Price vs. Demand basics from a first-grader

Lemonade Stand

On the way home from school yesterday – last day of finals week – my son told me a story that shocked, surprised and made me proud. Specially heart-warming since I am a Product Manager.

I was asking him about his test and he got really, really excited about ONE particular question in the finals that day.

 

 

(Q) At what price will you sell more cups of lemonade?

(a) $0.25/cup   (b) $0.95/cup   (c) $1.25/cup

He thought the answer was obvious ($0.25) and specially couldn’t fathom why many of his friends had marked one of the other very tempting but incorrect answer ($1.25).

Price vs. Demand

 

 

He will in time read the treatise on The Law of Demand but chances are that he is ready to move onto the next lesson. And if you remember this story, you are too!

 

 

 

 

 

 

Cross-posted to https://medium.com/@vdalal

 

Image #1 Credit

Image #2 Credit

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0xc0ffee, 0xdeadbeef, & …

This g4ff3 reminded me of all the times that I have used or seen leetspeak used in my projects.

Just last week, I saw someone use 0xdeadbeef (or 0xd34db33f). I have seen TI DSP 62x memory initialized to 0xC0FFEE right after bootup. I have had memory at 0x0 initialized to 0xfa11fa11 to debug memory corruption issue (via a hardware breakpoint).

Now that you are longing for more, go get your f1x before sending your next tweet or post.

Vasu

Image Credit

Facebook IPO: Leaving $5B on the table

If I look at the Facebook IPO purely as a product:

1) Very eagerly awaited by all investors (admit it, you have put in your limit order)

2) Super popular brand, 900+ billion users, addictive product

3) $100+ billion valuation, $4B revenue, 25% net profit, high growth, dominates social

4) Low costs, ~4K employees

5) Selling 421.2 million shares at $38 for a $104.2 billion market-cap, or 107 times trailing 12-month earnings

As a Product Manager managing the Facebook IPO, my goals are:

1) Manage demand (increase or even decrease the # of shares depending on whether I want to maximize initial revenue)
– There is always a secondary offering (release 2.0) with more features (voting rights :-))

2) Achieve the best price/share

Since the market is a voting machine (“like” machine) in the short-term, and based on the feedback from the Beta (IPO Roadshow), I should expect a pop (up).

Just raising the price/share or the # of shares (much like we have seen happen over the past few weeks) does

not bring the best returns to Facebook though it does cut into the profits at the underwriters.

Assuming that Facebook stock reaches $50 in the first months, then I would be leaving ~5B on the table. (421.2M * $50 – 421.2M – $38 = $21B – $16B).  Granted, one won’t be able to sell millions of shares at the highest price without bringing the price down, but there are still more than a few billion more that can be profitably made. Even better – and I suspect that most companies don’t use this because they are too short-term focused and it’s a very risky for almost ALL companies – use a Dutch auction to gain the best value.

In this case, the downside can be controlled and (probably) limited, while the upside is at least a few billion (with a b). As a Product Manager, you are presented with such odds many times and you need to decide if you want to take it. In negotiations, I have always felt that I *may* have left money on the table and this is just one of those where it was a few billion 😉

Vasu

PS:

Despite the fact that I have limit order for FB shares – it’s a momentous time like the Netscape IPO so you couldn’t keep me away from the action – I would not “like” it at this time (specially if you are a small investor)

Image Credit

Psychic, super serendipity or Google is violating your email

In light of the new Google Privacy Policy debate, Path‘s (fairly common) mobile address-book upload storm (in a tea-cup?), Google tracking Safari users and Super-Cookies, comes this article from NY Times about “How companies learn your secrets“.

My personal view on my experience and the whole privacy issue is that Google needs to do what it needs to doAfter all, it’s a business and it’s avowed goal is to “…organize the world’s information and present it in useful ways…” – the “database of intentions”.

So without further ado, in what will warm the cockles of marketeers hearts everywhere (heck it may even put marketeer’s out of business if when Google gets really good over time but that’s a story for another day) and cause others to cringe and cry foul, here is my observation:

1) I sent an email to my friend Amit – reproduced below (with the most relevant text)

[snip]

… there are a bunch of contacts/email backup/restore/share solutions out there (http://www.migrationwiz.com/, http://shuttlecloud.com/, http://www.yippiemove.com/, http://www.liveoffice.com). The BIG and ONLY issue is would you trust a small company with your DATA. I expect that Google/Microsoft to support this already specially since there are people migrating to/from their platforms all the time.

[snip]

2) Within minutes of sending this email, GMail started showing me the banner below in GMail

GMail Banner - Import emails from Yahoo Mail

Psychic, Super serendipity or Google is violating your email

In light of what I observed and described above, Target‘s method to determine if a customer is pregnant, is just a lot of hard work and almost quaint. Andrew Pole and others of his ilk may as well look for a new job or a new career.

Let us extrapolate this further so that the implication is clear(er) in light of  the new Google Privacy Policy (effective March 1st 2012). Let’s say that you are in the market for a car and have been exchanging emails with friend(s) on a few car choices . Next say you go to a website and there is an ad for a few hundred dollars off a car which was on your list. Cool, right?

Let’s take another example. Say you received news (via email or IM or Google Voice?) that your great aunt Gertrude died. Next say you go to a website and there is an ad that gives you discounts on flowers, cards, funeral services and air-fare or rather bus fare to (surprise) Abilene, Texas (Aunt Gertrude’s place of residence) and … you get the point. Crass and creepy, right?

Psychic, super serendipity or Google is violating your mail – you hear, heed and decide. And welcome to the brave new world!

Vasu

Embrace Failure

Yesterday, I was asked for my thoughts on High-Availability (HA) for 24x7x365, 99.999% uptime software. And today, a friend forwarded this article about experiences with Apple and Dell Customer Service. The common theme between the two is “recover gracefully, recover fast!“.

My answer (yesterday) was elaborate and went into some detail about the various features required in the software but I started with “A good HA architecture starts with accurate detection followed closely by recovery. Recovery is more important than determining the root-cause of the failure“. If you have worked on widely deployed, sufficiently complex, leading edge products you may appreciate what I just said. You may will not be able to find all failure cases in your software ever, so do your best to ensure a flawlessly, graceful recovery. Think of what I just said again.

Similarly in the Customer Service story, Apple figured a way to “recover gracefully, recover fast” and even find a way to make this challenging customer touch-point enjoyable. Wow.

As we Engineer software, build applications and manageproducts, I encourage everyone to think of this  post. If you don’t remember anything but just remember the associated image – and what the person being resuscitated will appreciate more – it will do just as well!

Vasu

Photo Courtesy:

http://depts.washington.edu/learncpr/quickcpr.html

Lead Generation & (a bit of) Virality for Doctors (who can’t advertise)

This is a true story – I have since re-confirmed this with my Dad. I mentioned this incident to my professor Kevin and others in my class and they absolutely loved it. I hope you will too…

I heard this first when I was a kid and it blew my mind. I have wanted to be a marketeer and idea-tor ever since. True.

Doctor’s in India (and in many other countries) have certain size restrictions on the display/bill-board that they can place outside their offices in addition to advertising limitations. A new doctor (family practitioner to borrow a US term) had moved to my father’s neighborhood in Bombay, India (around Grant Road (East) for those curious enough). Now it would take something to standout in Bombay unlike a small town or village where you may be the only doctor around. This doctor came up with a novel strategy to get the people in the neighborhood to know about him without advertising, staying within his legal boundaries and maybe just stretching his ethical limit some.

He got a bunch of his friends to move about in the neighborhood asking for him. Let me set the context – this was a few decades ago, there was no Google Maps (probably wont work even today’s), people ask other people for directions, there are actually people walking the streets and doctor’s (family practitioners) are typicallyjust walk-in!

Courtesy: chefsanchez.posterous.com

Extra points for pointing out a doctor's sign board. Courtesy: chefsanchez.posterous.com

It went like this – one of his friends would ask some random person on the street if he knew of a Dr.Such-and-such who was practicing at such-and-such address. This would happen for many (of the doctor’s) friends, for many times a day and over many days. If this happens a lot in a short period of time, word gets around. Pretty soon, the neighborhood knew that Dr. Such-and-such had moved into the neighborhood at such-and-such address.

I am thinking not only do most people know the doctor’s name but am sure they must have thought highly of him since so many people are visiting him. Brilliant!

My dad still remembered this campaign and we shared a good laugh this weekend. Ah, the memories.

Vasu

Photo Courtesy: http://chefsanchez.posterous.com/

Procrastination to action

“There is no force like inertia…”

I loved it that WordPress setup a blog post milestone – my next one is 5 posts – for me by default.

If you have been putting something off (procrastinating) – idea, task, project, chore, or pretty much anything – for whatever reason

– Just setup a time for (say) 30 minutes

– Stop everything else and spend just 10 minutes on it. Give it your ALL. Just do it!

– You will have started and pretty soon the 10 minutes becomes an hour and you are warmed up or halfway there depending on the job at hand

I have used this technique many times before on tasks small and big with great success.  Try it and watch your ideas come to life and all your chores wither away…

Vasu

Hi, there

“There is no force like inertia and no better feeling than momentum.” – paraphrased and partly made up (by me)

“An idea that is developed and put into action is more important than an idea that exists only as an idea.” – Edward de Bono,  Author of Lateral Thinking

“You can’t wait for inspiration, you have to go after it with a club.” – Jack London

In that spirit, I have restarted blogging. And will do so regularly. Besides, my wife knows how smart I am and now you will too.

If you like what I say, enjoy! If you don’t, let me know and I will give you a month free or a full refund 😉

Vasu

This site is under Construction. Pardon the mess!

This site is under Construction. Pardon the mess!

As you can see that I just moved in and am still un-packing. Most of my stuff from the old place still didn’t make it here. I actually might just start afresh.

Thank you for stopping by. Do come back soon.

Vasu

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