"Hacking" Education

Fred Wilson at Union Square has been writing about "Hacking Education" for a few months, under the theme that maybe the same guidelines that drive VCs and Entrepreneurs could be useful to advance the struggling education system in the US. Various events and discussions have spawned from these posts. One from today caught my eye, as Fred looked at turning students into teachers, which is a similar concept to one that I discussed with my team earlier in the year. I haven't been as successful as I hoped in steering people away from a "grades first" approach to a "learning & exploring" first approach, but I am making some progress. Some of the late night weekend discussions have been very interesting lately, especially with the economy forcing people to thinking creatively about their next hustle.

The things that jumped out my about this concept were:

• How much it sounded like my G&T program in 4th and 5th grade, which is probably the most fun I ever had in school and the time when I truly learned how to think creatively....to the point that my group finished 9th in the world in the Olympics of the Mind competition (Michigan State Champions). To Bob Jedd, I am truly grateful for that experience.
• The kids in the example that excelled were the ones that didn't require structure and guidance in their life. Seems to sum up entrepreneurs vs. non-entrepreneurs pretty well.
• It almost completely aligned to the discuss we had in our ITMgm't class last weekend as we discussed Disruptive Technologies. The majority of the class, trained in traditional MBA skills, quickly shifted from disruptive thinking to sustaining thinking without any prompting. Find the structure. Find the well-known.
• When I brought up the idea that "freemium" might be a starting point for MBA programs of the future (ie. the courses are free and the revenues for the school evolve from there), it drew the expected "are you from Mars?" look from Deans of the Winston-Salem and Charlotte programs.

I'll be following Fred's work in this area closely, both because of my secondary interest in teaching as well as my primary goals of providing educational opportunities for my two daughters.

ObamaNation - Lessons from the Front Lines of Social Media

As promised, here is the presentation that Team 5 gave in our Strategic Marketing course on advances in marketing.

As I mentioned before, there was so much that could be covered. We felt like these 5 powerful concepts played a

major role in the success of the Obama campaign. We also believed that those items could be translated to most

businesses, which was the other key goal we had for the project.

After the presentation, as good set of questions and discussions ensued around how to apply this to other

businesses, where we think the next social media trends will emerge (start-ups emerging

from all the layoffs), would this work if it extended beyond 2yrs (most marketing campaigns don't go

that long), and how to create a spreadable message (keep it simple, inclusive and positive).

NOTE: Several people asked this was done to push a specific political agenda. The answer is no. Our team

is made up of Republicans, Democrats and Independents. We chose the Obama campaign because of its

visibility. Since few of our classmates plan to run for political office, our ultimate goal was to help the class

learn concepts that they could apply to their businesses.

ObamaNation - Lessons from the Front Lines of Social Media

View more presentations from bgracely.

Freemium Marketing Strategy (and Business Model)

Our assignment for this week's StratMktg class was to define one of our favorite marketing strategies, which would then be aggregated by Dr.Narus and put into a single "book" for us to take away from class. I selected "Freemium", which is sort of a hybrid between a Business model and a Marketing strategy. Below is a copy of the paper I submitted.

I used Google's various free applications (Search, GMail, Maps, News, Reader) as an example of using "free" to drive other aspects of their business (AdWords). Perfectly valid example that people can easily understand. If I had this project 6-12 months from now, I probably would have used a Twitter example.

Freemium

Contributor: Brian Gracely

Source of Strategy: Chris Anderson, Free: The Future of a Radical Price, (Hyperion; July 2009). ISBN-10: 1401322905

Type of Strategy: Market Growth

Description of Strategy: With the growth of Internet devices and users, the demand for online services continues to rapidly expand. Due to the relatively low cost of entry into the marketplace, online services must growth their customer acquisition counts at tremendous rates to avoid users switching to another service. Initially offering the service free ensures that the user does not have to make an initial value decision before joining. Once a large population of users become active and perceives value, the opportunity to offer premium (paid) services becomes a possibility. In addition to user-paid revenues, additional partnership opportunities are available to online companies that provide a service that allow adjunct services (advertising) to be created around the user community.

When to Use This Strategy: Freemium is a marketing strategy that has been deployed by Internet-based companies since 2004, and is synonymous with the term “Web 2.0”. The primary concepts of Freemium are:

• Extremely low customer acquisition and transaction costs due to web-only assets. These low costs allow the strategy to address both mass markets and niche markets under the same cost structure.

• Basic services are provided free to customers.

• The company allows numerous opportunities for the services to be expanded by the users, allowing viral growth through user-centric marketing.

• The company allows numerous opportunities for the services to be interlinked with partners to create “mashed up” new services that can be co-branded and cross-promoted.

• Revenues can be generated through premium versions of the basic service, through online advertising, or through various types of partnership programs.

In most successful Freemium models, only 2-3% of the users need to engage in revenue services in order to break-even or become profitable.

Example(s): In 2009, Twitter has become the poster child for Freemium. Having grown it’s user count 1900% over the past year to 10M, with a staff of just 35 people, it is now beginning to introduce revenue models targeted at advertisers, business users and local media. A private company, Twitter has gotten buyout offers of $500M from Facebook and $1B from Google.

From 2006-2009, Google was the best example of a Freemium and Reverse-Freemium model. Google initially offered their search without ads (free to users, no revenues), but soon added AdWords to generate tremendous revenues. They then added free services (GMail, Maps, News, Reader) to generate more content that could be monetized through advertising revenues.

What isn't in our ObamaNation presentation...

As with any project, some ideas or concepts don't make the final deliverable and are left on the cutting room floor. Our presentation is next weekend, but I thought I'd highlight some of the areas that didn't make it. It's not that they weren't important, it was just a matter of getting down to something that was powerful and could still fit in the 10-15 minute timeframe. It was a tough call, because our research uncovered so many interesting and valuable concepts that were used to drive the Obama campaign.

Here's a list of things we would have loved to cover in more details:

• How to migrate a company's existing marketing / advertising culture from internal-centric to community-centric (transparency, brand ownership, brand variations, etc.).
• Edge Economies and how to let data "into the wild" to achieve results you never could have with existing internal personnel.
• Partnerships - how to engage stakeholders across your value chain to create greater breadth and variety of your offerings, without additional costs to your business.
• Breaking the rules and blurring the lines between traditional STP-based Marketing (Segmentation, Target, Positioning) and the uber-STP and micro-STP Marketing used throughout the campaign.
• PR management during crisis, across various media types.

We'll figure out a way to get our notes on this areas publish somewhere, because they were created through many hours of research and late-night discussions. We actually discussed this topic prior to the class and had both hoped it would be the focus of our studies. It wasn't covered that much in class, so the project became the highlight of the course for us. We're just hoping to do justice to such an important trend in marketing.

A Preview of our ObamaNation (Social Media) presentation

In the publishing industry, there is nothing worse than being "scooped" by your competition. In other words, they got the story to press before you did.

Portia Mount and I are presenting our Team 5 Market Trends report this weekend, something we've been looking forward to all semester.

So I was slightly disappointed to open the mailbox last week and see the cover story in Fast Company (see right) that highlights how Chris Hughes brought social media to the forefront of the Obama campaign and played a huge role in his eventual election. An excellent piece, it highlights many of the focus areas we planned to present.

One of the key points the article makes is that Hughes was the least technical of the three Facebook founders, instead being the one focused on how all this technology could highlight or enhance human behaviors and interactions. While our presentation intends to touch on the underlying technology, there is an entire section devoted to applying the techniques and lessons to almost any business. The approach taken by the Obama campaign will not only revolutionize how elections are structured in the future, but also how companies and individuals will market their brands and products going forward.

That last point is the focus of our presentation. We hope we do it justice in the 10-15 minutes alloted to the presentation. I'll be sure to post the presentation and highlights in subsequent posts following next weekend. If anyone from the Wake Forest community would like to attend , it will be on Saturday April 18th, between 1-3pm in Babcock Room 1101.

Discussion of the Week - The Right Compensation Model?

Spurred by a Friday headline in the WSJ on CEO pay, an interesting discussion arose about the various ways to compensate employees:

1 - Performance of a group vs. company

2 - Stability of workforce vs. frequent turnover (competitive salaries)

3 - Stock Options only

4 - Vesting of Bonuses (pay it forward)

5 - Other??

Among the people in the discussion; a COO, a Banker, a Director at a company that is owned by a Private-Equity firm, and someone that has seen huge gains and losses from Employee Stock Option Plans.

How to avoid creating compensation models that lead to short-term decisions (profits) that may create long-term destruction of value? How much of the compensation should be tied to individual or group performance vs. company performance? How to create "internal start-up" environments that encourage your best employees to explore their great ideas without losing them to outside opportunities?

We did not come to any hard conclusions, but I suspect this discussion will continue throughout the program, and be heavily influenced by the changes coming out of the economic downturn. It was encouraging to see so many divergent viewpoints being debated openly. The program is really starting to bring together the breadth of topics that drive these types of conversations, and have been changing the thinking of the class.

Discussion of the Week - Financial Pricing Assumptions

This past weekend, we covered a case on pricing equities in FinMgmt. The core of the case was to highlight the various "Cost of Capital" elements and assumptions can create variability in pricing between analysts. How to determine an appropriate Risk-Free rate? How to determine the Cost of Debt?

An interesting side discussion came up from a classmate that works in the financial service industry (one of the remaining banks). He talked about how some of the banks were starting to dissect the algorithms and assumptions that are embedded in the planning software used by other banks (from IT vendors, not proprietary software). They were beginning to use that knowledge to create prediction models for how they would reacted to market conditions and use that to influence their strategy.

It creates an interesting dilemma for financial services. Do you incur the costs to develop your own software and models but give up the time-to-market, or use 3rd-party tools and software in exchange for faster availability? Where can the competitive advantage be gained, or lost?