Moving Past Legacy Systems

A well known marketing strategy is the first-mover advantage. An advantage is gained by the initial significant occupant of a market segment. For a period of time this may allow for technological leadership within an industry. However, its not uncommon over for technology to continue to develop over time while an industry and/or its occupants are stuck with legacy systems. This often means that the cost of implementing new technology becomes much greater and takes much more time. I believe that this has occurred in the real estate industry were legacy systems have resulted in a dysfunctional market, unnecessary costs for technology upgrades, and barriers to entry. The status quo becomes the enemy of innovation.

Eight years ago I had the intention of deploying a portfolio of real estate websites with a customer-centric model. Unfortunately, legacy systems and fragmented MLS offerings prevented cost-effective development. What should have cost $30,000 or less, based on the technology of the day, would have actually cost a minimum of $300,000 to implement for one MLS system. The cost of integration and adaptation to the legacy systems would have required an extra $270,000 just to overcome the short comings of the status quo. This economic reality would be repeated in hundreds of MLS systems across the United States. To grow beyond California would require a multi-million dollar budget with a majority of it wasted on adapters and patches to overcome outdated technology. Therefore, the project was delayed. Even today, there are over 700 different listing services in the United States alone making it very difficult, if not impossible, to aggregate and build a 21st century brokerage lead by technology and customer empowerment.

RPR is one group within the National Association of Realtors that is attempting to overcome the past with investments in new systems. They are trying to move past legacy systems and outdated business models. It's a real life case study in big data and disruptive technology vs the status quo.

Here is a presentation by the CEO of RPR that is worth watching.

Even if you're not in the real estate industry there is a lot to be learned from challenges of Brokers/Agents, Associations/MLSs, and Service Providers. Without competition and opportunities for innovation the tenancy is to resist change and protect the status quo. They will protect the good or mediocre from the possibility of great.

Is it possible to move past legacy systems in real estate technology from within? Maybe. If not, one day we might find Zillow or another outsider taking control of the customer experience changing the bargaining power of suppliers and buyers of real estate services.

Death of the dot com

For several decades the .com gTLD was the dominant domain extension for business and most brands were successful in obtaining theirs. However, for many companies, large and small, there has frustration in not being able to obtain their preferred name. This resulted in a secondary market and the use of top level domains like .tv, .co, and .me. Yet, many people don't realize that these are the Internet country code top-level domains for Tuvalu, Colombia, and Montenegro respectively.

In 1998, ICANN was created and they started the process to expand the offerings beyond the eight original gTLDs (the originals were: .com, .edu, .gov, .int, .mil, .net, .org, and .arpa.). In 2000, the first round included a handful of domains including .aero, .biz, .coop, .info, .museum, .name, and .pro. In 2004, the second round of expansion occurred with .asia, .cat, .jobs, .mobi, .post, .tel, .xxx, and .travel. Between 2004 and 2012 ICANN was working on policies and guidelines for a much larger expansion. Now in 2016, hundreds of new gTLDs are available and the implications are significant. Here is a video from ICANN promoting their new "friends". (Note: As of July 16, 2016 this video had only received 20,509 views. That seems very low considering the significance of this change.)

This summer 374 new top level domains became available to register at GoDaddy and other registrars. Additionally, one started pre-registration (.games) and 292 are "coming soon". Beyond hundreds of new generic domains for common words in English nearly three dozen languages will have their own domain extensions including Arabic, Chinese, and languages based on the Cyrillic alphabet. According to GoDaddy, "This will be a huge boon for companies that promote their products in countries where these languages are spoken."

So what does this mean for you as a brand manager? This is both a huge opportunity and a huge threat.

A FEW OF THE THREATS

The death of the dot com means that you must protect your brands vertically against competitors and defend your trademark rights. It will be so much easier for a competitor or a customer to register your brand with hundreds of different extensions. This is going to impact brands both large and small.

The registrars, like GoDaddy, just won the lottery. They've been able to break free from the status quo and apply tiered pricing to domain extensions and to premium domains within these new gTLDs. Whereas, in the past, a company with bulk purchasing power could acquire a .com in the range of $8 per domain...this new world includes domains that will cost hundreds of dollars to thousands of dollars per year just to register.

A FEW OF THE OPPORTUNITIES

This is going to give brands alternatives to a dot com and allow for shorter more relevant URLs. For example, as many of you know Google recently changed the name of it's company to Alphabet and launched the website https://abc.xyz. This was only possible by the expansion of the gTLDs.

You have the opportunity today to fence in your brands and even utilize these new URLs for micro sites or web applications that you do not want on your main company website. Below are some examples (note: "brand" in these examples should be replaced with your brand).

  • "brand.press" could be used for all of your press releases, media kit, and media contact information.
  • "brand.careers" or "brand.jobs" could be the job board and applications portal for your company.
  • "brand.pics" could have all of the approved images for your brand.
  • "brand.store" could become your e-commerce site allowing you to have your main website using a better CMS system than what is provided by your e-commerce platform.
  • "brand.deals" or "brand.cheap" could be used for flash sales that you may chose to target to specific audiences. However, if your value proposition is not based on having the lowest price, then you might not want utilize this domain but you would still want to control it.

TIME TO RETHINK STRATEGY

As Michael Porter teaches, "The real point of competition is not to beat your rivals. It's to earn profits." Therefore, you need to determine the risk/reward for your brand and how these new domains can enhance your positioning and your ability to earn profits. These new domains may be meaningful to you or they may be an expensive distraction.

In the past, the internet has had an impact on industry structure and I believe that this milestone has the potential to change the playbook for many players. Keep in mind Porter's five forces as they relate to this opportunity/threat and your strategy to earn profit. As a reminder, the five forces are:

  1. Rivalry among existing competitors
  2. The threat of new entrants
  3. The threat of substitute products or services
  4. The bargaining power of suppliers
  5. The bargaining power of buyers

As Joan Magretta summarized, "From advertising to zipper manufacturing (and every industry in between), the same five forces apply, although their relative strength and importance may differ."

I believe that the death of the dot com will have an impact on business and consumer behavior in the years to come. The smart players will see if these new offerings can improve their strategic position and increase their profits. There will also be many threats of higher costs in blocking competitors, legal battles over CyberSquatting, and adapting to the greater bargaining power of the domain registrars.

Will these new gTLDs be your friend or your foe?

Cold and the Crazy Man

This article was written as an apology for my unreasonable behavior and an in appreciation for great family, shelter, and clothing. 

What This Is

This is a true story. It happened to me on the night of June 25, 2016 in Homer, AK (59°36'44" N 151°26'36" W - 50 ft Elevation).

This is my personal story as it occurred to me. Since I was not in my right mind there may be errors. The incident may have occurred quite differently to other people at the same scene.

This article is a work-in-progress and will very likely be edited and it might be a slightly different version tomorrow. Deal with it.

What This Is Not

This is not an endorsement of any brand. I was not paid for this article and my goal in sharing is so that you will be prepared if something similar happens to you or someone you love. The principles of this article can be applied equally if you're on a budget or if you prefer best-in-class brands (I think).

This is not a scientific article. If you want to learn more about the science of how humans deal with and survive extreme cold then go elsewhere.

The Story

First of all, we should set the scene. It was a long hard day of camping and fishing. My brother-in-law and I had spent the morning on the Rainbow Tours and the afternoon/evening exploring Homer, AK with family. We were ending the day sitting around a camp fire while the kids played. It was one of those days you could aptly describe as being a "Terrific Saturday".

As the night wound to a close I was practicing keeping my mouth shut and enjoying the moment (because I've been told by some people that I can monopolize the conversation). Being tired I closed my eyes and used a hat to block the midnight sun. Then the inevitable happened...I fell asleep.

Not being awake I cannot comment on how long I was asleep or the weather conditions at the time. Based on the conditions when I was writing this article it was in the range of 48-61 degrees with pockets of light rain. I got cold.

When I woke up I was scared and confused. I made a scene with family members by making unreasonable demands and arguing about who knows what. I made my wife mad and I likely scared my seven year old son and my nine year old niece. I was not the best version of myself.

What I remember doing was taking off my jackets and putting them in a cubby, that I never used, and crawling into bed wearing my jeans and button up shirt. I covered my body head-to-toe with the blankets and tried to stop shivering and to get warm.

After an unknown period of time I decided that the crisis was over and I was going to go outside to help my brother-in-law clean up the camp site. I got up and made another scene, this time demanding my jackets, a pair of shorts, and a t-shirt. To make matters worse, I couldn't recall that I had put the jackets into the cubby near my bed. I could not be satisfied. 

Eventually, the scene is over with my son sleeping beside me and my wife is sleeping in the bunk above. I woke up before everyone else and proceeded to write/publish this article from bed using only my iPhone. I'm now wearing my REI jacket without the t-shirt and a pair of REI shorts. I feel normal again.

Tips to do it better

  1.  Keep Calm: If you are not in your right mind due to environmental changes you maybe entering into survival mode. This can result in irrational behavior and actions that can be dangerous to yourself and others. If you are the principle or just at the scene...keep calm and take steps to minimize the impacts of the crazy man (I.e. protect the children).
  2. Follow Instructions: If someone recognizes what is happening and can speak with authority then follow their instructions. You might not remember what happened a few minutes ago and you cannot be trusted to make good choices
  3. Take off your clothes: If you've ever used a Northface sleeping bag you know that you can stay very warm, even in extremely cold weather, by getting into a caacoon in just your underwear. This gear helps to trap your body's heat.
  4. Be appreciative:  Family, friends, and/or first responders just went through an unpleasant experience with you. Hopefully they're cool and you didn't do long term damage. Be appreciative of each person who helped get you through this drama.

Are Credit Card Surcharges Bad for Business?

Recently I went to an independent coffee shop and purchased a vanilla latte and a scone for breakfast. They told me a price, which I accepted, but as I was using the terminal to pay with my credit card I noticed an extra $0.19 fee. I asked about it and he quickly proceeded to give me a quarter as a refund. Why should you care? Because this is actually an issue of consumer protection, freedom of speech, and small business competition!

California has a law, California Civil Code section 1748.1, that prohibits retailers from adding a surcharge when a consumer chooses to use a credit card instead of paying by cash. It says, "No retailer in any sales, service, or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means." It also says, "It is the intent of the Legislature to promote the effective operation of the free market and protect consumers from deceptive price increases for goods and services". As a Californian, I've become used to this law (personally and in business). I believe that we should all play by the same rules and I've accepted credit card fees as a "cost of business".

As I was waiting for my coffee several other patrons bought coffee, paid with their credit cards, and incurred the fees. There was no signage to disclose the fee and they never mentioned it unless you noticed it on the receipt. This bothered me. So after the line died down I said something to the person behind the counter who happened to be the owner. I told him that this practice was illegal and his response was basically 'I know and I don't care'. He gave the common reasons about being a small business owner, the expense of the fees, and that customers appreciate that they accept credit cards, etc. Then he surprised me by trying to compare it to speeding on the freeway and that is wasn't a big deal. However, speeding is dangerous and if you get caught or have an accident there will be consequences. I told him that the consequence was that he just lost a customer (and I have not been back since).

What neither the coffee shop owner or I knew was that in March 2015, U.S. District Court Judge Morrison England ruled that this California law “is an unconstitutional restriction on plaintiffs’ freedom of speech and is void for vagueness.” California's Attorney General believes that "...this decision is incorrect and has appealed that order." However, as of now, the Attorney General cannot enforce the statute. This combined with the change in credit card merchant agreements in 2013 has lead to confusion on this issue. The coffee shop owner and I both thought he was violating the law but what he did not know was that he technically could impose the fee legally if he gave full disclosure prior to purchase.

The State of California Department of Justice Office of the Attorney General said on this matter, "Although the Attorney General is enjoined from enforcing this specific statute, California law does prohibit a merchant from engaging in activity that is unfair or deceptive. So, for example, if a merchant charges a credit or debit card surcharge or offers a cash discount, but does not fully disclose this to customers prior to their committing themselves to the goods or services, or if the merchant does not clearly explain its policies regarding debit and credit cards, the merchant may be violating California law."

This will likely be a topic of interest for many California small business owners in the years to come. Personally, I don't think it is wise to add additional fees to the customer that they may not understand or agree with. Major merchants are not imposing these surcharges and if small businesses adopt the practice they'll be putting themselves at a competitive disadvantage. In e-Commerce the popularity of 'fast and free shipping' has shown that customers like knowing what they'll pay without being surprised by extra costs at checkout.

If you do decide to impose the surcharge then don't do it in a way that is unfair or deceptive. Fully disclose the fee and educate the customer about the policy and the change in the law (and be prepared to discontinue the practice if the appeal is successful). I would also encourage you to watch and listen to see if you're losing customers by the policy. You might lose business to competitors who do not impose surcharges and there might be hidden costs for encouraging customers to use less secure payment means (such as cash or checks).

[Disclosure: I am not an attorney and this post does not represent a legal opinion on this matter.]

Enjoy the Journey

Early in my career I believed that it was important to get to the destination as quickly as possible. However, after learning from success and failure I discovered...how you get there can actually be more important than where you go. There are many routes to take along your entrepreneurial path. Some are fast and others are slow. Some are dangerous and others are low risk. No matter your destination it is more important that you enjoy the journey, constantly learn along the way, and improve the way you make decisions. If you have not learned how to make good decisions and have fun along the way then you are destined for failure.

Success is less about the final destination and more about the journey or process that you take along the way. It should be fun. You should like your traveling companions. Appreciate the little successes and learn how to repeat them so they can become exponentially bigger. It is equally important to learn from the little failures on your path so they don't become massive problems in the future. While speed can be useful strategic advantage if you are first to market those advantages can be quickly lost don't have the correct solution for the market. Sometimes going slow enough to create an innovative solutions will yield a greater competitive advantage than simply being fast. Either way, you need to be true to yourself and enjoy the process or you might arrive at your destination and find that you are there before the market or find out that the market was never going there in the first place.

Innovation in the OC

For the last year I have been working on launching an internet start-up in Orange County. This has given me the opportunity to explore the ecosystem and develop relationships with other tech leaders in the OC. Overall I have been very impressed with the efforts being made to both create new companies and support them.

If you’re just getting started I would recommend that you attend some of the monthly events from OCTANe, specializing in TCVN, or TechBiz Connection. Also, there are some good annual events like the Irvine Entrepreneur Forum and VC in the OC.

The best people to network with are the fellow entrepreneurs (even if they are in a different type of business). Collectively they have likely encountered your problems before and can provide guidance or insider tips that can help save you money and accelerate the process of accomplishing your goals. Sometimes, when things are not going very well, they can be great listeners and allow you to vent.

Overall I would say that we’re pretty lucky here in Orange County to have an environment to create innovative tech companies (and we have great beaches too).

Quality Content Costs Money

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[Originally published November 3, 2009]

The Web 2.0 world has released a surge of content and challenged the status quo. Yet an increase in quantity doesn’t automatically equate with quality. Just because the barriers to entry have been lowered for journalism, graphic design, copy writing, photography, and songwriting it does not mean that we now have better news, better design, better writing, better photography, and better songs. On the contrary, generally it’s worse!

Crowd sourcing is all the rage right now for tech companies. An army of free workers providing lots of content seems like an attractive business model. On the flip side, there are plenty of case studies of bloated content companies, like newspapers and record labels, that are having difficulty adapting. Does this mean that commercial enterprises should not be paying for the content that produces their revenue? Do newmedia companies have the magic formula for making money for nothing?

Path forward I believe that viable companies will take a hybrid approach. There will be much more content but the stuff that is valuable will not be free. They will have to pay for it in some way. Writers will be paid for their contributions. Songwriters will receive royalties for their music. The pricing and revenue sharing models will be adjusted because long-term paying for quality will result in a better customer experience.

Jason Calacanis, the CEO of Mahalo.com, reported today that they paid 100 writers $40,000 in October. He understands that quality content and an engaging customer experience will make them successful long-term. With so much bad content out there it is nice to see that some people still value the good stuff enough to pay for it.

Be Approachable

[Originally published October 27, 2009]

It is much easier these days to have your voice be syndicated and reach a wide audience. However, how many people that you like and respect would you consider to be approachable? How approachable are you?

Great leaders recognize that it is important to be approachable. Seth Godin, author of Tribes, said that he reads all non-anonymous e-mail (even if he doesn’t always reply). Harold Taber, former President of Coca-Cola Los Angeles, said that he spent time almost every day interacting with people at all levels of the organization (from executives to shipping clerks). US Congressman Dana Rohrabacher has open dialogs on Twitter.

Has your own sense of importance prevented you from being available to the people in your community? I have found myself guilty of this by not always following up on all of my e-mails or phone calls. Yet, I’m learning that if I want to be able to approach the people that I respect then I should have the same courtesy for those who respect me too.

Quasi-Small Business

Now that we live in a flat world (see: The World Is Flat 3.0: A Brief History of the Twenty-first Century) you’ll start to see more organizations (entrepreneurial, non-profit, government, etc) that no longer act like “small businesses” but rather “quasi-small businesses”.  They use the leverage, manpower, and distribution systems of  large multinational organizations and media channels to accomplish their goals.

They may have some attributes that resemble a small business like a corporate office with “4 dogs and 12 employees”. They will have some, but not all of the features of, what we traditionally know as a small business.

Small business is traditionally defined as 500 direct employees or less. Yet, with collaboration between people utilizing various legal entities to protect their assets (including intellectual property) it is becoming the norm to have small business silos that operate cooperatively without engaging in a corporate merger or acquisition. Leaders are moving with ease between multiple organizations utilizing the power of their worldwide networks to accomplish their tasks without the need to obtain a passport or work visa.

It no longer requires a corporate structure, a board of directors, or a shareholders meeting to get things accomplished in this flat world. Yet when they are used it is not a surprise to find out that the board of directors meeting was actually just a foursome on the golf course or a conference call between people who have never met in person.

Quasi-Small Businesses, business mashups, and the hiring of the “majors” is occurring every day. It is being done by smaller and smaller organizations as the barriers to entry are getting less and less. The power brokers are the ones who represent talent and creativity. It’s the innovators, the out-of-the-box thinkers who will be successful in this new world. These are the people who don’t observe and design in the same breath; who don’t accept “business as usual”; who think big and get other people excited about their visions.

Find people like that and become like them. You no longer need to work for the large multinational to accomplish your career goals. Let the large multinationals work for you!

Seth Godin vs. Donald Trump

[Originally published on August 3, 2009]

What if you were given the opportunity to have lunch with Seth Godin or Donald Trump but you could only pick one. Who would you dine with? Would the choice change if you were paid $5,000 to sit down with Donald but it would cost you $5,000 with Seth?

If given that choice I would chose Seth gladly paying the $5,000.

Why would I make that illogical choice when I could have been PAID $5,000 to have lunch with Donald Trump? Because it’s not about them it’s about me.

I would chose Seth Godin because he has had a bigger impact on me and my business. In my opinion, he is also more humble and approachable. I believe that I can become like Seth but it would be very hard to replicate the same business playbook as Donald Trump. I can start a website that makes money by connecting people. I can’t, and don’t want to, build a 50 story skyscraper in the OC and call it Mobley Tower. I think that best way to make your first billion today is different than when Trump did it. Maybe that belief comes from the fact that I’ve done experiments with Seth’s teachings but I don’t have a lab that would work for doing trial and error in major real estate development projects (once again all about me). I can have a feature page on Squidoo but becoming the next “The Apprentice” isn’t high on my priority list.

Don’t get me wrong. This isn’t a bash Trump and praise Godin post. They have written two of my favorite books (All Marketers Are Liars: The Power of Telling Authentic Stories in a Low-Trust World & Trump: The Art of the Deal). The both are successful entrepreneurs and I’d like to meet them both in person some day. I’ve learned a lot from both of them and I will continue to in the future. The same decision might be different for you and that’s o.k. because when it’s your choice it’s all about you.

Fortunately, you didn’t mention the haircut issue. I think it would be a great lunch, but I’m wondering if it’s possible to have Donald’s bankers pick up the check...
— Seth Godin (August 3, 2009)