Freakonomics and Superfreaknomics – the bestselling books of Steven Levitt and Stephen Dubner are no longer news to the readers of this blog. However, their new work – Think Like a Freak is worth a shout-out. In Think Like a Freak, Levitt and Dubner use their famed unconventional analysis in explaining the hidden side of things. The readers of Freakonomics will recognize the authors’ thinking process and their unorthodox approach. But their compelling story telling and the new topics covered make this work a page-turner for anyone interested in behavioral economics, or in simply thinking outside of the box.
In less than three hundred pages, the book covers topics from politics, business, and medicine to food eating contests and magic. My favorite part remains the story of Takeru Kobayashi, a slim Japanese man who becomes famous after eating fifty hot dogs in a hot-dog eating contest, and essentially doubling the world record. Kobayashi is what Levitt and Dubner define as a Freak. However, it is not an abnormal stomach – the obvious explanation that came through my mind – that makes Kobayashi a Freak, but his thinking and the way he approaches the hot-dog-eating problem.
On the other hand, the obvious can also be our friend. For instance, you will find out why it is harder for magicians to fool children than adults. It is simply because children are more curious than adults and they don’t overthink magic tricks. If you want to think like a Freak it is imperative to stay curious and realize that sometimes the solution to what looks like an impossible puzzle is in fact the obvious.
Think like a Freak is about refusing to accept conventional wisdom as fact, and daring to look at the world around you from a different perspective.
The used car industry is massive. There are 40 million used cars sold per year in the US representing $320 billion in value and $70 billion in industry revenues. The average household buys a $8,000 used car every 3 years. This is the second largest household expenditure after housing.
Given how massive the industry is, it’s shocking how awful the used car buying and selling process is. To sell a car online, owners have to endure the pain of taking pictures, describing their car and posting them on Craigslist, eBay Motors or Auto Trader. They have to receive people at their home with all the security risks this entails, especially for women. After showing the the car to buyers, sellers have to organize getting paid and deal with the paperwork to transfer possession. This is a huge pain especially if there is a lien on the car. Alternatively if they deal with dealers, sellers get 10 to 20% less than the KBB trade-in price (which is already very low) and have to spend hours in the process. Dealers rarely give offers on the phone forcing them to visit 3 or 4 dealers to get a reasonable price. Let’s be honest, no one ever said they looked forward to spending 5 hours with a car salesman!
For buyers it’s even worse. There is no real way to buy a car online. After doing an average of 9 hours of research, buyers have to reach out to sellers to organize a test drive. This entails further safety concerns, especially if the payment is in cash. Buyers also have to deal with registration and financing. If they are buying offline, they spend an average of another 9 hours at the dealer. They go through a lengthy negotiation process. If they good negotiators they end up paying the KBB retail price, which on average is 54% more than what the dealer bought the car for. Worse buying a used car is fraught with risk given that sellers have more information about the car than buyers, and it’s very possible that the car is a lemon. Most states don’t have cool off periods and used cars are not returnable once purchased.
As I mentioned in my article The Evolution of Marketplaces, a new generation of marketplaces is emerging that focuses on providing delightful consumer experiences in categories that were essentially broken. This is best exemplified by Uber’s massive improvement of the taxi Read More →
I had the pleasure of being interviewed by Emprendedor Universal … in Spanish! They asked me to relate my entrepreneurial journey, focusing on the challenges I faced along the way. I also shared what I have been up to since leaving OLX along with advice for budding entrepreneurs.
If you want to hear me embarrassing myself in Spanish, you can listen to the interview at: http://emprendedoruniversal.com/fabricegrinda/
It’s also available on iTunes at: https://itunes.apple.com/us/podcast/12-fabrice-grinda-angel-inversionista/id865252986?i=313805747&mt=2
For the past year I have been the proud owner of a HTC One. As the new generation of phones emerged, it became time to re-evaluate my decision. I almost picked the HTC One M8. It’s clearly the better looking phone with a finely brushed aluminum body (vs. a generic plastic body for the S5). It has much better speakers. The HTC Sense interface is more streamlined and the HTC One M8 comes in a Google Play edition.
The Samsung Galaxy S5 has much better battery life, camera and is water resistant. Some might also point out that the battery on the S5 is swappable and that the screen is marginally better looking. However, I would never carry an extra battery in my pocket and both screens are gorgeous, so I felt those advantageous were de minimis.
I ended up weighing the pros and cons based on what matters more to me on a day to day basis. Based on my personal use, better battery life is paramount. With my old HTC One I could never finish the day without running out of battery. At the same time I take more photos with my smartphone than I listen to music without a headset. The waterproof feature is also a clear plus given my notorious clumsiness. Two years ago I broke 9 iPhones in 1 year (4 of which from water damage)!
Both are great phones and you can’t really go wrong with either, but the practical benefits of the S5 tipped the scale in its favor. I will revisit next year with the next generation of phones including the long awaited larger screen iPhone.
Nicholas Carlson just published a fascinating in depth article about Larry Page. It covers his evolution over the last 15 years. When he started out at Google, he was an immature CEO who fostered conflict and micromanaged. He resisted the idea of giving up the CEO role to Eric Schmidt and over the years disengaged himself from the product role at Google.
Android fostered his renaissance. He had the vision to buy the company without permission (which was not blocked because the $50 million made no difference to Google’s bottom line) and to foster its development. He learned to delegate and improved his management skills.
At the same time, despite all of Eric Schmidt’s success at Google the company, the company became slower and more risk averse, loth to go for moonshots. Having built up his management experience during his wilderness years, Larry Page had become just the person required to take the company forward with the proper combination of vision, ambition and experience.
Read the full story at: http://www.businessinsider.com/larry-page-the-untold-story-2014-4
It’s amazing how Wes Anderson can create a good story out of any material! The way he films is so different from the way anyone else is making movies, it’s refreshing. I loved everything: his use of color, the offbeat humor, the acting… I was also impressed by the number of famous actor he managed to rope into the movie: Ralph Fiennes, Adrien Brody, Willem Dafoe, Jeff Goldblum, Jude Law, Bill Murray, Ed Norton, Owen Wilson…
Go see it!
As you can see from my article on The Evolution of Marketplaces, Craigslist is facing a great unbundling. Startups are attacking Craigslist category by category by offering a better user experience in a safer environment. They are successfully taking share from Craigslist despite the fact that they charge and that Craigslist is free. Moreover, by not addressing a few fundamental issues, Craigslist is failing in its stated mission of providing a free public service to the community.
All that said Craigslist has tremendous strengths. The site still has extraordinary liquidity and strong network effects. Despite being out of date, the site has three great things going for it from a product perspective: it’s simple, super-fast and mostly free.
Despite the obvious improvements that Craigslist could do to its user interface, this should actually not be its first priority. First and foremost Craigslist should focus on content quality. Great ads are the lifeblood of the business. Second Craigslist should focus on traffic quality and make sure the buyers are legitimate. Everything else comes after that.
Here are some suggested changes in order of priority:
1. Pre-moderate all the ads:
The number one complaint that potential buyers (and I use the word “buyer” liberally to mean anyone who is looking at ads) have on Craigslist is that there are lots of fake, spam and scam ads. Worse because it takes a bit of time for the ads to be moderated by the community and for the site to remove the ads, the very first ads we see on the site are the ones with the lowest quality or that have been deleted. This creates a terrible user experience.
The solution is to pre-moderate every ad using a combination of tools and experts per category to keep the site clean. The system automatically flags ads that are too cheap for the type of product / city it’s in for instance. It’s a lot of work, but it’s completely worth it from a user experience perspective as the visitors never see bad ads. No ad should go live without manual review.
Many sites in the world get upwards of 1 million ads per day and manage to moderate them within 30 minutes of them being posted. The moderation team also makes sure that the site stays close to its consumer to consumer roots: no ads are allowed Read More →
Anand Iyer, the Chief Product Officer of Threadflip, just wrote a thoughtful blog post on how to build liquidity in modern marketplaces.
Read the full article at: http://firstround.com/article/How-Modern-Marketplaces-Like-Uber-Airbnb-Build-Trust-to-Hit-Liquidity
In the early days of the web Craigslist’s horizontal listing based marketplace was all things to all people as speed, simplicity and liquidity were the key success factors in the market. A few vertical competitors emerged in the late 1990s and early 2000s, illustrated by sites like Monster, 1stdibs and HomeAway. They typically retained a listing based business model, but offered better content quality and more sophisticated tools and search.
In the mid and late 2000s, vertical sites became transactional, managing the payment process and taking a percentage of the proceeds. By closing the transaction loop their reviews also became accurate. By simplifying the transaction process and improving trust, sites like Etsy and Airbnb not only took share from Craigslist but grew their category dramatically.
Partly spurred by Craigslist inability to innovate, there has been an explosion of vertical sites of late as illustrated by the timeline below. The latest trend in marketplaces is the emergence of what I dubbed “end-to-end” or “e2e” marketplaces. Others have also referred to them as “full-stack” marketplaces. Even though transactional marketplaces simplified the purchase experience somewhat, they still require the seller and the buyer to do a lot of work. The seller has to take pictures, write titles and descriptions, come up with a price, and answer questions from buyers. Once it’s sold the seller also needs to pack and ship the item. For buyers depending on the category the experience can also be traumatic. A car buyer for instance needs to deal with financing, insurance, and registration, not to mention the fear of buying a lemon. To address these issues end-to-end marketplaces absorb the friction typically borne by buyers and sellers and do the work for them. They have emerged for product marketplaces (e.g;. Beepi, Lofty, Suitey, AptDeco, Fobo, Munchery), service marketplaces (e.g.; Uber, HomeJoy) and information marketplaces (e.g.; DoctoronDemand, Clarity, Rise).
These end-to-end marketplaces won’t completely take over the market. By virtue of their structure there is a limit to their potential market share. However, by focusing on high end customers who value their time and the quality of the experience above all else, they may end up capturing a large share of the profits in the market. As a result Read More →