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Mashable’s SummerMash San Francisco 2008

16 Jul

SummerMash SF 2008Mashable hosted its annual SummerMash event tonight – it was the third such entrepreneurial hob-knobbing event I have joined since moving back to San Francisco in March.

After receiving a free drink ticket from PubMatic for signing up for their iPod drawing, I set out to meet some other guests.  The first dynamic duo I met were Adam and Braxton from Zannel, the Twitter of mobile phone rich media.  By which I mean, they turn your mobile phone photos and video into micro-blog updates, the same way Twitter and FriendFeed do.  Adam, Zannel’s CEO and a former McKinsey consultant, mentioned that users seemed to take a lot of photos of food, and we got into a conversation about how they might try to monetize that and other types of user content to build a real revenue stream for the micro-blog.

The second person I met was David Koehn of Phlooq, a stealth-mode social technology startup that connects individuals with the events and businesses they are fans of.  Phlooq will enable a publisher like San Francisco’s 7×7 to tap into the social graph of a reader when he or she indicates what events she will be attending.  I got a sneak-peak of the new app on David’s iPhone and from our conversation it sounded like the business was nearing the point of “unveiling.” I would say more, but then I would probably have to kill you…

Finally, I met Brendan Nee and his friend Justin, two young business partners working on an interesting new iPhone app which will help digest the powerful GPS data of local public transportation into a useful form.  Using your phone’s own GPS signal, you could determine the best route from your current location to the destination of your choice using public transit, taking into consideration the current location of the busses, trains, and other vehicles in the network.  The challenges confronting them, they explained, were two-fold:

  • First, getting MUNI and other public transit networks to share their data.  Releasing this data would be potentially embarrasing to the transit authorities, since it could reveal just how often their services fail to arrive on time.  Then again, argued Brendan and Justin, by sharing the data with an application like theirs, users would be better equipped to react and make alternative arrangements.
  • Second, how to monetize the application.  If MUNI doesn’t even want to share the data in the first place, it would be a stretch to think that they would be willing to pay a software developer for delivering it in a user-friendly form to riders.  We discussed alternatives, including helping public transit systems without GPS-enabled networks get online.  The two could serve as a center of excellence in deploying the technology, and deliver the technology to analyze the GPS data on a fee-for-service basis to help the transit authority cut costs and optimize its network.  They could then also push that proprietary data out to riders in the form of a application, perhaps with a small monthly fee.

SummerMash was a great event, even if the organizers didn’t quite manage to get the doors open on time.  It’s nights like these that I will miss most after leaving the SF Bay.

Opportunity to Build a Worldwide Brand of Boutique Hotels

16 Dec

Thai Boutique Hotel - BangkokTourists visiting new cities are certainly not all looking for the same thing out of their experience. Some seek inexpensive or unique shopping experiences, some seek thrills and adventure, others seek the opportunity to say “I went, I saw, I … took a picture.” What generally unites people when they are traveling, particularly in parts of the world that are new and unfamiliar to them, is the desire to sample and taste a bit of the culture that makes their destination unique.

For tourists, selecting a hotel is a challenge of balancing their desires. In most cases, they want:

  • A hotel they can afford
  • A hotel where they feel they will receive the level of service they are accustomed to
  • A hotel that is comfortable, safe, and clean
  • A hotel that is conveniently located to the places they want to visit

Trying to satisfy these four challenges is difficult enough, and in many cases lead people to choose the Marriott, Hilton, or Sheraton, even as they aspire to “immerse themselves” in their experience. They settle for these international chains because they are reliably consistent, delivering fundamentally the same hotel experience wherever you go.  Yet that, inherently, is their fundamental flaw – they fail to meet the truly differentiating fifth and sixth criteria for a truly remarkable hotel experience:

  • A hotel that reflects the culture and local flavour of the surrounding city
  • A hotel that is exciting and unique; an adventure unto itself

I have little doubt that in nearly every corner of the world there are wonderful local hotels that meet all six of these criteria (though, sadly, not all – Jizan, Saudi Arabia comes to mind). The challenge for the tourist is how to FIND these hotels. For the more adventurous, sites like TripAdvisor can help. Where you are lucky enough to have a local friend to serve as your guide, you might be directed as to the best place to stay.

Moroccan Boutique HotelBut, at the end of the day, CatLover245’s rave reviews and assurances of good customer service really aren’t enough for most people to choose the Little Damascus Inn over the Sheraton. At least you can be reasonably confident that you won’t find bed bugs at the Sheraton.

The challenge of building confidence with consumers that a hotel can, in fact, meet all of these criteria creates a significant opportunity to build a network of branded boutique hotels in major tourist destinations throughout the world.

An entrepreneur with good financial backing could make a small number of hotel investments in high-growth tourism cities such as the Middle East and Northern Africa, bring them up to international standards of quality and service, unite them under a brand, and market them to tourists from abroad. With time, as CatLover245 and her friends write positive reviews, and as more and more customers experience the benefits of the hotel in its diverse locations, it will build a faithful following of advocates and frequent stayers.

I would choose to first target the developing world, where many hotels miss out on substantial opportunity to attract visitors merely by lack of a web presence with photos and a map, written in fluent English. With an understanding of the increase in revenue that could be expected by linking a hotel into online reservation systems like Orbitz and, investors could value properties higher than their current owners.

By upgrading service, renovating and redecorating rooms, and bringing in an additional infusion of local flavours and colours, the hotels could start charging more for rooms. Substantial changes to management and workforce wouldn’t be necessary so much as bringing a few leaders who can help oversee the transition to world-class standards.

How long this opportunity will remain untapped is questionable. Already, chains like Joie de Vivre and Kimpton are building branded networks of boutique hotels throughout California and the United States. Companies like Mexico Boutique Hotels are taking that concept to other popular mainstream tourist destinations. It’s only a matter of time before the same basic concept is carried to other parts of the world.

Further reading on Boutique Hotels:

PayPal Should Go Social

14 Dec

PayPal LogoPayPal, the electronic payment program launched to prominence by eBay, should join the social networking bandwagon and create social applications for LinkedIn and Facebook. While other stalwarts of “Web 1.0,” such as eBay and Skype, have launched into this space, PayPal has inexplicably lagged behind.

My friend Tony and I were discussing this idea yesterday as we tried to finally sort out payment from a recent trip we took together to Spain. We had a few ideas about how a social application could add real value for the company:

  • Build Awareness: PayPal already has good penetration and is clearly the market leader in the US for electronic money transfer. It is not, however, universally understood or used. Trying to arrange payments for a company ski trip recently I discovered that more than half of my colleagues had never used the program. Facebook badges and notifications about friends adding the new application would surely help further build brand awareness for their service, and attract more users.
  • Find Fellow Users More Easily: Similar to Skype’s Facebook application, PayPal could help users of the application to more easily identify which of their friends also use PayPal to make it easier to determine the easiest way to send payments to them

But with an ounce of innovation, combined with a new social platform, PayPal could start to offer some truly interesting services.

  • Collaborative Accounts: Allow multiple users to create a common account linked to each of their individual accounts for making payments and managing cashflows relevant to all of them. This would have been perfect for organizing the company ski trip, as it would have both allowed users to easily add money into the account, it would allow a small group of “Administrators” to make payments out of it and to the various vendors that needed payment (lodging, lift tickets, shuttle services, etc). Everyone would be able to see how much money is in the account, and how it’s being spent. Its transparency and paper trail would largely eliminate the need for a single person to be the “Treasurer.”
  • Pay Backs: So you and your friends went camping this weekend. Two bought $40 worth of groceries each, one bought $200 in alcohol, and your other three friends, well, they ate and drank. How are you going to work out repayment? A newly social PayPal could help friends solve this dilemma, allowing multiple users to add money to a common account (called, perhaps, “BoozeCamp”) which would then be repaid evenly to all members. A little creativity on how to allow people to add non-cash value (receipts) to represent their contributions, and you’d be set
  • Communal Payments: You have three roommates, and a landlord who insists on receiving only one check each month for rent. Or perhaps, you and your friends want to chip in to help out your friend who hosted a great party, or who paid for a birthday present from “everyone.” Basically just a slight modification on the above ideas, PayPal could create an easy system for making payments together, by aggregating funds from multiple users, and allowing everyone to see who has paid, and who hasn’t

Any of these innovations could add new uses to the stagnating PayPal platform (who, by the way, could still use a user-interface makeover while they are at it – even after they prettied-up their front page), and help combat new entrants. There could be some tough legal issues to overcome regarding money laundering, but I imagine there could be some balance struck between putting maximum fund-limit caps on accounts while still allowing 90% of legal uses.

Leveraging the Spirit of Giving to Do Good

29 Nov

Several months ago, one of my work assignments involved looking at “new trends in international development.” It was a large, difficult to structure task, but one which revealed a number of exciting and interesting organizations which are doing great things to try and improve the world in the places that need the most help.

I found that the simple ideas were often the most powerful. Kiva, an organization which allows users to provide small loans directly to entrepreneurs in the developing world, was an example of one of those ideas. By matching a face, name, and story to charitable donations, the “feel good” factor of giving to a cause is substantially increased.

A further extension of that idea, equally simple and powerful, was pointed out in a recent blog post by Guy Kawasaki. Gift certificates, essentially a charitable pledge, can be given to a friend or family member, who then decides which entrepreneur should receive the funding. Over time, that recipient repays the money that is lent to them, enabling the new user to invest in a new recipient.

What a wonderful way to build your user base and encourage a net increase in the amount of money being donated. Good work, Kiva.

Kiva Diagram 2

“Green” Seal: Opportunity for Consumer Badging

2 Nov

Energy Star LogoI see a significant opportunity for someone to create a credible and well-branded “green seal” for products which are environmentally friendly. This application of a certification to an existing, branded product is often called “badging” and measures a product against a specific set of standards. It enables a company to say “look, we care!” and justifies charging a price premium.

While today many companies make claims about being environmentally friendly, most do so without applying a rigorous, broadly-recognized standard.

Consumer Badges:

Three consumer badges come immediately to mind in this area. Each involves a certification that a product has met certain criteria:

Energy Star: A certification for things like computers, appliances, lighting, etc. created by the US Environmental Protection Agency (EPA) and Department of Energy to create an incentive for manufacturers to meet certain energy efficiency requirements on their products.

Fair Trade: A US certification based on an international standard for specific agricultural crops that their producer is being paid a fair price, that they work under fair labor conditions, under fair terms, in a sustainable manner.

Organic: A relatively new certification regulated by the US Department of Agriculture (USDA) which sets criteria for products made without the use of synthetic chemical inputs (e.g. fertilizer, pesticides, antibiotics) or genetically modified organisms, produced on farmland that has been free of such chemicals for at least three years. It also regulates how they can be labeled.

What is Missing:

In light of the growing chic-ness and popularity of products that help demonstrate a consumer’s environmental conscience, there is an eco-branding opportunity. Beyond products that just claim to be “environmentally friendly,” however, the real opportunity would exist for an organization which could actually credibly certify products as “green.” Not only that, but the brand could actually be a force for good – driving consumer product and service manufacturers to strive to reach a certain high standard or bar.

So who could feasibly create such a standard?

  • The Government: Similar to Energy Star and Organics, individual country governments, or an international governance organization like the UN, WTO, or EU could establish a standard and related brand
  • An NGO: An organization which has credibility with consumers (particularly liberal ones), perhaps the Sierra Club, Green Peace, or even something like the National Academy of Sciences could certainly create a “green seal”
  • Individual Businesses: Companies such as Proctor & Gamble could create their own “clean” brands, but might lack real credibility with consumers. This is the current status quo and will likely continue in the absence of some superior option
  • Industry Association: An industry organization, such as the National Retail Association of the US, could set a standard through the cooperation of its member businesses.
  • Brand Licensing Company: An individual business could be built as a brand with a corresponding set of standards, whose sole operation was the licensing of that standard to other companies for application on their products. I cannot think of a good analogy here, and an obvious challenge once again would be gaining credibility.

Some Business Opportunities:

There are two major revenue opportunities that I see here. One is licensing, and the other is testing and certification. Both could generate a lot of money for the right organizations.

Licensing: The organization which established the standard and the brand could license it to a broad group of audiences for a small fee. Any company wishing to apply the brand to their product or service would need to pay a small royalty, which would cover administration and monitoring of the brand (i.e. preventing its application without permission) as well as providing a small kickback to its creators.

Testing and Certification: A quick look at the similarities of the companies that certify Organic and Fair Trade labels and those which certify financial statements should hopefully be sufficient to convince you that there is a lot of money in auditing. These companies would ensure that client organizations and their products / services are meeting the established standards in order to qualify for the brand. Any company that wants access to the brand would have to hire a certified auditor – the fewer and more differentiated they are, the greater value they could capture.

New Insights In the Quest for an All-Business-Class Domestic Airline

16 Sep

Virgin America InteriorIn the time time since writing an earlier post, “Domestic US All-Business-Class Airline?,” I have stumbled across some additional, interesting insights about the prospects for an all-business US airline. To quickly reiterate, in that post I proposed that a company like EOS or Silverjet, which offers business-class-only flights over the Atlantic, could be successful flying domestically within the US.

First off, I failed to point out in my previous post that some airlines have taken a similar, if not identical approach in the past. Midwest Airlines is effectively an all business class domestic carrier, and airlines like JetBlue and Frontier have tried to position themselves as premier economy airlines, with leather seats and seat-back entertainment systems.

Second, it is important to note that the recent boom in transatlantic business class airlines is likely to not only continue, but to increase in light of the upcoming March 2008 opening of the transatlantic market to new competition when the Open Skies Pact goes into effect. This will likely distract much attention from the domestic US market for the next year or two, as the existing business-class players focus their investments on expanding service between new, previously unserved markets.

Third, Richard Branson appears to have really set his sights on the US domestic airline market. Virgin is expected to enter the all-business-class fray with a new transatlantic option, competing with EOS, Silverjet, and the others. This, only months after Virgin American began service from San Francisco offering a new premium domestic option. Its flights are split like most traditional airlines with both economy and “first class” sections, but many new service innovations such as on-demand meals, custom MP3 music playlists, and a seatback entertainment system that even allows electronic chatting with fellow passengers.

Virgin American appears set to fill a niche for low-cost premium service, but doesn’t eliminate the attractiveness of a truly upscale business-class-only option, since that configuration offers advantages in terms of lightening-fast boarding, lower risk of screaming babies, and smaller planes that can fly to less congested regional airports.

Finally, I should point out that I am not the first to have thought about this. Steven Livett and Stephen Dubner over at Freakonomics wrote about this very opportunity just a few months ago. Similarly, Scott McCartney at the Wall Street Journal, author of the Middle Seat column, generated some interesting discussion on his forum a couple months ago about domestic opportunities when he wrote about L’Avion and Silverjet.

Have others already tried?

While I still believe United PS is the best example of the type of routes and target audience such an airline would target, MidWest Airlines (formerly Midwest Express) is an interesting case study. It offers a single, “premium” class of service that is close to traditional “business class” on most domestic carriers. They even bake fresh cookies onboard!

The airline is rated “tops” again and again by customers, and demonstrates that a niche player can indeed be successful in the airline industry. It recently fended off a hostile takeover bid by AirTran, whose efforts were blocked partially through grassroots objections by its customers.

But Midwest Airlines is still relatively small and doesn’t compete in all US markets. Interestingly, it doesn’t compete for most of the long-haul domestic routes like LA to New York and Seattle to Miami where I believe a business class airline has the greatest prospects. If a proposed purchase of the airline by private equity giant TPG Capital and Northwest Airlines goes through, however, this sort of move and expansion between more US airports might very well be in the cards.

The Gluten-Free Niche

5 Sep

GlutenTwo years ago, my friend told me she couldn’t eat bread or drink beer, but that corn-tortilla-wrapped tacos were just fine. I did my best not to look at her like she was crazy.

Then last year I met a coworker with a similar ailment, and then just this summer, a new flatmate. That trend is telling, and apparently in-sync with the growing trend in diagnosis of “Gluten Intolerance” throughout the United States. As with any ailment, increasing prevalence or diagnosis of previously inexplicable symptoms leads to new business opportunities for those willing to customize their service and products to cater to the afflicted.

In July, The New York Times wrote about Risotteria, a descriptively-named restaurant in Greenwich Village with a menu that caters to the needs of the gluten intolerant (“For the Gluten-Averse, a Menu That Works“). The success of that restaurant would seem to be a harbinger of opportunity for restaurants and food-product manufacturers looking for a new niche audience to target. Indeed, many producers have already started to move to the scene.

It has become a popular dietary villain. Gluten-free foods are popping up on grocery-store shelves and restaurant menus, including those of national chains like P. F. Chang’s and Outback Steakhouse.

The diagnosis of Celiac’s Disease (the scientific name), an autoimmune disorder wherein sufferers have an adverse reaction to Gluten, a protein found in wheat, rye, and barley (read: bread and other baked goods, beer, and a whole host of things that use wheat flour as a thickening agent) is on the rise in the United States. The New York Times wrote in May about this trend, comparing it to the similar rise in lactose-intolerance in previous times (“Jury Is Still Out on Gluten, the Latest Dietary Villain“)

The prevalence in North America was previously estimated at about 1 in 3,000, but several studies published in the last three years indicate that it is closer to 1 in 100 — and 1 in 22 for those with risk factors like having an immediate relative with celiac disease.

Two or three restaurants and a few packaged foods, however, would seem to barely touch the surface of the trend that could lie ahead. Wrong Diagnosis puts the disease’s prevalence rate at 1 in 250 Americans, and according to the University of Chicago’s Celiac Disease Center, prevalence among otherwise healthy adults may be as high as 1 in 133.

Businesses can cater to the gluten intolerant through a variety of means. For the majority of the restaurants in the world, the option will be as simple as ensuring one or two items are suitable for those with Celiac’s Disease, and labeling them appropriately in the same way vegetarian options often are. In places where populations where disproportionately many “alternative” or “healthy” diners reside, such as San Francisco and Chicago, or where a particularly aggressive diagnoser has a clinic, there is likely a large enough customer base to support a restaurant dedicated to gluten-free items. The place to start would be to contact local support groups and physician specialists to get a better feel for the size of the opportunity.

And best of all, especially for the friends of the gluten-intolerant, it turns out that the food can be quite tasty. I ate at Risotteria while in New York last year, and found my shimp, pepper, and spinach risotto to be excellent. The gluten-free beer made from sorghum, on the other hand, was another matter entirely.

Off the Beaten Path: Tourism for Expats

26 Aug

Camel During the first weekend that I stayed in Riyadh, Saudi Arabia while living as an expatriate consultant, I quickly realized that there was a significant untapped business opportunity to provide tourist services to expatriates in unusual locations.  Riyadh, and Saudi Arabia broadly, are not your typical destinations for tourists (in fact, there are no tourist visas), but there are, large numbers of expatriates who live within the country.  And there is very, very little to do.

Many of us benefit from expense accounts which compensate for having been pulled from our lives in places in London, Amsterdam, and Toronto to move to the desert in August.  Those accounts afford us the opportunity to explore the region every few weekends, but aren’t necessarily large enough to fly us home regularly, or even necessarily get us outside of the country (flights to most “destination” cities like Beirut or Cairo are upwards of $700 USD from Riyadh).  We can, however, afford fun, reasonably priced local activities that allow us to explore the cities and regions where we live – making the best of the opportunity while we are here.

The challenge, however, is that the tourism industry is substantially underdeveloped.  Beyond a large, good quality museum, Riyadh has little in the way of tourist attractions.  Some opportunities do exist, for instance, to take advantage of things that locals already do, such as ride ATVs in the desert, eat traditional foods, or smoke a hookah.  Others, such as visiting the local camel market, might result in the lucky coincidence of finding an enterprising rancher who will let you ride his camel.  By and large, however, it is a substantial undertaking the string together even a few interesting activities.  Some of us are young, adventurous, and enterprising enough to do it, but there are surely thousands who are not.

All it would take is formalizing a few key relationships with locals (e.g. the guy with a small fleet of ATVs, a camel rancher or two), creating some marketing materials, hiring a couple English-speaking guides/drivers, and you would be well on your way to having a lucrative local tour business.  The biggest challenge (and not a small one to overcome) would be finding someone who could manage and grow the business on the ground.

Taking it a Step Further:

Okay.  So, you could make a little money selling tourist packages to a few expats in Riyadh.  You could make a few bucks doing lots of things you say.  I think there is, however, a broader opportunity here.

The Middle East is not a typical tourist destination, but with business booming on the wave of high oil prices, the region is awash in money.  That money is bringing in a lot of skilled, highly paid workers who are eager to do something on the weekend, and are curious to see the world.

Expand Throughout the Region: I believe that this same opportunity is present in many countries in the region.  Bahrain, another country I have visited recently, had a number of activities which were available, but were poorly marketed and difficult to arrange.  What other cities might this work in?

  • Doha
  • Jeddah
  • Abu Dhabi
  • Others…?

Invest In Developing Your “Suppliers”: Because many tourist activities do not exist in these cities, you could become a co-investor in the development of several related businesses that would appeal to both locals and tourists.  These might be:

  • Go-karting
  • Up-scale local dining
  • Water sports (e.g. wave runners, parasailing)
  • Adventure travel (e.g. spelunking, climbing)
  • Cultural education (e.g. cultural etiquette courses)

As more people begin to venture into the Middle East (and the boom in Dubai alone is enough to ensure that will happen), the opportunity will only grow.

Blog Action Day: Collective Action for the Environment

22 Aug

Blog Action DayAvid reader and comment-extraordinare Tony sent an interesting link this morning: Blog Action Day. I’ve signed up and committed to writing a post on The Strategy Fox on October 15th about exciting business ideas related to the environment. If you have any ideas or know of any exciting startups that aren’t well known, send them my way.

Bloggers can participate on Blog Action Day in one of two ways:

  1. Publish a post on their blog which relates to an issue of their own choice pertaining to the environment.
  2. Commit to donating their day’s advertising earnings to an environmental charity of their choice.

Simple enough. I’m happy to do my part.

Needed: Flight Search for the Middle East

13 Aug

Saudi Arabian AirlinesI have just arrived in Riyadh, Saudi Arabia for a three month consulting engagement working on issues of regional competitiveness. Realizing that my teammates are escaping to various corners of the region this coming weekend (aka Thur and Fri), I decided to try and find a cheap flight to Istanbul or Doha, where I have some friends. Trick is, my old standbys, and ITA Software, don’t have much coverage at all in the region.

Therefore, out of pure self interest and with little basis other than my own 5 minute web search, I declare the Middle East is in need of some innovation in the online web search arena.

With Dubai and other regional cities booming, this might not actually be a terribly bad idea…