Snapshots Across Time

What’s the fair price — carpooling across the Bay Area Bridges?

My colleague, Thomas Tan, has a pricing dilemma that is worthy of Steven Levitt’s (of Freakonomics fame) attention….

As you might know, the cost of using the Bay Area’s bridges has gone up as of July 1, 2010. As you might also know, cars with 3 or more passengers (“car poolers”) until recently drove across for free. Now, they get to pay between $2.50 and $3.00 to FasTrak.

While it is still clear, from a game theoretic perspective, that carpooling is the way to go, poor Thomas, who regularly picks up a few car poolers while crossing the 4.5 mile long Bay Bridge, was left wondering what is a fair distribution of the $2.50 fee??

Thomas’ math:

Cost if everyone went their merry way: $6 + $2 (toll + cost of ~4 miles) for the driver, $4 (for a BART ticket) for each of the carpoolers = total cost of $16.

An equitable distribution suggests that the $4.5 ($2 for using the car and $2.5 for tolls) be split as $2.25 (driver) and $1.125 for each of the 2 carpoolers.

My take, close but more simple minded:

Keep the math simple, use whole amounts to simplify the transaction, and let the driver use his FastTrac device to pay $0.50 and let each of the carpoolers pay $1 each. I assume that the cost of driving across the bridge is a sunk cost, as it will not go away in either case.

(Better) Ideas for Thomas, anyone?

Demand generation – science or art?

If you are like us, targeting small and medium businesses (SMBs) around the globe, you are likely spending serious cycles studying your marketing activities, spend and the corresponding results. And, in doing so, likely to be asking questions and testing your beliefs… Like the one I hear often – “Demand generation is more art than science.”

I’ll start off by acknowledging a few core tenets: 

• You’ve got be clear about the few, key and compelling, messages that are most relevant to your target audience
• You’ve got to have engaging materials that quickly and directly address the prospect’s buying needs and questions
• There is plenty of room for creativity in delivering the above

That said, I’ll posit that it’s as much, if not more, about execution efficiency than about the creative. Without both, your efforts are likely to fail. Application/use of carefully designed experiments and measurement, quick and frequent analysis, ruthless application of Darwinian principles, rapid prototyping and iteration of ideas – since rank in the organization doesn’t always translate into better campaign ideas. (Remember that article on the endless meetings at Amazon (to determine where to locate the different content elements on their web page) that vanished when they started statistically testing placement?)

What does mean for the marketing professional of tomorrow (and for educators creating the corresponding curricula?) The first is the recognition that there are ways to continuously improve by borrowing from other fields (case in point – ICICI Bank’s use of the core principles of the Toyota Production System). The second is that a working knowledge of statistics is a requirement. The third is that an understanding of measurement techniques (e.g., web tools) is a critical job skill.

I’d love to hear from you if you have real life examples that either prove or disprove my position!

Privacy and your social graph — Lessons from the early days of Social Networks @ Spoke Software

Facebook, every so often, tunes its business model. And in doing so, tweaks the default privacy settings. Triggering rebellion in the ranks. Resulting in Facebook redrawing the boundaries to be more conservative.

While I haven’t, admittedly, delved into the details of Facebook’s endeavours (ok, I do have limited “spare” time and spending time with my family trumps being active on Facebook), I have scanned recent articles on the topic. And, almost always, find my mind wandering back to the lessons we learned at Spoke Software. (Not surprisingly, Chris Kelly joined us as one of *the* first Chief Privacy Officers in the world; and then went on to become Facebook’s Chief Privacy Officer.)

We founded and funded Spoke Software in 2002 on a contract from McKinsey, the strategy consulting firm. And learned very quickly that the partners at McKinsey compete intensely in their roles as rain makers. We learned that we had to build tools that gave these partners “control” over their social graphs – to let them explicitly control who had had visibility into whom they knew and, then, whom they granted access to.

This was a particularly tricky topic because we mined the Spoke user’s email box and address books to auto-magically/implicitly build the social graph (in direct contrast to LinkedIn that came after us and helped users explicitly build their social graph – a topic for a strategic and scientific conversation over a good cup of Indian tea!)

We spent an entire release cycle – and precious and expensive investment dollars and time – building privacy controls into the product. Since privacy was core to the platform, we had to re-engineer from the bottom up.

What we learned was fascinating –

1. users want to know that they can control their privacy settings – they need to feel that they are in control

BUT

1. very few users actually *explore* the privacy settings
2. and, even fewer (and, I do mean *few*) users actually *use* the privacy settings!!

Which leaves product managers and designers with some intriguing questions –

1. “How much control do you provide your users on their privacy? Where does the ‘utility curve’ (to borrow from our economics brethren) intersect the ‘privacy curve’?”
2. “What can guide my decisions? How closely do my target users behave to the best existence proof out there? Are college and school kids similar to or very different than the McKinsey partners we were working with?”
3. “Since privacy is an evolving topic, how do you, from a marketing and PR perspective, handle the inevitable rebellion?”

I must admit that I feel for the folks at Facebook – they are trying to build a business model by monetizing the behavioral information of your users. They are constantly innovating. They have no idea what the acceptable social mores are likely to be. And they don’t have an inexpensive way to rapidly test concepts with prototypes.

The best approach, perhaps, is to be completely transparent about what one is doing and why? Message the utility, so the quid pro quo is crystal clear. (After all, don’t we *willingly* give the local grocery story, not to mention Amazon, direct insight into what we are buying in exchange for a few dollars???) And deal with the outliers who will always reject the status quo.

Prasad’s “24 hour” migration rule

People have migrated ever since mankind evolved on earth – to safer grounds, for food, for better living conditions, for a better education, and, perhaps, out of boredom and a need for adventure. From the center of Africa across the (then closer and joined) continents to Asia, Europe, North America). There, always, is some driving factor that makes us leave everything we have (family, friends, places, social status) to move to apparently greener pastures. And science has played a critical role in supporting these patterns (the Roman invention of the wheel, the British commercialization of the railroad train, the American love affair with the automobile and plane, …)

Out of curiosity, I studied the migratory patterns of my family and, in doing so, found myself wondering about where my kids might end up. First, the facts:

• My (paternal) grandfather moved his family from Kakinada to Madras in the early 1900s, a distance of 675 kilometers and journey by boat or train of about 24 hours so he could build his businesses (pharma distribution and banking). He maintained two homes and maintained tight connections with Kakinada till his businesses suddenly collapsed and he died. (View a map of the Indian Railway system in the area circa 1914)
• My father, upon graduation, moved from Bangalore to New Delhi in 1950, a distance of ~2222 kilometers and a journey of about 36 hours, so he could work for the Indian Federal Civil Aviation Agency (DGCA). He traveled the world, returned to Bangalore for most of his life before living with us in California.
• I grew up in Bangalore and moved 16,573 kilometers and a journey of ~24 hours to Stanford upon graduation in 1985. We’ve since travelled the world and have established our primary home in Palo Alto.

As I look at this admittedly unscientific data set, I hypothesize that every generation moves in “migratory chunks” of a day. Hence my “24 hour migration” rule.

Why ~24 hours? Technology aside, I wonder if there is a fundamental need for security and a need to “anchored’ and “close to your roots.” Like a gravitational field, does the wonder lust get balanced by the need to be anchored?

Which leaves me wondering:

• Where science might take my kids – 24 hours away from Palo Alto?? Moon is the closest spot (that can currently be made habitable) that crosses my mind; and
• Why do some people NEVER move… and often grow within a stone’s throw of their parental home? (thanks, Trish, for seeding this complementary thought!)

Ideas, anyone?