Sunday, December 29, 2013

How to make products with a happy ending

Nir Eyal, one of the most influential mentors I have, just published the book Hooked: How to Build Habit-Forming Products . You can download it for kindle for free until December 31, 2013. My review is Amazon site  For convenience, here it is 
When I downloaded the book, I recalled this quote from Nir Eyal blog, NirAndFar:
"A funny thing happens when you lie to people: they tend to believe. Why shouldn't they? They lie to themselves all the time. Our minds are wired to respond in predictable ways-among them is perceiving the world the way we want to see it, not necessarily the way it is."
Does this book lie? Well Nir gives us facts. He describes the way we reach user hearts and brains, in the same way perhaps Bob Dylan music hooks you on.. What is a Habit? ("automatic behavors triggered by situational cues..things we do with little or no conscious thought"). A habit-forming company, says Nir, links its services to the users' daily routines and emotions.
Nir Eyal teamed with Dr. Baba Shiv to design and teach a course at Stanford Business School, on the science of influencing human behavior. This is how the Hook model was created. It is well described right at the beginning, and each step is analyzed thoroughly in subsequent chapters. Nir dedicated also an entire chapter to discuss the morality of manipulation. The irresponsible use of habits creates bad habits that may degenerate.
This is not the reason the Hooked model in product management was created.
What is CLTV? It stands for customer lifetime value. This is the ammount of money made from "a customer, before she switches to a competitor, or dies". User habits then,, increase the CLTV.
Nir quotes a paper by John Gourville from Harvard Business School "Many innovations fail because consumers irrationally overvalue the old, while companies irrationaly overvsluer the new"
Kindle has this feature that one can see how many people highlighted a paragraph. This quote had 26 highliters in 72 hours. It says why, for new entrants, they can't just do better, they must be nine times better.. Why is this? Because old habits die hard.
Even if "the benefits of using a new product are clear and substantial", if the use of this products require a high degree of behavior change, they are doomed to fail.
To me this is clearest and most lucid explanation on why the attitude "we want to be the best of class" - by challenging an existing market leader, aka a "me-too" application - fail 98% of the time. It is also why, writes Nir, users did not leave Google to move to Bing in significant numbers.
Nir goes over the Fogg Behavior Model, one of the most lucid model on how to remove obstacles that stand in the way of users adopt a product. The technology to achieve these results are based on the teachings of The Stanford Persuasive Technology Lab which "creates insight into how computing products ... can be designed to change what people believe and what they do."
After at length descriptions of each element of the Hooked habit builduing model, Chapter 6, What are you going to do with all this?" is a must read. Before I wrote this review, I watched the movie "Silver Linings Playbook" where a character named Pat  (Bradley Cooper) threw away all books that did not have a happy ending (like Hemingway's "A Farewell to Arms")
This is why Holywood's movies reach our hearts. We have enough strugles and tensions in our real life. We buy a habit forming product, because we like it. We like the iPods and Androids. We like FB and Google. The book by Nir Eyal teaches us, the product creators, how to make a product with a happy ending for everyone, Thus we elevate the quality of our lives.
Nir Eyal

Wednesday, December 18, 2013

How to create non cliché visionary businesses in 2014

Everyone talks of new company for the 21st century. We see Kodak, Sun, Compaq disappear. We see HP and Dell struggling . Oracle may join them.

All ideas and quotes below are part of The Operating Model That Is Eating The World by Aaron Dignam .These teachings add up to my non-cliche product management credo as described in the Product Management Manifesto 

The problem

"Massive organizations are feeling intense pressure to innovate, as unencumbered startups take shots across their bows. Legacy processes that enforce bureaucracy, command-and-control structures, waterfall development, and risk management are still largely the standard among big corporations, yet they’re liabilities in this fight. Those processes were built for a very particular set of circumstances – ones that don’t persist today. Educational researcher Sugata Mitra explored this notion... speaking of the British Empire’s bureaucratic approach to managing a far flung empire, “They engineered a system so robust, that it’s still with us today, continually producing identical people for a machine that no longer exists.”"

The solution

"Today’s fastest growing, most profoundly impactful companies are using a completely different operating model. These companies are lean, mean, learning machines. They have an intense bias to action and a tolerance for risk, expressed through frequent experimentation and relentless product iteration. They hack together products and services, test them, and improve them, while their legacy competition edits PowerPoint. They are obsessed with company culture and top tier talent, with an emphasis on employees that can imagine, build, and test their own ideas. They are maniacally focused on customers. They are hypersensitive to friction – in their daily operations and their user experience. They are open, connected, and build with and for their community of users and co-conspirators. They are comfortable with the unknown – business models and customer value are revealed over time. They are driven by a purpose greater than profit; each has its own aspirational “dent in the universe.”

The picture


The details


Sunday, December 08, 2013

Must Read: The new, improved New Dandelion plan for HFA's employment

This is the new, improved plan. Read it. Think of your friends who are parents of a grown up Highly Functional Autistic (HFA) young person. Ask them to read it. Write to me. I want to start a non-profit, open an office in Rocklin, California, US where I live and where the main campus of Sierra College is located. I want to start a pilot to multiply by 10x the number of successful HFA students gainfully employed. Then by 100x and by 1,000x as we grow in California and the rest of United States and Canada.

Many thanks to Bob Dorf for the support. In preparing this plan, the ideas from The Startup Owners Manual book Bob co-authored with Steve Blank, percolated my thoughts. This is a social enterprise that needs social capital to create happiness and goodness for all Americans. Here the idea for "customer development" is how to extract the enormous talent hiding in many HFAs and saving their future.
“The fundamental principle of customer development is that you start to think about where the customers are going to come from,” Dorf said. “What are they going to pay you? Where are you going to find them? How much is it going to cost to get them?”
I tried to rewrite this statement  to be relevant to this plan:
“The fundamental principle of developing the unique skills of HFA's is start thinking what the individual's skills are and how they relate to corporate jobs. How much are they going to be paid? Where the employers are? How much is it going to cost to create the system that scales up to many thousands HFAs succesfully and meaningfully employed?”
Compared to all plans so far proposed and / or implemented for autism employment, The New Dandelion is the most cost effective, most engaging and will bring more hapiness

I have also been influenced by Umair Haque's "The Beterness Manifesto". See my blog Optimize your work for happiness, not only profit

Hapiness? Yes, hapiness.

Saturday, December 07, 2013

Bernard Madoff and I - updated January 1, 2015

On a personal level I don't really understand how Wall Street makes money. I am not in that league.

But do all the movie stars, sport stars, Internet entrepreneurs, winners of lotteries know how Wall Street works? Ultimately, do these chief economists and Harvard Business School grads  know how Wall Street works? Probably they can give courses and talk for hours, but they don't know either.

There is only one explanation; Faith. "Faith becomes necessary only when we cannot directly experience the object with our senses or understand the reason for doing something." Chaim Kramer writes

Faith in people like  Mr. Madoff? We love to fabricate idols, because we need them so much to feel protected from our own doubts and fears. Having a lot of money, I mean really a lot of money, brings insecurity and nightmarish demons. We need people like Mr. Madoff to bring deliverance to the rich

Bernard Madoff was the Ponzi scheme operator  using the money of the wealthiest people in the world. He was sentenced to 150 years of prison and has 300 minutes monthly quota to speak over the phone from his prison in North Carolina. He doesn't use his allocation because he doesn't "have anyone to talk to."

His wife does not speak to him. His brother Peter, who  is languishing in another prison sentenced for 10 years, does not speak to him. His son Andrew  who is battling stage-four blood cancer does not speak to him ( *) and his other son, Mark committed suicide.

I read all these from an interview in WSJ today:
[Madoff] wanted to justify the actions that resulted in his 150-year prison term. He said he felt "trapped" into the con by other people and always thought he would be able to get himself out of it.
His investors, he said, were "sophisticated people" and should have known better.
"People asked me all the time, how did I do it. And I refused to tell them, and they still invested," he said. "Things have to make sense to you. You should ask good questions."
He insisted banks knew about his fraud and were complicit in the scheme for years
Norb Vonnegut, a financial advisor, tried to snatch some customers away from Madoff. He writes:
Mr. Madoff didn't have clients. He had a cult of happy, supremely loyal investors....
After a fierce struggle, I once managed to wrest a $5 million account away from Mr. Madoff. "It's crazy for you to put all your eggs in one basket," I told the client, who parked more than ten times that number in the Ponzi scheme and played golf with the man himself.
When I left my brokerage firm for greener pastures at a registered investment adviser, my client refused to follow. He moved his money back to Mr. Madoff instead. The returns were better and he wanted to "simplify" his affairs by consolidating everything in one shop. I should have pushed harder.
At the bottom of this blog, see a list of clients who lost money. My school, the Technion  (the MIT of Israel) is on the list. So is Yeshiva University, Steven Spielberg foundation, the largest apartment landlord in New York City, BBVA one of the top banks in the world, Royal Bank of Scotland and Henry Kauffman, Salomon Bros Chief economist. What about Ascot Partners, run by Jacob Ezra Merkin, GMAC’s chairman?

Was Madoff evil? Are his clients naive? Or stupid? Then why some of the most sophisticated investors, the smartest entrepreneurs are on the list?

This is the moment when Madoff discovered he arrived at the end:
In 2008 at the Palm Beach Country Club in Florida, Madoff said, and he had "a young black kid" for a caddy, and the caddy was buying and selling homes.
"He said he didn't need credit. He would buy homes and flip them for a profit," Mr. Madoff recalled. "I told my wife, 'This is the end.' "
The end of the housing boom would be a contributing factor in the collapse of his fraud, as many investors began seeking to cash out as the economy stalled and financial assets sank in value.
If the reverse would have had happen, Madoff would have been still living in his 18 million residence in New York, surrounded by his adoring family and worshipped by his clients How many Ponzi schemes went un-detected because of favorable economic conditions, that occurred at the right time? (**)

In a secular world, even if one has "friends in high places" , he needs to be aware that at any time "a new king" could arise, or that his former friend turn against him. In truth, our security comes directly from God.
 A pharaoh, now believed to be of Hyksos lineage, who “didn't know Josef". enslaved his descendants
Top cult entrepreneurial figures in Silicon Valley know that. We live all one inch away from success, adulation and wealth and one inch away from failure, bankruptcy, misery and being forgotten

Read also part 2 of this story

Notes


(*) Andrew Madoff died after a long battle with cancer on 09/03/2014


(**) The movie Arbitrage, starring Richard Gere and written by Nicholas Jarecki alludes to Madoff.

Gere acts as a financial baron, named Miller, who has everything, like Madoff. He cheats and is about to fall, but the end of movie, unexpectedly survives and maintains all the privileges, money and reputation. The character that Richard Gere plays in "Arbitrage" has been described as a Bernie Madoff-like figure, Although the director writer flatly denies the resemblance, and that Richard Gere is better looking than Madoff,  the film clearly describes a typical story where everyone remains honest, if not caught, Because on a smaller scale, we all commit sins and tell lies.

About another movie, Match Point written by Woody Allen, the director says in an interview:
"People are afraid to acknowledge or to face what huge dependency they have on luck,". "There's a tendency to think we have great control over our lives or some control, but the truth of the matter is that we don't have the control that you think. You think you have control - you think if you get up in the morning, you exercise, you eat right and don't smoke, you will be healthy. But it doesn't work that way - you still get cancer and you still get hit by a bus. So much is luck. But if you face that, it's a very unpleasant feeling. You like to feel 'I have some control over events' ... You do have some control, but much less than you think, and that's why I wanted to make the movie."
(***) Leaked Palantir Doc Reveals Uses, Specific Functions And Key Clients
This article from Techcrunch states
Palantir’s data analysis solution targets three industries: government, the finance sector and legal research. Each of these industries must wrestle with massive sets of data. To do this, Palantir’s toolsets are aimed at massive data caches, allowing litigators and the police to make connections otherwise invisible. For example, a firm hired by the Securities Investment Protection Corporation used Palantir’s software to sort through the mountains of data, over 40 years of records, to convict Ponzi schemer Bernie Madoff
 _____________________________________________________________


Wunderkinder Foundation, run by Steven Spielberg
Charity
Unknown
The Horowitz Association
Charity
Unknown, reports of up to $800 million
Sterling Equities, run by Fred Wilpon, owner of the New York Mets
Financial firm
Unknown
Stephen Siegel and other executives at CB Richard Ellis
Commercial real estate
Unknown
Several brokers at Newmark Knight Frank
Commercial real estate
Unknown
Senator Frank R. Lautenberg’s charitable foundation
Charity
Unknown
Notz Stucki
Financial firm
Unknown
Norman Braman, former owner of the Philadelphia Eagles
Individual
Unknown
JEHT Foundation, will close
Charity
Unknown
Jeffrey Katzenberg, DreamWorks Animation SKG
Individual
Unknown
Henry Kaufman, former Salomon Brothers chief economist
Individual
Unknown
Edward Blumenfeld, owner of Blumenfeld Development Group
Commercial real estate
Unknown
Charity of Leonard Litwin, one of New York's largest apartment landlords
Charity
Unknown
Chais Family Foundation
Charity
Unknown
Bramdean Alternatives
Financial firm
About 9.5 percent of assets
Mediobanca
Financial firm
$671,000
Clal Insurance
Insurer
$778,000
SAR Academy
Chartiy
About $1.2 million
Caisse des Dépôts et Consignations
Financial Firm
$1.4 million
Gift of Life Bone Marrow Foundation
Charity
$1.8 million
New York Law School
Charity
at least $3 million
Mirabaud
Financial firm
Several million dollars
Congregation Kehilath Jeshurun
Charity
$3.5 million
CNP Assurances
Insurer
$4.1 million
North Shore-Long Island Jewish Health System
Charity
$5.7 million
Neue Privat Bank
Financial firm
$5 million
Maimonides School
Charity
$5 million
Ramaz School
Charity
$6 million
Julian J. Levitt Foundation
Charity
$6 million
Jewish Federation of Greater Los Angeles
Charity
$6.4 million
Technion-Israel Institute of Technology
Charity
$6.5 million
Robert I. Lappin Charitable Foundation, supports student exchange programs to Israel
Charity
$7 million
KAS Bank
Financial firm
$9 million
Korea Teachers Pension
Pension fund
$9.1 million
Jewish Federation of Greater Washington
Charity
$10 million
Mitsubishi UFJ Financial Group
Financial firm
$11 million
Harel Insurance
Insurer
$14.2 million
Massachusetts state pension fund
Pension fund
$12 million
Phoenix Holdings
Investment firm
$12.4 million
Société Générale
Financial firm
$13.8 million
Groupama
Insurer
$13.6 million
Alicia Koplowitz
Individual
$14 million
Elie Wiesel Foundation for Humanity
Charity
$15.2 million, almost all of the Foundation's assets
Jewish Community Foundation of Los Angeles
Charity
$18 million
Madoff Family Foundation
Charity
$19 million
Tufts University
Charity
$20 million
Sumitomo Life Insurance
Insurer
$22 million
Mortimer B. Zuckerman Charitable Remainder Trust
Charity
$30 million
Royal Bank of Canada
Financial firm
Under $40 million
Fairfield, Conn. pension fund
Pension fund
$42 million
Great Eastern Holdings
Insurer
$44 million
Banque Bénédict Hentsch
Financial firm
$48 million
Korea Life Insurance
Insurer
$50 million
Unione di Banche Italiane
Financial firm
$85 million
Hadassah, the Women's Zionist Organization of America
Charity
$90 million
Yeshiva University
Charity
$100 to $125 million
UniCredit
Financial firm
$102.5 million
Dexia
Financial firm
$107 million
Credit Mutuel
Financial firm
$124 million
Aozora Bank
Financial firm
$137 million
Carl & Ruth Shapiro Family Foundation
Charity
$145 million
M&B Capital Partners
Financial firm
$187.9 million
EIM Group
Financial firm
$230 million
Pioneer Alternative Investments
Financial firm
About $280 million in assets
Maxam Capital Management
Financial firm
$280 million
Nomura Holdings
Financial firm
$302 million
Reichmuth, the Reichmuth Matterhorn fund
Financial firm
$330 million
Man Group
Financial firm
$360 million
Fix Asset Management
Financial firm
$400 million
BBVA
Financial firm
$404 million
BNP Paribas
Financial firm
up to $478 million
Carl Shapiro
Individual
$545 million
, ,
Financial firm
up to $609 million
Natixis
Financial firm
$614 million
Benbassat
Financial firm
$935 million
Picower Foundation
Charity
$958 million
HSBC Holdings
Financial firm
$1 billion
Union Bancaire Privee
Financial firm
under $1.08 billion
Fortis Bank Netherlands
Financial firm
$1.4 billion
Access International Advisors
Financial firm
$1.4 billion
Ascot Partners, run by Jacob Ezra Merkin, GMAC’s chairman
Financial firm
Most of the firm's $1.8 billion in assets
Bank Medici
Financial firm
$2.1 billion
Banco Santander, Optimal Investment Services
Financial firm
$3.1 billion of client exposure
Tremont Group Holdings
Financial firm
$3.3 billion
Kingate Management
Financial firm
$3.5 billion
Fairfield Greenwich Group, run by Walter Noel
Financial firm
$7.5 billion




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AI and ML for Conversational Economy