My Ideas to Accelerate the Growth at Blue Nile

May 7, 2012

Author’s Note: Though I spent several years with the company I’m writing about and keep in touch with a few current employees, I do not own any stock in the company and the ideas I have are 100% my own and any connection to directions the company goes are entirely coincidental.

One of the jobs I learned the most from was in the marketing department at Blue Nile from 2005-2007.  The company was growing rapidly at the time and executing very well on its mission to make diamond and jewelry buying a better experience by utilizing technology and transparency in the process.  I took many lessons away from this role and applied them in important ways in the jobs that followed.   What I gained from that experience plus my belief that they offer a far superior value to consumers has made me surprised to see some recent changes at the company caused by slowing growth.  I am rooting for Blue Nile and thought I’d come up with a few ideas for how the company can accelerate its growth.

Background

Before proposing any ideas, I decided to take a look at how the company has been performing relative to the competition.  To determine this, I pulled quarterly revenue growth for Blue Nile (NILE) as well as two other publicly-traded competitors: Tiffany & Co. (TIF) and Zales (ZLC).

When I left in 2007, Blue Nile was growing even faster than Tiffany.  Data were not readily available for Zales that far back, but I would wager Blue Nile was also growing much faster than them as well.  All three struggled with declines from Q3 FY08 – Q3 FY09 as the larger economy fell into a severe recession, but each returned to growth for many of the quarters to follow.  Things began to change for Blue Nile relative to the competition in 2011, however, as Tiffany grew faster in all four quarters and Zales grew faster in three of the four.

Ideas to Grow

Of the ideas I came up with, I narrowed them to down to three: creating an iPad app, investing more in targeted and measurable brand-building and opening a retail store.  I chose these three because they were no dependencies between them and they ranged in difficulty and upside from relatively easy and modest (iPad app) to much more challenging and high (retail stores).

iPad App

When visiting Blue Nile’s mobile application page, I was surprised to see they do not have a dedicated iPad app.  This seemed like low-hanging fruit as development of a dedicated app would not take that long and the product and buying experience seem perfect for a tablet-buying experience: the site features great photography and a diamond search that allows customers to build custom diamond rings from an unmatched selection of choices.  I can see many customers sitting on their couch and completing an entire purchase from a tablet computer.  One of the greatest ecommerce success stories recently is Fab.com, who generates 25% of their revenue from their iPad app.  Although most Blue Nile purchases are much more considered than the more impulse buys on Fab.com, I can still see a sizeable portion of revenue coming from an iPad app.  Creating one could also lead to a few PR stories, which have historically been a successful source of customers as well.

Targeted and Accountable Brand-Building

Back when I was at the company, a sizeable portion of growth was generated by incremental improvement in paid and organic search.  For customers looking to buy diamonds and jewelry online, Blue Nile showed up early and often and offered the best experience among the companies featured in results pages.  Success in that area was one of several reasons why they became the largest pure-play Internet retailer in the category.  However, growth from monetizing customers shopping this way can only take them so far as they are limited by the number of customers beginning the jewelry buying process with a search. Looking at Google Trends for the terms “Diamonds” and “Diamond Earrings” back up this claim:

Both charts show a decline in search impressions since 2006.  My suspicion is revenue from search at Blue Nile was still able to increase through 2007 while the overall economy remained strong, but growth from search has been much harder since that time as it is difficult to continue to improve once you’ve reached the top in an area with shrinking overall demand and macroeconomic headwinds.

To address challenges in search, I would invest more heavily in offline brand-building campaigns.  With narrower margins than many competitors, the Blue Nile I knew was reluctant to go in this direction instead preferring marketing activities that featured an immediate payoff and positive ROI.  To protect from the downside, I would do this in a very targeted manner and pick a few markets to run tests to see which vehicles were most effective.  Before any programs began, I would run a brand awareness study in each market (which Google now offers very inexpensively) to see a baseline and evaluate the success based on direct purchases, as well as increases in subsequent measurements after brand-building programs were kicked off.  The more closely programs can be targeted at specific customers (educated males in this case) the better, making radio, TV, and event sponsorships as a few of the first that come to mind.  Getting momentum behind the brand like this could lead to a multiplier effect as new customers have a great experience and tell their friends, which would lead to continued growth even after the aggressive marketing had stopped.  Going in this direction is definitely taking a risk, but in my view is a good way to counteract the struggles I suspect they are seeing from search and other programs that no longer have as much upside as they once did.

Retail Stores

One of the concepts I am most excited about in ecommerce is blending physical and digital together with the strengths of each making the shopping experience better.  You can see this with the rumored Amazon Kindle stores, Nordstrom investing in Bonobos and other digital initiatives, or Sephora encouraging the use of mobile apps in stores.  In each case this allows shoppers to have the close and personal contact in the physical world to make them comfortable with the more robust information and inventory made available by an ecommerce backend.  This blending of the two worlds could be carried out spectacularly by Blue Nile: customers could see the settings and example diamonds in person, get the same great service they are known for over the phone in a more intimate setting (having its own version of the “genius bar”), and then have access to the unmatched diamond selection and finely-tuned building process that have been making customers happy for all of these years.  Customers could move between shopping in store and on the website and those buying in store could connect to the web inventory using their mobile phones, a tablet PC or other kiosk system provided by Blue Nile.  Gone would be any worry over how to get a ring re-sized, seeing the item in person (or a close representation of it), or any stigma over such an emotional purchase being made over the Internet.  I bet that many customers who have considered, but ultimately decided against Blue Nile would give this new hybrid model a shot and moving the business in this direction would bring back growth in a big way.

Opening a few Blue Nile retail stores to accompany the online experience would certainly represent a big shift in strategy and would require a decent amount of capital.  However the company spent $40 million buying back its own stock in 2011 and moving in this direction in a deliberate and careful way could be done at a fraction of that amount.  I would start with a store in Seattle and possibly a market like Washington DC to minimize sales tax disruption and take the lessons learned from these experiences to a broader retail presence in other locations.  A move like this would create a wave of PR stories and a larger halo effect that could position the company for long-term success with increases in sales coming both from purchases originating in stores and through the website.  Online competitors who are all smaller and do not execute as well would have no way to match this new delivery model and brick and mortar stores would also struggle to compete with less diverse supply and the inability to create a custom ring in only a few days like Blue Nile has been doing for years.

 

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Secret Weapon for Seattle’s NBA Return

February 27, 2012

With the return of an NBA looking more promising than ever, I couldn’t help but think about the possibilities of once again cheering on a local team.  No matter what team would play here, the first few years of professional basketball in Seattle would be an amazing time and would fill a noticeable gap in the winter entertainment landscape.

After the honeymoon period ends, however, it’s important for the team to show some level of success or risk a loss of fan interest like another team playing in the SODO area.  The team moving here will most likely be pretty bad, so this is a very real possibility.  This got me thinking about an advantage that might make it easier for a new NBA team to succeed in the Seattle market.

The advantage I came up with was what seems like a large number of players from the Seattle area. However, I had no easy way of knowing if the number were actually large or if this was a case of local media disproportionally covering its own.  To answer that, I analyzed player and hometown data using Tableau and developed the dashboard below.

Click on Image to View Interactive Tableau Dashboard

Besides being a really fun tool to play with (click here to try it yourself), this analysis showed that Seattle provides a disproportionate number of players to the NBA. The easiest way to see this is to zoom in and click on Seattle. This shows the 6 players, as well as a scatter plot of Seattle’s population ranking vs. its number of players ranking. I find the scatter plot particularly interesting (with a few notations added):

Population Rank vs. NBA Player Rank

I added the grey diagonal line that highlights cities that had disproportionally more players than their population suggests (bottom right) and those with less than their population suggests (top left). This shows 4 cities that stand out: Indianapolis, Washington DC, Dallas and Seattle.  Besides being irked that Seattle is the only one of the 4 without a team, this also confirmed my belief that Seattle contributes more than its fair share of players.

The 6 current players from Seattle also seem to be very loyal to their hometown. Whether it be Spencer Hawes shaving the space needle in his head or Nate Robinson taking it a step further by getting a tattoo of the city’s skyline players from the 206 definitely seem to put large value on where they came from.  The NBA lately has been a league where players go where they want to play, so this could play into the new Sonics’ hands.

Could a starting 5 of Jason Terry, Jamal Crawford, Rodney Stuckey, Spencer Hawes and Nate Robinson be successful?  Not likely on its own, but add in the likes of Avery Bradley, Isiah Thomas (Tacoma), Jon Brockman (Snohomish), Marvin Williams (Bremerton), and whatever talent already exists on the team and you could have a pretty competitive team even if it started off with subpar talent.

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An Analytical Approach to Being Healthier

January 16, 2012

With the New Year upon us, it seemed like a good time to reflect on steps I have taken over the past few years to be more healthy. Though I never considered myself that overweight, I did spend a few years recently living in Chicago – not exactly a place known for its healthy local delicacies. Add in the lifestyle of an MBA student at a school known for its active social life and I found myself 10 – 15 pounds more than I should have been.

Phase I – Increase the Exercise

It was February 2009 when I decided to try and be healthier. I had a job in hand and about 4 months left in Evanston before I moved on to the next chapter, so it seemed like I could be successful. Because I tend to be an analytical person, I decided to track how often I exercised and weighed myself periodically to see if I could find any correlations:

The blue line connects my periodic weight measurements, while the red is the number of “exercise units” over the past 30 days. One mile running = 1 and other types of exercise that I did are weighted based on their intensity level (0.6 miles hiking = 1 mile running, for example).

When looking at the data, it seems increasing the volume of exercise didn’t have much effect. Even with huge increases in April and August (turning 30 and not working yet for those still reading), my weight stayed in the 180-185 range. I also moved to Seattle in the summer of 2009 and felt like I was starting to eat healthier and drink less, but this only had a marginal effect as I remained in the 180 range until late in 2010.

Phase II – New Focus on Diet

In September 2010 (the end of the graph above) I decided to also track the food I was eating in hopes of seeing better results. Around that time I read In Defense of Food by Michael Pollan and decided to incorporate more plants and less meat into my diet. I decided to track the % of vegetarian meals (lunch and dinner only) along with continuing to monitor how often I exercised and how much I weighed:

This approached worked far better – you can see the blue weight line drop as the green line is increasing (% vegetarian prior to my tracking are estimates as I rarely ate vegetarian). When I took the vegetarian % from around 50% to 60 – 70% this summer, the blue line dropped even further as I have dropped far more weight than I was expecting. This approach took me to below 160 for the first time since early in my high school years. If you look at exercise vs. weight loss (dropping veggie % due to the need for a 3rd axis), I was not increasing exercise during this time and often was exercising even less:

Conclusions

From my experience, eating a healthier diet with more vegetarian meals and less meat has been the secret to becoming healthier (along with maintaining moderate levels of exercise). I still enjoy a great burger, pork sandwich, or slice of pizza, but make sure to limit the number of times I do so.

Beyond being healthier, I really enjoyed the exercise of analyzing the data and seeing the correlations that resulted. The process of doing this, though, was far more difficult than it should have been. I had my data in 3 separate places with my food log in Office Web Apps, my exercise in RunKeeper and my weight in HealthVault. I then had to do some gymnastics in Excel to format the data so I could compare all 3 data series. With the number of people trying to lose weight through similar methods, you would think an app would exist to make this far easier. Since Google has dropped their health product and Microsoft’s HealthVault is not the most user-friendly, hopefully there is a startup somewhere working on a multi-faceted health app to take advantage of what could be a huge opportunity.

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Posted in technology

Owen’s TV debut

December 7, 2011

On December 5, my two-week old son Owen was featured on the Seattle ABC affiliate KOMO. The story came out of a discussion I had with the reporter when I mentioned that I had reserved his domain name and Twitter account in the week after he was born.

This might seem like a strange thing to do for such a young child, so I wanted to take this opportunity to clear up some confusion about why we decided to do it.

1. Domain Name – As you can see from the url of my blog, I was unable to secure the .com domain for my name. I have no idea if Owen will ever desire the same thing, but decided it was worth the relatively small investment in case he ever decides he would like to have a website with his name on it.

2. Twitter Account – This idea also came from wanting to secure Owen’s identity with a service where multiple can try to obtain the same name. However, since this was created I have used it a few times to post updates to friends and family members about what Owen is doing. This is a private account, so only people we approve can see it. This has proven to be a great alternative to emailing photos or updates to friends and family. My wife and I can write a short Tweet, take a quick photo and share them very quickly with people in our lives.

It is very likely that Twitter and even blogging will be nothing like they are today when Owen is old enough to make use of them. This thought was not lost and if that proves to be the case, we will still have a nice memory in video form for when Owen gets older.

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A Better Way to Buy Glasses with Warby Parker

November 29, 2011

I am normally a contact lens wearer, but also have a pair of glasses for those times when I don’t want to bother (which are increasing rapidly lately).  With a crack in my old pair it was time for a replacement.  A while back I read an article in the Wall Street Journal about the monopoly Luxottica has on the market with its 64% profit margins and that, combined with the poor quality of my old pair, made me open to another buying option.  When I read about Warby Parker in Business Week, I thought this could be a great alternative.  I am a huge fan of companies trying to disrupt stagnant industries, particularly if they use technology as the catalyst.  Since this is just what Warby Parker is trying to do, I was excited to give them a shot at my business.

Shopping Experience 

With prescription in hand, I headed to Warby Parker’s website to select a pair of frames.  This was far more enjoyable than past experiences I have had in optical stores and it was also nice to do so after hours so my wife and I could shop together without coordinating schedules.  I could upload a photo or take one with a web cam and virtually try on multiple pairs with a Flash app they have built, which allowed me to narrow my choice down to a few options.  The site is also professionally-designed with quality photography which gave an impression of high quality products.  The product detail page for each frame had detailed information on which type of face it works best with, product measurements and the “if you like this, you might like this” feature which opened my eyes to more options I hadn’t originally considered.  Through this process, I was able to narrow my options down to a handful of them and was excited to try the Home Try-On program, which ships for free (in both directions) pairs that you can try on and help you make a decision.  This feature also allows you to try on different pairs with different outfits, which I’m told by my wife is a huge advantage compared to being in an optical store where only 1 outfit can be compared against possible frames.

First Impression with Product and Placing My Order 

I was impressed with how quickly the product arrived – it was less than a week after ordering and they came via UPS 2nd Day Air with a postage paid return label.  Unfortunately 1 of the 6 pairs I received was incorrect, but it was not one of the ones I was most excited about and did not affect my decision.  I ultimately liked the Langston pair the best and decided to buy a prescription pair of those.  There was a little friction in that process, as I needed to upload a prescription and mine did not have a listing for the pupil distance.  It turns out I was able to get this from LensCrafters where I had purchased a pair previously, but Warby Parker could benefit from a clearer explanation on this process – I bet they lose a lot of customers at this point.  Perhaps their showrooms that are located in a variety of places (though not Seattle) can also provide this measurement in person, but the website does not make that clear.  I also felt the ordering process could benefit from an easier path to purchase – I had to navigate to the pair I wanted as if I were a new customer rather than the site knowing I had tried on that pair.  Seems like links to buy in the email receipt for the at home trial or a QR code on the packaging that takes me to the shopping cart would make things easier.

Product Arrives 

My pair of glasses also arrived quickly, particularly considering they require customization (unlike the try-on pairs that only have frames).  The box was impressive and featured a professional-looking thank you card.  The glasses themselves were very comfortable and seem to have the correct prescription.  The case was a bit bulkier than it needed to be, but the frames still seemed to fit well enough to be secure in transit.  At first appearance, the quality of the glasses themselves also far exceeded my old Luxottica / Polo pair which did not hold up very well over time.

Summary and Areas for Improvement 

Overall I was very pleased with my experience – I like my glasses and enjoyed the process far more than the last time I bought a pair.  The company has a lot of potential to shake up the industry and I will be rooting for them to succeed.  That said, there were a few areas where I think they can improve:

  • Crisper Operational Execution – when people are making the leap to try a new buying experience, they often do so with some skepticism and can easily return to old habits should anything fail to meet expectations.  This is why when I was at Blue Nile it was so important to nail every detail – from the professional and highly-trained customer service reps, to how the box gets packed (complete with pre-setting watches to the correct time), to how it arrives quickly through FedEx.  There were a few places where Warby Parker could have done better: the shopping cart had a confusing step where it recommended special lenses but then did not allow me to select them, I received 5 correct and 1 incorrect pair of try-on frames, I struggled finding the pupil distance, and the customer service line was closed at an hour where I expected someone to be there (a weekday evening on the west coast).  I was motivated to stick with them and ultimately placed an order, but I can see little things like this leading to lost sales with other customers.
  • Pushing Referrals More Aggressively – it is my firm belief that the most successful marketing programs for businesses like this are PR and word-of-mouth referrals with other programs helping only on the margins (SEM, SEO, display, re-targeting, etc.)  Warby Parker got me through PR and seems to have done well in this area with articles in Business Week (note the spike in traffic they received following the June 30th article), Inc. and a few other major publications.  I imagine they also do well from word-of-mouth perspective as new glasses seem to be a common conversation starter, but in my view they could be doing better by adopting a few tactics that can encourage more referrals.  In the box that my glasses came in they included a nice thank you postcard – this looked professional and was a nice touch – how about adding a $10 off referral bonus for a friend of mine who might be in the market?  I think they would also do well to add a 15-day post-purchase email asking how it is going with links to share on Facebook / Twitter and a referral bonus offer as well.  This is a tactic I have seen drive a ton of revenue and seems like a great fit with their product.
  • Higher Pricing – My previous pair of “Polo” glasses were decent-looking, but ended up being poor quality and cost $286.  Warby Parker charges $99 for pairs that are higher quality and better looking.  This is obviously a great value, but I think they would do better charging a bit more.  Their positioning (and ultimately product) seem to be consistent with high-end frames and I have a feeling the prices that are so much lower than people are used to paying might make some pause.  Glasses require precision to work correctly and anything that makes you think they are cheap (like suspiciously low prices relative to other pairs) could backfire.  Raising prices is never easy, but I think prices in the $149 – $179 range could sell well and lead to a more profitable business over the long-run.  Though the Business Week article quotes the founders as being content with lower margins, it’s my view that they don’t need to be.  Higher prices could also allow for longer customer service hours, fund referral discounts, and bring in more engineers to improve the website experience.

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Thoughts on Zulily and Blue Nile

August 24, 2011

I was thrilled recently to see the success and funding round brought in by Zulily that was reported a few weeks ago.  I worked previously with a few members of the executive team when I was at Blue Nile and am not surprised to see the success they are having.  Since I will be in the market for the products they carry soon (moms, babies and kids), I thought it would be interesting to take a look at their site and compare the business to Blue Nile to see if there is any overlap between the two.

Here are five similarities I noticed from my time at Blue Nile and what I know so far about Zulily:

  • Favorable Cash Model: one of the best qualities of Blue Nile’s business model is its cash conversion cycle, which I calculated at -48 in the most recent quarter (vs. brick-and-mortar competitor Zales at +264).  Much like Amazon and Dell, it collects money on average before paying it out, allowing it to grow quickly without the need to acquire additional capital (unlike Zales who has to sit on a lot of inventory).  From what I can see, Zulily has a similar setup – most if not all of the merchandise featured on its site is likely not owned by them allowing them to collect the cash on purchase and then pay for it later on.
  • Fragmented Competitive Environment: This is a point Darrell mentioned that immediately made me think of Blue Nile when I read of it.  The local boutique store in any given town that he mentions could just as easily be the local jewelry store that Blue Nile has taken share from since it began.  This situation is much more favorable from a competitive standpoint than if they were competing against well-established companies already operating at scale with much greater brand recognition.
  • Marketing via Site, Experience and Referrals:  while at Blue Nile, the biggest source of new customers was referrals from past customers.  Instead of spending large sums of money on expensive advertising, they decided to build a great site, with incredible photography and design and then deliver a top-notch customer experience that got people talking about it.  The category of jewelry was perfect for this, as it is an emotional purchase that people often speak openly about after it takes place.  I see similar things with Zulily with high resolution photos and a well-designed site (and most likely a great experience – I’ll let you know after I purchase something).  The category of children’s clothes and goods also would seem to have a lot of discussion around it, which leads to strong referral traffic and likely a similar marketing pattern to Blue Nile.
  • Business Idea Inspired by Personal Experience: the founding story of Blue Nile is one of legends – Mark stepped inside of Tiffany, got poor service and decided there had to be a better way.  Though I don’t know the story behind Zulily, I can imagine it was inspired by a similar personal shopping experience.  This not only leads to tons of free publicity and exposure (at least in Blue Nile’s case), but also allows you to think from the perspective of a customer and deliver a superior experience to buyers.  Many consumer businesses would have this feature by default, but I have had a few ideas over the years based more on speculation than on experience (like my idea for a web-based maternity clothes exchange that any moms out there are free to pursue!).
  • Able to Take Advantage of Powerful Analytics:  I spent a lot of my time at Blue Nile in their data warehouse, which was filled with information that could be turned into powerful insights.  We could learn a lot about our customers this way and make site design and marketing resource allocation decisions based on data.   We could also offer targeted offers to our email list, like providing a discount on wedding bands to customers who had bought an engagement ring.  Similar tactics are a natural fit with daily deal sites like Zulily, with another daily deal site, Groupon, even hiring someone from Netflix to build its recommendation engine to do just that.  With the likely size of Zulily’s email file and customer list, I can imagine this will be a key asset going forward, particularly since pageview data can easily be tied to identity by virtue of their membership model.

After coming up with this list, I thought it would be interesting to see if I could identify other industries where these same elements could be used to build a successful business.

The best idea I could come up with where a strong player doesn’t already exist is a marketplace for buying and selling original works of art.  This market shares similar fragmentation as jewelry and children’s clothes, with local galleries being the main sellers with little to no regional or national competitors (that I’m aware of).  If artists posted art on the site that was available for purchase, there could exist a similar finance model with little capital needs required to grow. Marketing could also be really successful through a well-designed site and favorable word-of-mouth that would lead to lots of referral customers acquired profitably (people like to talk to their friends about this category, just like jewelry and things for their kids).  For the right person, it would be easy to see things through the eyes of customers as many aspiring entrepreneurs have likely had experience buying art for their homes.  The only element that isn’t as strong is being able to take advantage of powerful analytics, but by nature of being a web-based business there is still some interesting things that could happen.

Something in health care and finding doctors also seemed to have some characteristics (fragmentation + referral possibilities), so it will be interesting to see how ZocDoc does and if they can scale.

I also thought about real estate as people definitely like to talk about who they used to buy their home in a market that can be very fragmented (not in the Windermere / ReMax sense, but in individual agent sense).  I wrote about a great experience buying a home with Redfin, who I can see having success moving forward because of these very same elements.

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Posted in business

On Local News Talking About Moving

June 9, 2011

Last Friday I had the opportunity to talk about my upcoming move with KOMO TV’s Connie Thompson. I’ve thankfully never had any of the really horrible scams that she talks about happen, but did write a  Yelp review about a past bad experience I had with City Moving Systems of Kent.  Hopefully this one that I’m planning on with Super Friends Moving goes better than that one.

Anyone think I have a future in TV?

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Posted in business

Buying a home with Redfin

May 16, 2011

My wife and I recently became first-time homeowners.  This was by far the largest and most considered purchase we have ever made, so it was important that we find a real estate agent who would make us both comfortable and ultimately help put us in a house we loved.

We used Redfin.com as our agency, who I had known about for many years as a local Seattle company trying to disrupt an industry with a lot of inefficiencies.  Having enjoyed working for another local company using technology and transparency like this, I was happy to give Redfin an opportunity and ended up being pleased with the result.  Because finding an agent can be a difficult but important step, I thought I’d outline in more detail the pros and cons of the approach we took for others in a similar situation:

Our situation –

  • Analytical and specific in our needs: Throughout the process of looking for a home we established a pretty long and detailed list of must haves and nice to haves (stored in a shared Excel Web App).  We ranked each home we toured against our parameters, leaving only the top performers in our consideration set.  This proved to be a great fit with Redfin, as much of the information we were looking for was listed on their website or could be identified with a quick tour of the home.
  • Not in a hurry: We loved the house we were renting while going through the process and were on a flexible lease, so we could afford to wait for the perfect home to show up.  This gave us the luxury of time, which might work better with a high volume agency like Redfin vs. an agent who is more reliant on single sales and could be pushy when their own bills come due.  This allowed us to be very specific with our search and to take as much time as we needed, which ultimately was over a year from the time we started looking.  All of the people we dealt with at Redfin were patient with us, more concerned with getting us in a home we love than getting their commission.

Pros –

  • Killer website: Because of factor #1 above, the search and listing information on Redfin’s website was a great fit for us.  We could search in our target areas and quickly identify if a house was a good fit with the listing information and the series of maps provided.  Since our list of factors was clear to us, but difficult to communicate to others, doing the search ourselves with a great website was far superior to relying on an agent’s interpretation.  Being empowered with so much information saved us from wasted trips and made us feel confident that nothing would fall through the cracks.  Because Redfin is a member of the MLS, we also noticed they had more up to date and accurate information than other real estate sites using different business models.
  • Cost: I had long felt it odd that real estate agents were paid on the basis of the sales price – is it really 5x as much work to transact a $1 million home as one that’s $200K?  While Redfin doesn’t address this inconsistency (likely due to regulations they have no control over), they do correct it somewhat by refunding ½ of their commission back to you.  Should rules permit, I would love to see them take this a step further and charge everyone a fixed amount and refund anything above that to the sellers.  Absent this, it is still a great deal and a huge advantage over agents who charge twice as much for what is ultimately the same outcome.
  • Team approach: With Redfin you have a lead agent who negotiates deals, as well as field agents who show you homes and coordinators who do what the name implies.  This worked well as the team approach allows them to take advantage of individual’s strengths better than dealing with only 1 person.  Our favorite field agent, for example, does not need to learn the intricacies of real estate transactions, but was an expert on home inspections.  This allowed us to get deep into the basements of older homes where she could flag warning signs much earlier in the process.

Cons –

  • Ability to move as quickly to close a deal: Redfin is likely quicker than other agencies in getting you in to see homes due to their team approach.  However, once you see a home and want to move quickly to make an offer, this approach could have a disadvantage, as you will need to contact your lead agent to move ahead.  Had you been touring with your lead agent (i.e., rather than the field agent), you could get the process started immediately after leaving the tour without bringing in another party.  This didn’t cause us to miss out on a home, but we did have a few tense moments waiting for a call back after seeing homes that we really liked and knew would go quickly.

Ways to Improve –

  • Establish marketplace of vendors: We learned that you need not only an agent to close a house, but also an inspector and a mortgage broker (+ later a moving company and specialized inspectors should the need arise).  One home we considered buying required a remodel, so we also needed a contractor to provide an estimate on what it would cost to add a bathroom.  We had no idea how to find quality vendors and we were fortunate that Redfin was able to recommend people we really liked.  This helped me realize that Redfin has an advantage in the high number of deals they close as well and the transparent feedback they collect – they can see how these firms operate and can pass along leads more effectively than a traditional agency.  I would love to see them create an “app store” for this process where they have firms listed with reviews from customers.  This would highlight a key benefit from using Redfin that we only discovered once we were well into the process.
  • Enhance alerts with self-drawn maps: I really enjoyed setting alerts for when new homes entered the market or changed in status.  This is a benefit that Redfin enjoys from their status as a member of the MLS.  What I would enjoy even more is if I could draw smaller sub-areas and be alerted when homes in those areas change.  We weren’t focused on the Greenlake neighborhood, for example, but a few blocks of it had some homes we really liked where it would have been nice to receive notification if any of them went on the market.
  • HouseRank: With all of the data that Redfin is likely capturing (pageviews, searches, home tours, offers, etc.) they could come up with a proprietary algorithm that could help show which are the “hot” houses in a given market (their own version of PageRank).  This could be the default sorting feature when you do a search for a particular area and would be particularly helpful for people not as familiar with the local market.  Additionally, this feature would also be something that would be hard for competitors to match as it would take advantage of data in aggregate that only Redfin possesses.
  • House comparison tools: When we were looking at several homes, it would have been nice to have a tool that compared them side-by-side.  This would allow you to compare stats like square footage, $ per square foot, # of bedrooms and bathrooms, etc. without looking at them one at a time.  This is a tool that websites like Bestbuy.com have been using for a long time with items like digital cameras, and I would love to see Redfin add this to their website.

Taking all of this into consideration, I could not be happier with my choice of Redfin.  We ended up getting the best house we saw in a multiple offer situation due to an aggressive strategy recommended to us by our lead agent, all within 48 hours of the home going on the market.  If Redfin is in your market, I strongly recommend you take a look.

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Playing Around with Prezi

March 27, 2011

Recently I had the opportunity to present some facts about myself to my team at work. Past team members have done this with some photos in PowerPoint, but I decided to try out Prezi. I had read about it from Scoble and thought this was a great opportunity to try a new tool. Here is what I put together with some observations below:

Introduction to the team on Prezi

  1. Outcome: giving the presentation was a lot easier than if I had done it in PowerPoint.  Flow between slides was smoother and a “story” came together easier than if it were in slide form.  I can see a real use case for Prezi when trying to tell a story to a big group.  Many of the presentations I do involve embedded graphs and data that would be hard to replicate using Prezi, but for “ballroom” style presentations I will likely consider Prezi in the future.
  2. Technology: the use of Flash seemed to be a negative.  I would love to see them rework the tool to take advantage of HTML5.  Want to view what I put together on a mobile device?  Too bad, that will have to wait.  Flash also felt a little clunky when I was putting it together, though it likely did make things possible that would be hard to do another way.  They do seem to have an iPad story, so perhaps this is something they are working on since Flash will not work there.
  3. Business Model: Prezi is using a freemium model where you can use a free account to get started and then upgrade to a paid version.  Free gives you 100MB, which is not much when making image-filled presentations like I did.  The next tier is $60/ year with the Pro version being $159.  $60 for a web service seems more than most people would be willing to pay, so I imagine many members stay with the free tier.  Having this in monthly terms would seem to be a better approach for them to get over the initial price shock factor.  I’m also surprised to not see a Prezi for corporations option, though you can contact sales for multiple accounts.
  4. Company Prospects: looking at Quantcast, Prezi seems to be getting around 100K visitors per month.  They had been rising at a good clip, but have been flat the last few.  Their association with TED has likely given them some publicity that should keep them relevant for a long time.  I have also heard from my mom teaching abroad in Ukraine that her students and fellow teachers have used it, so perhaps they can get users interested at a young age and then covert them to premium once they hit the workforce.  The outcome from Prezi also seems to be like something that could come from Apple, so perhaps they could be an acquisition candidate and be incorporated into a future version of Keynote (update: no way would they ever buy a company built with Flash – might be a better fit with Google or even Adobe if they are looking to add a new product).

What do you think?  Do you see a solid future for Prezi?

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Corazonas Marketing Campaign Misses the Mark

February 26, 2011

The following is a guest post from emerging marketing guru Erin Metzger

corazonas logo

Corazonas is a small, privately-held snack food company that makes heart-healthy snacks for people with high cholesterol and is the only snack product in the market using the power of plant sterols to lower LDL levels.  Launched by CEO Ramona Cappello after watching her father deal with heart disease and the limits it put on his food choices, Corazonas is a company I’d like to see succeed.  Cappello, an alum of an impressive list of food & beverage companies including Nestle and Celestial Seasonings, hired  Denver-based agency LeeReedy to launch the company’s  first integrated-marketing campaign.  LeeReedy says they are “experts at efficiently discerning the true essence of a brand, whether it’s a new brand or one that needs repositioning.”  Taking the scientific underpinnings of this brand’s reason to believe and translating it into a very consumer-friendly tagline (“Freedom to Snack”), as well as creating an impressive digital campaign which engages customers to send “I Care” packages to loved ones and to join a 28-day snacking challenge to lower cholesterol, LeeReedy seems to have delivered for Cappello.  With that said, I’m wondering whether another tenant of LeeReedy’s approach is what caused the huge miss in executing the outdoor portion of this campaign?  LeeReedy touts as one of their strengths the ability to execute campaigns quickly and brags that the Corazonas project required only “90 days for a complete overhaul.”  To date, the only piece of the campaign that has reached me is the following billboard:

corazonas billboard

This billboard is all over Seattle and the more of them I see popping up, the more I cringe at the Corazonas marketing dollars going to waste.  I love my heart and I love good taste, but how am I supposed to buy this product when the brand is nearly indecipherable?  Only after developing a mild obsession with this billboard and repeated squinting attempts to read the small logo appearing on the bags themselves could I finally identify the product as Corazonas.  Could it have been LeeReedy’s speed to market that caused them to make this simple Marketing 101 mistake?  LeeReedy did right by Cappello by creating an impressive brand identity for a challenging product line, now I hope they do the right thing by posting some new billboards, with a logo sized appropriately for this medium, before the campaign expands any farther.

 

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