Tag: market

Devil’s in the details? Good news!
By Ryan Long

Devil’s in the details? Good news!

The Devil is in the details. Good news! This means picking a trade name for your new business venture will involve a great deal of planning and detail oriented thinking about your launch plan, and the market you serve. This will only serve you in good stead down the line.

Take, for example, a company called “Designbook.” According to a recent article, Established Firms Fight Startups on Names, they are a fledging upstart who is seeking entry into the now crowded social networking market. In attempt to gain a nationwide monopoly on their name, Designbook filed an application to register it’s name with the federal government’s Patent and Trademark office.

Guess who opposed the application? Facebook. According to the networking giant, Designbook’s use of “book” in it’s name is confusingly similar to the “book” used in “Facebook.” Of course, if Designbook was a pen manufacturer, Facebook’s claim wouldn’t likely have merit.

However, as applied to the social networking market, “book” has gained a worldwide reputation as being associated with “Facebook.” So the mammoth’s argument about confusingly similar use has merit — in this instance. Imagine if the market became saturated with “Desginbook,” “Loobook,” “Cokebook,” “Gangabook,” “Pornbook,” and so on? Such uses give the impression that the companies are affiliated with Facebook (as in the case of “Designbook” or “Lookbook”). Otherwise, the tradenames dilute the “Facebook” name (as in the case of “Cokebook,” “Gangabook,” and “Pornbook.”). Unlike confusion, dilution doesn’t require that folks think one brand is affiliated with the other, but merely that that the new brand — i.e. “Cokebook” — makes the famous brand — “Facebook” — less unique.

That being said, assume “Pornbook” launched a website, not in the social networking realm, but as a new humorous online publication by evolutionary biologists like E.O. Wilson for the study of sexual practices among Rhesus monkeys, in addition to other non-human mammals, throughout history. In that case, Facebook would be hard pressed to bring a claim. “Book” is a generic word. Facebook doesn’t own it. So the question becomes, how do you, as a new venture backed company, pick a good name to enter into an otherwise crowded market?

Be original. While “Designbook” describes, in some ways, what the company does, the trade name “Nike” does not. If you didn’t know that “Nike” referred to the shoe company, you’d otherwise think it may apply to a Greek God for victory — it does. All this means is that a company like “Designbook” needs to pick a more original — “fanciful” — name that doesn’t describe, in anyway, what they do. They then can make a splash in the market — like Nike did after Mr. Jordan helped revamp the brand. (Remember those Spike Lee/Michael Jordan commercials?) In the end, an original name can actually help “Designbook” gain more market share instead of merely being a “me too” Facebook.

Only by respecting the Devil and his details will you arrive at a sustainable, attention grabbing, name.

Michael Jordan was an MVP, but would he like the lean start up’s MVP?
By Ryan Long

Michael Jordan was an MVP, but would he like the lean start up’s MVP?

Michael Jordan. Ever heard of him? The winner of the Most Valuable Player five times, Mr. Jordan was one of my heroes growing up. While I am sure he loved winning the MVP all of these years, would he have liked the minimum viable product (“MVP”) of the lean start up methodology? What on earth is that anyway?

The MVP theory says that before you put your head down for months, or even years, developing a fancy business plan with the likes of Harvard, Chicago, or Stanford MBAs, you should first test the idea via an MVP. Say you are seeking to develop a social networking platform that will require retention of a large data base of names, and that the software you are creating will require much effort — and funding — to create. Before you create the whole network, you may want to make a sample that is big enough to get feedback from the marketplace as to functionalities that will be well received, and others that will not, before you create the whole.

When he entered the NBA, Mr. Jordan was criticized and cajoled for having larger shorts than anybody else in the NBA, and for also sticking his tongue out when he played. If he abided by the MVP method, would he have continued? Or what about Steve Jobs, when he sought to make your personal computers pretty, instead of the regular drab look that IBM was creating at the time? Would he have continued on his path if, after being ousted by the board of Apple for spending too much on hardware design, he sought approval from the market via an MVP?

Probably not. As I covered along with Silicon Valley Software Group in our first panel discussion, entitled Choosing the Right Technologies for Your Next Product, at San Francisco’s General Assembly on April 2, the MVP was created in reaction to the “build it and they will come” ideology. Einstein said “religion without science is blind” and so, too, building hardware or even software without any idea of what the market will or will not like is like flying in the dark with no radar.

But the reason why we call certain people innovators is that, in some ways, they can see in the dark. They are ahead of the market, close enough to get its energy, but not so close so as to be eaten up by it. The shortcoming of the MVP is that, if you are really looking to make a big bang, the positive relationship between risk and reward says that, in the end, you need to be aware of where the market is, but also have faith in your vision of where the market is going to be.

Now, most NBA players wear the larger shorts that Jordan sported when he first came into the league, and Apple is the largest company, in terms of capitalization, of the United States. MVP has its place in terms of spending scarce venture capital funds in an efficient way, but too much worshipping at its feet will make us all followers and diminish innovation.

Take a bite out of crime — not Apple.
By Ryan Long

Take a bite out of crime — not Apple.

We all know the old saying: take a bite out of crime. Unfortunately, today a New York federal court took a bite out of Apple, Inc., instead. The court found that Apple violated antitrust laws when it entered into contracts with major book publishers to distribute e-books using the agency model. The opinion is misguided in failing to see these vertical arrangements as efficient and reasonable methods of competing against and responding to Amazon’s below cost e-book pricing, which the government has to date ignored.

The opinion says that two wrongs don’t make a right. On the one hand, Amazon has overwhelming market share in the e-book market. What is more, it can subsidize losses in that product market with profits it makes in other anything but the kitchen sink markets. On the other hand, book publishers don’t have equal e-book market power — nor do they have equal ability to finance below cost pricing of e-books with profits from other diversified product markets.

Nonetheless, in the court’s view, the fact that Amazon was pricing e-books below cost didn’t justify Apple’s contracting with the settling book publishers to stabilize the price of print and e-books at above cost levels. The reason: Apple or the publishers could have either reported Amazon to the Department of Justice, or could have filed their own lawsuit.

The court’s argument assumes that the government is an impartial observer who doesn’t favor one entity over others in this grudge match. Objections to the government’s settlement with the book publishers raised concerns that the Department of Justice was and has been aware of Amazon’s below cost pricing of e-books but didn’t lift — and hasn’t lifted — a finger to address it.

Given the inability of Apple — and the publishers — to get the police officer to take action, they took matters into their own hands. As previously explained in this blog, the market should decide who wins this billion-dollar fight between Godzilla and King Kong — not one judge sitting in the Southern District of New York.

The T-Mobile – AT & T Merger — Why not just require a corporate pre-nup?
By Ryan Long

The T-Mobile – AT & T Merger — Why not just require a corporate pre-nup?

The Department of Justice (“DOJ”) recently sought to block the merger between AT & T and T-Mobile (“merging entities”). Indeed, many states, including New York, are now on board to stop the merger, too, reports the WSJ in States Join Suit Against AT & T.  The fear: the new entity will have too much market power. This, in turn, will enable to the new entity to raise prices, restrict output, and/or reduce the quality of service.  Rather than block the merger, the DOJ should permit it and require the corporate couple to have pre-nuptual agreement, which is something most but not all couples, including Russel Brand and Katy Perry, pictured below, now have.

In their Answer to the DOJ’s complaint, the merging entities claim that their merger will improve the quality of services they provide by, among other things, increasing the bandwidth — or decreasing the “spectrum shortage” — in the marketplace so as to cause less dropped calls. The Answer cites FCC Chairman Genachowski as saying that this “spectrum shortage” is a threat to the economy as more and more burdens are placed on the cellular highway. In short, the merging entities are telling the proverbial Rabbi — or Priest — that is the DOJ: we will be a good corporate couple, good corporate parents, and will foster a family of products that will cause pro-competitive benefits.

Instead of vetoing the marriage, the DOJ should allow it but require the merging entities to sign onto a proverbial corporate pre-nuptual agreement. The agreement would require the merged entity to report on a quarterly basis to the DOJ concerning the pricing and quality of its products compared to others in the marketplace. Such reports are often required by courts who issue injunctions. The agreement should also require the merged entity to achieve certain benchmarks which would determine whether the pro-competitive vows of the merged entities, as more fully set forth in their Answer, have been met. If not, the agreement would provide for the dissolution of the merged company. It seems that this is a better way to handle the merger than to outlaw it due to knee jerk fears which, in the end, may be unfounded.

Antitrust should police Internet hogs, not the FCC.
By Ryan Long

Antitrust should police Internet hogs, not the FCC.

Recently, the Washington Lawyer ran a great piece called Net Neutrality: Who Should Be Minding Online Traffic?   The article goes back and forth between the extremes of: (1) heavy handed Orwellian like regulation of the Internet by the Federal Communications Commission (“FCC”), and (2) self-regulation and content discrimination by greedy Internet Service Providers (“ISP”). This seems to be a false dichotomy. Even in the absence of heavy handed FCC regulation, which can crush innovation, the Sherman Act (“Act”) is an available tool to punish unlawful Internet hogging or collusion by ISPs.

The Internet is a public good.  It was created by the government.   Before, it was called ARPANET.   It was a tool of the military.    As a result, the Internet is akin to a public park.   At the same time, there are now Internet Service Providers (“ISP”) who provide Internet users with differentiated access to this public good.   Think of the ISPs as competing private tour guides in Central Park.   Some tours will be faster but more pricey than other slower tours.

The net neutrality debate wrongly omits how the Sherman Act can help police the ISP market without the need for heavy handed regulation by the FCC.   To the extent an ISP has market power and tries to keep competing companies out of the market, the essential facilities doctrine would likely apply.   To the extent that there is an oligopoly of price fixing ISPs, then there will be claims under Section 1 of the Act.   If an ISP tries to obtain too much market power through a merger, the government can oppose it.   The problem with too much regulation by the FCC is that it discourages technological innovation by ISPs who compete for customers by providing better service at a lower price.   If the FCC requires such companies to take a one size fits all approach to every customer, competitive innovation will likely suffer.  So, too, will consumers seeking faster rides through the Central Park that is the Internet.

Google can learn from Mr. Jeff Spicoli.
By Ryan Long

Google can learn from Mr. Jeff Spicoli.

“Luckily for us, surfing isn’t an organized sport,” Travis Ferre explains in the May 2011 issue of Surfing Magazine. That is a good thing because it has kept the surfing industry diverse and authentic. Google, which has gotten so bureaucratic that good ideas come to market too slowly, can learn from the surfing industry’s more disorganized and yet innovative ethos.

As Mr. Ferre explains in his article, surfing is not an “Ocean Pacific ad anymore,” since the waves are now full of “tight denim modsters, dreadlocked carvers, trained competitors, soloists who wander alone, flannel-clad grizzly bears that love the cold, sandy groms, ex-cons, teachers, chicks.” There has been press lately that Google has gotten so big and organized that it now takes too long to innovate. A good idea has to be passed through several layers of committees, like in the picture to the left, before the idea comes to market. The problem is, by the time the idea comes to market, a competitor has already beaten Google to the punch. Of course, Google, and others companies like it, are too big to be as disorganized as the surfing industry — or Mr. Jeff Spicoli, the surfer played by Mr. Sean Penn in Fast Times at Ridgemont High. But being too organized can be maladaptive, too. As evidence: Larry Page, one of Google’s founders, has taken the reins from former CEO Eric Schmidt in order to “streamline decision making.” In so doing, Mr. Page wants to bring some cutting edge ethos back to the spirit of the giant company. As such, Google can learn from Mr. Spicoli. Because he didn’t have a committee to govern each step of his behavior, he was the only student to think of having a pizza delivered to class.