Why I Think I Think Jess Spear is Wrong

No, the title isn’t a typo. I think I think this. I need to do more research, but maybe someone can enlighten me.

All over Wallingford, I see political lawn signs for candidate Jess Spear and her tagline of something like, “We Need Rent Control.” I did a little research on her web site to learn more. Other than finding out she’s a socialist who got arrested for protesting the transportation of oil from Seattle to other distribution centers via train, I didn’t see too much detail on her call for Rent Control.

So here’s a business perspective on why I think Rent Control is probably a really bad idea.

1) I don’t see anything in her proposal that says Property Taxes can never be raised again, or that any increase in the appreciation of property value won’t cause building owners to pay more in taxes. You see, if the property owners see an increase in their taxes, but can’t raise revenue, then they won’t have any way to stop themselves from losing money. Since real estate is a long term game, if you make the long term riskier without any chance of increased profit, there’s no incentive to get involved. You’d simply build somewhere else.

2) So, if people don’t have financial incentive to build apartments here, then they won’t. So that will cause a lack of supply. In normal economic theory, this lack of supply would create a rise in prices that normalizes everything. But since we’ll have frozen rents, we won’t be able to correct the curve. Thus, people with these scarce resources (apartments) won’t have incentive to ever give them up. They’ll now inhabit places that they shouldn’t be able to afford.

3) Meanwhile, companies like Amazon, Microsoft, Facebook, Google, etc… who want to hire people who could afford these apartments, will now have a harder time bringing in out-of-staters since they won’t have anyplace to live.

4) Now we’ll have driven away the people who want to build new buildings AND the people who want to move here and take good paying jobs. Companies have obligations to shareholders, not cities. So it’s in their best interest to leave Seattle and move their offices to places where employees can actually live.

5) So this will mean we’ll have fewer good paying jobs, which means a less robust economy. As companies leave, the people who have the good paying jobs will leave with their companies to these new locations.

6) But here’s the bright side. With all the high paid employees leaving town, property values will fall. Demand and supply will come back into equilibrium. Rents will be much lower since the only people still around will be those making lower wages. (However, anyone who had a job supporting one of these companies, such as waiters, baristas, bartenders, janitors, security guards, parking attendants, delivery people or construction workers will have lost their jobs as well. So we’ll still need to figure out how they will be able to afford these new lower rents.) But the rent controls will seem kind of silly since those people with apartments to rent are fighting for the people who are still here.

Anyway, that’s what I think my MBA classes in economics and my exposure to the real world tell me. But maybe I’m missing something. If I am, let me know what it is. Otherwise, I’m curious why Ms. Spear is using this as her main Marketing message.

My Crazy Idea For the Month

So it’s been a while, but here’s a new and ridiculous idea that might not be so ridiculous.

1) The problems with trying to build a profitable business delivering food or items with same day service (such as Eat 24), are the extreme set up costs to buy a fleet of vehicles, the complexity of hiring drivers who know the area, and the ability to launch branches in every key neighborhood.

2) The U.S. Postal Service is losing tons of money every year. But they have a fleet of delivery vehicles that go unused every evening, drivers who know the area and an existing branch in every neighborhood.

It seems to me that a forward thinking postal service with a strong CTO could figure out a way to deliver mail during the morning, and same day local deliveries in the afternoon and evenings.

Would love to hear why this couldn’t work.

How Bad Will the 2022 Qatar World Cup Team Be?

The 2022 World Cup has been a controversial subject for a few years now, and will only become more so as more people call upon FIFA to change the location from Qatar. But here’s a sub-topic that came up in discussion last night, and I haven’t seen too much on it yet.

As host country, Qatar gets an automatic bid to the tournament, the same way Brazil, South Africa, Germany, Korea & Japan, France, the USA and Italy did, going back to 1990. Now, most of those teams were WC regulars or had at least been to a Finals before, so it was no big deal.

But we’re in uncharted waters, er desert, with Qatar. Let’s look at the Qatar National Team and some World Cup history.

  1. Qatar is currently ranked #100 by FIFA. For comparison that is between Zimbabwe (99) and Moldova (101).
  2. The lowest ranked team at the 2014 World Cup was Australia at #62. Australia went 0-0-3, scoring 3 goals and giving up 9 to the Netherlands, Chile and Spain. The next lowest seeded teams were Korea (57), Cameroon (56), Japan (46), Nigeria (44) and Iran (43). Those teams combined to go (1-4-11) with a Minus 18 Goal Differential.  (Note: Iran and Nigeria tied each other so if you pull those games out the 5 teams went 1-2-11.)
  3. In the history of the World Cup, the host nation with the worst ranking was South Africa in 2010. South Africa tied Mexico 1-1, got drubbed by Uruguay 3-0 and finished by beating a French team that had sent some of its players and a coach home early, 2-1.
  4. In 2014 World Cup qualifying, Qatar was ranked as the #8 Asian team, and survived a 3rd round group of Bahrain (5 ), Iran (7) and Indonesia (24.) Their record of 2-4-0 netted them 10 points to finish 2nd behind Iran (3-3-0), and advanced them to the 4th round, eliminating the favored Bahrain (2-3-1) in the process. In the 4th round, they finished out of contention in 4th place (at 2-1-5) behind Iran (7), South Korea (2) and Uzbekistan (9), and ahead of Lebanon (20.)

So what might happen in the next 8 years? Is it conceivable that a country investing Billions into hosting a World Cup might also invest in strengthening their National team? Could money talk and lure some of the top 14-18 year-olds in Asia and Africa to train in a newly developed Qatar Football Training Facility? Could Qatar become close to par with the top Asian Football squads – Japan, South Korea and Australia?

Perhaps. My friend Alex posits that Qatar will simply pay their Group Stage competitors not to drub them too badly. Give them $1MM for a 3-0 loss, $500k for a 4-0 loss and nothing for 5-0 or worse.

But barring a miracle, it seems that Group A in 2022 will be wide open, with all the other teams being assured an easy win over Qatar, and it could be important how much they win the game by.  It’s also conceivable that we’ll see the worst showing ever by a World Cup Finals team.

Trying to Decipher MLS Transfer Rules

Here’s something about MLS I don’t quite understand. DeAndre Yedlin could be headed to Anderlecht of the Belgian League. A friend of mine who knows a ton about soccer asked this series of questions:

Is this a big step up for Yedlin? I’m sure he’d get a raise, but I’m sure he could get a raise in MLS too. But in terms of advancing his career, does it make sense to go to a second tier (or third, or fourth?) Europe league? Or should he try to get a decent MLS salary after this year, and wait until England calls And what would the Sounders get out of this? Do they get any of the transfer fee? Do they get to set the transfer fee? Are we just out of luck? And we’re full on designated players too, right? So even if we got a ton of cash, we can’t really use it, right?

Here’s what I think I know. Please correct me if you know better.

1) Whether or not the play in Belgium is better than the MLS, there’s the perception in Europe that the play in the Dutch, Turkish, Norwegian, Belgian and Portuguese leagues is better than the MLS.

2) It’s easier for a Premier League, Spanish League, German League, Italian League or French League scout to catch a game in Belgium than Seattle.

3) The top teams in all the 2nd tier Europe Leagues at least get to compete in some round of the Champions League. Anderlecht won the Belgian First Division in 2013-2014, and are one of 22 teams to have already qualified for the Final 32 of the Champions League. That’s nice exposure he wouldn’t get here.

4) The MLS technically owns all the contracts of all the players. Essentially, the MLS is a giant talent agency that hosts matches in which to show off the talent they’ve recruited. Part of their revenue model is to find cheap players and develop them into players that other teams want to buy. They need the old guys to drive fans, but the real money is buying young guys low and selling high. It’s another reason the league wants parity and would rather have all the best players split amongst the teams to get playing time rather than having some great players sitting on the Sounders bench behind Dempsey and Martins for 34 games

5) There’s some sort of revenue split between the MLS and the team who scouts and signs the player. Not sure what it is.

6) MLS sets the transfer fee. I believe the team has some input based on whether they think the team and league would generate more revenue if they held the player another year.

7) Sounders would get some cash, but all it would do is help the ownership group. We can’t reinvest it into a higher salary cap.

Bottom line, the more Yedlins the league develops, the more revenue the league makes, the more revenue the teams split, the more designated players the teams can afford to have on each roster, the higher salary cap each team can have, and the more talent we can recruit to the league, which makes it easier to get the next Yedlin to play here, etc…

Let me know if you have more insight.

 

A “Spirited” Discussion About Marketing

I tend to enjoy listening to panel discussions more than most people. And I like them even better when I’m the one who gets to ask all the questions.

On June 19, the Seattle Chapter of the American Advertising Foundation hosted an event with four of the city’s strongest small craft distilleries. When they asked me if I’d moderate this panel about how to market a small craft distillery, I thought they were kidding me. But they were serious, and I excitedly prepped for a topic that I had not previously done much business research on.

Our panelists were fantastic (left to right):

AAFInsights

Here are a few bullets I took from the event:

  • The one piece of advice every small batch distiller will give you is, “Don’t start a small batch distillery.”
  • “Taste” can only get you so far. You have to have a decent flavor, but you are selling a brand, not what you taste like.
  • Your brand needs a story. Sparkle Donkey Tequila has the made up history of “El Burro Esparkalo” and then follows that up with a legend of, “In the modern era, Sparkle Donkey Tequila has come to mean many things to many people. But above all it means celebration, fertility, and quality.”
  • Winning awards is good for a boost, but you need a great follow through campaign to keep it going.
  • Great quote: “Whiskey is what beer wants to be when it grows up.”
  • Advice for anyone who thinks they can make tons of money in the burgeoning cannabis industry: “If you think there are a lot of forms to fill out for liquor, the cannabis guys have no idea what’s headed their way. We love that it’s getting legalized. The Liquor Control Board has so many headaches with them, they barely pay attention to us anymore.”
  • Fact: “40% of people in the bar do not know what they want to order when they walk to the bar.”
  • Make your bottle bright and easy to see against all types of backgrounds in all types of light. Don’t let it hide on the shelf.

The hashtag #AAFInsights has more of these nuggets if you want to roll through them.

Thanks to the AAF for letting me moderate. It was a blast and I hope people in the audience had as much fun as I did.

AAF Seattle Distilling a Brand

World Cup Round 1 – Continent vs Continent

Only 32 teams are invited to the World Cup finals that you are watching now. How did the 190 or so teams get whittled down to these? Well, there are 3 years of intra-continent tournaments that deliver a few finalists. Here’s how the allocations break out:
1 Host Country
13 European Countries
5 South American Countries
5 African Countries
4 North American / Central American Countries
4 Asian Countries

So, is Europe deserving of 13 spots? Is Africa worthy of 5? Let’s look at the first round of games. (For this comparison, we’re putting the host Brazil with the other 5 South American teams)

North/Central America (4): 3 wins, 1 loss. Vs Africa 2-0-0. Vs South America 1-0-0. Vs Europe 0-1-0.
South America (6): 4 wins, 2 losses, 0 ties. Vs Europe: 3-1-0. Vs Asia 1-0-0. Vs North America 0-1-0.
Europe (13): Total record: 6-6-1. Record vs non-European teams 3-3-1: Vs South America: 1-3-0. Vs NA: 1-0-0. Vs Africa 1-0-0. Vs Asia: 0-0-1
Africa (5): 1 win, 3 losses and 1 tie. Vs North America: 0-2-0. Vs Europe: 0-1-0. Vs Asia 1-0-1.
Asia (4): 0 wins, 2 losses, 2 ties. Vs Africa 0-1-1. Vs Europe 0-0-1. Vs South America 0-1-0.

So what does this tell us?
- The only African or Asian team to get a point against a non Asian or African team is South Korea, with a tie against Russia.
- South America has been as good as advertised, other than Uruguay.
- North America has been pleasantly surprising.
- Europe could not be more neutral.

Clearly the African and Asian teams are struggling, while Sweden and Ukraine are sitting at home. Maybe we should be allocating some of their spots to Europe.

How Marketing is Like Little League

Every spring, tens of thousands of dads, friends, uncles and even moms embark on the gratifying, frustrating and always surprising journey of coaching a Little League baseball team.

Other than Crossfit and Fantasy Football, there may not be an activity that is so mind-absorbing to you – and that absolutely no one around you wants to hear about. No one outside your bubble of coaches and parents cares about little Jimmy’s amazing catch in center field.

But I wouldn’t be me if I didn’t subject you to my thoughts on the matter in this little forum. And my thoughts revolve around how coaching 9 year old baseball players is a lot like running a marketing program.

Andy Little League small1) Every channel / kid is different: Coaching would be easy if you could just get out front of the audience, give a little spiel about how to turn your hips when swinging, and watch everyone respond in perfect union. But one kid is going to interpret that message as, “Pretend like its a hula-hoop” and another is going to hear, “Keep my feet perfectly still like they are in cement and turn my hips.” Just as every online or offline channel you choose needs its own nuanced content, you must also shape your message for the kids.

2) No matter what you do, some audiences are just not going to do what you want them to do: You can test images, graphics, copy, videos and more. Your content can be fabulous, and still there’s a percent of the market that will ignore, or not understand, anything you try to get across to them. You can explain over and over again, “Run through first base.” You can do drills in which they run through first base. You can have quizzes and ask them what they are supposed to do when they get to first base. During the game, 11 out of 12 kids will run through first base. And the 12th kid is still going to slide, come up short, be out by 2 feet, end the rally and the coach will have to resist throwing his scorebook through the fence.

3) You will have some successes you shouldn’t have, which makes it hard to change: A 9 year old doesn’t know how good he can be. He looks around and sees he hits better than most of the kids despite only keeping one hand on the bat, and says, “That’s good enough.” You beg and plead, “You will be a better hitter if you keep that 2nd hand on the bat.” And so he takes one swing in batting practice, keeps both hands on the bat, misses the ball and decides that sample set is large enough that he’s never going to listen to you again. He shouldn’t be able to hit with one hand, but since he can, he won’t change. We have marketing campaigns that are “doing ok” so we may be resistant to change. It shouldn’t be doing well, but we can’t ensure we’ll do better. And when we dip our toes in the water and have a day of less success, we revert back to what we know.

4) There is always a team with greater resources who looks impossible to beat: In our league, we have the team that plays hard and fast with the rules. The team knew of an all-star player, kept him out of the draft, and then had him join their team later when no one was looking. In 9 year old Little League! Plus, the kids of all the coaches are all 1st rounders that got placed on the team with their dads. So by very definition, they have 4 first round quality players and everyone else has one, maybe two. Your marketing team has less money than Starbucks, less brand power than Coke, fewer distribution channels than Microsoft and can’t afford Apple’s Brand, Design and Ad Agencies. That’s just the way it is. You have to be smarter, see who it is you can beat, and possibly just accept you may not beat everyone.

5) The losses will be hard to take but the wins will be fantastic: Something is always going to surprise you. The kid who never gets a hit will make it to first – and even run through the bag! The center fielder will track down the longest ball hit against you all season and make an amazing catch. The first baseman staring at the kids in the other dugout will make a back handed stab. You just never know where these unexpected gems will happen. You’ll want to take credit for them, but just enjoy the win. It doesn’t matter if the idea for the ad came from the copywriter, admin, customer service rep or janitor. It’s a team win when it works, no matter how and why it happened.

Those are my 5 takeaways. I’m sure I’ll think of more, but like most Little League baseball games, this post has dragged on too long and we’ve seen enough pitches already. I’ll just be thankful if someone of them were strikes.

5 Insights About Digital Advertising

Marketing Dive released a nice summary about trends in Display vs Search Ad Spending.

The original report came from a survey commissioned by SumAll. The long form report and the associated visuals are worth reading, but Marketing Dive Distills it down to 5 points.

1. Display ads cost one-third less than search ads
2. Tablets offer the most bang for your buck
3. It still takes more tablet impressions for a click than desktop
4. Mobile devices take even more impressions than tablets to inspire clicks
5. Advertisers spend seven times as much on search ads as on display

If you are in the business of buying ads in social, search or display, the data behind the conclusions is worth taking some time to read through.

Winners and Losers in a Digital Economy

This was the best 22:00 of YouTube video that I’ve seen in a long time.

The speaker is Scott Galloway, who owns a think tank called L2 and is also a marketing professor at NYU Stern. He quickly explains who is winning and losing in everything from social media and retail to brands and world economies. Really interesting stuff.

Geek Stars Shine Bright at Annual Geekwire Awards

There was more Polo than Prada. More Ralph than Lauren. And Levi’s outnumbered Louboutin’s about 5 to 1. But there was enough revelry, camaraderie and fun at Geekwire’s “Oscars of Seattle Startups” last night at EMP that you expected Ellen to organize a group selfie.

You can get the full results of the 13 Geek Awards over at Geekwire.com. But maybe more importantly than the awards themselves is the annual chance to catch up with what every startup in town is up to.

The startup world is a fluid one. Some people who were 100% confident in one project last year have a new passion this year. And some folks working out of their garage a year ago now have a staff of 26. But thanks to Geekwire, we get this annual opportunity to check in with one another.

It’s hard to know where this community would be without Geekwire’s involvement the last few years. Would the Seattle Times and Puget Sound Business Journal have been able to whip 800 entrepreneurial and tech enthusiasts into a kind of extended family who cooperate more than compete with each other? Would we all know the brand names of a few companies poised to be the next Zulily? I think not.

And in an industry still made up of more men than women, it was fantastic to see Julie Sandler and Jane Park given two of the top individual awards – for Geek of the Year and CEO of the Year respectively. In addition to her day job at Madrona, Julie has pushed tirelessly to encourage more young girls to pursue tech careers. And Jane is running one of the fastest growing non-tech businesses in the region.

I don’t think any more people could fit into EMP, and I don’t know how long you’d have to make the event in order to chat with everyone you know there. But it’s nice that in an environment that delivers more struggles than solutions, you know there’s a community rooting for each other. And that’s really what the Geekwire Awards are all about – a place to recognize the ones who made it, and be inspired to follow them on stage next year.

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