Catherine Healey's Blog

It's been a while

2011-09-26T12:56:00.001-07:00

It's been a while since I visited this blog. For being inactive it certainly gets a lot of google juice.

Since you're here you must be checking out my background. Since April 2009 my efforts have been promoting Fossati, my handbag line.
You can read my posts at

FossatiUS.com
@FossatiUS
facebook.com/FossatiUS

I've learned a ton about marketing and sales. One thing I knew was it is easier to market and sell for an established brand than to start from nothing. Easier when you have a sizable budget too. After two years of pushing we stumbled upon a revenue source we didn't expect. The lesson of how hard what I've been doing struck home. A known product with a loyal following sells itself. No marketing required. Just put it in a strong distribution channel and it sells. Provide excellent customer service and keep adding stock and you've got a growing business.

Launch a luxury brand during a global economic recession( depression in the Detroit area) and the climb is more difficult. Who would have ever thought this 'downturn' would last so long.

I'm ready to continue my corporate career. It was a lot easier. I'm damn good at overseeing initiatives and leading teams.

C

Detroit Automotive Ruins Tour

2009-05-17T20:06:00.000-07:00

The Arsenal of Democracy

A good friend of mine, Pete Hollinshead, is an automotive history buff. More than a buff really, he knows stories behind what you find in history books. I met Pete while working at Chrysler when he was brand manager for jeep.com and I was operations manager for ChryslerFinancial.com. Pete left Chrysler in August 2008, we’ve met at our neighborhood library to visit. We both miss the social aspect of work. I always knew Pete was into automotive history, but I had no idea to what depth until recently.

Pete has been giving tours of the Detroit Automotive industry ruins to anyone interested. There are so many stories behind the stories of the automotive history. I asked Pete for a tour and to help in gathering and writing some of those stories.

On May 13, 2009 Pete took my husband Jim and I on a tour of what was the envy of the world, the heart of the early 1900’s automotive industry. Places now ghost towns that used to be vibrant and alive, full of business and prosperity. Where the middle class was born and the rich ordered cars made to order. Bespoke vehicles, can you imagine.

We visited Dodge Main, Ford Model T plant, American Axle, the Russel industrial center that used to be Murray Body. We passed Pole town, named for the community GM bought to build its plant; a huge sprawling facility. The Ford Piquette building built in 1904. It was the prototype for the assembly line. There men walked the line, the line did not move. The most fascinating ruin was the old Packard plant in the Milwaukee Junction. Milwaukee Junction was the heart of the automotive industry in the early 1900’s. Packard was a brand with the cache of Lexus or Mercedes. In the beginning of the automotive industry, the manufacturing model was outsourcing. Packard built Chassis. You could order the frame, the engine, transmission. Then you had a catalog to order the body from a number of body manufacturers. What you actually ordered were the body components. There was a good deal of customization. You literally designed your own car. Truly a bespoke business model. Packard was an elite brand priced for the wealthy. You’d order your car like a fine suit. They only built around 100 cars a year.

During WWII Packard built Rolls Royce Merlin engines for our fighter planes. Detroit and the automotive industry was called the ‘Arsenal of Democracy’. Without the industrial might of Detroit Germany would have won WWII. It was surreal to stand outside and to walk around the decrepit ruins that used to be the pinnacle of luxury and technology in another era. You could almost imagine what it must have been like so many years ago. The Packard plant ruins must be a mile long and they’re as high as eight stories. Vehicles moved from floor to floor in an assembly line using huge hoists. Giant sliding doors separated sections of the assembly. Imagine at lunch, thousands of people leaving the factory to eat at the restaurants, shop in the stores or enjoy the beautiful Michigan day. Today hardly a soul lives in the Milwaukee Junction.

Detroit is a melting pot of humanity. The waves of immigrants influenced the culture and fabric of life in the city. The first wave was from Europe. Germans, Finnish, Dutch, French, English, Irish. The next wave was from Eastern Europe, Poles, Ukraine, and Serbs. In the 1930’s and 40’s blacks immigrated to Detroit from the south to escape oppression. Each culture brought with it their customs and cuisines, their religions and values. There were micro cultures. Each wave of immigrants built their own churches and clustered together. You’ll find four catholic churches in one area. One for Germans, one for the Irish, one for the English and so on. Many of the churches and buildings still stand. Many are crumbling like the Packard plant.

There’s a bridge over the road by the plant, it used to have the Packard emblem on it and the tag line ‘ Ask the man who owns one’ above the door to the plant. During the depression, Packard decided to ‘go down market’, to produce a cheaper car for a larger audience. They built the 120 model. The 120 had the Packard quality, and looked like a Packard but it was at a lower price point. This move marked the demise of Packard. They lost their cache and exclusivity among the wealthy.

Their timing was off. In 1941, they built and introduced the Clipper. Then came the war and they had to retool for the war effort. Four years later, after the war, they reintroduced the Clipper. They sold a lot, and even through the late 1950’s they sold more Packards that GM sold Cadillac’s but the management was too conservative. The new Clipper design for 1949-1950 was nick-named ‘the pregnant clipper’ . They had some supplier problems when Chrysler bought Briggs one of their body suppliers. What finally killed Packard were quality problems.

In 1952- 53, Packard brought in Jim Nance to run the company. He was talented and brilliant, but he saw the multi floored Packard plant as an albatross. He moved manufacturing to a new facility that was nicknamed ‘the cracker box’. It was just too small. It was so small men couldn’t move around, it was dangerously close. Quality suffered. The final Packards ever produced were beautifully designed with amazing engineering. Bu they fell apart and by 1956 the public had had enough.

Today the Packard plant ruins are stripped of almost all metal. A few frames remain with shards of broken glass. A musty smell exudes from the entry ways filled with garbage. Strange things like a boat, computer equipment, tires, shoes and plush toys. We didn’t see any vagrants, bodies or animals. Packard is the most decrepit.

We also went to the Rouge plant which is still operational. Raw materials go into the plant and cars come out. Raw materials like steel, rubber. Huge piles of coal sit ready to heat the furnaces to melt the steel , which is then rolled and formed and cut and assembled. Ford Rouge is the only plant where raw materials go in and a finished car comes out.

Outside the Rouge complex is a memorial. There’s a bigger than life bronze statue of Henry Ford. Along the courtyard are etched marble photos of historical events in Ford’s history. The images are not all favorable to Ford. They tell an amazing story. Then there’s the bridge where ‘the battle of the overpass’ took place. This is the very place where the UAW was born. Workers battled with Henry Ford’s goons and won the right to fair work conditions and pay. Since then the UAW has grown too strong and fallen out of favor, but there is still a need for unions. There’s a need for bargaining strength for the small and weak against the strong and rich who hold all the advantages. That’s another story.

Henry Ford while no philanthropist did see the benefit in paying his employees well. You could say he was the father of the middle class. He was the first to pay his workers enough so that they could afford to buy his products. He paid them enough so that they could afford to buy his cars and one of his homes. The basis of the Ford family’s wealth is the belief that the good of many is most profitable; much more profitable than today’s culture of ‘everyone for themselves’.

There are so many stories about what it was like to work in the automotive industry in its hey days. I’ll end with one of the more fun stories. Back in the day before automated assembly lines and business practice offices, anything was possible. One worker sitting in his office with the window open and the oscillating fan blowing turned his head just in time to see his fan fall out the window. It fell four stories right onto the hood of his boss’ brand new Cordoba. Bummer. So he called his pal at the factory. Hey Joe I need a favor. Yeah what? I need a dark blue Cordoba hood. My fan fell out the window on my boss’s new Cordoba. So he took the Cordoba to the plant and they installed a new hood on it that day. Those were the days.

If you have a story of life in the automotive industry during its heyday please write in the comments.

Packard - 'Ask the man who owns one'

Street view of the Packard Plant

Packard Ruin

The strangest things were discarded in the Packard ruins. This boat has a 2008 license

Shoes... and plush toys

Raw materials go in and cars come out

Rouge - The Battle of the Overpass took place here. Ford workers took on Ford goons for safe working conditions and fair pay

Our vision of sustainability is to build great products, a strong business and a better world

'Bringing Home the Birkin' Michael Tonello

2009-05-17T19:52:00.000-07:00

'Bringing Home the Birkin' by Michael Tonello is a delightful story about his adventures traveling to the swankest places in the world in search of Hermes treasure. The story takes you from his life in Province Town to Barcelona where he finds his soul mate and then around the world to places like Paris, Luxemburg, and dozens of other luxurious places you’ve only dreamed of visiting. You’ll learn his ‘formula’ for buying Birkins in France versus Italy. You’ll laugh till you cry at the descriptions of the typical Hermes sales people. It isn’t all frolic and gallivanting though.

After cleaning out all the Hermes stores in Europe and Asia Michael finds that even traveling to the luxury capitals of the world to shop dine and visit the finest hotels can get old. His final trip to the beautiful Island of Capri (pronounced CAP ree) Italy is to recover after the loss of a very close loved one.

The story has adventure, humor, love and sorrow; all the ingredients for a great story.

All that Sparkles is Not Gold

2009-05-06T17:31:00.000-07:00

“Fashion is made to become unfashionable.” - Coco Chanel

That’s the unspoken mantra of most ‘It’ brands today. Instead of timeless style, they give us new trends each season. Instead of exclusivity based on scarcity, we have exclusivity based on price. Instead of high quality handmade craftsmanship we have mass production from China with finishing touches in Italy or France to justify the Made in Italy or Made in France label. Luxury is available to the masses but luxury isn’t what it used to be.

At one time, our ‘It’ bag luxury brands were small family owned businesses catering exclusively to royalty and the very wealthy. Today most are brands owned by one of three conglomerates. Conglomerates focused on profits that have made their owners the richest men in France.

Bernard Arnault bought 43% of LVMH during the 1987 stock market crash. He wanted to add Dior perfume to his Dior clothing brand. Once at the helm, he led LVMH through an ambitious development plan acquiring luxury goods brands including, Louis Vuitton , Fendi , Celine , Donna Karan New York (DKNY) , Emilio Pucci , Givenchy , Loewe , Marc Jacobs LVMH is the largest luxury group and Bernard Arnault is the second richest man in France.

Bernard Arnault tried to buy Gucci but lost in a battle with PPR the second or fourth largest luxury conglomerate. Gucci, Yves Saint Laurent, Alexander McQueen, Stella McCartney, Sergio Rossi, Bottega Veneta, operate as brands within the Gucci Group owned by PPR.

The third largest luxury goods conglomerate is Swiss-based Richemont, which owns Cartier, Van Cleef & Arpels, Piaget, Baume et Mercier, IWC, Jaeger-LeCoultre, A. Lange & Söhne, Officine Panerai, Vacheron Constantin, Dunhill, Lancel, Montblanc, Montegrappa, Old England, Purdey, Chloé, and Shanghai Tang. Richemont focuses more on Watches, jewelry and writing implements.

Ten ‘It’ handbag brands owned by three very profitable conglomerates. Ten brands with the same tactics to maximize profits. Introduce a new trend each season, mass produce using the cheapest labor, market, market, market to create a need to achieve status. Tightly control distribution.

For fifteen years the results were phenomenal with double digit growth mostly from handbags and shoes. Luxury goods are usually insulated from economic downturns, but 2008 was a difficult year even for luxury goods. The economic slump is expected to continue through most of 2009. Consumers, still in a good position financially are careful with their purchases and are buying more traditionally designed bags that can be considered an ‘investment piece’. ‘In essence, frivolity is out of fashion – short-lived Champagne high - bad - long-lasting leather - good.’ Luxury brands that have stayed to the tenants of luxury have done well. Hermes, the only handbag brand that still makes their bags by hand, has done well in today’s difficult economic climate and announced better than expected profits in March 2009.

That may make them a target for acquisition. According to the Financial Times smaller weaker brands will be bought up the big conglomerates. LVHM is interested in Hermes and Prada. There may even be a merger of conglomerates as PPR and Richemont consider how to seize top position from LVMH.

As more and more ‘luxury’ brands are bought by conglomerates bent on profits one has to ask whether they really are luxury brands or well marketed mass produced fashion brands. The most sophisticated luxury consumers will seek out truly unique quality handbags from small designers. Like Fossati.

Threadless...No More

2009-05-01T17:59:00.000-07:00

The original pitch for Fossati handbags at start up weekend was to apply Threadless.com’s business model to high end handbags. Threadless is a T-shirt company that skyrocketed to popularity in 2007. Threadless business model is based on crowd sourcing and mass customization.

According to Wikepedia, Crowdsourcing is a distributed problem-solving and production model.

In its simplest form, crowdsourcing follows 8 steps:
1. Company has a problem
2. Company broadcasts problem online
3. Online crowd is asked to give solutions
4. Crowd submits solutions
5. Crowd vets solutions
6. Company rewards winning solvers
7. Company owns winning solutions
8. Company profits

Threadless follows this process to solve the problem, How to get an endless supply of hot designs almost guaranteed to sell on threadless.com. They ask consumers to contribute designs and to vet out the best designs. Threadless rewards winners for the best designs, taking ownership and profits.

It works because t-shirt design and mass customization are fairly simple. The compensation to winners is good and it’s become a platform for artists to promote their work. Even if you don’t win, you get a one of a kind t-shirt with your design printed on it for $12.00. This level of customization on a mass produced item at mass produced prices is called ‘Mass Customization’.

It worked really well for t-shirts and in 2008, threadless expanded to mass customization of bags. They partnered with Timbuktu, a bag manufacturer specializing in sturdy laptop bags.

Crowdsourcing and mass customization work well when you are printing onto a mass produced product like a t-shirt or canvas bag. It doesn’t work as well for more complicated product design like high end handbags. The model finally adopted for Fossati is call Social commerce. I’ll leave social commerce and how I settled there for another post.

Top Secret

2009-04-14T12:53:00.000-07:00

Your mother’s maiden name is still considered the height of security. It’s used by banks and credit card companies as the most obscure question you could ask someone. A secret no one would every guess. I doubt that’s been true for the last 20 years and it certainly is not true for my two sons.

Their ‘Mother’s maiden name’ is plastered all over the internet. It is signed to thousands of public documents. It’s now the name of a luxury handbag brand.

On the final day of start-up weekend, my three remaining teammates and I discussed the merits of a name. We wanted something either French or Italian. Knowing that the challenge is picking something not already being used, I offered up my maiden name. It met the ‘Italian’ criteria. Although I never thought of it as glamorous, having had to spell it all my childhood as ‘F” as in Frank ‘oss’ as in Sam ‘ati’, they thought it had cache.

And so my handbag brand name became ‘Fossati’.

Startup Weekend Ann Arbor June 2008

2009-04-13T12:14:00.000-07:00

‘Startup Weekend is a community building startup event.’ It’s like a mini Ycombinator, but 2.5 days instead of 3 months. And you get to go home at night. Local Ann Arbor businesses donated food and space. We were well fed and had 5000 sq feet to play around in.

Friday night, business ideas were pitched and then everyone gravitated into groups of their choice to work on an idea. 38 ideas were pitched that June evening from tracking and reclaiming stolen metals like copper to providing travel advice on an iphone as you visit a new destination. By Sunday 4 or 5 viable businesses launched. That’s amazing. Pitch an idea, form a team of talented motivated strangers and launch a business in 2.5 days.

It’s polite to bring something to a party. I brought homemade cookies and an idea to create a high end handbag business based on the threadless.com business model. I felt kind of like Reese Witherspoon in Legally Blonde. It was at Startup weekend in June of 2008 in Ann Arbor that Threadless for high end handbags was pitched to an audience. Not only did 6 people join my group but one guy stood up and said ‘I want to use the threadless model to make low end bags and if Cathy doesn’t want to then I’m going to.’ Hmmmm.

That made things interesting because I wasn’t sure whether people were joining me or him. As it turned out, most people had something in between a $30,000 and $10 handbag in mind. Something maybe around the $700 mark. Fortunately for me, this guy turned out to be a little Hitler, and the group shrank from 8 to 4. We became a much more productive team.

By July, a lot of those businesses had fizzled out. You have to wonder how viable a business is when it can be built in a 2.5 day weekend by a bunch of strangers thrown into a room together under time constrained pressure. It was a really great exercise in social and group dynamics. You got to see how people act under pressure really quickly. My team drifted away by late July too.

Startup weekend is where Fossati handbags began to take shape.

Time Traveling

2009-04-09T18:10:00.000-07:00

Time travel is possible.

You know you’re time traveling when:
• you call someone and ask if you can email them a handbag design and they say ‘email, nooooo. I don’t use computers. I got no time. ’
• you ask if you can email a handbag design to someone and they say ‘I don’t do email, FAX it to me’.
• ‘someone insists you work side by side with them through the month long handbag design process’ And you live across the country. Or in another country.

It’s been a blast traveling to the past to find a high end handbag manufacturer in the US. Fortunately, I found one of this era. And She’s really good.

Have you done any time traveling?

FossatiUS

In the Pursuit of Happiness

2009-04-09T16:05:00.000-07:00

The last 19 months I've transitioned from being a corporate executive to an entrepreneur. It's a hard story for me to tell because I'm still in the transition. My April 6 launch of Fossati US marked a new stage of my transition. It seems time to start to tell the story in case it helps someone find the courage to start something new when they find the way they've known, the path they've followed, for years is gone.

Last Career: Automotive Executive: Twenty plus years working in the automotive and automotive finance industry. Most recently employed as Interactive Marketing Director, Chrysler Financial. Responsibilities included overseeing all aspects of the interactive marketing initiatives from policy, strategy, planning, execution and maintenance.

New Career: Entrepreneur. CEO and Founder of Fossati , a boutique luxury brand specializing in exquisite limited edition handbags.

I left Chrysler along with a number of colleagues on the day Daimler signed over ownership to Cerberus, August 3, 2007. Becoming an entrepreneur isn’t too different from directing chryslerfinancial.com except I have no employees, no multi -million dollar budget and high short term personal risk. In the long term the risk is much lower because when I come through this, I’ll have many revenue sources.

Being at a cross roads in my career and life, I realized I could do anything. I have so much at stake and am in such a risky position that doing anything is less risky than doing nothing. The job market is abysmal. My sister and I had joked about selling handbags and shoes for years. As it turns out handbags and shoes are lucrative. In fact, they carry most big brand names. I learned most big brands have sullied their brand by mass producing and manufacturing in China. Not only will you see your bag everywhere, but you can buy a knock off made in the same plant, for a fraction of the cost on the streets or at a ‘purse-party’. Terrorists sell knock offs because the profits are as high as selling hard drugs but the penalties are almost nothing. Your purses are taken versus years in prison. This has opened the door for people like me to enter into the market. There are a few successful examples of women without design backgrounds launching boutique brands specializing in handbags. I followed their path and created Fossati.

After nine months of planning and preparation, I launched Fossati, on April 6. Fossati is a luxury brand specializing in exquisite limited edition handbags. Each handbag is meticulously hand made in the USA of the finest materials. My factory insures all their workers and many have worked there for over a decade. We use only top quality ostrich and reptile skins and buy only from reputable sources that follow environmental guidelines. Our editions are limited to 100 bags in any design, material and color combination. Fossati is a socially responsible luxury brand, contributing to the US economy.

At Fossati, luxury means exquisite craftsmanship and materials, classic styling with an edge, exclusive, limited-edition handbags and personal service. From the convenience of ordering online to the knowledge that you will not see your purchase everywhere – all priceless, rare little luxuries.

Visit us at fossatiUS.com

Obstacles to Overcome: You’ll have a lot of bad ideas that don’t produce any income. You’ll work hard and not earn a dime for months. You’ll need a way to survive financially. You must be confident, independent, determined and persistent.

The best way to have a good idea is to have a lot of ideas. That means most of your ideas will be bad. Learn to evaluate your ideas quickly and cheaply. Move on from the bad ideas.

I wanted to pursue an idea of creating a fashionable solution for mild to moderate hearing lose. My family has hereditary hearing lose. My mother is very hard of hearing; my sister is losing her hearing, as am I. It’s estimated that half of people over 40 have mild to moderate hearing lose. The only available solution is hearing aids. Hearing aids are expensive, not very effective (for my type of hearing lose) and have a social stigma. I wouldn’t want to be seen wearing a hearing aid. I can pass for 30-something but with a hearing aid, I’d look old and decrepit. Even the most expensive hearing aids look like you have a wad of gum stuck in your ear. I found the industry is moving in the direction toward fashion and function. In fact Siemens came out with a hearing aid in 2008 that has fun coverings and makes a fashion statement. It retails for $3000 per ear. I abandoned my idea to produce a mid priced digital Bluetooth hearing solution that filtered sounds and worked with modern gadgets because Bluetooth chipsets had not reached a small enough size to create something fashionable. There’s also a lot of competition and not much margin. Four months learning about consumer electronics and no productive outcome. That’s part of being an entrepreneur.

In January 2008, I had an opportunity to bid on Chrysler’s dealer web site initiatives. Unfortunately the bidding was limited to a small set of vendors and I didn’t make the cut. Having invested time into the idea, I tried taking it directly to dealerships. After months of talking to dealerships, it became clear that dealerships were stuck in a time loop somewhere back in the 1950s. I decided to pursue something that sounded fun; something not so serious and dominated by gladiator types. It was June 2008.

Advice for Others: Start your own business while you’re gainfully employed. Know when to leave. Some may consider it a conflict of interest to start your own business while earning a salary. That was a rule made in a different era. It may have been true in the days when you could count on your employer for a stable lifelong job. Times are different. It takes time to build a network of colleagues you trust and can rely on to deliver. Start building your network and client list when the stakes are lower.

As an employee, your employer can decide to ‘cut –you-loose’ at any time. They don’t need a reason. Usually the real reason is cost cutting. They can hire someone with less experience for less money that costs them less insurance. You’re most vulnerable after you’ve accomplished your goals. Especially if you’ve made it look easy because you are competent. The best time to leave is when you’ve accomplished your goals, and have the most offers. Leave, even though you want to enjoy the fruits of your years of hard work and dedication. Leave.

Automotive machine churns on

2008-10-14T11:57:00.000-07:00

The banking and market meltdown, the credit crisis, recession, and ‘global warming’. Yesterday’s spiraling gas costs, US automotive over production and poor product mix. ‘Dealer consolidation’. Detroit is a nervous town. The question on everyone’s mind is how much change all this turmoil will cause and which US automotive manufacturers will survive.

All three are scrambling to raise capital, talking about mergers and sell offs. They’ve already been rushing to cut inventory and produce products consumers want at competitive prices. They’ve laid off employees, outsourced, cut production, discounted, discounted and discounted even more. With all the challenges there is some normalcy, the machine churns on. A number of online initiatives have launched recently. Let’s take a look.

Chrysler LLC recently launched new dealer sites focused on driving more revenue. The refreshed sites do a nice job of repackaging existing functionality. The corporate dealer sites are fully integrated into the brand sites. You can’t ‘visit’ a dealer site, you can view inventory, request a quote, schedule a test drive etc on Chrysler.com, Jeep.com and Dodge.com. They incorporated google maps to find dealers near you.

Still missing is the ability to search inventory across dealerships and accurate pricing. Still missing is any attempt to incorporate the social sharing tools all online junkies have come to expect on every site.

Ford continues to provide store sites for their dealerships. They’re all template based, but at least Ford let’s dealers upload videos to inject some personality into the site. Here’s talking at you. Being able to search inventory across dealerships is a nice touch.

GM also provides template sites for its dealers bu even if they were links out it would be hard to tell. Competition for dealership business is fierce and owned by a few big players. The only way for vendors to make money is to resell a template based platform. Most dealer sites, regardless of who implemented them, look very similar with similar functionality. Almost all use the same data and image sources. Where are the sharing features? Where’s the conversation? Where’s the talking at you video?

There are some renegade dealerships experimenting with virtual F&I and accurate pricing. These are the exceptions; innovation generally comes from startups leveraging the lead generation model. Lead generation is the automotive retail monetization model of today. Leads and ads.

Domestic auto companies and dealerships continue to do things the way they’ve done them for the last 10 years. It’s web 0.5. Accurate pricing and a shopping cart would take them to web 1.0. Simply adding social sharing tools would move them onto the beginning edge of web 2.0. Matching the dealerships mega store business model to help them upsell and help consumers shop their entire inventory based on needs. Errr, No.

Maybe in the next few months as more dealerships go under we’ll start to see to real changes in how cars are sold. Both online and off.

Triiibes

2008-10-14T11:49:00.000-07:00

In early August, I was invited to join Seth Godin’s online community, Triiibes. It’s a gated community, the price of entry was preordering Seth’s book 'Tribes'. All members were also ‘approved’, only 3,500 people were invited. For me, Triiibes has been a study in how leadership style and exclusivity effects group dynamics.

I didn’t know what to expect when I joined, but I have been a fan of Seth Godin for over a year and was thrilled to be invited. The first week I got used to the format. I created my profile, read the rules, accepted some friend invitations and sent some of my own. One of my new friends invited me to join a game where the leader starts a story and tags someone to write the next scene who then tags the next person. This was incredibly fun to watch the story unfold and see where each person would take the story, until someone didn’t participate. The leader didn’t step in to tag someone new. I felt this same kind of disappointment with a lot of the threads.

With 3,500 members, there’s a tremendous amount of activity. I could read for hours. I found it hard to catch a thread at the beginning that I could contribute to meaningfully. Many of the threads were over by the time I could jump on. Most seemed to last one or two days and I found that many people felt the same way I do about social media. Conversations end abruptly. The relationships are shallow. Someone you’re having a conversation with will leave and you’ll never hear from them again. You never know why. It’s disconcerting if you expect a reply. Triiibes is better than most social networks in regards to depth. Some threads went on for days and the conversations were very deep. Certain people emerged as natural leaders.

Anne has a natural talent for encouraging more conversation. After each reply to her post she’d make an insightful comment and pose another question to encourage deeper conversation. Becky, is amazingly prolific. She flits around contributing to so many posts. She’s an amazing story teller with tremendous depth. Mary added the hard core marketing perspective. The hard love. You’ll notice I don’t mention Seth Godin.

It wasn’t that Seth wasn’t there, he was. He set the ground rules, he posted, and his posts ran longest and had the largest participation. He was a leader, but he took a background position. I learned to pick up his posts from the home page and look at his page to see where he posted. He was very active. He set the rules and let the tribe lead. He encouraged and complimented members. He let the natural leaders emerge. He did enforce his rules. One was that triiibes was not a place to promote yourself. One person was excommunicated early on. Then someone tried to excommunicate an entire category of members in the name of Seth. Weird.

Three weeks in, a few people still had the default monkey picture. One member wanted to kick these people out. He called his post ‘The thinning of the tribe’. He attempted to change the rules and used Seth as his lever. His point was that Seth had asked everyone to upload a picture and these people had been disrespectful in not following Seth’s request. They should be ‘thinned out’ if they didn’t comply. He went as far as recruiting people to write to the slackers to update their photo or else. A few responded. They had been incredibly busy or on vacation. They were obviously people you’d want in the tribe. Seth’s only input was that it would be too much work to remove the profiles. This was a very long thread and many posts and comments about the monkey pictures followed for weeks after. The original poster changed his story to ‘It was only an experiment’. This guy is a leadership coach who works with politicians. Whew!

In September, Seth held a webinar. The agenda as purposely left open. Two people that hadn’t been strong leaders in the tribe led this initiative. They organized it, collected questions, and conducted the interview with Seth based on the questions.

I’m an even stronger fan of Seth Godin after hearing him speak about an experience we had shared vicariously for weeks. The most telling answer, paraphrased below, was to the question of what you keep score of.

‘What you keep score of is important in whether you see yourself as successful. Some people measure money or traffic. I measure how many people I can touch and help to be successful. My goal was to take the idea of tribes and flesh it out and allow people to experiment with it; to push people to build their own tribe. I believe in peoples’ power to make a difference. The biggest thrill would be to have someone come back months later and say ‘we never conversed during tribes but I did what you said and it made a huge difference.’’’

2008 round of automotive retail startups

2008-09-26T14:13:00.000-07:00

It’s fall 2008 and there’s a new crop of automotive retail startups featuring …gasp… accurate pricing. Truecar, realcartips and pricehub recently launched. truecar shows a great, and good price for each car with easy to understand graphics for most if not all vehicles for sale in the US. Price hub and realcartips rely on consumer input; the data is scant for some models.

Other recent launches have a social slant. Vlane focuses on finding the right vehicle according to your lifestyle needs. It also features consumer ratings and reviews for community input when you are close to making a decision. The founder plans to eventually monetize it by…Pfff… generating leads. Driverside and repairpal are recent launches focusing on the ownership phase. Both are basically a lead source for service. Repair pal links to dealerships, driverside links you to other service providers.

Last year’s round of automotive startups focused on appealing to women. Askpatty founded by women auto executives certifies dealerships as female friendly. cartango lets women anonymously haggle /tango with dealers in a facebook like site dressed up like snow white. Carsdiva offers a ‘safe’ place to learn about cars. And Carfolks is a weird take on ‘hot or not’ and encourages me to not attempt this on my own. I’ll send in a man.

In 2007, Automotive retail accounted for 20% of all retail in the US. There are over 20,000 dealerships. These figures may be smaller in 2008, but the point is it is a huge market. It’s an incredibly crowded space with a few big players and a lot of small players picking up the scraps. Dealerships are generally loyal making it hard to break into that space and next to impossible to change the sales model. That’s why startups monetize by generating leads. The appearance of more service and repair focused startups is a sign of the times. Less people are buying new cars due to job insecurity and high gas costs. Truecar has the potential to disrupt the automotive retail industry. The timing is right for disruption.

These are anxious times for the automotive industry. Over production, high gas prices, poor product mix, the financial crisis and subsequent credit tightening, all add to slumping sales. The OEMs reported as much as 35% sales drops from last year’s figures. The financial crisis has tightened credit to the point where dealerships can’t make payroll and are being forced to declare bankruptcy turning the last year’s consolidation into an industry retraction.

After lagging behind every other industry in its sales processes, this could be the 'straw that breaks the camel’s back'. Consumers are fed up with the antiquated Orwellian sales processes. Saying they’re ready for a change is an understatement. They’re so ready they gloat over dealership’s demise.

Watch to see which dealerships and or OEMs approach startups to help them step into the 21st century. Envision a shopping cart behind truecar.com's accurate pricing with a ‘deliver to your home’ option and a checklist to help you through the final paperwork.

Stripping away the veil of mystery.

2008-09-26T08:45:00.001-07:00

Probably the last holdout, automotive retail has managed to keep pricing a mystery. It’s a testament to the strength of NADA and the dealer brotherhood. But there’s this one guy, Scott Painter, who repeatedly disrupts the automotive retail industry.

His latest venture is Truecar.com. It’s his third attempt to break the traditional car buying model and make buying a car online as easy as buying anything else. It’s currently in Beta and open to anyone that requests access.

I found truecar.com from a techcrunch article after searching on ‘honest dealerships’. You can vote on whether you think it will thrive or fail

Pricing sites seem to be the latest rage for automotive sites. Here are a few pricing site from the techcrunch article

Pricehub
realcartips

What do you think would be truly disruptive to the automotive retail industry?

You don’t create a need, you exploit a need

2008-09-20T07:30:00.000-07:00

De Beers , the diamond monopoly, latched onto a trend in declining marriages and exploited it in 2003. In 2000, 52% of all households were married down from 72% in 1972. This trend was an ugly reality for a diamond trading company whose product celebrated marriage and commitment. In 2003 they launched the right hand ring campaign. A campaign to capture the disposable income of the single woman as diamonds become as much a way to celebrate independence as the blissful state of a union.

What are the trends to exploit today?

The (automotive retail) Twilight Zone

2008-09-11T11:48:00.001-07:00

Learning about the automotive retail industry and talking to dealers was like being in the Twilight Zone. It was like being stuck in a time loop where nothing ever progressed. A perpetual web 0.5. Gads, they aren’t even doing ecommerce. They think negotiation by email and fax is best in class or ‘allowing’ consumers to apply for credit is the same as buying online. Grikee, you can’t even get an accurate price online. How could you possibly trust a business that can’t even give you a price for their product?

This journey started back in December 2007. A friend showed me this incredible car buying prototype he’d created at shopnik.com. In January, my friends at Chrysler invited me to bid on their dealer sites. Fantastic, this could be worth millions. By February, Chrysler closed the bidding to a small group of vendors. I lost the chance to bid. One of my dealership principle friends challenged me to come up with an online revenue plan for him. OK, this could snowball. Start small and build.

Lots of things changed between January and March 2008. Gas prices started to soar and automotive sales to slip. Then Bear Sterns collapsed and was sold for the price of the building and the credit crisis started to roll. Dealerships became more cautious about spending money. By June, I abandoned the idea and decided o move on to something more fun.

The plan was to eventually take dealerships from web 0.5 to web 2.0. The first step was to implement the basics. Web 1.0 ecommerce with web 2.0 sharing and bookmarking. It was pretty basic. The goal was to increase dealer revenue, and reduce costs. The strategy was to make buying a car online as easy as buying any other product. The tactics included matching the site product availability with what was available through the dealer group, cross sell, up sell amongst products with an easy to use gallery that could be filtered and sorted according to a consumers needs. It implemented viral sharing and book marking tactics including a widget.

The ideal dealership was a mega dealer group with global reach. Penske would have been my favorite judging from the Morningstar profile. Autonation too. The implementation was designed to appeal to women because 80% of purchases are influenced by women. Women love to shop online.

Women have proved that highly personalized expensive products sell very well online. People with money tend to be time starved educated and to know what they want. For those reasons a couple of online retail pure-plays are shaking up the fashion and jewelry industries.

Like automotive retail, fashion and jewelry are both very traditional, technophobic industries with tight control on their distribution channels. In both cases, industry insiders and investors did not believe these products could be successfully sold online. The argument was that fashion and jewelry are too personal a product and too expensive. The leading brands believed their brand would be compromised online. The experience, the luxury and exclusivity could not be reproduced online. Two pure-plays proved this wrong and now lead these industries in the move online. In fact the pure-plays are admired and hated / feared.

In 1999, when investors were throwing money at any crazy online idea no matter how weak the business plan, they said ‘Fashion, Online, NO’. One brave entrepreneur, Natalie Massenett , went ahead and founded Net-a-porter anyway. The rest is history, in 2007 net-a-porter’s net revenues exceeded £37M representing nearly 10 years of double digit growth. Sales are global. The success of Net-A-Porter has pressured traditional brands like Gucci, Armani to move online. Read more in the Financial times

Similarly, the jewelry industry has been shaken up by a pure-play called Blue Nile.com. Blue Nile’s 2007 revenues were $319 m. They sell more engagement rings than Tiffanies. Their largest single sale was $1.2m (MILLION) in June of 2007. They have shaken the jewelry industry in the US and are now selling globally. Read more in the economist

What’s with automotive?

Doesn’t the argument against selling cars online sound a lot like the arguments made in 1999 against selling fashion and jewelry online? You have to try the product before buying it. It’s a complicated product. It’s expensive. You can’t return it once you buy it. Yeah, all true. Buying online won’t be for everyone. But consider. Those that have to try it first can test a car anytime at any dealership. This is no different than what people do today before buying at a dealership. You rarely test drive the actual car you buy. This is analogous to the shopping trend toward browsing at the mall and buying online. Yes cars are a complicated product, but with the amount of information online most consumers know more about the product when they walk into a dealership than the sales people. Yes, a car is expensive, so is a diamond and Haute Couture. It’s true, you can’t return the car after you drive it off the lot. Is it any different after you’ve wasted half your day at a dealership trying to buy your $30k - $80k car? No! And why can’t you return a car? There’s no law, it’s a policy. In fact there is a law that you can return a car if it’s faulty. It’s called the ‘lemon law’.

The only thing holding the automotive retail industry back from selling cars online is the power of NADA, and the dealership brotherhood. They tightly control the distribution channel and lock out anyone that tries to change things. You do see cracks in the strangle hold. Smart took preorders for Smart fortwo in 2007 and sold out. They’re sold out through 2009 or 2010. Smart cars that listed at $16,000 resold on ebay and at Barrett Jackson for as much as $31,000. Tesla Motors is allowing preorders of their new electric sports car. For a $5000 down payment you can reserve your $100,000 Tesla. Zap, another electric car manufacturer, has a standard shopping cart. There are a few of renegade dealerships experimenting with selling online. They’re willing to ship anywhere.

While the rest of the world moves on, automotive retail is stuck in an endless time loop. As I stand at a cross road in my career, I choose to continue to learn and grow. I’m going to sell really nice handbags using mass customization business model. It’s a dream.

Go One test drive

2008-05-31T08:42:00.000-07:00

Today we test drove a Go One velomobile. You won't find one in a bike shop. For a test drive visit go-one.us site, find an owner nearby. Call and schedule a test drive. The owner we visited, Dave, is a bike enthusiast. In addition to the Go-One, he let us test drive his Rann long wheel base recumbent bike, ,and electric powered upright road bike. He offer to let us try his Fuji carbon fiber racing bike but we didn’t want to impose too much. Dave was very knowledgeable, in his opinion, the Go One is the only well built machine available. The only well engineered machine. Every one of Dave’s bikes was a blast to ride. Each one was a unique experience.

The go-one is for the bike enthusiast. It's expensive, around $10,000 depending on the exchange rate, requires some athleticism and isn't practical for the most US streets.

Getting in and out of the Go-one , or any velomobile, requires coordination and some upper body strength. You have to step over the side and stand on the seat. Using the sides to lift your weight, step into the foot openings and lower yourself into the seat. Take care not to step on the casing, it's thin and may break. To get out requires even more upper body strength to lift yourself up as you step onto the seat, then step over the side as the bike rolls downhill.

Once inside, it's comfortable, there's enough foot room and you can put your feet in the foot holes or on the peddles. For someone with big feet it might be hard to peddle. Certainly hard to step into the flintstone holes. There's good visibility out the front through the casing. You can easily see over the sides. The bike comes with a detachable cover for riding in bad weather or to maximize aerodynamics. With the cover on it's a little claustrophobic. Opening the vent windows helps. The cover would be nice in cold weather but you'd cook in the hot summer months.

It took a little practice to get used to the steering. Upright, the 'tiller' you see works like a boat tiller. The 'tiller' can pulled close and used like a steering wheel. At first I over steered. The steering bar is so small it doesn't take much movement to turn. I also had to stretch to reach the peddles and noticed I'd turn with each stroke. The bike is set for someone 5' 10", I'm 5' 6". I had to stretch. Once I realized what I was doing I relaxed, pushed the bar away a little and I was used to the steering. It almost steers itself. It has a wide turn radius. It felt like the bike would role if you took corners too fast. You can't lean because of the 3 wheels.

We didn’t think we’d be safe on the streets. Dave felt the same way. We’ve found that drivers don’t see cyclists. Even when they do, they’ll sometimes pass within 6 inches of a cyclists. They must not realize how difficult it is to ride in a straight line when you’re terrified of being hit by a car passing you at 45 MPH just six inches away from you. The gutter of most roads is cluttered with debris, over hanging branches and with some of the worst pot holes. You’d constantly be looking over your shoulder to brace for the hit.

While fun, the test drive kind of squashed the idea of building a velomobile for the US market. Unless the US builds bike friendly pathways, the go-one is a great toy for a bike enthusiast.

Bugatti Veyron vs a jet

2008-05-29T22:49:00.000-07:00

While I'm on this quest to develop a velomobile for the US market... I'd design the body after the Bugatti Veyron. A Velo Veyron

If I had a million dollars, I'd buy me some toys

2008-05-29T15:29:00.000-07:00

Wooow! that looks like fun!

Look at Jeremy Clarkson get in the back seat! LOL

I want to ride my bicycle, I want to ride my bike

2008-05-27T23:06:00.000-07:00

Remember summer vacation when you were a kid? Three months of nothing to do but sleep in and hang out. Hot summer days so long you felt bored and actually looked forward to the start of school. I remember my parents telling me that I’d look back on those years as the best in my life. They were right, but it’s taken me decades to see that. The one thing that helped me remember what my childhood was like is riding my bike.

I ride about 10 miles every day and would ride all year if we didn’t have winter. The desire to ride all year, along with the exorbitant gas prices sparked a thought to look for a pedal powered vehicle. A sort of Flintstone mobile. I’ve found that almost anything I can think of, someone has already built so I wasn’t surprised to find a true Flintstone mobile. Watch the video, I'm not fond of 86 Buicks but this is hilarious. I love how you can see their feet. When they pull in the garage, you can see through the grill and out the window.

I actually had something more fashionable and luxurious in mind, a little more practical too. I like the peddle power but I want two seats side by side, room for groceries, heated seats and air conditioning. It has to look 'cool', and easily travel at 35 MPH. That sounds like a Smart car, except for the pedals. There is something like that called a Twike. Its top speed is 35 mph, it seats two, is pedal powered with an electric motor assist. Unfortunately, it’s fugly and expensive… $35,000.00. I think I would rather have a Smart. Or better yet a Mini.

Then I stumbled upon these things called a velomobile. They’re quite popular in Europe, especially the Netherlands. I found a reference to them on the wikipedia page for People Powered Vehicles (PPV). A velomobile is a covered bike, usually a recumbent bike or trike. Picture one of those laid back bikes that old guys with beards and bellies ride but a tricycle. Now encase it with a lightweight covering. Wella you have a Velomobile. We test drive a go-one this weekend. You can have your own go-one for around $10,000. At little less than a Smart car.

Here's a picture of a People Powered Vehicle from the 1970’s. It was built in Sterling Heights MI and was introduced during the 1970's oil embargo. Ironically, the high gas prices that made the PPV appealing also caused the company to go bankrupt.