I was reading this morning and in it there’s a huge ad from a company called eton with an idea of how to help disaster victims in Japan.  My initial reaction was “Great! I’m in, where do I sign?”

Anyone paying attention to the multiple crises unfolding there should have the same reaction.

The basic idea seemed really solid, there’s an image or an emergency radio that doesn’t require batteries – there’s a hand crank to generate the energy needed.  Brilliant.  Very specific item that helps in a really obvious way, and from the looks of it I would be surprised if the radio is more than $10.

Much better than just giving $10, you are giving something really tangible with very clear impact.   I love it.

But then I started reading the fine print next to the logo for the American Red Cross, and from what I could tell, it seems they actually want me to buy the radio and send it in.

Why not just set up a number to text like they did for Haiti and say just send a text to this number and my credit card will get hit for the amount to give and ship the radio.  That seems like a much easier way to do it, and the Haiti cause already got us familiar with that format.  I went to the web to look for a copy of the ad, but I found an eton blog and it explains all of the information you need to provide about yourself to participate in this.  Way too complicated, and they shouldn’t need any information about me – my money for the radio is what’s going to help Japan, not my name and e-mail address. . .

Hopefully they will rethink this promotion and I will happily be the first to text in the help.

-Ric

If you saw my last blog post, about five major trends, then you may remember that #2 was paying money for something and not getting anything, the so-called Virtual Goods business and Farmville creators Zynga lead the charge on that front.

So when I was reading the paper this morning about Coinstar, talking about something I blogged about weeks ago,  but also in that five trends blog, I saw a reference to a company I hadn’t heard of called Rixty.

As I have learned, Rixty has done some really clever rethinking in the world of credit cards and they have very cleverly placed themselves smack in the middle of the virtual goods world and their customers are on the one hand the greatest credit risk (by definition – which I will explain shortly) yet on the other hand the greatest consumers of virtual goods.

As the article in the paper described, Rixby targets people who can’t get credit cards (which I thought was an oxymoron these days), younger kids and people with bad credit, and it allows them to use Rixby to pay for their virtual goods.  That by itself is really smart, but the piece that really cracks me up, is that with virtual goods, if somehow the person fails to pay, it’s virtual goods, so it’s not like Zynga has to write off a sale.  There were no real goods exchanged, so a bad debt is really pretty meaningless.  Clever.

I expect that on the back end of it that Rixty is actually reporting behavior to credit agencies, so that if you stiff them, you will never get a credit card from anyone, but I still love the model of having a credit card company helping people buy fake stuff.  It’s one of those case studies that if I were to try to explain it to my grandfather, who doesn’t even’t know what the internet is, I just don’t know where I would start, with any hope of him saying “I get it.”

Well done Rixty.

-Ric

P.S. Fingers crossed for those folks trying to cool down the reactors in Japan.

On March 22 at the Gartner CIO Leadership Summit in Phoenix, Ric Merrifield with be sharing the stage with Chuck Pol, the President of the America’s for Vodaphone.  Click this link for more information.

I spend a lot of time looking at and writing about disruptive business models (many of them are discussed in my most recent book, Surviving a Business Earthquake, and lately I have been talking about a handful that I think are really meaningful that will continue to mature over time and work their way into lots of other industries.

1) Friending.  No, it’s not new.  At all.  But the friend trend that I have noticed is that the practice has jumped the social networking fence and is becoming useful as a function in not-so-social industries.  A company that I have blogged about before, doxo, is the one that really opened my eyes to this.  What doxo figured out is that it’s OK for us to have to log on to our credit card site and our utility site, and our Fidelity site with our passwords and what not, but it’s better if we can do that from a single place, and effectively “friend” the businesses that we interact with on a regular basis.  Call it a handshake or friending or something else, but now that we have gotten so familiar with it through places like Facebook and LinkedIn, we understand the definition of “friending” and “connecting” from these sites, and now these terms and their actions are primed to jump into other places that are not social, but where certain levels of trust need to be established.  This is big and the companies like doxo that figure that out, there are some great new businesses to start.  And for already established organizations, now’s the time to put on your thinking cap and figure out where friending may play a role for your employees, customers, and partners.

2) Getting nothing, but paying for it. Farmville from Zynga is probably one of the more familiar examples of this, though Icelandic gaming company CCP is another great example.  In a gaming environment, if you want your farm to do something more or in Eve online you want your spaceship to be cooler or faster and you don’t want to have to do all of the hard work to make it happen, you can pay for it so that your gaming experience is better.  With Eve, you are already paying a monthly fee to play the game, and you can also pay a lot more to personalize it faster.  So you are paying for something and you don’t get anything tangible for it.  I predict that as people get more familiar with this notion, like friending, we will see this bleed into other industries.  To be clear this isn’t like buying a ring-tone that is intellectual property, and I am clear that you can argue that this is just paying more for the entertainment you are already paying for, to be more entertained, my point is simply that as people get familiar with the idea of paying and not really getting anything tangible for it, we will see this proliferate.

3) Getting something, but not paying for it. This is a subject I have blogged about before as well, most notably with alice.com, the online merchant that sells goods at cost with free shipping.  They make their money by charging huge rates for ads and coupons because they provide the age, gender, and ZIP code of customers that respond to the ads and coupons in real time.  Now I still think that’s a huge idea, but when I found out Coinstar (dump your coins into a big green machine and out pops cash you can spend) was no longer charging a 7% fee for the service they provide, and now the service is free to the customers (you can still pay the 7%, but if you choose to load up all of your cash on a card for a specific merchant, like amazon, then it’s free to the customer, and amazon pays Coinstar a fee).  Costco is actually another company that doesn’t make any money selling their products, they make their money from their membership dues.  The monster trend I see here is companies figuring out how to not make the customer pay for their costs – so the customer gets a better deal.  Back to Zynga, I am not an expert in their games, but I wouldn’t be at all surprised to see them selling bottled water for the farmers and the user getting the choice between Dasani (from Coca-Cola) or Evian and then selling the data of age, gender, and ZIP code back to those companies about who chose which product, for example.

4) David beating Goliath. Historically, a tiny company beating out a monster company has been rare, for really obvious reasons.  Amazon took out Barnes & Noble before becoming a monster company in their own right, being way more than just a book store, but that’s not the kind of trend I am talking about.  The poster child of this new trend is Rovio, the makers of the crazy-popular game Angry Birds.  It has been a top free and paid application in the iPhone store for a very long time.  What I love about the story is that it’s still a company with less than 20 employees based over in Europe.   So the Rovio’s of the world can stay tiny companies and create markets that we would expect someone like Microsoft or EA Sports or some other massive gaming company to own.  Will someone buy Rovio?  It kind of doesn’t matter.  The point is that with the platforms of smartphones and the internet in general, tiny agile companies can have a very real,very large global footprint and be very successful.  I am not saying that Rovio is going to put EA Sports out of business, I am just saying that they are competing in a space that is way bigger than they are, and they are winning big.  I think we will see a lot more Rovio’s soon, and that’s the trend.

5) Adding a third party to two party transactions. This borders on sounding like a repeat of #3, or a nuance of it, but I felt it an important enough nuance to give it its own bullet.  In most traditional business models, there is the merchant and the customer (and these days at least one middle man).  Companies had to charge the customer enough to cover their costs and make as much profit as the laws of supply and demand would permit.  The fact that Alice, and Costco, and Coinstar can get their costs covered by someone else, that is massive and I think it’s the biggest trend of all.  Yes, it’s great that the consumer wins by getting a better deal (point #3), but taking the basic two party transaction, and adding a third party is a pretty incredible thing to be able to do.  Per my Dasani water comment in #3 above, I wouldn’t be surprised to see Zynga get more into this space (if they haven’t already – as I said -I am no Zynga expert).

So those are the really big trends that I have been seeing and talking about lately.  I’d love to hear your feedback (and corrections).

-Ric

P.S. And we are working to fix the issue that if you do an internet search on my name you get an unexpected result.  As you might expect we are investigating whether we need to firm up security a bit on the site.

There is little doubt that there will be a lot of activity in the world of mergers and acquisitions this year.  Sure Facebook and Groupon will go public (though Groupon has enough flaws, I wouldn’t be at all surprised to see them blow up or get passed by Tippr or someone else – remember when MySpace ruled the world?) but everyone has loads of cash, and lots of companies have huge stock valuations that make M&A cheap.

So why not buy some revenue or market share or more differentiation, or greater profitability in these circumstances?

I think the list is very long on who will get bought, but I have picked 11 (since this is the year that goes to 11 . . .that I think will go, and I have also made some suggestions about who will gobble them up.

I did try to break them into two categories, consumer/social and business.  One of the reasons I did that was because I read a report from Merrill Lynch dated January 4, 2011 called “Eleven Internet Sector Themes for 2011″ which is one of the best investment reports I have ever read.  One of the statistics they cited was that in 2010, 14% of all internet traffic was spent on social networking sites.  WOW.  Talk about a huge trend.

I put together a diagram, but here’s the list with a little bit more detail (in random order):

1) doxo.  Doxo is a company I have blogged about before.  They offer free online bill pay services – one stop shopping and they keep your billing history.  Sounds like a yawn until you learn more about how they make their money (they cut down on postage for the billing organizations and get paid in return).  Because they have done the legwork to establish the major relationships needed with the billing organizations, the barriers to entry in this space are pretty high, and with such an appealing free service, I think any number of existing big companies would be smart to buy them into a space that will see lots of users and not a lot of competition.  Anyone from Concur to Microsoft would be smart to buy them now when they are in their infancy.

2) Yelp.  There was a time when this was a competitive space, but now it’s not and Yelp has won.  That’s not really news.  What has changed in the last year as we have seen with things like FarmVille is that everyone likes to see where things stack rank.  People want to vote for their favorite places and I think with the model Yelp has, they can make the voting more social and expand fast in a world where 14% of web traffic is social.  Obviously Facebook and LinkedIn would be smart to look at them, as would Amazon and Netflix where customer ratings are so vital.

3) Tippr.  I mentioned them earlier.  If Groupon is really already worth $15, spend a billion to get Tippr and aggressively highlight the major flaws in Groupon, and win.  Sure there’s risk, but lots of companies have a billion dollars to burn and Groupon’s flaws are so obvious, the right team could crush them like a tube of Pepsodent in no time.  If Yelp can afford them, this would be an outstanding brand extension for them, but it’s also a good play for Amazon and others.

4) Gist.  I am a little amazed Gist didn’t get acquired in 2010, but as the social web gets sticker, the more attractive Gist gets.  Gist aggregates all of our social interactions into one place.  No, it’s not really painful to alt/tab from LinkedIn to Facebook, but we are a lazy lot that loves convenience – we buy pre-cut salad in a bag for crying out loud.  And the think about Gist is that it makes the buyer the main page of all things social.  Smart for Facebook, but it would also be really clever for someone like Microsoft who, other than an investment in Facebook, is otherwise absent in the social world.

On to the world of business  . . .

5) ShiftHound or Shiftboard.  Shiftboard is one of this niche companies that does one thing and they do it really well.  For organizations that work in shifts, they let the people who work the shifts sign up for the shifts they want and they also let companies assign shifts.   It might sound like a bit of a yawn, but one thing you hear over and over is that it’s not really clear to people who does what in cloud, so the more specific applications you have, the clearer you can be to people about whether you are relevant to them.  That’s why I think anyone from Concur to Salesforce, to Microsoft would be smart to start buying companies like Shiftboard.  ShiftHound is roughly in the same space but I am told they are true SaaS staff scheduling combined with great Open Shift Management (OSM) functionality for any small to mid-size entity that is scheduling shift-based staff.

6) Limeade.  Limeade is another sleepy little company that may sound like a yawn, but they have now been around long enough to have a pretty interesting customer base.  Essentially they have figured out how to get people to personalize their plans to get healthier, including, but not limited to, weight loss.  I have blogged a lot in the past about the connection between obesity and diabetes and the out of control health care costs.  If someone like Kaiser Permanente were to scoop up Limeade, not only would it send a really powerful “we care” message to their customers, it would also help them help their customers reverse the trend of rising health care costs.

7) ReputationDefender.   I am also surprised this one made it through 2010.  Most of us have no control over what information about us is out there on the internet.  ReputationDefender gives you complete control.  Given how much bad press FaceBook has gotten about subscriber security, I expected them to buy this company, but at this point, our personal security and privacy is becoming so important, I would be surprised to see Google or Microsoft to buy them.  It would send a really powerful “we care” message that would boost any brand.
Concur.  Already a thriving cloud services company in expense management, they are they only major player in this space which Merrill Lynch estimates at a $639 million space.  So Amazon, Google, or Microsoft could buy them to further clarify the role they are playing in cloud. Salesforce could use them to further extend their platform message.  Concur isn’t cheap, but this is one of those cases where you can ask how expensive it will be to NOT buy them given how successful they have become.

9) ActiveWords.  OK, not really a cloud play.  Another sleeper of a company, but if you want to get some differentiation in a huge area where today there is no differentiation, you buy ActiveWords if you have anything to do with keyboards as a hardware play or a software play.  Anyone who has an Apple product knows how bad that software is at helping us finish typing a word, ActiveWords has this all figured out and has taken it to the next level where you tell it when you want it to launch a web site.  So if I tell it that when I type “NYT” to ask me if I want to launch the web site for The New York Times, it works.  Talk about saving time and keystrokes. . . . No brainer for Apple or Microsoft or Motorola. The folks at ActiveWords have figured out a key component of productivity.  Saving time does equal saving money. 

10) Symantec. OK, not so much of a sleeper, but they are one of the gorillas in the $4.25 billion security space.  Buy market share, revenues, and more differentiation.  Sending a “we care” message helps the brand, why wouldn’t Microsoft or Google buy them?

11) I4CP.  The institute for Corporate Productivity may sound like another yawn, but HR related Cloud services are a $3.36 billion space this year.  I4CP is profitable and growing and they have an amazing list of clients.  Concur, Salesforce, Microsoft, Google would all benefit from additional services and this one wouldn’t cost them an arm and a leg.

The new eBook Surviving a Business Earthquake is available through the iTunes iBook store, or you can click here for more details about it.

For years I have wondered why health insurance hasn’t been treated like other insurance, like car insurance.  With car insurance, the riskier your profile, the more expensive the insurance.  You get caught driving drunk, you have accidents, you drive a sports car, those all make you higher risk to an insurer, so your rates reflect it.

Not so with health insurance.  There aren’t really checks in place to know if you smoke, or if you have a horrible diet and become obese.

But when I bring it up people would say “oh, that’s too personal, that will never happen” – talking about giving people incentives to be more fit and eat/drink smarter, and stop smoking.  But every time I hear that, I can’t help but think it’s just bad business and that usually drives corporate behavior.  That said, as long as the insurance companies are making enough money and the companies that pay for our health care (when we have jobs) can afford it, a system like this can be sustained, as business-bizarro as it is.  And yes I realize that some people have medical conditions (like thyroids) that make weight control hard, but I also know that there are often tests like things like that so people wouldn’t be punished for things that aren’t their fault – Type 1 diabetes is a good example of that.

But in recent years, we have seen that these costs skyrocket to a point that’s no longer sustainable for a lot of companies, like Safeway and drastic measures are needed to curb these crazy insurance costs.

So I wasn’t at all surprised to see this article by Ron Lieber the other day talking about new programs that incentivize healthier living.  With cash.    And I totally agree with his point about the boss handing out $100 bills at the end of the year in front of everyone.  That would have a very big impact.

Anyone who has ever managed a team, but especially a sales team, knows that the way people are measured and rewarded causes them to behave in very measurement-aligned ways, so of course people are going to put down the Big Mac when there is a stack of $100 bills waiting for them.

And of course people will keep eating the Big Macs (and Whoppers, and Wendy’s this, and KFC’s that, and whatever Jack-in-the-box is pushing this week) if there is no reward (or punishment) for the behavioral change.

I honestly don’t understand why this took so long, especially after we have all been conditioned to expect this sort of thing from car insurance (see above), homeowner insurance (don’t buy a house on  flood plain), life insurance (if you have ulcers, life insurance costs a lot more), etc.  But I am really glad it’s finally here.

This is the sort change that could really have a transformational effect on the cost of health care that companies are paying, but more importantly, it can cause people to make smarter choices about their lives and their lifestyles.  A major seismic event in the world of health care.  An earthquake.  Excellent.

Speaking of earthquakes. . . you might check out my new book which is called Surviving a Business Earthquake that has just come out exclusively as an eBook through the Apple iBook store.  It’s only about four dollars – I hope you like it.

-Ric