Launch: Random Business Ideas

Note: I'm starting a new series called Random Business Ideas (RBI) to keep track of thoughts that come to mind.  These are all impromptu and undeveloped; feel free to critic, comment, or share your ideas! 

RBI #1: Starbucks merchandising

Starbucks made my day today – my favorite barista on 36th/Madison handed me a card, telling me I'm one of their best customers and enclosed a free 12oz drink (which I'm guessing translates to a "Tall"?).  After all, I go there religiously – maybe once every 2 days.  When my branch was under renovation for a week, I walked 5 blocks to the next branch; just to get my dose of skim mocha.  Brand loyalty doesn't get better than this…

Yet, how come they can't come out with better merchandises? With the following Starbucks has, trademark licensing should be a huge business – yes, the CD's are doing well, but what about mugs, thermos, coasters… or even a starbucks barista game or toy?  Every morning, I wonder why the collection is so dull and unoriginal…  Aside from trademark merchandising, with over 9000 locations worldwide, Starbucks is a retail powerhouse – what about cross-promotional campaigns?

Lastly, I'd personally like to see Dilbert strips on my starbucks cup (or sleeve).  That'd really make my day.

What is Hompy?

Hompy is big in Korea – but what is it?  Hompy is the short form for Homepage.  Joi Ito wrote a nice piece on it back in June, referring to Hompy as "personal home pages with photo albums, guest books, avatars, background skins and background music".  Unlike blogs or social networking sites, hompies are used to communicate within existing friends.  Users buy online currencies called "acorns" which can be used in turn to purchase avatars, furniture, music, etc. to decorate one's site.  Cyworld (subsidiary of the SK group) is the company behind Hompies – the company currently generates US$150K a day on "acorn" sales.  If you're still confused, check out this article in the Industry Standard.  And go here if you wish to try out Hompy on the Korean site…

Given its populartiy, I wonder why there's no English Hompy site as of yet.  Or, at the very least, some fusion of the model.  Blog platforms in the US are terribly constraining (and boring), designed mainly to host diaries and journals.  Social networking sites, on the other hand, focuses on communications capabilities and community building.  Customization levels are low, allowing little room for self expression. Can someone bring Hompy to the US?  Just think about the vast potential from selling premium digital products and product placement opportunities… 

Image Credit: http://www.we-make-money-not-art.com/xxx/park_homepy%5B1%5D.jpg

Why Webcomics will not stick

Sarah Boxer from the NY Times wrote a note on WebComics here.  Sarah addresses the challenges of putting comics online, highlighting the limitations of the e-book format and lack of a viable business model.  The challenges faced by Webcomics is representative of the nightmares faced by all online content developers: How does one get paid?

There are two distinct channels: advertising vs. subscription.  To date, the former is most applicable towards sites with huge traffic flows (i.e. portals) while the latter best fit niche, need-to-know info sites.  Webcomics, unfortunately, does not fit in either category.  Comics books has evolved over time into a niche market, currently reaping a mere ~$500mn in total revenue.  Apart from collectibles, comics is by-and-large discretionary spending…  there's no shortage of comics materials; and particularly, no shortage of free comics online.  It is thus to no surprise that no viable business model has emerged.

Perhaps comics has become obsolete.  The same way that live theater and broadcast radio has been replaced by movie theaters, cable TV and DVDs, comics has been replaced by video games, animations and other interactive media.  Perhaps it's not the format, but the times that has left webcomics behind.

Image Credit: http://www.dereksantos.com/comicpage/comicpage.html

Value of Eyeballs

On surface, IGN Entertainment is an attractive business: Loyal customer base, need-to-know information, targeted eyeballs, fast growing vertical…  25mn+ uniques and 550mn+ page-views in the month of April 05.  Not bad at all, especially considering its favorable customer demographics (teens and young adults, with skew towards male).  Yet, the valuable "eyeballs" has not yet converted into profitability.  A quick skim at its S-1 reveals that in 2004, IGN recorded operating loss of $9mn+ on revenue of $33mn.  And yes, it has filed for an IPO.

I have always believed in targeted eyeballs – what's better than a captive, measurable audience?  There seems, however, to be a mismatch between the cost and value of those eyeballs.  I struggle to find lead generation sites that are comfortably profitable (if you are aware of any, let me know!).  There appears to be three structural obstacles: 1) pay-per-click model is inherently flawed, discounting the value of brand exposure; 2) online audience is more fragmented, resulting in higher fixed acquisition costs; and 3)  online divisions within large corporates are often not very sophisticated.

Luckily, the trend is in our favor.  Online advertising dollars is growing ~30% year-on-year, and has reached over $10bn in 2005 (note it's still <5% of total ad dollars).  As valuable eyeballs continue to shift from traditional media to new media (online, games, mobile), so too would advertising dollars.  My prediction (or hope, rather) is an insurgence of in-game, mobile and online advertising; unfortunately won't happen in the near future unless there's a major shake-up in the industry…

Image Credit: http://www.greenscreen.org/newsletter/articlesjr/images/EYES_2ROLL.GIF

Is Alibaba a hype?

I must admit I've never visited Alibaba's site before Yahoo's acquisition.  Which must be surprising since it is, after all, valued at a whooping $2.5bn!  And that's a lot of money, esp. for a Chinese Internet start-up. 

After spending a good 15 mins on the site, I must say I'm most impressed.  While I can't comment on the valuation without more information), I must say it deserves to win every one of Forbes' "Best of the Web" Awards.  If you haven't already, go check it out!

What's good about Alibaba:

• The design, feel and usabilty of Alibaba.com is on par and perhaps even superior to the likes of Amazon and eBay.
• Alibaba.com connects the world in a real and meaningful way; and it delivers with simplicity.  On the site are listings of products and contact information.  No registration, no credit card, no PayPal. It's your new and improved Yellowpages.
• The auction arm, Taobao.com, is really an e-commerce site for merchants.  Comparing eachnet.com and taobao.com; it is not difficult to understand why the former is attracting traffic…  Again, it's strength lies in usability and simplicity.

What could pose a problem:

• Management – How would you motivate someone like Jack Ma, who literally hit the jackpot?  With his payout, he (and his future generations) can live like king forever in China…  Founders cashing out is always a headache.
• eBay vs. Yahoo – If you read (and believe) the article on WSJ, you'd get a sense that Alibaba emerged as a "winner" from a chicken fight between eBay and Yahoo.  It's great for the founders to cash out, but is it the best solution for the Company in the long run?
• Potential red flag – Why is the company not holding out for an IPO?  Rather, why is it not issuing IPO instead?  Baidu proved that the equity window is open…  Is there something we don't know?

Nobody knows how the Internet will evolve, and particularly in China.  Hence, nothing is a sure bet.  But one thing is for sure: Jack Ma found his treasure.

Image Credit: http://www.alibaba-bb.com/Accueil.asp

Who watches TV?

I watch a lot of TV.  And I just turned 30.  Which makes it really shocking to read the following statistics from Magna Global:

Network median age 2004-05 (October to May):
CBS: 51.8   NBC: 48   ABC: 45.3   Fox: 38   WB: 35   UPN: 32.9
The median age of the U.S. population in TV households is 37.9.

Alas!  I'm an outlier – A visit from my younger bro confirmed the statistics. He's addicted to World of Warcraft, and spend every minute of his time in our apartment roaming Mars, killing aliens and what not.  TV time?  Zero.  Someone needs to tell me why that game is so addictive…  or rather, tell me why anyone would want to be a Hilton (and I'm not even saying watching the show). 

Image Credit: http://bob.bigw.org/bobcomic/cartoonarchives/archive/cartoons/remote_tv.jpg

Can Blogs Make Money?

Self-publishing is the newest fad.  I'm no exception – with this blog, I'm sharing my thoughts with everyone (or no one) who happen to stumble into my site.  Implicitly, I'm hoping for an audience; otherwise I would have written a diary, or created a personal digital journal.  The exact number of blogs created to date is unknown – WSJ had an article quoting numbers ranging from 10-30 million.  Quality and purpose of blogs varies.  What's universal is the format: a simple, chronological record of thoughts.

By definition, a blog is independent, subjective and opinionated.  There are no editors, no publishers, no advertisers, no shareholders.  It is a form of self-expression and promotion.  Some would argue that blogs are less biased than traditional media – I tend to think otherwise.  What blogs give, however, are ample choices for readers to match their individual tastes (thus appealing less biased to the eye). In other words, it serves an expanding number of micro-segments.

The creation of micro-segments is great for consumers, but challenging from a revenue standpoint. I suspect advertising will trump subscription – and that targeted marketing will override mass advertising. Yet, will advertising dollars directed towards micro-segments be sufficient to support good quality content? On this, I remain bullish, and I am optimistic that blogs will in time find a strong footing.

Image Credit: http://www.geek.com/gtoons/gtoonsmain.htm

Google Mania

The current craze about Google suggests a 2nd wave to the Internet boom.  Same sentiments apply: Google is indestructible, it revolutionizes the Internet, and yes, it can crush everyone and anyone in its way.  Oh, and btw, we don't know exactly how it can sustain the growth, but we'd give it the benefit of the doubt.  Enthusiasts will tell you that Google is the new Microsoft, the new Berkshire Hathaway.  I beg to differ… and of course, I could be very wrong.

I'd be the first to admit that I love Google's products – I use Google Search religiously, I was in awe to see Google Map (how about overlaying subway lines on top?!), and I thought Google Answers and Google Images were ingenious.  What lies in its core is the rare ability to innovate consistently and execute with needle-sharp focus.  It's most valuable asset? – People.

Here is where Google is walking on thin ice – With the lure of an IPO removed, and the weight of being a public entity weighs in, can Google retain the best entrepreneurial minds?  Will employees remain focused and dedicated when and if market sentiment shifts to the next big thing?  Can it contain its oversized ego or will it be tainted by arrogance and complacency?

The test will come when the company hits a bump down the road (which, I'd argue is inevitable for any growth company).  I believe then, Google will find itself as vulnerable and destructible as any.  In the meantime, I'd download Google Earth and view my apartment from space.

Image Credit: http://www.wla.lib.wi.us/waal/newsletter/211.html

Purpose of Think Media

Think Media is subjective, opinionated and largely biased.  This is, after all, the definition of a blog!  I'd strive, however, to be factual and analytical…  The purpose of this blog are threefold: 1) to organize and express my thoughts on media trends; 2) to engage in a dialogue with like-minded individuals; and 3) to experiment firsthand with blogging.  I look forward to our dialogue – AF.