Aviv, and will continue to do so, making life better for consumers and profits higher for StarKist.

X-rays and smartphones and Figure1

September 3rd, 2014

A few weeks back, Fred Wilson wrote about his investment in Figure1, a social site for doctors to share radiology images – X-rays, MRIs, CTs.

The hypothesis behind Figure1 is that doctors can share images “en masse” across the network, leveraging the knowledge of many doctors to analyze, and benefitting every doctor who submits an image for others to read, or can compare existing images to the one that s/he is looking at this very moment.

The questions that bother me are whether this is necessary, and whether doctors are prepared to adopt it.

Is It Necessary?

Doctors have adopted much of technology with gusto. In the early days of PDAs, doctors carried their entire pharmacology list on their Palm Pilots, reducing their need to remember thousands of drugs, their interactions, and their dosages. These have since moved to smartphones with regular cloud-based updates.

The next generation is mobile imagery. Doctors not only use their smartphones to take images, they use their patients’ smartphones to take images and iMessage/WhatsApp to pass them around.

Back in February, I broke my ankle playing ice hockey (adding insult to injury, my team went on to win the tournament without me; I am glad they won, but I would have preferred to play to the end). A friend of mine from the tournament is a first-class orthopedic surgeon, and advised me that under no circumstances should the local emergency room orthopedist be allowed to operate or significantly treat without clearing it with my friend first. How, exactly, was I to have my friend see the images when they were on a hospital computer 20 miles from my friend?

“No problem. Tell the ER doctor to bring them up, snap a picture with your iPhone, and send it to me via iMessage or WhatsApp.”

I was surprised, had never heard of this before, but followed his suggestion. Even more surprisingly to me, the ER doctor was entirely used to it, actually expected it when I asked him to bring up the images.

Remote medicine performed entirely by smartphone plus free messaging app.

Will Doctors Adopt It?

Doctors are notorious for being over-confident in their own knowledge. While they will often consult other doctors, they carefully vet those with whom they consult, trusting only to those they personally feel are the “best of the best.” This shouldn’t surprise us; they are trained for years that they were the smartest, which is how they got into that great med school, let alone survived it, and those smarts are what make them so indispensable to society. While I have known many truly modest doctors, and many truly great doctors, and even a few great but modest doctors, our system still trains them to focus on their own skills and those within their own personal experience network.

A network of thousands or tens of thousands of doctors and images they do not know personally, by referral or by reputation is a foreign construct to most doctors, and one which makes them uncomfortable.

Do doctors who already have iMessage/WhatsApp and smartphones with high-resolution cameras actually need a social network? It clearly has benefits such as widespread sharing and interpretation of images and a broader base of images to compare against. But is it sufficiently better than the basic solution to drive adoption? And will it overcome doctors’ aversions to go beyond their own smaller networks?

It is also a liability landmine. If Dr. Smithers does not know the patient, has not seen the patient, has seen an MRI that has no name or history attached to it, determines that a growth is not a concern, and the person dies, will the family sue Dr. Smithers, or just the direct oncologist? Who holds malpractice liability?

Personal bias: since I like Fred, and I want his investments to succeed, I most sincerely hope so.

Beer, Jelly Beans, Ice Cream

September 2nd, 2014

Over the course of my travels, I had several interesting connections with beer. First of all, I saw several interesting micro-breweries in the Rockies and in Vancouver. More interestingly, at breakfast in the Vancouver hotel, I saw a man wearing a “Yuengling Ice Cream” hat. Yuengling Ice Cream? Isn’t Yuengling beer?

Apparently, it is both. During Prohibition in the 1920s, when manufacture of most alcohol was banned, the Yuengling family turned to running a dairy to support the family. It produced ice cream for 65 years, when it stopped and refocused on beer. By most accounts, it has been successful; most beer drinkers know of and have had Yuengling Beer. However, in the last year, the family has turned back to its dairy tradition, and begun manufacturing and selling ice cream.

The company’s return to ice cream likely is driven by two factors:

  1. The success of the Yuengling Beer brand. While companies like Toyota and Honda needed to create a new brand to move up-market, Yuengling may be successful leveraging the beer brand into a parallel market, ice cream. At the same time, the alcohol affiliation with the Yuengling brand may instinctively drive away one of the most important demographics: children (and their purchasing parents). While Baskin-Robbins or Ben & Jerry’s may have flavours affiliated with liqueurs such as Bailey’s or Kahlua, these are individual flavours specifically tailored to the adult market, not the entire Baskin-Robbins or Ben & Jerry’s brand.
  2. The memories of those who grew up on Yuengling. The national – and global – markets today are vastly different than they were in 1985. Children who grew up loving Yuengling Ice Cream are now well into their 40s with children of their own. If they wait too long, they are likely to lose that “market memory” entirely. Twenty to thirty years is the right time to get those adults to introduce their children to a love of their own youth.

Surprisingly, there is no “beer flavour” ice cream. I expect eventually it will arrive, as Yuengling leverages its beer flavouring expertise to attract people who remember great Yuengling Ice Cream but today enjoy Yuengling beer.

Where I did find beer flavour was…. jelly beans. Jelly Belly “draft beer” flavoured jelly beans are manufactured in their plant in California, just north of the San Francisco Bay. I was surprised at how realistic it tastes. Clearly, Jelly Belly knows it is marketing, at least partially, to adults who like beer, and thus sell both Candy Corn and Draft Beer flavoured… all without alcohol, of course.