Netflix - The Worst Apology One Ever Made
Many of you Netflix customers may have gotten an email or heard it from the news. Netflix' CEO has made a public apology about the recent price change with some further announcement. I think this is the worst apology I have ever seen. I am writing this mainly from a customer's perspective. I wasn't angry about the price change. Nor am I care about their business that much. They've asked me to pick between DVD or streaming. Since only about one third of movies I watch offer streaming, DVD only is the no-brainer option for me. This actually saved me a little bit of money.
What annoys me is that this is an apology that is not an apology. What exactly does Netflix believe they have done wrong? From they email they are absolutely convinced their business strategy is right, and I'm not here to dispute it. I just don't see what are they trying to apologize for? The are not back tracking the price change, nor are they offering any discount or compensation. In fact they are so convinced in what they are doing that they announce further change to spin off the DVD rental into a new company called Qwikster.
Some business pundits are nodding their head and approving of their bold move, often citing Innovator's Dilemma and such. But what is it in for the consumers? All the got is their service being spin into Qwikster, essentially a second rated brand name. The other difference is Qwikster.com and Netflix.com websites will not be integrated, so
if you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places. Similarly, if you rate or review a movie on Qwikster, it doesn't show up on Netflix, and vice-versa.
In other words, you customer are getting screwed. The interest of the company as a business is clearly different from the interest of the customers.
Why bother to write a super long email to the customers if you have nothing to offer to them? Why apologize if you have nothing to apologize for? In the announcement they regret that "many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming". I feel that they have just humiliated us again.
Tech Companies Tracked By CrunchBase
Last time I have done a small survey on the location
of YC companies. This time I survey a much larger database CrunchBase. CrunchBase is a database of database of technology companies, people,
Silicon Valley companies are featured prominently in CrunchBase. Again San
Francisco has a commanding lead in the number of companies among Bay Area
cities. My bet is most of these are small startup companies. There aren't really
huge company like Cisco (14,000 Bay Area employee in 2005).
|San Francisco ||905 ||39%|
|Palo Alto ||285 ||12%|
|Mountain View ||202 ||9% |
|San Jose ||182 ||8% |
|Sunnyvale ||180 ||8% |
|Menlo Park ||172 ||7% |
|San Mateo ||150 ||6% |
|Santa Clara ||137 ||6% |
|Redwood City ||103 ||4% |
|Total ||2316 || |
These are the numbers outside of San Francisco Bay Area. New York is the clear lead in this case.
|New York ||868 ||37%|
|Seattle ||246 ||10%|
|Los Angeles ||240 ||10%|
|Austin ||225 ||10%|
|Chicago ||199 ||8% |
|San Diego ||165 ||7% |
|Boston ||156 ||7% |
|Cambridge? ||145 ||6% |
|Atlanta ||123 ||5% |
|Total ||2367 || |
Although without a dominant city, these state has large number of tech companies. I aggregate the number until it exceed 100 companies.
And finally some international figures. CrunchBase probably does not have
very good coverage here. China is totally off the radar screen. So is Israel.
Below is everything in one chart. Bear in mind CrunchBase is likely to have
some local bias and that the number does not indicate the size of the company.
Still it is impressive to see San Francisco has twice as many tech companies has
Majority of YC companies are located in San Francisco
Y Combinator is one of the most successful startup incubator today. It has
funded over 200 companies since its inception in 2005. I have done a mini-survey
from a list of companies funded in 2009 and 2010 to find out where these
companies are located.
It turns out the largest group do not have an office address. They are
probably very small company without employees, working out from home or
someplace. Otherwise the top location is San Francisco where about 1/3 companies
are located. Mountain View, the home base of Y Combinator, comes in a distant
second at 7%. Not counting those without an address, there are 29 companies in San
Francisco versus 22 in the rest of the countries.
|Location ||Num|| Pct|
|San Francisco ||29||31.5%|
|Mountain View || 6||6.5%|
|Other || 6||6.5%|
|Palo Alto || 4||4.3%|
|Sunnyvale || 3||3.3%|
|Other Bay Area || 3||3.3%|
Finding the address is harder than it sounds. For example, for a company that
has already received 5M in funding, Hipmunk still does not list an office
address. I searched for the information from crunchbase first, then from the
company's website. One of the best place to find its location is actually in the
company's jobs page. You ready have to tell people where your office is if you
are asking them to come to work for you.
Substitute Ingredients In The Food By Air - Profit!
"With prices for cocoa, sugar and other commodities soaring, candy makers are finding a simple ingredient - air - can help pump up profits. Air bubbles make sweets creamier and easier on the waistline, while bulking up the candy and adding little cost." - sfgate.
Selling air for profit, how brilliant! By the way, aerated chocolate actually taste quite good :)
Twitter to Move to Mid-Market -- Win-Win!
A few weeks ago San Francisco Business times first reported that Twitter is looking for a bigger office and is considering to move to the former walmart.com building in Brisbane. This set off some panic reaction in the city to try to "OMG we have to keep Twitter in San Francisco!!!" They are so afraid to lose an iconic native San Francisco company that they are rumored to give Twitter what else but a tax break.
I think it is a really bad idea to give a particular company tax break just because they blackmail to move out. But first of all, Twitter cannot be serious about moving to Brisbane. The office is isolated. Transit is limited and the location is too far for daily biking. Even Caltrain is closing their South San Francisco station, reduce the transit option to nearly nil. If they move, San Francisco recruiters will spare no time to poach for disgruntled employees, easily bringing them back to the burgeoning tech scene in SOMA. The prospect of this move is so remote that I think San Francisco Business Times and some leaders really jumped the gun on this.
But the report from San Francisco Chronicle today about a possible
tax break plan to lure Twitter to Mid Market gets my thumbs up. I still don't think Twitter deserves a tax break. But a tax incentive targeted for revitalization of a part of downtown make very good sense. If the city is successful in bringing groups such as ACT theater, Burning Man and Twitter to Mid-Market, it will go a long way to pull in the catalyst for revitalization. The tax break can be justified by the economic growth it induced. I also think the edginess of Mid-market fit Twitter's profile better than a suburban office park.
Still I hope any tax incentive will be only for short term. Twitter is a resourceful company. They should have figured that the city payroll tax is not a major part of their expense. For this small price, San Francisco provide them great number of talents that will be difficult to find elsewhere. Be a good corporate citizen, pay you due, make the city a better place. You will be rewarded many times over.
P.S. More coverage from BeyondChron,
Tax break is for new hire only. Good job superviosr Jane Kim, David Chiu, and Mayor Lee. Seems like the new city government is functioning.
The Fall of Hong Kong Entertainment
The Hong Kong film industry, once a vibrant and dominant player in the Chinese and Asia cinema, is in a steep decline. It happens that I come across a web entry on Jin Yong (金庸), the most popular and prolific martial art novels writer in Asia. In the entry is a chronological list of all the screen adaptations. Since Jin Yong's novels has been made into TV and movies in regularity, it serves as a proxy to the activity of the entertainment industry.
I have plotted the adaption of each popular novel on a graph, with different colors to differentiate the country of production. The dense chart shows that each novel has been adapted multiple times, sometimes within only a short span of time. Looking decade by decade, you'll see how the pattern has shifted. Jin Yong stories first appear on Hong Kong TV in the 70s. It was the time when most families started to own a TV. 80s is the period when a lot of early and now classic adaptions are made. Taiwan has also started to made Jin Yong stories in this period. 90s continues the frenzy activities. It is also the beginning of decline of the Hong Kong movie industry. The last Jin Yong movie was made in 1994. In 2000s, the 3 decades of restless Hong Kong entertainment production seems to come an end. The last TV made by actors is in 2001 (an animation came in 2003). Instead it is the era of China, where nearly all new productions are now made.
The filmography is not just a list black and white raw text. It comes to life once we carefully render it into a color graph. And the graph tells a story of the rise and fall of the different players in the industry.
Wells Fargo debit card transactions lawsuit
Wells Fargo Bank is ordered to repay about $203 million to customers who were unfairly charged fees in debit card transactions under a court ruling. As a customer of the bank for over 10 years (though I have never been hit by the overdraft charge), I'm really unpleased with my bank's ethics.
The key scheme works like this. Let's say a customer have $10 in his account. Without a good knowledge the account balance, the customer make multiple debit charges and overdrafted his account. Let says he make a series of transactions in the amount of 5, 1, 2, 3, 11, bringing the final balance to -$12. Instead of denying the charges, Wells Fargo introduced a new feature around 2000 to automatically gives credit to the customer. The catch is each overdraft will cost them a fine of, say, $25. This in itself is not very evil. But what is really enraging is the way the bank manipulate the charges to maximize the overdraft fine. Instead of processing the debit in the order it comes in, the bank rearranged the charges to process them from highest amount to lowest amount order, i.e. 11, 5, 3, 2, 1. In this case all 5 transactions results in overdraft and a $125 fine. If they were processed in chronological order, they fine will be only $50 instead.
The bank insist they have done the right thing for the customers and the customers desire this. Because the larger amount transaction is more likely to be important, therefore it was given priority. Such reasoning is what prompt me to write this blog. It angers me because the bank is offering us a bogus reason. Since all charges are authorized no matter what order they comes in, the customers receive no benefit what so ever from such "prioritization". It would have make a difference if the bank deny the transaction once the account run out of fund. But in the present scheme, the only difference is the amount of fine the customer will incur. It can be mathematically proven that by processing the transaction from lowest amount to the highest, it results in least fine and thus the most beneficial to the customer. Instead the bank scheme to process the transaction from highest amount to lowest, this results in maximum fine and thus results in worst outcome for the customer. There is simply no justification to choose this scheme other than enriching the bank.
Note that while Well Fargo is the first bank to lose an anti-consumer lawsuit, this is an industrial wide practice. I'm looking forward for other major banks to be exposed and fined.
After this ruling and addition regulation against such practice preceding the trial, the banks are grumbling on how much revenue they are going to lose and the possibility of stop offering free checking and other banking service to make up for the difference. For me this should raise an alarm on the corporate board level. When your company is deriving a significant portion of revenue from such unsavory source, it is a clear indicator that it is not doing the right thing. It is like opening a gym with free membership, but in fact the true revenue is derived from the vending machine on the floor selling tobacco. Sooner or later pressure will come to maximize profit. Then the company will be mobilized to sell more tobacco to more people. This will become a corrupting force in no time.
Clearly a company wants to make profit and there is always a pressure to maximize profit. But the question if they earn it because they are providing value to the customer? It is justifiable if they charge for banking services because they are managing my money and dispose them to merchants I authorize to. But the overdraft fee scheme did not provide any value. Instead it is nothing but an exploitation on uninformed customers.
Twilight in the Valley of the Nerds
Just come across this 4 month old blog from an anonymous author known as Brad. His skepticism and sobering view on the IT industry is well thought out and presented convincingly. It makes a good reality check to the rather optimistic view from the industry.
Link - Twilight in the Valley of the Nerds
Yelp did it
I've heard about Yelp when they first start around 2 years ago. Social networking sites were the buzz word. They take that and use it for local shops and restaurant recommendation. With much larger competitors I thought they were a long shot.
Recently I look at it again. Sure enough people are drawn to it and leave comment all over. There are many devotees who have written hundreds of reviews on everything. Nearly every business establishment in my neighborhood, no matter how obscure or small, got multiple comments. I have lived in the neighborhood for a long time and walked pass some obscure establishment like American College of Traditional Chinese Medicine countless times. But only through the Yelp comments do I find out what they are doing.
The Map-tastic feature works really well. It merges Google Map and the search result. It allows user to move around on the map and have the search result refreshed. Yelp is where I will go for local search.
A report from Public Policy Institute of California says that California
is still strong in biotech industry. What really interest me is
its contrast with the IT industry. While biotech may turn out marvels in
science, its not likely to be a powerful engine of economic growth. The
report says "biotech is not an enabling technology like
information technology that lays the foundation for other industries and
promotes growth in many other sectors".
report is available online.
Low cost startup
Reuters reports low-cost
computers and open source software
making it cost less to invest in
a startup. I always think open source is an under appreciated
revolution. Not only is it redefining laws of economics and inspires
people to collaborate, now it also form the basis of a low-cost
computing platform and sprawl a new wave of innovations.
Apparently my characterization of the craigslist as a struggling
non-profit in yesterday's
post is more a myth than fact. According to Chronicle's report,
its annual revenue is estimated to be $7 million. Consider their low
operation overhead, they do not have advertising cost, another reason
for their non-commercial image, this translates to a very good profit
for a 14 person company.
The article also bring up a common root of the two companies. Both
were started in 1995 by pocket-protector-type programmers, craigslist by
Craig Newmark and eBay by Pierre Omidyar. eBay went on to become the
most successful Internet business. craigslist is still a community
communication board. Their contrast would make an interesting story in
Silicon Valley history.
eBay Acquires Minority Interest in craigslist
EBay bought 25% stake in Craigslist, as founder Craig commented in his
blog. This is
not your usual "community effort sold out to big corporation" story. It
begins when craigslist first established as company, Craig made a gift
of some equity to a guy who was working with him at the time. He reasons
that the equity really had more symbolic than actual dollar value. Given
the success of craigslist, this is probably self-deprecation. Indeed,
this person latter left the company and decided to sold his stake to
eBay. The irony is this person is going to make all the monetary gain
while Craig would likely to shoulder all the criticism.
Being a for-profit company or owned by big corporation is not
necessary a bad thing. People need to make a living and an office need
money to run. Even slashdot.org a
fervently independent outlet is now owned by VA Software. But craigslist has made a
name of itself by strongly resist to commercialize. The web design is
basic and text only, entirely free from advertisement. All services are
free with the exception of job posting as its sole income. Had it
decided to brought in venture capital, craigslist has every potential to
be a contender to eBay, a 50 billion dollars corporate giant. But it
choose to stay this way, running like a struggling non-profit, forgoing
the dream of uncountable wealth.
While it might look a mistake now that he gave away equity to
a person who later sell to big corporation and profited, I believe he
acted in the interest of the organization at that time. He understand
the website that bears his name is more than himself. By making some
form of employee ownership he could make it a better and more
I can only hope the ownership change will strengthen craigslist's
service without straying it from its mission. No matter what it is going
to be, craigslist has already made its name as an antidote to the dot-com
IT outsourcing debate
Among all the rhetoric about IT outsourcing, I find this
article on wired particularly insightful. The visit to the India
IT firm is an informative read. More importantly, the author is
looking for facts over myth. In the face of an economic change that
instill anxiety and threaten the livelihood of many, he ask the all
important question, what will it becomes next? The is no sure answer
except that change is inevitable.
Let the Music Play" Campaign
The Electronic Frontier Foundation
(EFF) has launched a "Let the
Music Play" campaign to fight back the recording industry on
criminalizing music sharing over the Internet. Their assessment of the
impact of peer-to-peer technology on the recording industry is very
"The problem is that there is no adequate system in
place that allows music lovers access to their favorite music while
compensating artists and copyright holders."
Instead of suing users, perhaps their should learn a few lessons
from Apple's iTunes music store and update their business plan.
Herald to the EFF to stand-up for consumers' right! Support by
becoming a member.
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