Meet John Osher: What We Learn from SpinPop & SpinBrush

By Shlomo  Maital  

SpinBrush

    As a retired Technion professor, with silver hair and lots of stories,  I get to meet and greet many visitors.  Yesterday I had lunch with one of the most interesting ones – an American entrepreneur named John Osher.   Here is his story.

    Osher grew up in Ohio;  he took 7 years to finish college. He worked as a plumber, carpenter and cabdriver.   He was an entrepreneur from age 5, he tells me.  He started and sold a vintage clothing store, and an earring outlet, while still in college.  HBR Professor William Sahlman, who wrote a lengthy case about Osher, says, “he’s a street-smart guy and he has this observational power.  He hated having to manage employees, so he built a big company with very few employees.” 

   Dr. John’s was Osher’s 3rd major venture built from the ground up and ending in a lucrative exit.  He produced the uniquely American (and ‘insanely popular’) SpinPop battery-powered lollipop, which later led to SpinBrush.  SpinPop is a lollipop that spins in your mouth (using a tiny battery-powered motor),  enhancing the flavour,  and creating a new market category of “interactive candy”.  In developing the product,  Osher focused laser-like on cost, setting cost targets and determining that if they were not met, the product would not be produced.  

    I teach, “don’t fall in love too soon with your product”, I told Osher.

    Osher answered:  NEVER!   (Never fall in love with your product.).    Easy to say, hard to do. 

    After SpinPop’s success, Osher simply walked up and down the aisles of Wal-Mart, and looked for product ideas that could build on the cheap-battery technology of SpinPop.  He came up with 100 of them.  Then he narrowed them down, to an inexpensive electric toothbrugh, to become SpinBrush.  Here was his plan:  Produce an electric toothbrush that would have battery life of at least 3 months,  and cost only $1.49 to manufacture!  Sell it retail at $5.00.    

     I told him that what he did fits 2 of our models, in our book Cracking the Creativity Code.  First, zoom in, zoom out.  Zoom in on “SpinPop” and what you learned from it;  Zoom out to find ideas that can leverage it.  Then Zoom in again, to implement the idea.   Second,  Price Cost Value.    Start with high value (electric toothbrushes that create value, because people are willing to pay  $50 for a Braun, e.g.).   Make it at very very low cost.  Then charge a reasonable price, to share the value between profit margin (for the company, price minus cost) and client margin (for the buyer, value minus price).  (You get, say, a $50 electric toothbrush for $5 – that’s value!). 

     Osher is very modest, quiet-spoken, and very very wealthy – he sold SpinBrush to Procter & Gamble for nearly half a billion dollars.   He achieved this with soaring head in the clouds imagination  (Lollipops that spin????   Give me a break!)   and hard-nosed hard-headed feet-on-the-ground pragmatism.     

     Anyone can do this.  All you need is imagination, experience, objectivity, pragmatism, leadership, drive, energy, hard work, and persistence. 

    Thanks, John, for showing the way.  

 

Why Boeing’s Dreamliner 787 Is a Nightmare

By Shlomo  Maital

Dreamliner

Yup, Boeing, one of America’s leading industrial exporters, is in trouble – again.

In 2011 it introduced the fuel-saving Dreamliner, a truly great and comfortable aircraft —   but Boeing is still not making money on it. Normally, the learning curve lowers production costs dramatically, moving new planes into profitability.  Why not the Dreamliner, which is a great airplane?

   Reading between the lines in Christopher Drew’s New York Times article: 

   Boeing has not yet ramped up production to 12 a month.  There are delays in supply of seats from a French supplier, Zodiac Aerospace.

   But buried in the article is the real zinger:   “Boeing has an aggressive stock repurchasing program; it spent $2.5 billion to buy back 17 million of its shares in the first quarter.”

   Had Boeing used that cash to boost its production rate, and help Zodiac get those seats delivered,  it could have moved down the learning curve faster.  Instead it buckled to shareholder pressure and distributed the money instead of re-investing it.

    I never give advice on the stock market.  But here is one exception:  Never invest in shares of a company that spends money to buy back its own shares.  The reason:  It proves the company knuckles under to shareholder pressure (bad sign), and proves the company has no other imagination or vision for using scarce resources.  

   And one more tip:  Beware of the accounting numbers.  Boeing apparently can book profits computed according to “average projected cost”  (using the learning curve) rather than the actual cost of planes at the moment.   This is highly dubious.  And Boeing has used this method for ages.   Where are the audit board and the auditors?  

 

 

Financial Trading: They’re Still Ripping Us Off

By Shlomo  Maital

 Sarao Sarao – The Guardian sketch

Navinder Singh Sarao

  With the indictment in London’s Westminster Magistrate’s Court of Navinder Singh Sarao, we again become aware that financial traders and speculators are still ripping us off.

   A criminal complaint filed against Sarao cites a practice known as “spoofing”, used to manipulate prices and make profits.  Spoofing  involves placing orders to move the price of a financial asset.  When the price moves (up), the trader sells the asset, then cancels the original (fake) order.  Apparently this practice is widely used by some high-frequency trading firms (i.e. firms that use super-computers to spot profit opportunities and buy and sell in a micro-second, faster than a human trader can spot them). 

     The spoofing method was apparently used in 2010, May 6, to move the Dow-Jones, which plunged some 1,000 points in moments and caused huge disarray in financial markets.

     One of the markets in which spoofing occurs is the Chicago Mercantile Exchange, where traders can remain anonymous.

     The information above is reported by Nathaniel Popper, in the New York Times.

     Ordinary citizens are ripped off, because when asset prices are manipulated,  the traders doing the manipulation take the profits at our expense, as we pay more for the assets we buy than we should.

     There seems to be no end to the sleeze and crookedness in financial trading, and it is small comfort to hear they are ‘fringe crackpots’.   The problem is, nobody knows how widespread these practices are, because there is almost no way to tell, especially with anonymous trading.

     Why not end anonymous trading?   It won’t end spoofing, but at least it will increase the risk the spoofers take.   There is no crime in placing an order and then cancelling it.  But when this is done systematically,  it becomes suspicious.  Proving criminal intent is super difficult.  The only solution is,  financial traders who don’t cheat.  But, why not cheat, if enormous profits result from it?   

 

Starbucks & Howard Schultz:

He’s For Real

By Shlomo   Maital  

Schultz

 Is Howard Schultz for real?  Are his pro-social activities and investments genuine?  Or is it all an act, to promote Starbucks?

   Writing in the New York Times, columnist Joe Nocera answers:  He’s for real.   Schultz grew up poor in Canarsie, Brooklyn, housing projects,  bought a small coffee chain in Seattle and turned it into…Starbucks.  He was CEO until 2000,  turned over management to someone else, Starbucks quickly crashed, and Schultz returned to the CEO job in 2008.  Starbucks’ market value rose from $5.3 billion at the time, to today’s $72 billion.  Clearly, Schultz knows something about managing and growing businesses.

    But what Nocera particularly stresses is Schultz’s social vision. Here are some of his projects:

  • In 2011, he called for a boycott on political contributions, until the two parties Democrat and Republican began to work together
  • He began a project to make loans to small businesses, partly with money from the Starbucks Foundation, when the economy was struggling.
  • He co-authored a book about the plight of American military veterans, and donated $30 m. to this cause from his family’s foundation.
  • He has launched a medica company, with Rajiv Chandrasekaran, that will use storytelling to tackle important social issues.
  • He started, last month, Starbucks’ Race Together campaign… including 10 forums for Starbucks’ employees to discuss race issues.
  • He has promised to hire 10,000 youths who are neither in school nor in the work force.
  • He will open Starbucks stores in disadvantaged neighborhoods, including Ferguson, Mo.   Personally, I think Starbucks coffee is ..well, yuck.   It is Robusta, rather than Arabica, because Robusta is cheaper. But heck, let’s give Schultz credit. He knows how to manage, and he also has a highly pro-active conscience.   We need more Howard Schultz’s.    
  •           Schultz’s vision is to re-establish the American Dream, which he himself lived. As one scholar pointed out, it is not just the inequality in wealth and income that is disturbing, in America, but the lack of social mobility, the ability to move from lower deciles to upper ones, as Schultz did. The American Dream has become the American Myth. Schultz wants to rebuild it.

How to be an Evangelist:

From Guy Kawasaki

By Shlomo   Maital  

Guy Kawasaki

Guy Kawasaki is the legendary marketing guru for the Macintosh computer.  Apple hired him, even though he was in the jewellery business at the time, had a psychology degree from Stanford, and knew next to nothing about personal computers. 

  Why did Apple hire him?  Because – he believed.  He felt that MS-DOS, and Microsoft in general,  were “crimes against humanity”.   He felt that “Bill Gates brought darkness to the world.”  He set out “to right a wrong”.    He was in his words – an evangelist. 

    The Greek roots of the word evangelist mean “one who brings or proclaims good news”.  The word has come to mean someone who preaches the Christian gospels. 

    Kawasaki became a VC (garage.com), and how is Chief Evangelist for Canva, a startup whose mission is to democratize design.  In the latest issue of Harvard Business Review, Kawasaki sets out the rules for becoming an evangelist.  Here they are:

  1. Schmooz. Build social connections. It’s easier to evangelize people you know.
  2. Get out of your cubicle. Network. Talk to people.
  3. Ask questions. Initiate a conversation, then – shut up and listen.
  4. Follow up. Make sure that you follow up on a meeting, within a day.
  5. E-mail effectively: Optimize your subject lines, and shorten your text. Always respond quickly.
  6. Make it easy to get in touch.
  7. Do favors. If you do things for others, they are more receptive to listen to you.
  8. Public speaking: An evangelist must master the art of public speaking.  Kawasaki says it took him 20 years to master the art and get comfortable. 
  9. Deliver quality content. 80% of the battle is having something worthwhile, interesting, perhaps novel,  certainly meaningful, to say.  It is NOT just about how you say it, but what you say. 
  10. Omit the sales pitch. If people think you are pitching, you’re dead. Don’t.
  11. Customize. Use the first few minutes to directly address the audience, show them you’ve done your homework, know who they are and what they seek.
  12. Focus on entertaining. If people are entertained, they are more receptive to the information you bring.
  13. Tell stories. Make it personal. Tell stories about yourself and others, that support your message.
  14. Circulate in the audience beforehand. Make contact with them, especially with those in the front rows.
  15. Control what you can. Try to speak at the beginning of an event; choose a small room, if you can. A packed room is better than a half-empty one.
  16. Practice. You need to give  a speech 20 times to get good at it.

 

Rules for Social Media:

  1. Offer value. Share good stuff – of four kinds:   information, analysis, assistance, entertainment.
  2. Be interesting.
  3. Take chances. Don’t be afraid to take strong stands, express feelings.
  4. Keep it brief.
  5. Be a mensch.
  6. Add drama.
  7. Tempt with headlines. How to…   top 10, etc.
  8. Use hashtags.
  9. Stay active: 3-20 different posts a day. 

  “Evangelism is not about self-promotion. It’s aobut sharing the best of what you, your team and your organization produce with others who can benefit. “

The Purpose of Life:  Ask Walt Disney?

By Shlomo   Maital

 plasticene restaurant

 

  Last month, I taught a one-week course on entrepreneurship and creativity to 43 dynamic Chinese students, mainly undergraduates studying at Shantou University, Shantou (Guangdong).   The course was in English; the students worked on business plans in teams, and made elevator-speech presentations (in English), prepared 2-minute videos, and wrote business plans (in English).   (The photo shows a Play-Do, or plasticene, model of one of the team’s ideas, for a novel restaurant – they stayed up all night to create it!).  

   I just received an email from one of my students.  I pasted it below, without correcting the syntax…   (Shantou University has a phenomenal English Learning Center, that provides each student with a tailored personal program for learning to read write and speak English)….

      I want to ask you a personal question, this question had confuse me for a very long time, the question is that “what do we live for?”, what’s the point of live? create value? make money? love? i not sure. now i just in my 20s age, i always feel there’s no a direction in my life, i’m not sure what is going on in my rest of life. but you have a lot of experience about life, you have make a lot of achievements in your life, so want to ask your answer about the question, i hope you can give me some suggestion.

 Dear readers:  How would YOU answer my wonderful student?

  My own answer was rather woeful – but, here it is.   Congratulations for just asking the question. Most of us ask it, at the end of our lives, when it is nearly too late to actually change anything.  I think the purpose of life is best defined by Walt Disney.  He set the mantra for Disneyland (later, Disney World):  “Make people happy”.   Create value.  Use your brains, your courage, your intellect, and above all, your CREATIVITY – to create value, by widening people’s range of choices, and thus, making them happy, or at least happier.  When you make other people happy (those around you, family, children, spouses, relatives, friends, total strangers),  you will make yourself happy as well.  If you only try to make yourself happy, in the end, you will be very alone.           

 

Anthony Ray Hinton: 28 Years on Death Row:

What He Teaches Us All

By Shlomo   Maital

Hinton

  The BBC World Service reports:    “A man released from prison after nearly 30 years on death row in Alabama has blamed his conviction on being black and poor.   Prosecutors dropped the case against Anthony Ray Hinton, 58, when new ballistics tests contradicted the only evidence that linked him to the murders of two restaurant managers in 1985.”

    The man is Anthony Ray Hinton.  And he has every reason to be bitter, angry and disconsolate.  Society took away his life, unjustly.  

     So, how does he really feel?  And how did he retain his sanity, while on Death Row for 28 years, beginning with when he was only 29 years old?  (He is twice that age today).  The BBC reports:    “Asked if he felt angry about the people who imprisoned him he said: “I am a joyful person. I have a good sense of humor and that’s what kept me for the 30 years I was locked up.    I couldn’t let them steal what I had left which was joy. They had robbed me of my 30s, my 40s and my 50s so if I get mad and hate them I’m letting them steal my joy.”  He said he was taking life “one step at a time” and wanted to “just try to live within my own means, try to bring joy to someone else, live a fruitful life and just be happy”.   

    I believe that if Anthony Hinton can still seek to “bring joy to someone else”, after nearly 3 decades on Death Row,  surely all of us can do the same!   

    And by the way – we learn one more thing from Hinton’s release, according to his lawyer:  “Mr Hinton is the 152nd person to be exonerated after being sentenced to death.   It’s a shocking rate of error. No system would tolerate that rate of error that cared about the people that were at risk but because most of the people on death row are poor or people of color we seem to not care as much that some of them are innocent.”

Reinventing the Automobile: GM & Ford vs. Startup Guy

By Shlomo  Maital   

Elio

   

  “In the ring, weighing in at about four ounces, is Silicon Valey startup guy Paul Elio.  Facing him, weighing in at 24,382 tons, is …General Motors, Ford, and VW.  12 rounds for the innovation championship in motor cars.”

    No contest.  A startup to make cars?    Non-starter, right?  Well, Paul Elio has done it.   There is a long LONG waiting list to buy the Elio automobile, a 3-wheeler, that gets…84 miles per gallon!  (Beats even the hybrids!).  The car is American made!   And its cost?  $6800.   (About the cost of 2.5  high-end Armani backpacks).   Here is what the Elio website says:

   “A few short years ago, automotive enthusiast Paul Elio sized up the prevailing status quo of personal transportation. He saw the soaring costs of the vehicles we drive. He saw fuel prices spike to record highs almost daily. He saw Americans struggling with an economy that was taking too much and giving back too little. Paul Elio decided that the world was ready for something radically new. The result? A three-wheeled masterpiece of automotive brilliance that bears his name.”    Elio’s vision?  “To provide a fun-to-drive, super-economical personal transportation alternative, that’s affordable, safe, and environmentally friendly. We are committed to the American dream, creating American jobs, and bringing American automotive ingenuity to every vehicle we build. This is, and will remain our mission at Elio.”

          The boxing match has begun.  It ends as soon as it begins.  Elio knocks out the automobile giants.  Why?   Big companies cannot innovate.  By definition.  They would never let a car like the Elio get past the drawing board.  Low margins.  Etc. 

        Elio Motors might yet fail. But like Tesla,  it could spur the car companies to actually try something innovative.   Innovation comes from rebels.  And rebellion is the last thing big companies seek or even allow. 

        Kudos to Paul Elio!   And Big Oil?    Think about trying another business.  

Methuselah Comes Back to Life!

By Shlomo  Maital

 Methuselah

    In the Bible, Methuselah  lived 969 years (Genesis 5:27), longer than anyone else recorded; his father was Enoch, who walked with G-d and went straight to heaven without dying.

     The modern Methuselah is much older – a Judean date palm over 2,000 years old!  And its products one day will be truly heavenly – dates that are identical to those enjoyed in Biblical times, in Judea and later exported to Rome, where the Romans loved them.

     How did this happen?    A decade ago, Sarah Sallon, an M.D., director of the Louis Borick Natural Medicine Research Center at Hadassah Medical Center,  had a wild idea.  Germination of Ancient Seed.  The idea is to use seeds found in archaeological digs, use modern techniques to germinate them – and recreate ancient plants that have medicinal properties.

     In the 1960’s the famous Israeli archaeologist Yigal Yadin excavated Massada, an outpost besieged by and conquered by the Romans, and discovered there date seeds.   Sallon asked the late archaeologist Ehud Netzer for seeds from Yadin’s excavation. Netzer thought the idea of germinating them was insane – but agreed.  Sallon brought the date seed to Dr. Elaine Solowey, a lecturer at the Arava Institute for Environmental Studies at Kibbutz Ketura in the Israeli Negev.  “They gave it to me because I was the only one crazy enough to give it a try”, Solowey says.  “I had to think very hard how I could sprout them, because you only get one chance.  ..The date seeds were perfect, they had no wormholes.” 

  She called the seed Methuselah.  

   Now ten years later, it worked!   Methuselah is a 10-year-old date palm. Turns out it is male. (Did you know date palms are male and female, separately – and the male ones fertilize the female ones with their pollen?).    Methuselah’s pollen is potent!  It can impregnate the right date palm female!  Now all that is needed is a female date palm, 2,000 years old.    Solowey will try to germinate a female date palm, 2,000 years old, and recreate the Judean date palm.  Not many 2,000 year olds marry and have kids, but I sure hope Methuselah finds a great mate and manages to knock her up.      

            

What I Learned from Lee Kwan Yew

By Shlomo  Maital   

  Lee Kwan Yew

Singapore’s legendary founding leader, Lee Kwan Yew, has passed away; he was 91. 

 I personally learned a great many  things from this wise and courageous man, who led Singapore to independence in 1965 and like the founding leader of my country, David Ben Gurion, knew the odds were strongly against survival.    He shaped a prosperous country with per capita GDP of over $60,000, double that of my country Israel. 

   I recall two things vividly.  First, in the early days of Singapore, he appealed to the mothers of Singapore, to “urge your children to study math”. Why? So they could study engineering in college. Why? So Singapore could build its wealth on knowledge, having no resources or land.  And it worked. They did, they did, and it did. 

  Second – he explained why America leads the world.  China has 1.4 billion people.  Among them are geniuses.  America has only some 340 million.  But America is a magnet. It attracts talent from the whole world – its talent pool is 7 billion, not 340 million.  That is a huge advantage.  My own parents migrated to Canada as immigrants from Bessarabia, now Moldova, worked hard, and passed their aspirations on to me.  Canada, I think, benefited.  

    Recently, Harvard Professor Joseph Nye wrote a book, with the title asking a question, is the American excellence and domination over?   His answer was, no.  But I’m not sure. Because many Americans (especially the Republican party) are anti-immigrant,  and I personally have waited hours and hours and hours to have my visa approved (in Toronto), just so I could go to Boston to teach a course FOR FREE. (Babson insisted I enter on a visa, rather than as a Canadian visitor).  Amusingly, I had to show my Princeton diploma to the immigration official; it was in Latin!  That took another few hours. 

     I know Singapore well, having taught there.  I got to know a very senior civil servant, a man of enormous wisdom.  I often wished my own country could have civil servants of such quality – and leadership like Lee Kwan Yew.  Very few countries do.  He will be missed.   

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
April 2015
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