Personal Interests

My Mixology Bookshelf

Favorites

The Modern Mixologist: Contemporary Classic Cocktails

  • Author: Tony Abou-Ganim
  • Level: Beginner on up
  • Rating: 🍸🍸🍸🍸🍸
  • Favorite Drink: Pure Joy, page 157

The Modern Mixologist was the first the book I bought which was very fortuitous. Tony Abou-Ganim’s recipes are both wonderful and straight forward. He uses mostly easy to find bottles and ingredients there are few complicated infusions. Abou-Ganim’s descriptions are engaging. And while it’s a great first book, I recommend it all cocktail enthusiasts since the recipes are delicious.

Speakeasy: The Employees Only Guide to Classic Cocktails Reimagined

  • Author: Jason Kosmas & Dushan Zaric
  • Level: Intermediate
  • Rating: 🍸🍸🍸🍸🍸
  • Favorite Drink: Mata Hari, page 102

Speakeasy is my favorite cocktail book which is not surprising since “Employee’s Only” is my favorite bar. The book is chock full of fantastic recipes. Employee’s Only style strikes the right balance between wonderful drinks and reasonable preparations. Some of the best drinks require infusions but none are too finicky. I’ve had the pleasure of trying many of my favorites both in that the bar and my home version. Some bars have large and rotating menus so what you see in the book isn’t still being served but with Employee’s Only, the recipes in the book are the core of what they still serve at the bar. If you are serious about your cocktails, this is a must have.

Smuggler’s Cove: Exotic Cocktails, Rum, and the Cult of Tiki

  • Author: Martin Cate & Rebecca Cate
  • Level: Intermediate
  • Rating: 🍸🍸🍸🍸🍸
  • Favorite Drink: Hibiscus Rum Punch, page 176

Smuggler’s Cove is my bible for tiki drinks. I love the bar and the book captures both the spirit and the tastes of the bar. To make full use of the book, you’ll need to build a up a decent size rum collection. Cate categories rums into eight numbered categories and each recipe refers to a rum category rather than a specific bottle. Some categories are used more than others so with 4-6 bottles of run, you’ll be able cover most of the categories. If you enjoy tiki drinks, this book is a must have.

Additional Recommendations

Death & Co: Modern Classic Cocktails

  • Author: David Kaplan, Nick Fauchald & Alex Day
  • Level: Pretty Serious
  • Rating: 🍸🍸🍸🍸
  • Favorite Drink: Flor De Jerez, page 107

Death & Co, both the book as well as the bar invoke some mixed feelings for me. The book has a lot going for it. Many of the drinks are both stellar and innovative. The book also has a great treatment of how to create your own custom recipes. However, many recipes call for exotic bottles. You’ll need to have a large liquor cabinet to take full advantage this book. I learned a tremendous amount from the book, but it’s not a go-to for me as most of the recipies take significant preparation.

The Dead Rabbit Drinks Manual: Secret Recipes and Barroom Tales from Two Belfast Boys Who Conquered the Cocktail World

  • Author: Sean Muldoon, Jack McGarry & Ben Schaffer
  • Level: Advanced
  • Rating: 🍸🍸🍸🍸
  • Favorite Drink: Alhambra Royal, page 111

The Dead Rabbit is both a cocktail history lesson and a recipe book rolled into one. Almost every recipe is quite challenging as it asks for a combination of exotic bottles, custom tinctures or a syrup (often referred to as sherbert). If you persevere, you’ll be rewarded with deeply complex drinks that connect to cocktail history. This is a book to buy when you want to challenge your mixology skills.

Artisanal Cocktails: Drinks Inspired by the Seasons from the Bar at Cyrus

  • Author: Scott Beattie
  • Level: Serious Commitment
  • Rating: 🍸🍸🍸🍸
  • Favorite Drink: ??? (I’ll let you know once I succeeded in making some of these)

Artisanal Cocktails is the bar book from Cyrus Restaurant in Healdsburg. Sadly, Cyrus closed in 2012. Both the bar and the restaurant were exceptional. Visiting the bar at Cyrus was a turning point for me with cocktails. I’d always enjoyed them but Cyrus showed me how wonderful they can be. I’d learned about the bar at Cyrus from an episode of Gourmet’s Diary of Foodie and was wowed when I went.

Cyrus is the other side of the same coin as Dead Rabbit. While Dead Rabbit is steeped in history and tradition, Cyrus is all about seasonal and incredibly fresh ingredients. Their recipes both take commitment to use but it’s very of a very different sort. The ingredients from Cyrus cocktails that are hard to find are all the fresh ones. Five years after the buying the book, I’m still on the hunt for yuzu & verjuice, and have found neither.

Aside from a handful classic recipes in the book, each drink will be a serious commitment to finding or maybe even to growing ingredients. Judging from my several visits to the Cyrus bar, the results will be amazing but they will not come easily.  But since there are no time machines, the only way to experience the magic of Cyrus’ cocktails, is to dig and make one of these recipes.

Disclosure: I’m a  participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

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Business Strategy, Internet Industry, Product Management

Thoughts on Innovation At Established Companies

I spent two plus year working in an innovation group at my prior job and in earlier roles I’ve lead many new product efforts. These experiences have taught me about why many corporate innovation efforts fail. I’m not going to name the places where I’ve worked in this piece. While every organization has its specific challenges, this piece focuses on what I see as common challenges to that any organization pursing innovation.

There’s been much written on why companies miss disruptive shifts in their markets. Clayton Christensen’s The Innovators Dilemma is the seminal work in the genre. As much as I think The Innovators Dilemma is mandatory reading and its recommendations are strong, there are a series of more practical issues which that work and others in the genre do not address.

Venture Capital Exists For a Reason

Many new innovative products are financed through venture capital funding new companies. Venture capital is well structured for financing new innovations and established corporations are not.

One of the primary reasons is the power law nature of returns for new innovations.  Power law distributions have much fatter tails than the “normal” distribution. The main implication of the power law is home runs generate more return than the rest of the fund. Venture funds take a portfolio approach. If they invest in 50 companies, then the odds the home run are greater. To increase the size of their portfolio, venture investors almost always co-invest with other funds, broadening their portfolio.

Except for the largest corporations, it’s not possible to establish a broad enough innovation portfolio to have a decent chance of a home run as it takes too much money. Looking at venture funded companies, in general, it takes at least $50M in funding to get them to cash flow positive. For the home runs, levels of investment are often much much higher to fuel the growth necessary to capture the opportunity.

An established company running an innovation effort typically either does not have the level of funds available or is unwilling to spend it. As a venture funded startup goes through its Series A, B, C, etc financing rounds, its financial statements are showing a sea of red ink. Venture investors expect this. For a public company, this level of spending means lower earnings per share which for most companies is not tolerable.

The other alternative is boot-strapping, using a small amount funds up front and using profits to grow the business. We love a great bootstrap story but there really are not that many of them that generate large scale returns. Boot-strapped businesses, because they are capital constrained, tend to grow slower. With in an established company, the slower growth of a boot-strapping will often result in executives thinking it’s too small a business to be worthwhile.

Long Time Scales

The other area where established companies struggle with innovation efforts is the time frame of returns. Venture investors assume, on that average, returns are years away which is why their investment funds have 10 year lifetimes. Venture investors will set aside money for follow-on investment rounds knowing that it takes years and follow-on investment to build a strong business.

Most established companies lack this level of patience and typically expect to see large returns much quicker which typically is not possible. Even an exponential growth rate doesn’t yield big numbers early on. The returns of the new business always seem puny and irrelevant when compared to the firm’s existing businesses.

Risk Aversion

Startups by their very nature move fast and are willing to take risks. If a startup can not show progress and achieve milestones, it will be unable to raise the next round of funding. The greatest risk is not being able to raise the next round.

By contrast, established corporations, particularly publicly traded ones, are risk minimization machines. There are many high paid professionals whose job it is to reduce risk regardless if it reduces speed. Considering there’s more to lose, this is a rational mindset. But for innovation efforts, it can become a serious obstacle.

This obstacle rears its head when there’s risk of lawsuits or regulatory concerns. A start-up will see a 25% risk of a lawsuit or regulatory action as preferable to the 100% certainty of ceasing to exist if it doesn’t make progress. Extreme examples are Uber or Airbnb. It’s inconceivable to me that any established company could have built those businesses because of the risks involved. YouTube is another example. The risk of being sued for copyright infringement is too large for an established company to take on a nascent product.

Option To Give Up

One of greatest impediments to innovation efforts at established companies is that it’s too easy to give up. Being a risk minimization machine, an established organization will at some level see giving up as a good thing when obstacles and risks arise. Those employees working on the innovation efforts will be moved to some other project. The senior executives are spared the discomfort of having to explain a reduction in profitability or a new lawsuit on an earnings call. For the startup, giving up means shutting down or at least a pivot, both of which are painful.

The Technology Myth

At the core of innovation efforts is the belief that new technology is what will drive future business success. The problem with this belief is not that it values technology, but rather that it discounts all the other pieces that go into building a successful business. The ignoring all the activities a business must get right is a primary factor in dramatically underestimating just how much funding it takes to turn one of these ideas into a real business. The technology is the cheap part. Turning an early stage product into a real business which includes productizing it, marketing it, selling it which all gets expensive.

What Works Better

Given all these challenges, established firms are most likely to be successful with innovations that are connected or adjacent to their existing businesses. The first reason is there’s leverage from the existing business which both plays to the firm’s existing strengths and lowers some of the costs. In adjacent business, many of the assets of the company are valuable such as the brand, the sales and support operations and the channels to market.

The second reason is that executive leadership will be able to recognize the value being created. The most innovation famous story, one which has reached the level of myth in the technology world, is Xerox Parc which in the late 1970’s invented the future of computing but failed to see the value and commercialize it. Malcolm Gladwell has a great essay on Xerox Parc titled the Creation Myth.  Gladwell tells us there’s one innovation from Parc where Xerox recognized the value:

Meanwhile, the thing that they invented that was similar to their own business—a really big machine that spit paper —they made a lot of money on it.” And so they did. Gary Starkweather’s laser printer made billions for Xerox. It paid for every other single project at Xerox PARC, many times over.

This outcome is partially because Xerox could readily understand the value of laser printing because it was similar to their core copier business and partially because printers was a smaller leap to turn into a real business since many of the activities needed to be the copier business are also useful for the printer business.

The underlying goal of most innovations efforts to create a continuous pipeline of profitable new businesses. Note that a pipeline of profitable business is not what the professional venture investors try to achieve.  Rather they focus on the power law and look for the home runs. Pure innovation is not repeatable or predictable.  For better or worse, established firms want a repeatable process for new sources of profits.

The repeatable process for new sources of profits is a system for successfully moving into adjacencies. Cisco does this via acquiring smaller companies and then leveraging its salesforce, customer relationships and brand to increase the value of the acquired product. Acquisition is not an easy model as most acquisitions fail but Cisco has built strengths in acquiring and integrating so it can achieve a high success rate.

Amazon is another great example. Amazon started in books and has systematically expanded to new categories to the point where it covers a huge portion of the retail landscape. These category expansions leverage all the strengths that Amazon has built including its world class supply chain, fulfillment capabilities and strong brand. One of Amazon’s biggest flops was outside its core competencies, the Fire Phone. Amazon has also been successful at consumer electronics, most notably Alexa.

If you read this far, what I want to leave you with is that innovating is an unpredictable endeavor where failure is much more common than success. Established firms are on the whole not suited to this pursuit in areas disconnected to their core business. Even if an innovation effort discovers a great new technology, the constraints that established firms have mean they are unlikely to successfully commercialize it. Instead, established firms should build a system to move into adjacencies where they are most likely to be successful and can leverage their existing strengths and capabilities.

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Product Management

Prioritization for Product Managers

At Product Camp Silicon Valley 2018, I presented on the topic of Prioritization.   Prioritization is at the heart of what Product Managers do. In the talk, I looked at frameworks for prioritization, stepped back to talk about the big picture of value creation which is what product managers are trying to achieve with their prioritization choices and then talked about practicalities of prioritizing effectively.

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Product Management

Product Manager’s Guide to Dealing With Sales People

I spoke at Silicon Valley Product Camp 2016 on “Product Manager’s Guide to Dealing With Sales People”  This was my third year speaking at Product Camp and it’s always a pleasure to share what I’ve learned with the Product Management community.

Talk Description:

If your product is sold to enterprise customers, Sales is a key constituency for Product Management.  Effectively managing your relationship with sales people, whether they be account executives, sales engineers, or account managers, is an important component of being a successful PM.  In this presentation, I’ll address how to get competitive intelligence from sales, deal with common problems and create a roadmap that helps the sales teams.

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Business Strategy, Product Management

My Product Camp 2015 Presentation

I spoke on “Overcoming the Barriers to Building Great Products” at this year’s Silicon Valley Product Camp.  In this presentation, I look at how great products generate superior financial returns even though they have equivalent or lesser functionality to their competition.  I then present a hypothesis that building a great product requires making decisions that run counter to the quantifiable ROI requirements that almost every business endorses.

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Internet Industry, Product Management

The Problem With Uber’s Surge Pricing

Uber’s surge pricing causes a ton consternation among for its customers and while surge pricing is a theoretically correct economic response to a shortage, in practice it makes for service that doesn’t meet the all the needs that Uber is trying to fulfill. The idea behind surge is pricing is sound on paper: when there’s more demand than supply, the price should rise so that market clears. The alternative is a shortage which would mean long waits for an Uber, similar to how its difficult to get a taxi in a period of high demand. The problem with surge pricing is that it forces the customer to be in a spot market for transportation. A spot market is where a transaction is made for immediate fulfillment or in simpler terms, an Uber ride can only be bought when you need it and the price fluctuates so there’s no way of knowing in advance (say a day or even an hour before) how much you’ll pay.

Consumers do not like spot markets in general and most of the time, their transportation needs are predictable rather than of the moment. The number of commodities that the average consumer buys at spot prices is quite small. Ones that come to mind are gasoline and food products like milk, fruits, vegetables, and meat. The amount of complaining when gas prices rise is a good indicator of how much people dislike spot markets. There’s less complaining about food because there are many of substitutes. If the price of beef is high, one can always buy chicken or pork instead.

When it comes to transport, people avoid spot markets. When was the last time you walked into the airport and bought a ticket for plane departing in an hour? The problem with walking into the airport and buying a ticket is that the price could be very high. If there are few seats left, a flight that is usually $400 could be $1000. Since most of us rarely need to fly on short notice, we avoid the spot market and make a reservation in advance. If fares are high the weekend we want to fly to Vegas, maybe we go the next weekend or decide to take a road trip instead.

With Uber, we have none of these options since we don’t know what the price is going to be till right when we need the service. Say I bought an airline ticket for 4 weeks from now. I know 4 weeks in advance that I need transportation to the airport on a particular day and time, but if I want to take Uber, I have no idea what that will cost. If I open the Uber app and see it’s 3x surge pricing, I likely don’t have enough time left to take the bus instead. The same problem exists if I need to be a work at 9am tomorrow and my plan is to take is to take Uber. For much of most peoples transit needs, they know in advance when they will need transportation. That foreknowledge should be useful in making sure that supply and demand are balanced but with Uber, it’s not used at all.

With Uber, the riders are only one-half of the equation. If surge pricing worked as intended, drivers would see the high prices, start driving and increase the supply. For the supply to meaningfully increase, the number of drivers has to be elastic meaning that high prices need to actually significantly increase the supply. Uber drivers have a similar problem to riders in that they don’t know what the rates will be in advance. If an Uber driver is sitting at home in their underwear and watching re-runs on TV then 3x surge pricing might motivate them to put on some pants, get in the car and starting driving. However, if they made other plans or just decided to sleep in, then 3x surge has no effect on their willingness to provide rides. If they had known that it was going to be 3x surge pricing maybe they would not have agreed to go to brunch or stayed out late the night before but with Uber’s current system it’s all guess work. An experienced driver might know when surge pricing is likely and plan accordingly but if it’s unpredictable (either in time or amount), then potential increase in supply is limited to drivers who happen be sitting around doing nothing.

I don’t have access to data on how surge pricing affects supply. Uber certainly has this data but even under heavy criticism, they’ve never (to my knowledge) made any specific claims about how effective surge pricing is at increasing the number of drivers. Even without the data one could presume that if surge pricing was effective at bringing in drivers that surges above 1.5x would be rare as most people would not pass up the chance to earn 50% more than usual. In some geographies, 2x and greater surges are a common event.

New Year’s Eve is surge pricing at its most extreme. On NYE 2013, some riders were paying $500 for rides. Every business that is part of people’s New Year’s Eve festivities, especially bars and restaurants, raises prices on New Year’s Eve which makes sense because demand is so high and supply is fixed so it certainly makes sense that an Uber ride will cost more. Personally, I’m not a huge fan of New Year’s Eve and there’s an amount of income that would at least get me to consider driving for Uber on NYE. However, with the current surge pricing system, I don’t know what I’d make. While some revelers wouldn’t want to pre-plan what time they go home, I suspect many would prefer to book their ride in advance especially if it gave them certainty on the cost. I’m not going to give up my NYE’s because the earning potential might be good but is unknown and I suspect there are many people like me. Predictability would increase supply and make consumer better off.

Allowing reservations and still keeping an element of dynamic pricing so that supply and demand balance isn’t an easy problem. However if ride-sharing services are going to fulfill their vision of enabling people to not own cars, Uber or its competitors will need to create a method where prices are known in advance for transport needs known in advance. While surge pricing might be economically efficient in a purely economic view, that’s too narrow a way to look at the problem. From a product point view, there are customer needs not being met. If Uber can’t figure out how to tell people what it will cost them to get from point A to point B a week now, somebody will come into the market and meet that need.

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Business Strategy, Internet Industry

Strategy Lessons from Cloud Price Cuts

Google cut prices dramatically last week on it’s Infrastructure as a Service (IaaS) offering, Google Cloud Platform.   Amazon followed suit on Amazon Web Services the next day and cut prices to match Google’s price cut.  What business strategy lessons can we learn from these prices cuts and what can we predict about the future prices?

Commodity Products Compete On Price

Even though it takes both access to a large amount of capital and a high level of technical capabilities to run a large scale cloud provider, the cloud computing services especially compute and storage are a commodity as one providers offering is equivalent to another’s in the purchasers mind.  There’s little difference in a virtual machine from Amazon, Google or Microsoft Azure.

As cloud resources are undifferentiated products, it’s not surprising that Google is choosing to compete on price.  As a smaller player (in terms of cloud market share) hoping to take share from Amazon, Google needs to compete on price.  Other attributes such as reliability surely matter but there’s not enough difference for Google to effectively compete on those.

As is frequently the case when when one player cuts prices, the other players respond with their own price reductions.  Amazon responded by cutting prices to match Google for on-demand instances.  Interestingly, there’s a significant difference in pricing structure for heavy usage.  Google gives automatic discounts at 70% and 100% usage in a billing cycle.  Amazon is cheaper when using reserved instances but they require up front payment and thus the buyer loses the option to terminate or reduce usage with out penalty.  The reserved instance approach helps Amazon when comes to capacity planning but is less buyer friendly.

The other piece to note is that Amazon cut prices only on services where Google competes with them.   Amazon left prices alone on services that do not have a Google equivalent such as Dynamo DB or the RedShift data warehousing service.  Services where the competitors do not have competitive offering are differentiated and not a commodity.

What to Expect For Future Prices

For both compute and storage, we can expect costs to fall due to Moore’s law for processing and that hard drives get denser over time.  Even if data center costs stay flat, providers being able to get more yield for a given amount of rack space and power means costs will continue to fall.  The other question is will competition force lower margins over time?  If so, prices could fall faster than costs as competition drives margins and thus prices provider lower.

As providers show no signs of being able to differentiate offerings in cloud storage and compute, I expect prices to continue to fall.  With prices likely to fall, Amazon three year reserved instances become on a gamble since as realized price for Google’s offering may fall over enough over the next 3 years where it’s a better deal to use Google’s pay as you go price especially considering the flexibility to change or reduce consumption as needs change.

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Internet Industry, Mobile

Think Through Your Competitor’s Response Before Acting

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Google Maps Image

Whenever one is evaluating an action to improve or maintain their business’ competitive situation, thinking through the competitor’s likely response is a critical element.  I frequently see companies taking actions and not thinking about competitors response.  A classic move to increase competitiveness is to cut prices.  It’s a huge mistake however to evaluate your offering with lowered prices against your competitors offering with their existing prices.  There will be a new equilibrium once competitors respond to your action.  There maybe several rounds as some initially follow suit, and some wait and see and take action later.  But assuming there will be no response and predicting the outcome using that assumption is foolhardy.

A recent example is Google Maps on iOS.  According to many published reports, Google refused to offer Apple turn-by-turn directions in the Google powered iOS mapping application that was bundled with iOS 5 and before.  Google’s refusal was so they could keep turn-by-turn directions as an Android only feature.  In hindsight, this plan was a strategic blunder as Google  lost a 23 million iOS users as a result. Even in foresight, this was predictably a blunder since it failed to consider Apple’s likely response.  Was it really even possible that Apple would just accept this deficiency in their most profitable product line, the iPhone?  It wasn’t necessarily predictable that Apple would create their own mapping app as there were many companies they could have chosen another partner instead.  But what was predictable was that Apple was going to quit using Google as their mapping provider costing Google many million map users.  Even though Apple’s switch to providing mapping was rocky to a say the least, Google still suffered. And, Google’s response to Apple moving to their own mapping system? To introduce that same turn-by-turn direction feature they originally refused to provide on iOS.  Google had no choice but do so once Apple introduced their feature as losing the entire iOS user base greatly decreases the value of their local content.

It’s entirely possible there were other factors that lead to Apple’s decisions to no longer rely on Google maps which make it difficult to judge how big a blunder this was on Google’s part.  Apple may just not have been comfortable relying on a competitor.  But what is clear is that Google was never going to succeed in gaining any competitive advantage over Apple in the smartphone war by withholding any mapping features as Apple had alternatives for getting these features. The moral of the story is think through the likely response from your competitors when taking any action to boost your competitiveness.  If someone else is proposing a plan, ask them what the competitor’s likely response will be.  If you get a blank look, you know that they haven’t thought it through and their touted benefits are likely fantasy.

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Internet Industry

Does Apple’s secrecy help overcome the Innovator’s Dilemma?

Tonight I saw Adam Lashinksky speak about his book Inside Apple: How America’s Most Admired–and Secretive–Company Really Works.  As he was describing how Apple would erect walls inside its offices to keep projects secret , I realized this extreme level of secrecy solves a core part of the The Innovator’s Dilemma.  It becomes impossible  for one part of the company to impede the disruptive innovations of another when the first part has no idea what the second part is doing.  Other pieces of what Lashinksky described about how Apple operate,s including having being functionally organized rather than having multiple business units, helps keep Apple innovating rather than getting mired in protecting its current businesses.  But I’m wondering if the secrecy that was designed to keep information from getting outside the company also prevents Apple from getting it in own way.

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