Business Model Canvas Executive Summary

Pintrest is a tool for collecting and organizing things that inspire people.  Users can pin photos and videos to customized pinboards that can be viewed by other Pintrest users and shared via other social media platforms.  The firm, established in 2010, is estimated to have nearly 50 million users and was recently valued at $2.5 billion.

Humans are social and passionate creatures, and Pintrest is one of the few firms that operates squarely in these two spaces.  This is a unique advantage and their main differentiator over other social media platforms.  In addition, the typical Pintrest user, a college-educated female living in a household with an above average income, is a highly sought after customer segment.

The challenge the firm currently faces, and what will ultimately determine its future success or failure, is establishing revenue streams that will not “commodify its users passions" and alienate its loyal user base. One of Pintrest’s key partners, venture capital firms, has financed the firm’s phenomenal growth thus far and will no doubt be looking for a return on their investment in the near future.  Pintrest has recently made efforts to forge closer ties to companies and build a base for the introduction of money-making features.  Pintrest Web Analytics allows business to track how many people are pinning from their website, seeing their pins, and clicking their content.  Whether these are the first steps in developing a successful business model or the first missteps in killing a promising start-up, will be decided by the social and passionate users of Pintrest.

Business Model Canvas -- Pintrest

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Business Model Canvas Executive Summary

             Strava builds online and mobile software that allows avid athletes to record, analyze and share their fitness endeavors. The firm, launched in 2010, targets competitive cyclists and runners who use the software for motivational and entertainment purposes.  Strava offers free and premium accounts, with over 90% of their revenues coming from the subscription fees paid by its premium account members (citation).

            Strava has a limited number of key partners and relies heavily on its internal design and engineering team to deliver a unique experience to its users.  A majority of its costs come from employing these individuals and supplying the technology needed to develop and improve its online and mobile software.  These two cost items are necessary in executing its key activities.

            Strava’s customer segments are a well-defined group of passionate and enthusiastic cyclists and runners.  The firm’s value proposition taps into this group’s commitment to physical fitness and addiction to a healthy and active lifestyle.  Its customer relationships are strong, as the software and mobile app are considered a trusted partner and resource to many of its users.  Despite is solid value proposition and loyal customer base, a large number of its current users are not paying for this service.  Strava must focus on retaining their current premium members and converting their free members to premium, fee-based accounts.

            Strava’s key resources will be of increasing importance in the near term.  Funding will be an issue since the firm is not yet profitable (citation).  In addition, employing a staff with the skills and expertise to grow its premium customer base will be absolutely necessary if the firm is to be successful in the future.

Business Model Canvas -- Strava

If you have trouble viewing my Business Model Canvas below, here is a link to the PDF.

Privacy

I have been thinking about internet privacy and its impact on online marketing in the future over the past few days.  As I mentioned in my last post, the push for increased internet privacy seems to be gaining some momentum.  I think everyone knows, and has come to terms to some extent, that their online activity is being analyzed by online marketers.  However, I think its quite possible that sweeping legislation could be established in the next few years that prohibits the tracking of individuals' online behavior.  There are steps already being taken in this direction.  The Right to Know Act (AB 1291) would require a company to give users access to the personal data the company has stored on them—as well as a list of all the other companies with whom that original company has shared the users' personal data—when a user requests it (source).  This law, if and when passed, wouldn't come close to stopping online marketers' efforts in finding the ideal customer for a particular ad, but, it is steps in that direction.

There is  actually a market for online privacy tools that helps to keep its users someone anonymous while on the internet and communicating.  The search engine DuckDuckGo doesn't save search histories and the mobile app TextSecure encrypts text messages over the air and on your phone.  This article, The Anonymous Internet: Privacy Tools Grow in Popularity Following NSA Revelations, talks about these tools and others.  The article also highlights the increase in downloads and usage of these tools since the NSA spying story came out a few weeks back.

Numerati

The Introduction to the Numerati immediately reminded me of an NPR segment I heard earlier in the week on my drive home from work: Tools To Help You Hide Online Raise The Ire Of Advertisers.  The story talks about Mozilla and other browsers' efforts to improve cookie-blocking.  Cookies are little bits of code that get planted by websites on our browsing devices that let others track our online activity.  Online marketers use this data to make decisions about where and when to place ads that are specifically selected based on our recent browsing history.

I am sure this effort to make improve internet privacy has online marketers a bit worried.  They have spent years fine tuning their algorithms and statistical techniques and have learned a lot about our online buying tendencies.  I don't think the online advertising industry was too pleased with a few of the headlines over the past few weeks:

Barack Obama seeks to soothe relations with EU over NSA spying

Lawmaker 'disappointed' with Google's response on Glass privacy

FBI drone use renews privacy concerns

The more concerned people get about their privacy in general, the more likely in my mind that there will be a greater push for online privacy in the future.

20x200

I was intrigued after watching Jen Bekman explain the vision she had when she started 20x200;  “Art for Everyone” sounded like an interesting idea.  I have a number of walls that could use some interesting art, so I decided to check out 20x200.

Unfortunately, the website is taking stock and making updates.  Apparently the website went offline on January 31 and the entire staff of 18 no longer work there.  From what I could gather from a bit of searching, "printers and artists were consistently paid late and communication among different branches of the business had become difficult."  Board directors resigned in late January and despite statements from Bekman that she is  “100 percent focused” on finding a solution, the site is still down.

 

I perused the reader comments section at a few of the sites I found that told the story of 20x200's demise, and a number of posters voiced their sadness about 20x200's demise.  Lots of posters mentioned other similar sites that they liked, www.artanddecors.com and www.eyebuyart.com to name just two.

 

 

I personally thin think the online are industry will remain mildly successful.  I think there is a market for the budget conscious are connoisseur, but the hurdle of only seeing the artwork on a computer screen seems to be a major roadblock.  Perhaps a model like Warby Parker would work???

Twitter turns 7

I have been a long time Twitter user...longer than 98.6% of all users.  It is my favorite social media site and I think the idea of it has real staying power.  However, I do have some concerns if the Twitter turns 7 article is correct and Twitter goes public in the near future.

Like the article mentions, Twitter has been quite secretive about their finances.  Some estimates project their revenue to reach nearly $1 billion by 2014.  Once public, Twitter will be under increased pressure to increase ad revenue and create value for their shareholders.  Personally, I am not a fan of the "promoted tweets" that pop up in your Twitter stream, and I'd imagine most Twitter users feel the same way.  I think a likely outcome of IPOing will be an increase in the paid ads that all Twitter users will see, watering down the experience and disenfranchising loyal users.  Facebook has struggled walking the fine line of increasing ad revenue while not bombarding their users with ads.

It might sound crazy, but I almost think Twitter is a public good...not on the scale of national defense, but maybe close to the Post Office?  Who knows what would have happened in the 2009 Iranian presidential election or if the Arab Spring would have occurred if Twitter was chock full of ads

Business Models on the Web

Did anyone else notice that Amazon was listed three times in the Business Models on the Web article?  I think they have really reinvented retailing (and probably a number of other industries), and the fact that they show up three times is a testament to that.

In addition to the models they are listed for, they also compete in the Content Services model with their Amazon Instant Video and Amazon mp3 offerings (Listen.com and Netflix cited), the Manufacturer (Direct) Model through their Kindle products (Dell Computer cited) and the Classifieds Model through Amazon Local (Monster.com and Craigslist cited).

It'll be interesting to see if they can continue to do so many things well.

Full Circle

I had to sneak in one more post this week...I don' think Professor Talbott could have drawn this up any better.

Sunday I was researching for my Twitter as a Brand Building tool.  I was trying to determine the market share of Trek bicycles in the bicycle and cycling market.  My research took me to bicycleretailer.com where I found some commentary on the 2011 Brand Representation in Bike Shops.  Trek had the largest single market share in 2011 with 22.5%.   However, the "Other" category, the combination of a number of smaller, niche brands, combined to make up 31.5% of the market.  I immediately thought of the Long Tail, a topic I just learned and commented about 2 days earlier.  Not only that, the author of the commentary sums up the 2011 report saying, "What does all this mean for the bike-buying consumer, or the bike-selling retailer...it is a classic representation of the Long Tail Effect."

I think my learning this week has come full circle.

Amateur radio and Twitter

I thought the interview with Jeff Pulver was the highlight of the NPR "On the Media" segment.  He tells the story of when he first saw an amateur radio in his uncle's office up and talks about his fascination with it growing up.  He taught himself Morse code and electronic theory and the rules and regulations of amateur radio.  He spent countless hours on amateur radio in high school and junior high school.  He attributes the interest in the radio to his desire to connect to people despite his lonely personality.

I had never made the connection between amateur radio and Twitter before, but their similarities are quite evident.  Their technological aspects are quite different, but at the core, they each allow people to keep in touch and connect with other people.

The Long Tail

I had not heard of the The Long Tail prior to reading the first chapter and listening to the Gil Frisbow and Frank Acito podcast.  The first chapter left me wanting more, so I think I might have to track down a copy.

I think one stat from the first chapter really solidifies the idea of the long tail.  For Neflix, Amazon and Rhapsody, "sales of products not offered in brick and mortar competitors amounted to between and quarter and nearly a half of total revenues - and that percentage is rising each year."  As it turns out, when given the chance, lots of people don't want the mainstream, mass produced option A.  They want Option B with the some special feature and made of some premium material....and in pink.  I hardly ever make a significant purchase without seeing what my options are outside of the brick and mortar stores that carry only mainstream items.  Thanks to my Amazon Prime account, I spend lots of time in the Long Tail.

Sermo and PatientsLikeMe

I have bad knees.  I have had 4 knee surgeries in the past 7 years and am three months out from a tibial osteotomy.  Leading up to my last surgery, I spent hours researching the procedure in an attempt to find out what to expect...how long would I be on crutches, how long should I stay home from work, will I be able to go for a jog again?  All these questions were answered by people who had been through what I was about to go through and shared their experiences online.  I found the info very helpful and reassuring.

The info I found was on a few random blogs and message boards, a far cry from sites like Sermo and PatientsLikeMe.  As the HBR article talks about, online health-related sharing sites are great places where the collective experiences of a large number of people can be organized and used for the better.  Not only can the data be used by practitioners to improve treatments, but it gives patients the hope and motivation that their sickness or injury is treatable and others have overcome it in the past.  I couldn't believe doctors have consulted Sermo while performing surgery... that is just crazy.  To borrow a term from last week's readings, I doubt 10 years ago many doctors would believe me if I told them it was possible to crowdsource surgical advice.

How to get your ideas to spread

I found Seth Godin's idea of marketing to the innovators and early adopters interesting...marketing to marketing to the people that care and listen.  I especially liked his discussion of otaku, a Japanese word that means people with obsessive interests.  I don't think I quite agree when said that marketing a product to a constituency that doesn't have an otaku is almost impossible, but I still think it is a strong idea.

If I think about a few successful companies, I can defintely think of people with otakus for their products or way of doing business.  People on a tight budget shop at Wal-Mart.  They are obsessed with making their dollar go further and Wal-mart makes that happen.  People that love great customer service buy shoes from zappos.com.  Apple has a follwing so strong that someone came along and made a movie about their faithful followers, Macheads.

Groundswell

I thought the story about Digg and AACS LA was a great example of how organizations must be ready and committed to adapt to groundswell and everything that comes with it.  I think for a lot of firms, this change will be tough, especially within firms that might have an "old school" leadership approach or a culture that resits change.  I think its fair to say that social media is here to stay in one form or another, and the sooner firms realize this, the sooner they can figure out how to leverage its power.

Crowdsourcing

I really enjoyed reading the Introduction: The Dawn of the Human Network" in Crowdsourcing.  A few points mentioned really got me excited, as it is a topic I think about often: what motivates people. I was an Econ undergrad major, and most of the traditional economic models are based on the fact that humans make decisions based on their own self-interest.  Adam Smith famously wrote that, "It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own self-interest."

Crowdsourcing contradicts this idea to some extent.  The introduction briefly touches on a study conducted by MIT that examined why programmers would donate their time to open source software projects.  The study found that the programmers were driven by a number of reasons including, "a desire to create something from which the larger community would benefit as well as the sheer joy of practicing a craft at which they excel."  When I am on Wikipedia I often find myself wondering who in their right mind would spend hours editing entries about nucleic acids or schizachyrium maritimum.

Crowdsourcing wasn't a term thrown around too often in 1776 when Wealth of Nations was first published, but I wonder what Mr. Smith would make of the topic if he were around today.

The Today Show

The clip of Gumbel and Couric discussing the internet on the Today show gave me quite the chuckle Sunday evening.  I wonder if either of them have seen the video recently.

It's a perfect example about how fast things are changing.  20 some years ago, people were talking about the internet like it was some crazy, strange thing, like an alien spacecraft or something.  Now it is pretty much interwoven in most people's lives.  You can't help but wonder what products or technologies that are crazy and strange will be mainstream in another 20 years...maybe Google Glass or some other wearable mobile device, or maybe 3-D printing.

A Confession

I have to admit, I have blogged before: B-W Blogway

I was one of 7 or so contributors to the B-W Blogway, a short lived blog mainly commenting about the sports world.  All the bloggers became to busy and enthusiasm waned, but I enjoyed it while it lasted.  For some reason we got over 7,000 page views and visitors from all over the world.

Anyway...I have been intrigued in the different ways companies are trying to engage the consumer through emerging technologies and social media.  From the outside perspective, it seems there is a wide range of strategy and level of engagement from firms; some firms are really pushing social media while some seem to have a more wait and see approach.  I am really looking forward to this clinic and delving into the material.