Month: May 2012

There are Damn Good Reasons Why I Live in Reno

[Update 2016]: **Make sure to check out the comment threads below -AND- Many people find this other Reno post even more helpful**:

What it’s like living in Reno? – Lifestyles answer

I know what you’re thinking; there are too many casinos, too many bums, its too dry, I want some more local stores, give me some more trees…

Shut It!… I don’t care what you say,
this is a damn good place to live!… 🙂

This topic is something that has been firing me up for years. I moved down to Reno in 2009 in need of a larger market than Truckee to satisfy my career needs, and while I was sipping the Reno haterade for years, there is a fresh growth of revival taking over the city and I love it. As I wrote on the MadeInReno blog a few months ago:

We the people of Reno know that we live in Reno for a number of glorious reasons. We know that Reno’s perception around the globe is not the truth we know it as. No one is going to pull Reno up, we know that. We are left to our own devices, our own grass-roots means. We have to pull ourselves up by our own bootstraps. “Made in Reno” is the place for Reno made businesses, entrepreneurs, and all-around real people to tell their stories, to share what is happening with real people and real businesses Made in and successful because of Reno.

There are thing happening, people moving and shaking to help pull Reno in a new direction. My favorite Reno band Jelly Bread definitely knows it (I hope I can get them to jam at my wedding). As does my favorite new bar Craft. And who doesn’t love our own home-grown, started in a garage, local, state-fossil, dinosaur-named beer: Icky by Great Basin Brewery.

“People need to know that Reno is not about the 4-blocks downtown,
there is a lot more to Reno.”
– Rick Reviglio, CEO of Western Nevada Supply

If you haven’t seen it yet, Bungalow Mike does a great job of covering new developments in downtown and mid-town Reno. He must spend hours upon hours in county and city meetings digging up all the great information he has on that website (PS, did you know he’s pulled together a Downtown, Midtown Reno App now?). On top of  that Michael, Chris and Zach have started the Reno Rebuild Project which is a revolving loan program funded by downtown businesses for more new downtown businesses.

We’ve Started Telling the Story

I am looking to pull together people that want to help me share those stories of why Reno rocks. Kristen Stith and I have started and we invite you to check it out:

MadeInReno.wordpress.com

I’ve started by sharing the stories of Better Green Building, Western Nevada Supply and Moment Skis, but there are lots more great stories to share about Reno, and I would love your help. We’ve made a list of local business whom we believe help capture the essence of what is making Reno, Reno; and we would love to talk with each of them:

  • Midtown Eats
  • Sup
  • Craft
  • Public House
  • Hiroba
  • Reno Collective
  • Scolari’s
  • Girl Farm
  • Great Basin Brewery
  • Silver Peak
  • Jimmy Bean’s Wool
  • Great Basin Food Co-op
  • Organic Tea & Herb
  • Sierra Eco Systems
  • Wells Avenue Stores
  • The Lil’ Waldorf
  • Truckee Sourdough Company
  • Fallon Farmers
  • QCS
Kristin has already covered a ton of great stories to date and I am looking forward to collaborating with her and pulling some over those posts over to the MadeInReno Blog (including her awesome video):

Why Millennial Need to Do, Not Try: A Lesson for My Peers

Its not what you know or who you know;
but how you create value out of the world around you

A quick lesson for my peers, while you are bowing out, playing video games and making excuses, those of us with determination to play the game are changing the rules in the job market. One more piece of paper or letter behind your name won’t get you anywhere; demonstrated experience, determination and connections (on and offline) are the name of the game.

Background: Our Families

The priorities of our grandparents following the great depression, and resonating through today have been, “It is your responsibility to do whatever must be done for the good of you family, your community, and your country without question.” This idea sprang from the shortages in life, the demanding times, the hard losses experienced and the need for a solid footing in an ever-changing world. Our grandparents laid new foundations for the war-ravaged world.

Our parents, having the liberty and luxury of a solid foundation, grew to question everything regularly accepted and provided for. Many of their priorities focused internally with, “How can I  be the best version of myself by seeking out adventure, practicing self-control, mindfully contemplating, and questioning reality?” They swore that they would not be so regimented as their parents. They swore that they would show their children the love and adoration they constantly sought and seldom knew.

Our School of Thought

As young children we discredited our grandparents as being old-school depression children in a high-tech world that was booming and would be forever. We bent our minds trying to convince them that it was okay to waste, that they needed technology, and that we were in a new peaceful and endlessly profitable world. Boy were we wrong.

Turn to the present, end of May, 2012… News media is saying, “The Great Recession is over,” though in real life we aren’t so sure. Everyone is holding their cards close to their chest as they have seen, experienced, or heard the stories of life-long homes lost and friends and family that cannot find work within the past few months and years. “You can tell me its over; buts its not over until I say it is.”

Where does that leave my generation (Millennial, Gen-Y, whatever you want to call us)?

We are inheriting a world that has been sold to us as a lie. “This is a new world. Growth is endless. Styrofoam, paper plates, and plastic silverware are the way to go. Growth is sustainable. Build fast. Triangle Schemes. Blah blah blah. Buy Real Estate. Find a way to make a quick buck.” Deep down our generation respects Gen-X (between us and our parents) as they are working hard to build from the ashes and unlearn the traditional approaches handed down in the workplace to them by our parents. In the end, however, we know that they mostly have 10-15 years of productive work left in them before they start looking to retire and move on as well.

The Lazy Hero Complex

Overall my generation has a lazy hero complex. We have been told our whole lives that we are special, that we deserve a trophy and should get credit just for trying. Today and in the midst of global financial crises my generation has largely made excuses, said, “I’ve tried to get a job, but in this economy…” My generation has been taught that to try is to succeed. Perhaps a quick lesson is needed from Yoda:

Do or do not, there is no try
– Yoda

So instead of fighting the good fight, my generation is making the excuse (though few will accept this point), bowing out for the time being, living with parents and waiting for their extra-ordinary situation to force them to be a hero in their own eyes. “If only I could get a lucky break like Mark Zuckerberg,” comes the thought. “Maybe if I just get another degree at this University, someone will recognize my talent and pay me a huge salary.”

The Lesson

A quick lesson for my peers, while you are bowing out and making excuses, those of us with determination to play the game are changing the rules. One more piece of paper or letter behind your name won’t get you anywhere; those of us fighting the fight know that demonstrated experience, determination and connections (on and offline) are the name of the game. So go ahead and boost your resume and email it off to another garbage bin, because what you don’t realize is, you don’t have a job because you aren’t trying hard enough. Survival of the fittest my friend. Make opportunities for yourself where they did not exist before out of your own determination and passion. In my humble opinion:

Its not what you know or who you know;
but how you create value out of the world around you

Thank you for reading my blog – Daniel S. Herr.
I invite you to connect with me on Twitter @DanHerr
Or follow to my blog 

Natural Inelasticity: Providing Value instead of Value Engineering

“Sell to the classes, eat with the masses.
Sell to the masses, eat with the classes.”
– Henry Ford

One recent point in my class on Economics and the Firm looked at how to maximize revenue in a business from the standpoint of an economist. The example has been, “If you increase the price of your product by 10% and you lose less than 10%, you likely aren’t charging enough and haven’t maximized your marginal revenue.” Once you  lose the same percentage of your customers as the percentage you increase in your price, you have maximized your revenue. All of this lead to an interesting point in my head demonstrating that Henry Ford, from an economists standpoint, would be dead on to market and sell to the masses.

Economists create some pretty lame terms, but I have to go into one for you here. All that “price elasticity” means is “how much people will react when you change your prices.” If I am selling my Aqua-Globe doodad for $20 each, will no one buy them anymore if I raise the price to $40 each? What about if I just raise it by one dollar, how many people will just say, “The heck with this, I’ll get a friend to come over and water my plants”? To address these questions economists came up with their terms:

  • “Elastic” – like a rubber band, it can be changed / stretched easily
  • “Inelastic” or solid stuff, doesn’t like to change

With an  inelastic product people won’t really change how much they purchase and with elastic they will. Anyway, enough with economics vocabulary… the point was that you want to build an “inelastic” business so your customers won’t leave when prices change (perhaps by building a connection with them, proving that you are about value more than cheapest price, etc.).

To Henry Ford’s point, if you are selling more of a product (selling to the masses) you will tend move toward the economist’s “inelastic region” and rest on the right side of the maximized revenue point (eat with the classes). I believe Mr. Ford had some great points, and obviously proved his abilities and business values far more than I have, but I would make sure to emphasize that more than simply selling to the masses, you need to provide enough value such that customers keep coming back. I believe Mr. Ford would agree.

I would argue that in focusing upon value, your business will naturally end up in that “inelastic region”. Sure you may be more likely to reach that region by selling large quantities (which are likely at a lower price), but I believe businesses can also get there with a cult-like status. Build a business that provides so much value and genuine emotional connection that it is near impossible to replicate the results: Disney, Grateful Dead, Harley Davidson, Red Bull, Google, or Incline’s T’s Mesquite Rotisserie. Once you’ve built that great business, even if your prices come up, or competitors try to imitate you, you won’t lose many customers. When your business is just barely “inelastic” (whether naturally or economically engineered) an increase in price still increases your revenue and your business is less susceptible to another Great Recession (or decrease in customer income).

Bringing us back to the first example, if I want to operate in this attractive inelastic region, I can’t just maximize my revenue. Once I focus simply on maximizing my revenue, any change in the economy will push me off the hill and down the slope into elasticity where all the customers care about is the cheapest price. No longer are you a value provider, but just another name in the game of the lowest bidder. To that end I say:

Don’t forfeit your values to squeeze every last penny out of your pricing.
Focus on providing Value instead of Value Engineering.
– Me, Today (25-May-2012)

This is all too often what you see companies do just before an Initial Public Offering, trying to puff up their feathers for the potential investors. “Look! Our revenue has grown 100% in the last year! We are booming!” Fail. If you subscribe to this philosopy, please allow me to give you a little lesson Value vs. Growth stock investing (for educational purposes only).

In wrapping this up, economists basically went through all this to show that you should try to have a hook that keeps customers coming back (inelastic) and if you’re interested in making more money, sell to more people. Amazing that it takes all this math and graphs to figure out something that is common sense. Gotta love economists.

Thank you for reading my blog – Daniel S. Herr.
I invite you to connect with me on Twitter @DanHerr
Or follow to my blog 

If you’re still unsure about price elasticity, these simple examples should help:

Inelastic = We don’t react as much when price goes up ( we keep buying)

  • Arm, Leg & 1st Born−0.09 Gasoline (Short run)
  • −0.1 Eggs
  • −0.20 City Bus Fare / Pass
  • −0.3 First Class Airfare
  • −0.31 Gasoline(Long run)
  • −0.31 (Medical insurance)
  • −0.5 Cigarettes
  • −0.5 Chicken
  • −0.8 Beer
  • −0.87 Movie Theater Visits
  • −0.9 Discount Airfare
  • −1.0 Wine

Elastic = We definitely buy less when prices are jacked up

  • −1.5 Spirits
  • −1.5 Pleasure Air Travel
  • −2.8 Purchase New Car
  • −3.8 Coca-Cola
  • −4.4 Mountain Dew
Some Sources:

Julia Boorsten of CNBC: I have an Inbound Marketing lesson for you

Facebook’s IPO is obviously a landmark achievement; $16 Billion raised in no time, $104 Billion Market Cap, estimated wealth in excess of $20 Billion for Mark… Well done guys. One of the big concerns prior to the Facebook IPO has been GM’s announcement (or leak) that it was pulling away advertising on Facebook, and asking why would GM do and say that now.

Earlier today I was watching the Facebook Special on CNBC’s PowerLunch when something concerning caught my ear (good thing we have TV with a DVR in preparation for the Olympics – thanks babe!). Today Julia  Boorsten said:

“I think if you look at the numbers of what GM was actually spending; they were spending $10 Million on Facebook Ads, but $30 Million on creating content for Facebook. That’s a wierd mix. A lot of people say that that’s not the way you should advertise on Facebook.”

Bravo Julia on subscribing to the old-school advertising bandwagon that is dying. You’ve done a lot of digging into the Facebook story, but I’d say GM has the might know a bit more about social media than you at this point…

No Bullshit Social Media:

Only 5% of people trust advertising, and only 9% say advertising companies act in customers’ best interests while 84% of people buy based upon what other people have to say online. The web, post dot-com bust, is about relationships, communication, and sharing by the people (exhibit A for Facebook’s success thus far).

Some other hard to swallow numbers for traditional marketers:

  • Newspaper advertising revenue fell more than 28% in one quarter in 2008. More than 20 metropolitan daily newspapers have folded or moved online since 2007.
  • Television advertising is predicted to fall more than 75% in the next decade
  • Since 2007 radio advertising has declined for 14 consecutive quarters (to publication of book in 2010)
  • From 2008 to 2009 only cable TV and online mediums showed audience growth with network TV, local TV, magazines, and newspaper all in decline.

Inbound Marketing

Ch1: “The bottom line is that people are sick and tired of being interrupted with traditional outbound marketing messages and have become quite adept at blocking marketers out!” The “10-years ago” tactics in marketing do not work anymore, people primarily gather information through search engines such as Google today. As you are well aware, the average info-seeker performs dozens of searches every day. The second place people look is at one of the more than 100 million blogs on special topics. Thirdly people learn/shop (other than search engines & blogs) with recommendations through social media.

Ch3: In order to move from outbound to inbound marketing you have to stop interrupting people and “get found” by them instead.

Ch4: Remarkable content is the gift that keeps on giving, unlike paid advertising.

Ch7: The value of Facebook is the ability for content to go Viral and for remarkable content to be genuinely shared with friends of friends, not advertising.

Ch11: On average inbound marketing leads are 61% less expensive than outbound marketing leads.

Ch12: In years past Procter & Gamble, Coca Cola, and IBM perfected the craft of interrupting their way into customers’ wallets using outbound marketing, but the era of interruption-based marketing is coming to an end.

My Thoughts on the Facebook IPO:

In case you care about my two cents on Facebook: The stock price will jump because its hyped in the short-term but personally I would not go long on it. Facebook will continue some good growth as it enters into more new markets for the next few years; I have seen that stalker-book obsession of new users too many times since thefacebook.com’s introduction to Cornell in 2004 to not place merit on its new market growth potential (currently less than 1/7th of the world is on Facebook).

You might remember, one of the main reasons people shifted to Facebook from Myspace was because it was clean, simple and free from ads and spammy content. Facebook, in looking to become a more and more profitable business, has forgotten its original premise and those of us who were on the site when there were less than a few thousand people have begun to distance ourselves from it. I do not believe that outside of application (in game etc) advertising Facebook has a solid-enough revenue model as people are more and more annoyed with interruption advertising and are exceedingly better at ignoring it (which devalues Facebook’s offerings). Their introduction of sponsored stories changes the game a little bit, but again at some point, people will get sick of the advertising in this manner.

In the midst of the hype it may seem like Facebook is the end-all conduit for online communication of the future, but I believe its time is coming and that its purchase of Instagram for so elevated a price is a warning sign and insecure fear of insignificance from the leadership.

I welcome your comments…