Sachin’s Posterous

This challenge was presented to a group of students at the Design Institute at Stanford. Each group took a different approach as to how they would use the $5 to make even more.

The teams who did the best were the ones who didn't use the $5 at all! That seed money was actually a limitation on what they would have been able to achieve. The more a team challenged the assumptions of the project, the better they did.

And even in the relatively short time period of 2 hours, some teams iterated on their idea to maximize their return.

When I was 11 years old, I took a job as a paperboy. I delivered The Daily Breeze on bike to our neighbors. It was a fun job but it didn't pay very well at all. I realized that the real money was in selling newspaper subscriptions, not delivering the paper.

I started going door to door selling subscriptions to my neighbors. It was a tough business. A subscription cost $5 per month, but I was paid a $25 bounty for each new customer. It didn't take me long to realize I would make more money giving the paper away. So I offered people a free month of the paper, out of my own pocket.

After signing up a bunch of customers in my neighborhood, I realized a couple things:

• I had exhausted the doors that I could knock on. Being 11 years old, I couldn't travel far outside my neighborhood
• I actually didn't want to sign up people in my delivery area. That just meant more work for me delivering newspapers. I had to expand out

I know marketcap is a relatively meaningless stat, but Apple's is truly an astounding figure. With today's surge, the company is worth roughly $178 billion. That's more than Google ($175 billion) and General Electric ($165 billion), the parent company of this fine network.

In fact, only Microsoft is worth more in the tech space.

More interesting, Apple's market cap is now greater than Dell's and Hewlett-Packard's combined ($145 billion), even though those two companies comprise 40% of the market share for personal computers, compared to Apple's paltry 4%.

Apple commands 15% of the market for smart phones, and 4% for all cell phones, but its total value is still twice that of Research in Motion's and Nokia's combined ($88 billion).

So basically, in the most simple terms, Apple is worth just slightly less than one RIMM ($38 billion), one Dell ($30 billion) and a Hewlett-Packard ($115 billion).

And yet to some, the company still looks downright cheap.

"If you look at earnings and valuation, you're talking $280," said Piper Jaffray's Gene Munster, who noted that Apple's quarter was slightly constrained by the fact that it couldn't build enough iPhones, a trend that could bode well for the holiday season.

"As good as the quarter was, it's gonna get even better," said Munster. 

This quote from Michael Dell comes up every time Apple has a jump in stock price. So much has change in just 12 years.

Some people look up to Michael Dell. Yes, he's a great business man and built a huge company. But I don't want to be him. I'd rather build great products like Apple.

And in case you missed the announcements, Apple has beautiful new iMacs and a new Macbook. Getting less press, but equally gorgeous are the new Apple Remote and Apple Magic Mouse.

This is some of the best tilt shift work I've ever seen, doesn't hurt that Disney World is probably the best location to shoot something like this. Now I'm tempted to get a tilt-shift lens, but they are expensive!

Thanks to Roy for the link.

Rapp is a menu engineer. He helps restaurants maximize revenue by hacking common flaws in human decision-making. For example, by simply removing “$” signs from prices, people are less intimidated by them. And he advises against listing items from least to most expensive, because that focuses the consumer on price. Instead he mixes up items, making it hard to find their price — thereby encouraging the customer to emotionally commit to something before finding out what it costs. But my favorite strategy of his is that of putting some absurdly expensive item on the menu. Rapp doesn’t expect many consumers to buy it, but having it there makes expensive items appear cheap by comparison. Think about it: How many times have you ordered a bottle of wine in the middle of the price range?

 

I've read a lot about how to price web services, or negotiate deals, using some of the same principals outlined here. But these ideas really do go all the way down to basic pricing on menus.

Fifteen years ago my parents owned Indian restaurants and I did all the desktop publishing work, including menus, newspaper ads, and all the signage. I was 13 years old and hadn't read anything about design or pricing. I probably thought I was being clever by listing items in price order; that's what made sense in my brain.

What I find more interesting than how to price things, is how to be a smart consumer given I know how people price things. As you may know, I'm a smart consumer, I find deals, I'm good with money, and I'm very interested in consumer protection.

It's important for consumers to know the tricks retailers use to up-sell them so they can be avoided. For example, through college it was a common trick to order the second cheapest bottle of wine on the menu. "It will be better than the cheapest!" This is wrong. First of all, it's wrong to order wine based on price so arbitrarily. Second, you have to assume a retailer knows people do this and will price a bad bottle to be the second cheapest.

People come to me a lot for advice on purchasing things: cars, computers, cameras, you name it. More often than not, I steer people to purchase the low end, intro model of whatever they want. Get the base Macbook. Get the base Canon DSLR. Don't buy every option on the BMW you want.

Most people see the lineups or options lists on the products they want and tend to over purchase. These retailers have done their research to get you to do this!

Instead of being influenced by the price of items, their order on a menu, the relative cost of one item over another... A smart consumer should decide exactly what they need, and buy exactly that. Not more, not less, and make that decision with as little influence from company marketing as possible.