Subsidized Pricing

The big news on the tech world this week was Amazon's launch of a $199 tablet and a $79 kindle. I mentioned to the boys that an analyst estimated the tablet costs Amazon $250, so they will lose $50 on each one they sell. I asked them why they thought Amazon would do that. P thought it was to achieve critical mass and generate network effects (I guess he was listening the other day when we spoke about operating systems!). I said that was probably not the case as Amazon's tablet will run on Android, which already has critical mass. I said it was probably because they can sell more than $50 worth of books, music, videos and apps to each tablet buyer. We also thought of another reason: this aggressive price will force other tablet manufacturers to lower their prices thus accelerating the growth of the entire market for tablet computers. Since Amazon sells content to customers with competitive tablets then a larger overall market of tablets also benefits Amazon.

Another interesting element of the $79 kindle is that it shows ads on its screen saver and home screen. The ad-free version costs $30 more. I would love to know how much Amazon makes on those ads...

Marketing Math

C joined us in the car today so I put her on the spot and asked her to share something with us. She has been preparing an after-school program for kids who want to participate in math competitions. Yesterday she went to all the 6th grade classrooms in our kids' school to tell the kids about it. She gave the kids a problem as an example and asked those who would come to the first session to try to solve it. Afterwards one of the math teachers approached her and told her the problem was too hard and the kids would be discouraged. So C is worried about it. P thought it was good that it was challenging because that way it would attract the kids who took math seriously and were good at it. A said the problem with that approach is that some kids might turn out to be good with a bit of training and practice but would not get to that if they were discouraged with the first problem. I said the good thing about the specific problem she gave them is that a) it was a fun one, and b) kids wouldn't know if they got it right or wrong until C explained the answer. Furthermore, it is easy to take a stab at this problem, so that even if most kids got it wrong, I doubt they would get discouraged. We also discussed that she could have given them several problems (some easy some hard) to cater to all levels - and to quickly find out the level of the kids.

I mentioned to the boys that companies often face a similar challenge: in such areas as dieting, exercising, language training, gardening, etc., companies often start with easy steps to get customers hooked, and only move to harder more meaningful challenges after the customer is committed. Of course, some companies never go beyond the easy stuff, thus keeping their customers "happy" even if the results remain elusive...

What is the problem C gave the 6th graders? If an ant is standing on one of the corners of a cube, what is the shortest route it should take to walk to the opposite corner?

The Sky is Falling

An old satellite is falling to Earth today. The boys didn't understand why a satellite would fall (since satellites just use gravity to circle the Earth). I don't know either. Maybe satellites use their own power to make small corrections and stay in the correct orbit and this one can't do that anymore. Maybe the orbit deteriorates gradually over the years until the satellite falls... But what I am really wondering about is whether the scientists who first launched the satellite carefully planned for it to fall into the Earth in 20+ years, or didn't worry too much about what would happen in such a distant future.

I mentioned to the boys that I wouldn't be surprised if it was the later, as we rarely do much planning for the very long term. Maybe they thought something like "Heck, in 20+ years we'll have super rocket robots that will pick up old satellites...".

When I did my second start-up my CTO suggested that we use Oracle as our database (N asked what a database was so I explained). Knowing that the licensing cost would be over $100K per year I pushed back. But then my CTO came back with a "great" deal from Oracle: The software would be free the first year, cost 10% the second, 20% the third, and full price afterwards. My reaction? In 3+ years the company will either have been sold, gone public, or gone under, so lets do it. Guess what? The 3 years came and went and the company was still a medium sized private company for which $100k+/year in licensing fees was a lot. Ooopppss.

Don't Pass the Hot Potatoe - and cows

I sometimes leave a sweater (or two) inside my car. And maybe a few other things such as a hat or glasses (yes, I admit it, I am guilty!). Since my car is a Mini, the boys need to move my stuff to have room for themselves. P complained today that N would frequently move my stuff from his seat to P's. N argued he needed to move my stuff to seat down. I acknowledged the situation and asked how else they could deal with it so that instead of making it someone else's problem they would actually solve the problem. P suggested calling me to come move my stuff. I said that wasn't a great approach as they sometimes got to the car before I was anywhere near. A then said that when he found my stuff on his seat he would put glasses and hats where he knew I moved them to (the glove compartment) and sweaters on my seat for me to deal with. I agreed that was a good approach: he was solving the problems he could and passing those he couldn't to someone who could, i.e., me.

We are frequently in similar situations in which the easiest thing to do is to transfer our problem to someone else. That is rarely the right approach. If you can you should solve the problems rather than move them around. And if you can't solve them, at least move them to someone who can.

What about the cows? Ask N. He claims that is what we spoke about!

Don't Lecture Me

I told the boys this morning about a great program I heard on the radio last week. It is the story of some physics professors who realized their students were not learning the basics concepts of physics - even though they were doing well in the tests. Long story short their conclusion was that lectures were a very poor teaching method. If you think about it a bit this is pretty obvious. The term lecture comes from the Latin lectura, reading. From before the printing press, when someone had to read stuff out loud because you couldn't just get the book. Forget the impact of computers, the Internet, iPads, and smart phones. The educational system has yet to adapt to the printing press! Otherwise, what are professors still lecturing students when students could simply read the material on their own? Besides being medieval, lectures have other problems: research has shown that we learn better when we participate. When we are active. Research has also shown that our short term memory is simply not equipped to retain an hours' worth of facts after facts. And the list goes own...

Back to the physics professors, and, btw, I believe they did this 10+ years ago, they asked students to read the material (at their own pace) before each class (duh!). They used classes for problem solving in the following way: they wrote a problem on the board (or screen), they showed three possible solutions, and they asked student to pick one. Then students had to find nearby students with different answers and explain to them why they choose the answer they did. After a few minutes of this the students voted again. This second time around most students got the answer right. A couple key points:

- Students were much better at explaining the solution to other students than professors. Why? The students just learned the material. They could relate to the doubts and challenges of the students who didn't yet understand things. They also had fresh in their minds the process by which they got to understand the material. On the other hand, professors had learned the material so long ago they couldn't relate to the notion of not understanding it, much less remember exactly which doubts they had when they learned it or how they went about understanding the issues.

- The students that had the right answer normally convinced those that didn't - as oppose to the other way around. They had better logic on their side and more confidence. Plus many of the students with the wrong answer knew they probably had the wrong answer.

Some of the critics of this approach point out that the traditional lecture is more efficient and allows more material to be covered. Yet in the age of Google & Wikipedia, who cares about covering lots of material? All that maters is for student to grasp the key concepts and know how to apply them. The rest that can find online...

The kids could totally relate to all this and agreed the same applied to their classes. I wonder how much longer it will take for education to adapt to the development of the printing press!

Keep your hands inside the vehicle at all times...

A & P are at a retreat so N is getting the single child royal treatment. He loves seating in the front with me :-). N noticed the funky turning signal of the car in front of us. This reminded me of when I used to stick my hand out to indicate that I would turn. I can't remember if the reason was that cars had no turning signals or that drivers didn't pay attention to them. But I am pretty sure we used to signal with our hands. N thought this would be very dangerous. I said it was, but not necessarily for the reasons he had in mind. For example, my dad once had someone try to steal his watch (in Venezuela where I grew up). My dad always told us not to argue or fight with thieves but to just give them whatever they wanted. Yet he pulled back his arm, pushed the thief away and managed to get away with his watch. Similarly when another thief entered our house (armed with a stone) and asked my father for his watch my father managed to keep the watch. Why? We act differently under pressure than when we rationally and calmly plan proper behavior. N can relate very well to this...

BTW: eventually a third thief put a gun to my dad's head and that was the end of the watch...Probably best not to wear fancy watches at all!

My Favorite Day of the Week? Thursday!

Last Monday we spoke about favorite and least-favorite days of the week (Thursday and Sunday respectively for me). N hates Mondays, with the full week ahead. P thinks Tuesdays are even worst, because at least on Mondays you get to see your friend whom you haven't seen for a couple of days. I told them that for me, the anticipation of something good or bad is often more powerful that the thing itself. That is why I hate Sundays, particularly in the evening, knowing that the next day is a Monday but I love Thursday, knowing that the next day is the beginning of the weekend :-).

We then spoke about other things for which the anticipation matters more than the thing itself: a tough exam, a dentist appointment, a sports competition, a party... The takeaway? Enjoy the anticipation of positive events as much as possible. If possible, you might even want to postpone or delay the event to have more time to enjoy the build up. On the flip side, try not to think about the negative events because they are likely not as bad as the build up to them.

Smelling the Neighborhood

Last rainy season, after several days in a row of getting my newspaper drenched (even inside two plastic bags) I had decided that I would let the subscription expire and start reading it on an iPad. The moment came this week but I am having second thoughts. The reason? I like walking out of my house at 7am to pick up the day's paper. That is the moment when I normally realize if the day is warm or cold. It is some weekdays the only time I set foot on my street (as I otherwise mostly drive in and out of my house). It is sometimes the occasion when I interact with a neighbor that walks by with his dog. I love walking into the typical cool & misty SF morning...

A few years from now physical newspapers will disappear altogether. Think about the waste of all that paper & ink, the delivery, and the disposal. Every day. It doesn't make sense with the technology that is fast becoming mainstream. To a lesser extent the same can be said about physical books. Books are not as bad since they have a longer "shelf-live". Still... P said he still prefers to read physical books, and N said he wanted a tablet with pretend physical pages. But there is no way around it. Those who enjoy physical books, papers and magazines should enjoy them while the can. They are a "luxury" and will soon become collectors items. This reminds me of an article I read a few days ago (in my printed paper) about car collectors concern with the disappearance of cars with standard transmission. They worry that no one in tomorrow's generation will be able to drive a collectors car. I am glad I taught the boys how to drive standard this summer on the beaches of Brazil :-).

Back to my newspaper dilema. The boys had a suggestion: every morning I can grab my ipad, walk out to our street where the printed newspaper would normall be, smell the neighborhood, and hit the download button.

If you could have dinner with anyone...

My brother read my post from yesterday and is wondering who would I pay to have dinner with. So I asked the kids today who would they choose if they could have dinner with anyone. P immediately said Douglas Adams. He is a hard core fan. P would ask him what he meant with some of the things he wrote in the Hitchhikers Guide to the Galaxy. N would like to meet Jim Carey and ask him for some acting tips. A would have liked to meet Freddy Mercury and asked him how he dealt with being so famous. So, we covered literature, acting and music. Not bad.

What about me? Since we are talking about anyone dead or alive I would choose Leonardo Da Vinci. What would I ask him? I would show him the modern world and ask him what the next few inventions should be. I bet he would come up with some pretty awesome stuff :-).

Dinner with Obama

I mentioned to the boys that I got "invited" to a dinner with Obama. The catch? The required $35K donation. N was very excited and at the same time very disappointed that I wouldn't go. A asked me an interesting question: how much would I pay to go. I wasn't sure... Not much as I've been disappointed with Obama and have no interest in contributing to his political campaign - not to mention that "having dinner with celebrities" is not really my thing. I explained to the boys that Obama would probably raise $1MM towards his reelection campaign with this dinner. And that his target was to raise one billion dollars. The boys were surprised by this. What would all that money be for? TV, Radio, Newspapers, direct marketing, etc. etc.... But, asked P, shouldn't he just be focused on being a good president rather than on raising money to run again? Ahhh, to be young and naive!

Lindbergh vs. Nungesser

There is an article in today's paper about a French historian who believes a French aviator, Charles Nungesser, actually beat Charles Lindbergh in crossing the Atlantic. The attempt took place two weeks before Lindbergh's flight but Nungesser went missing and was presumed to have crashed on the ocean. The historian just uncovered some coast guard records that point to him having crashed on the mainland of the US - thus having beaten Lindberg, even if he died in the process... The reason they were all trying at the same time is that there was a prize of $25,000 (1919 dollars) for the first one to accomplish the crossing.

I mentioned to the boys that prizes such as this one (and the X Prize, the Netflix challenge, Darpa's challenges, etc.) have spurred great innovations. I asked them why they thought that prizes were a good approach. P said that the competitive nature of prizes got people trying really hard. A said that the prize sponsor only had to pay for success, as opposed to taking the risk of funding someone who might fail. I agreed these were key factors and added a third one: a prize of $25K might generate a combined investment by all the participants of hundreds of thousands or even millions of dollars. Prize money has a multiplicative effect.

I asked the boys for suggestion on the W Prize. A prize they would compete on which C & I would fund. Nothing viable came out but I think there might be something there...

There are no original ideas

We were brainstorming today about the kids' middle school science projects. Since P has a microscope I suggested he do something that used it. I thought he could take samples throughout the school, e.g., water fountain, cafeteria, biology lab, and see in his microscopes what bacteria and other things they had. We all got talking about this idea a bit then N said P wouldn't do it. Why, I asked. Because it was not his idea N said. I told them that few ideas were entirely original. Most are based on existing ideas, then modified, and, most importantly, well executed. What matter was not whether P had had the original idea or whether I had suggested it. But what P would do with it: make it his own, refine it, execute it. I gave them the example of my first start-up, which was the first company that measured web traffic. The inspiration for the company came from someone else' suggestion (back in 1993) that the Internet needed the equivalent of supermarket scanners to track everything. I combined that, with some existing analytics tool to create a company that was original on its own. The same can be said for most of the "new" products and services that we are familiar: the iPhone, Google, FaceBook, etc.

I think the got it, although P then told me about his own original idea for a science project :-). I liked it even better than mine!