Jason Rines (iThinkBig)

Yahoo, Microsoft: The Bigger They Are, The Harder They Fall

There are some mixed comments here, I'll throw in mine since I am in the consumer health/online marketing world:

Read the book Innovator's Dilema if your in management. It speaks loudly to the success or failure of an enterprise based on conducting ongoing research. Failure to understand what the customer wants which does indeed change now every few short years is paramount!

This kind of research requires a Regression Model, one that charts anticipated behavior of a five year forecast and then company conducts ongoing surveys of existing and prospective customers on a monthly basis to chart the slight changing trends and the inevitable tipping point (Also a good read, Tipping Point). It is tedious work that requires a consistent effort. Lack of research kills! But I love those companies like AT&T that become beurocracies, stock drops to $5 while company has billions in reserves and then brings on new management! I didn't need Mr. Buffet to explain that one to me. He does indeed seem to find these companies the best, demonstrating a high level of research propensity. Some simply call this 'dilligence' but it does way beyond this mere word.

2) Advertisers like the rest of our culture have gotten lazy (not all but most). Hard work is required in advertising to return healthy margins. You must care about the customer as if it were your son or daughter. Abuse them and bad things happen. Companies operated this last decade like this:

A) management does initial market research, raises tens of millions for start-ups, early stage companies
B) liquidity is injected in product development, marketing models
C) marketing managers count how many cheap widget ad units were bought in a quarter or per year. Results are lousy but the thought process was it was OK to spend five bucks to earn one customer worth a lifetime return of $2. That was because the management will do a billion+ deal next time based on the INFLATED valuation of a customer asset.

Hmm, overinflated valuations? This seems to be cropping up everywhere these days!

I was a Jr. Partner of the first opt-in email company on the web in 1997. When Dennis Kovloski and Mark Schwartz asked me to sign a document that each person in the database was worth $15 when current market prices (even at the high end) was $5, I left the business. Dennis is now in jail and I was successful, it just took me longer as I slept well at night knowing the right thing was done for my children, my dear customers.

This has all abruptly ended. Those with a value proposition on how to earn a profit using fundamentals (which does include some proper capitalization) step forward. Those without one step back. Very simple to understand.