The Yin and Yan of Jack Dorsey

I thought this was interesting on multiple levels. By coincidence I read these two articles almost back-to-back, so even I couldn't miss the connections.

We start with a man named Jack Dorsey, the man who launched Twitter. I think Twitter is (like Facebook) overhyped and little understood, but I still found this story in Wired Magazine a compelling read. It's a personality profile of Dorsey; and of course because it's written by a leading-edge tech mag, there's a Cult of (Steve) Jobs undercurrent; much of the article compares him with Jobs and Apple.

As an illustration, there's a discussion of Dorsey's current project, a merchant payment service called Square. For the purposes of this blog post, I'm not interested in Apple, design, or other Revealed Truths. I'm interested in the company itself and what it does:

. . . Earlier this year, Square . . . released Square Register, an app that makes it easy to use an iPad as a full-featured cash register. Vendors can set up buttons for each item they sell, much as McDonald’s lets cashiers simply press Shake instead of entering the price. It can also connect wirelessly to a cash drawer.

But Register’s real value is that it offers sophisticated analytics for free. Its users get data that allows them to identify which products are selling and when, and future versions will be even more powerful. “As a customer enters the vicinity of the establishment, a notification will spring open on the merchant’s screen,” says Megan Quinn, Square’s director of products (who has since left the company). “It will show the customer’s name and suggest their most likely order, based on an algorithm that knows past purchases and things that sell well at the store.”

Henderson, the engineering lead on Pay With Square, points out that the company collects all kinds of information about its users, data that might be invaluable to merchants and customers alike. “First of all, we know your location,” he says. “Second, we have a decent sense of your history. We know the kinds of places you’ve been and what you like. But we also know lots of other things—like if there’s a whole bunch of food trucks that pull up nearby, we’ll see the spike in activity and can point you to those trucks. I think you’ll see us get really good at this.”

Analytics and data-mining might provide Square’s real business model. So far, the company has charged a very small fee for each transaction, and merchants aren’t likely to pay much more. And while Square has been giving participating merchants access to analytics about their businesses for free, it is also aggregating that data, real-time information about what people are buying in every region of the country, complete with detailed demographics. It’s reasonable to think that might be very valuable in the near future.

Square is still focused on smaller merchants, but its executives believe that even tier-one retailers will use Square before long. “The Neiman Marcuses and the Walmarts will want to have an emotional attachment with their buyers, where anybody can walk in and pay with their name and have an electronic receipt,” Rabois says. “That’s what we’re going to deliver.”

In other words, Square aims to provide shoppers with an emotionally satisfying experience . . . .
—Wired, "The Many Sides of Jack Dorsey", paragraphs 40-45

I showed this article to a friend and he was thrilled at the prospect. Rooting through the wallet for money, making and handling loose change and such just slows everything down and can be an annoyance (e.g. almost nobody wants pennies anymore, let alone a pocketful).

He also made a point that in some places, like Europe (and probably many parts of the US), a lot of transactions are still in cash, such as cab fare. Cabbies don't take plastic, so you have to have and handle an often unfamiliar foreign currency, which leads to more bills and more coins, and receipts (if you're lucky) to keep for expense reports. Even when you are able to use credit cards, you're still limited to whichever brands or systems they accept; American Express (still a favorite for US corporate travel) is often non grata.

The no-swipe, no card, electronic-wallet-on-your-iPhone world that Square envisions may still not be adopted by cab drivers or small bistros in France, but it's still a welcome step toward it.

That aside, the portion of the Wired article that I quoted above discusses the use of analytics—the analysis of buying habits. Wired's example would be walking into a coffee house and the barristas would have your likely order on the cash register and ready to go as soon as you walked in the door. I used to frequent a chinese restaurant and always bought the same lunch, so they always knew what I wanted as soon as they saw me. That's not a bad thing.

So next I came across an article in The Economist magazine (June 30-July 6, 2012. London's skyscape on the cover). This article never discussed Square in particular, but the part about Square's analytics dovetails in nicely:

The internet was supposed to be the consumer’s friend. By making it easy to shop around, it would drive prices lower. But online sellers of all sorts of goods and services are taking a keen interest in new software that promises to help them spot customers who are well off, or whose money is burning a hole in their pockets, so as to charge them more).

Online shoppers let slip plenty of information about themselves that could be of use to crafty salesmen. Cookies reveal where else they have been browsing, allowing some guesses about their income bracket, age and sex. Their internet address can often be matched to their physical address: the richer the neighbourhood, the deeper the pockets, it may be assumed. Apple computer-owners are on average better-off than Windows PC users, and firms may offer them pricier options, as Orbitz, a travel website, is doing. Your mouse may also be squeaking on you: click too quickly from home-page to product page to checkout, and the seller can conclude that you have already decided to buy—so why offer you a discount?
—The Economist, "Caveat Emptor.com", paragraphs 2 and 3.

I know the Wired article wasn't about the dark side of technology, yet there's a little bit of me that thinks it's the "Apple is Good, Steve Jobs is God, this man is obviously the Chosen One so all he touches is good" philosophy springs forth. If Dorsey idolized Bill Gates, I would bet the implications of Square's analytics would have gotten a harder look.

And then finally this cherry on top. Flip the page after the Economist article and you see a full-page ad for SAS's analytic services (see image at top of this post). If I were SAS, I'd be pissed.

The Case Against Borders and B&N

MOUSEBENDER:
It's not much of a cheese shop, is it?
WENSLEYDALE:
Finest in the district, sir.
MOUSEBENDER:
Explain the logic underlying that conclusion, please.
WENSLEYDALE:
Well, it's so clean, sir.
MOUSEBENDER:
It's certainly uncontaminated by cheese.


I've written and rewritten this numerous times and scrapped it, but this time it stays.

I'm sick of watching various businesses go under, blaming everyone but themselves for their demise. There are outside factors that contribute, but I believe many businesses refuse to examine themselves and address their own faults--it's easier and more satisfying to blame competition.

The latest: Borders Books' flagship store in Ann Arbor is closing its doors. A sign supposedly says "No public restrooms--try Amazon."

Yeah, it's all Amazon's fault.

I grew up in suburbia and most of the bookstores were small. The major ones were located in malls. The two biggies where I lived were Pickwick (which later became B. Dalton) and Waldenbooks. They were nice because the alternatives were department stores, whose book departments were mainly best-sellers, drug and grocery stores, which had only the top sellers, and a few independents which were always on the other side of the city. The mall stores didn't have huge inventories, but there were better than non-bookstores and a lot easier to get to.

For me, the mall stores went sour when they began getting away from books and selling other things, like toys and games and other crap that weren't books. Given their already limited size and space, this seemed monumentally stupid.

Not too long after this happened, the big chains arrived: Barnes & Noble and Borders. They actuall had BOOKS! Huge stores with tons of books! All of a sudden I could go to the store and find things on shelves. Books I'd only heard of before but never seen. Books I'd never heard of but just happened to be shelved in a section I was interested in. It was a golden age.

You know what happened? The same thing.

I think in the last 5 years, I've actually bought a book or magazine one-visit-in-seven to either Barnes or Borders. Maybe two out of six I left because I thought the book was too expensive (they heavily discount the best-sellers, but they do it on the backs of stuff I want, which always seems like it's $40). The other times I left in disgust because they didn't even have what I wanted.

They still had lots of books, but I began noticing that more and more floor space was devoted to crap. Not stuff that made sense to me, like magazines and newspapers (even though I've often not found what I wanted there either), but games, puzzles, collectables. Candy.

Candy?!

Now I realize that even in a huge store like Borders or Barnes, they still have limits on what they can stock. But I was continuously disgusted by the fact that they don't have room to stock something I thought they *ought* to have, but they sure as hell had space for the Lindt Chococlate display.

Some MBA will say that the Lindt chocolates generated more revenue per square foot that whatever exotic book I wanted, and turned inventory far more often.

That may be, but I didn't go into Borders to buy a chocolate bar. Or a teddy bear. Or a Lego set.

So more and more often I turned to Amazon to buy books, because *they had books,* and the brick & mortars became the retailers of last resort because I was tired of wasting my time looking for books they didn't stock.

Ah! But I could order it!

Yeah--but if I'm going to order it, I CAN ORDER IT FROM AMAZON!!!! The whole point of going into the brick & mortar was being able to actually SEE the book. See if it was really what I wanted. And if it wasn't--maybe something nearby on the shelf *was* a better fit for my needs.

That was something that really pissed me off about B&N (Borders not so much): I pretty-much can't find anything at B&N now without having to ask. I can usually find things by myself at Borders, but at B&N you have to cool your heals at the info desk, which is either empty because the clerk is helping someone else find something, or backed-up because several other people have to find something--which is almost everything if it isn't the new James Patterson novel which is prominantly displayed in the middle of the store. With Borders I can usually figure out where my book is, or at least was supposed to be. With B&N the clerk has to consult a computer to figure out what assinine location it would be stashed--if they had it.

There's never a wait to talk to the clerks who are selling the company e-reader, though; and you don't need a directory to find him.