My contemporaneous notes from a particular INFORMS Marketing Science Conference six years ago feature the letters W, T, and F scrawled in the margins a few times. I learned of a deeper problem lurking in the way we were using the crosstab to identify segmentation. In this post, I’ll unpack a heap of jargon and lay the concern bare. To the twenty or so marketing scientists in the room at the time, I read concern on the faces of about a dozen. It was a atypical because typically that community doesn’t get concerned about too much. One leader remarked that most in industry were not even executing basic segmentation on their users, so it wasn’t a huge industrial concern, but[…]

Who do you trust to manage your attention? Because now that the news cycle has surfaced Cambridge Analytica issue – that’s the real thesis question. Let me explain. How the Newsfeed manages your attention I really can’t understate just how powerful amplified engagement really is. When you overlay the like/share verbs on top of a network of individuals who all have something in common, or who procure people who have something in common, you get some pretty strong effects. Don’t believe me? Just check out the clothing in your drawers and the items in your fridge. You, my friend, are an outcome of considerable social contagion effects. Facebook’s newsfeed algorithm shelters you from a power law distribution of content that the[…]

You may have been to a conference. Ever wonder why they’re the way they are? The Conference Market(s) Different people hire a conference to do different jobs. For some, a conference is a chance to learn, be exposed to new ideas, and exit a comfort zone. Or, to enter a comfort zone to be exposed to new ideas and feel safe enough to learn. For some, it’s entirely about networking with colleagues, or recruiting, or to be recruited. For others, a conference is a chance to spam people with signing authority with their marketing messages. Or to upsell. Or to crossell. Or to retain. For others still, a conference is a reason to visit a city. To get the hell[…]

I was 28 and sleepless when I encountered a marketing version of the logistic function. It was beautiful. It’s one of those things you’re taught about in one context, and when you’re shown it from another angle, it expands your mind. It was like discovering Pi for the first time. I could use it to check the assumptions of a market penetration forecast, and substitute my own estimates for others. I felt empowered and delirious from being able to produce a solid forecast. It became a tool as useful as btau or the crosstab. There’s a part of that math, a variable called saturation, that worried me from the outset. Saturation is the maximum percentage of adoption that a market[…]

The other I likened the process for taking apart a Job To Be Done to taking a part a lobster. There’s a very effective way to decompose any problem with enough energy. And then I watched The Founder on Netflix and admired the McDonald brothers using a classic technique in management science to refine a system on a tennis court. And I loved it. They really refined hamburger and frenched fry delivery. And then this morning I read that Andrew Ng in working on a new coursera course for AI. And I’m thankful for his initiative and optimism. Out of those three threads, this one post. The Assembly Line The assembly line was an American invention for Americans. It could[…]

Earlier in the month, I dined under the space shuttle Endeavour with some of the best minds in marketing science. One mind remarked: “That’s why I bring a glossary with me, oh, you want to do supervised learning? Oh you mean regression? Oh, okay, now we can talk… We’ve been talking to managers about these methods for decades, but it’s just suddenly sexy because it’s all machine learning and deep learning and reinforcement learning.” A lot of the math that underlies much of machine intelligence and artificial intelligence is indeed remarketed marketing science. And, hipsterism aside, the annoyance is understandable. Marketing science started out a bit of a revolt against the Mad Men. Some of the early stories feature post-war[…]

What if Total Addressable Market can’t be estimated accurately? What then? What is Total Addressable Market (TAM)? Total Addressable Market, or TAM, is the number of buyers who are Willing To Pay (WTP) for a solution to a problem they have now, or are Willing To Pay (WTP) your firm instead of the firm they’re currently paying to solve a problem. Why is TAM important? TAM determines the life and death of a firm. The leading cause of startup failure, and perhaps all business failure in general, is the failure to penetrate and/or retain TAM (Including bureaucratic capture and rent-seeking). In this context, I’m concerned about the introduction of a new product into the market in an effort to generate both[…]

A great mind in public policy told me, just this last September, that people are really bad at judging the rate of technological change and when it’ll affect them. It’s like standing on a railway. You can see the train out there. Some people assume that the train is going to hit them very soon. They get off the tracks. Then, when the train is getting very close, others misjudge the speed and assume that it’s still a far way. And then they get hit. It’s a great analogy because it combines prediction with decision. The rate of technological change is actually quite difficult to predict. If it was easy there’d be a lot more successful startups. One Heuristic Start[…]

Why does it seem like all the unimportant, easy stuff gets done first? Look up The Urgency Bias. Employing simplified games and real-life consequential choices, we provide evidence for “urgency bias”, showing that people prefer working on urgent (vs. important) tasks that have shorter (vs. longer) completion window however involving smaller (vs. bigger) outcomes, even when task difficulty, goal gradient, outcome scarcity and task interdependence are held constant.- Zhu, Yeng, Hsee (2014) Even when task difficulty, goal gradient, outcome scarcity AND task interdependence is held constant, urgency wins. Even when it would be more beneficial to do something important instead of something urgent, even when you’re painfully made aware of those incentives, you still gravitate towards doing the urgent. There’s[…]

Assume that you’re a founder of a tech startup. Assume that you’ve achieved product-market-solution fit. You’ve nailed it. Time to scale. Many founders are great at sales. But not all founders are great at marketing. And that’s a bit of a problem because of three letters: CAC. The Customer Acquisition Cost CAC is the ratio between dollars spent on marketing, and new customers acquired. And it is related to valuation in a very important way. Let me explain. Take a look at the chart below. This is an output from a standard model of SaaS market penetration. Market size is 333,333 customers, the product will approach saturation at 51% of that target, with a monthly churn rate of 0.20% held[…]