I waited for almost 10 minutes before writing this short post but I couldn’t find any arguments counter to my flash gut feel that said "So what?" after watching gdgt.com intro video featuring Veronica Belmont.

Silicon Alley Insider has reported a traffic lock-down in this new start-up a short time ago.

I think I was never this sharp in any of my comments, so this is a new benchmark. I see no future at all for gdgt.com. This is one of those websites that people interact for a while and then say "So what I am doing here? What will I get from this site". People can argue that there are lots of theme-based social avenues such as flixster or shelfari. But their themes are in fact filled with value. I guess the key point is the exhausting number of items in each theme (thousands of movies, millions of books, etc.) but gadgets are different. Two key questions make me absolutely pessimistic about building a social wrap around gadgets:

1. Is there a long-tail for gadgets?
2. Even if there is, what is the problem of millions of product reviews that are already sitting in the cloud?

I wish there was a way to short start-up stocks…

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Thanks to Stanford Business School’s unique class offering called Critical Analytical Thinking, I ended up reading a book that I wouldn’t read if it wasn’t for the class: Ghost Map by Steven Johnson. It is a greak book about a major cholera outbreak in Victorian London, but in its essence, it is full of gems that I would integrate into my investigative thinking process against hard-to-crack situations and endeavors. In fact, I have read the book for the second time to make sure that I am not missing some key messages and I actually found new things with the second pass.

One important idea that hit me while reading the book was about an alternative approach in fighting contagious diseases, such as the recent swine flu case. My key question is this: Could we create medicine that is infectious, but in a positive way? What would happen if biotech companies start investing resources in creating microorganisms that can immunize or treat people against diseases such as tuberculosis or cholera and that are air-borne or water-borne? Think about the implications of such an advancement assuming that is is somehow achievable. Think about pouring a ton of swine flu antibodies into Los Angeles municipal water tanks and letting millions of people getting ‘infected’ with swine flu immunization. Doesn’t it sound powerful?

I wonder the barriers for such advancement in medicine. From a cost perspective, how much R&D budget would it require to develop it, and could the efficiency gains in distribution compensate for those investments? Would biotech/pharma companies be concerned about loss of control on their revenue stream? From a technology perspective, if nature is prone to existence of violent viruses that are contagious, what is the limiting factor for artificial creation of contagious benefical microorganisms?

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One thing I was passionate to pursue in Stanford during the last few months was an up-and-coming gaming start-up. Through our S356 Evaluating Entrepreneurial Opportunities course, uniquely offered by Stanford among other business schools, I joined a team of Stanford CS, EE, and business school students to execute on the idea of a flash gaming platform inside Facebook. I will follow with the details when the time is right to show how we are planning to tie the loose ends in the world of flash games and blend those hundreds of millions of gameplays into a sticky, ongoing social experience.

For now, I wanted to update the community that Gameyola was chosen to be a fbFund finalist.

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I stumbled upon two of Intel’s new advertising campaign while watching Hulu today. It was interesting that Intel started reaching out to end-users after a few years. Yet, I think they had some rusty consumer marketing cabinets that prevented them to think carefully about the messages they are communicating to customers.

Here are two messages:

1- Our rock stars are not like your rock stars.

2- Our big ideas are not like your big ideas.

Now, these words can go different ways for different people, but certainly, for some people it will just mean that Intel people are smarter (and better?) than the non-Intel people?

I am really curious to see how the ads will turn out for Intel. See it for yourself in Youtube by searching for Sponsors of Tomorrow. In my opinion, it adds an unnecessary greedy and arrogant dimension to Intel’s public image. Looking at Intel’s not-so-bright advertising history (consider the insulting print advertisement called Sprinters a few years ago), I think Intel needs to start hiring a few brand managers that are, in fact, average humanbeings.

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Strategy was one of my favorite classes in Stanford’s first-year MBA program. In general, the entrepreneurial-minded students in Stanford GSB (who are in majority), thinks the strategy class is highly impractical, and in real world, what matters most is the novelity of the core idea. Some people quote strategy professors contradicting themselves in some consequent classes (such as Formation of New Ventures) as these professors are said to be saying "Now, forget everything you learnt in general strategy classes". Students perceive this as a proof that first strategy class had no useful application, while, in fact, this is exactly how the application of strategic thinking works.

When you are starting a new company, your competitive advantage has to be a novel core idea, doing something in a different way that what companies before yours did. Your first competitive advantage is probably the product/market fit, the first-mover advantage, or a patent. No company gets founded on the basis of a strong talent management practice of unique culture. Yet, after the company operates for a while, the rise of the competitors render most of these competitive advantage items as obsolete (maybe except patents, where you have a monopoly). At that time, your company would better have some higher-order competitive advantages (extensive distribution network, loyal customer base, strong talent management or a congruent corporate culture that fits directly into your business model of providing low-cost or high-quality products/services). That is why, in the first stragegy classes where we analyze companies such as JetBlue or USA Today, competitive advantage discussions are mostly based on human factors and leadership, whereas in a Formation of New Ventures course where we evaluated start-up stages of Cisco and SUN Microsystems, we looked at the product/market fit of new product offerings and whether core ideas solve painful problems of a start-ups potential customers.

In summary, competitive advantages are extremely different for companies at different stages of their establishment. One usually overlooked competitive advantage, that is in fact the king of the others on my mind, is Experience. Simply, this is the set of information you accumulate over time operating your business. If you find a robust process to systemically use the information generated by your operations to improve your product offerings, you are said to have a sustainable competitive advantage, the most difficult and the most rewarding advantage a company can and should have. We don’t hear about it often, but when a company has it, it would be extremely harder for competitors to catch them in the marketplace.

One company that I think has such a systemic approach to using experience as the competitive advantage is Netflix. Let’s make the case shortly. Netflix exactly started with a novel core idea: subsciption-based DVD rentals via mail. The competitive advantage of the start-up phase was an extreme product/market fit. Customers had pains about late fees, limited selections in stores, and the need to drive-by (maybe some others as well). Netflix solution addressed most of these, creating a big competitive advantage by fitting its product to market needs. But then what? Blockbuster followed suit (and maybe some other regional players as well). So, as the competitors start doing the same what Netflix does, how can Netflix find a sustainable competitive advantage? It is, in my opinion, the experience.

Now read the following short piece from Download Squad, as an argument for Netflix’s systemic leverage of operational information. Netflix’s higher-order goal is to provide a superior customer experience, or let’s say value. Basically, customers would continue to be a subscriber for Netflix as long as they find good and enough number of movies to watch for the same fixed monthly fee. Otherwise, they might switch to a competitor or leave the market. How can Netflix continue to provide movies to fit the likes of the customers? That is how they leverage experience. On the basis of their huge customer data, they try to predict what customers would like more. That is not novel by itself, as almost all retailers do this. But don’t ingore the crucial point. Netflix is trying to push the envelope at this cutting edge of recommendation engines, not just implementing a recommendation engine suite offered by a specialty start-up. They are making their data available under the Netflix Prize, hoping to seize the most effective methods offered by its developer community. Probably, what Blockbuster is doing at the same front is paying hundred grand to a third-part recommendation systems builder to implement its standard software suite. If you think about Netflix’s customer base and its emphasized approach to customer experience, you will realize that the gap between Netflix and Blockbuster (leader and the follower) is actually widening over time. This is like a reverse death spiral for Netflix, as the more they leverage the experience they have, the lower the attrition will be and the higher the user acquisition will be, contributing to the accumulation of their operation information more, on which they will experiment further to improve user experience.

As every strategy piece has a limit to be exploited though (an analogy to Netflix can be Capital One’s analytics-based approach to credit card industry, and they realized a ceiling for the number of profitable customers they could acquire), Netflix’s experience-based strategy is bound by the mismatch in movie production rates (which is slower) and users’ movie consumption rate (which is higher). I believe that is why they are experimenting other well-known options in strategy literature (one example of which is diversifying with on-demand streams).

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