The role of distribution

I’ve been thinking about distribution quite bit with regards to different businesses. I believe the role of the distribution network is usually overlooked or not given enough importance with regards to the potential growth speed of companies. One of the reasons Supercell was able to ramp up sales of almost a billion euros in just three years was due to the existing and extremely well functioning Apple’s app ecosystem. Hundreds of millions of devices that have a very tightly knit integration with the credit cards of their owners to the accounts on AppStore. There is very little friction between discovery, purchase and actual use.

This is not the case in all industries. For example with UpCloud, we rely fully on the internet as a distribution channel. This of course means that we too have a powerful distribution platform on our hands, but it is not as tightly integrated as that of Apple’s. Our customers need to enter their credit card details to their account on UpCloud to be able to use it. Needless to say we have tried to make the sign-up and purchase of our service as easy as possible.

However, I believe a great way to understand the role of the distribution channel can be summed up through the amount of friction between discovery, purchase and being able to actually use the service. Distribution plays a key role, but so do the types of equipment required to actually consume that service. This is also one of the reasons why HTML5 and other cross platform languages are extremely crucial in designing and building online services these days.

One of the reasons I believe you need to assess the path to purchase from the discovery is because that is ultimately the point when the customer receives the value of the service in return for the money she paid. In the quest to lower friction between the different steps, tutorials and other methods are extremely important in creating a successful on-boarding experience.

I got the idea for this post after I decided to pull the trigger for the Android phone I blogged about previously. While the shopping experience is one that tries to increase the attribute of exclusivity – it is not very scalable nor very enjoyable. I had to wait 90 minutes before I was able to enter the store and then after a few failed attempts, I was able to finally buy the phone.

It might create appeal towards the phone, but it is not very scalable. One has to remember that growing companies have very concrete boundaries of growth that are sometimes very hard to overcome, especially in the case of physical products like that of the OnePlus One. Despite all this, my order number was north of 145 000 from which I gather that OnePlus sold more than 145 000 phones yesterday in just three to four hours.

Despite the tough to scale sales process (one through invitations) – selling 145 000 phones a day is impressive.

OnePlus One – January 20th sale

OnePlus, a company that has created a phone called the “Flagship Killer” is putting on an online sale tomorrow evening (local times) globally in three different time slots where people can order their OnePlus One phone without an invitation. Previously, the company has sold these phones through invitations to build up an audience and demand through viral promotion. The company may not be as well known as Xiaomi, but it creates really high end phones for a low price. Their 16GB model costs $299 and the 64GB version costs $349.

It’s great to see competition in the industry from these new upstarts. Just a while ago, Xiaomi announced that they had taken on funding north of a billion US dollars at a valuation of over 40B dollars. That’s a phenomenal valuation for a company that was founded in 2010.

What’s more interesting is that OnePlus also uses the Cyanogenmod version of Android. This makes it quite a bit different from the vanilla installation by Google.

These kinds of sales and stories are perfect reminders of the speed these companies move with. Also, something like this would not have been possible just 5-10 years ago.

Regardless – I invite you to take a look at the phone OnePlus makes. It’s a very solid looking phone at a third of the cost of an iPhone6.

A week with Polar Loop

I purchased a Polar Loop activity tracker a week ago and I’ve been happy with it so far. It’s a fairly simple tracker in the sense that it shows you the time, activity level of the day (through a graphical bar), calories burned and steps taken. In addition to the tracker there is the Polar Flow website that shows you in more detail the information gathered from the tracker.

I also made the decision to buy the H7 heart rate sensor, which binds itself to the Polar Loop through bluetooth. This is a nice add on for weight and cardio training as it will give you a more accurate sense of how hard you are training.

The Polar Loop is also water proof, but the H7 and Loop won’t bind in water due to bluetooth signals not being transmittable in water. I haven’t tried it in water yet, but it’s a nice addition.

The biggest gain for me is to bring more activity data to me throughout the day. This helps me make small decisions throughout the day to be a little more active, take the stairs, walk the extra block and so on. Nothing big, but it makes me more conscious about how much I move.

Some might say these are kind of vanity devices, but if they help conceptualise your habits to hard data – it’s helping. I’m a huge data geek so this is what makes me tick.

Polar Flow Summary for a week in January 2015
Here’s a screenshot of my week in Polar Flow.

My weekly summary tells me that my weekly activity goal was reached by 71%. A somewhat active week by the service. Saturday and Sunday were mostly spent with the family and not doing any sports, pulling down the week’s average.

The only thing I’m missing from the Polar Loop is the opportunity to show phone notifications on the tracker itself. However, this isn’t a major let down. Quiet alarms through vibrations would also be nice, but then again – the tracker itself cost less than 70€ so it’s understandable you can’t pack a lot of features in that kind of a price.

Overall, I’m very happy with it.

Too hard to let go

I started my blog in 2002 before I left to Spain for my exchange study period. I’ve kept a blog in multiple different forms ever since and I’ve tried to revive my motivation ever since I passed the baton at ArcticStartup onwards to Greg and Dmitri. I think I blogged my fair share during those years and it has taken its toll.

However, during the last two years I’ve been quite lost on how to go about creating content without a blog. It’s been tough and I’ve come back to playing around with a blog every now and then. It’s just something different, when you’re hosting it on your own without resorting to any other service provider, being able to design your themes and run your own show as you wish.

I also liked Fred Wilson’s statement on his about page: “This is my diary, my sandbox, my therapist, and more than anything it is my bar where I get to be the bartender.” That’s something I’ve been missing and writing is a great way to conceptualise your thoughts.

It’s simply too hard to let go and not have a blog.

Innovator’s dilemma as a state of mind

Clayton M. Christensen has written one of my favorite books – Innovator’s Dilemma. The basic paradox presented in the book to innovative companies and entrepreneurs is that you need to basically cannibalise your existing business to survive.

A good example of this is the ebook market in relation to physical books. Consumers are asking a justified question with regards to pricing; why aren’t the prices of ebooks lower than those of physical books considering their dramatically lower publishing costs?

Let’s say, that currently publishers are getting 10 units of currency for a physical book. If they’d sell the same book as an ebook for 5 units of currency, they would voluntarily let go of 5 units of revenue. Despite letting go of the revenue, they still need to pay for fixed costs regarding the publishing of physical books. The sale of an individual ebook isn’t complimentary to a physical book, but a substitute sale – the overall revenue of the publisher will go down.

This is the innovator’s dilemma in a nutshell. The publisher must cannibalise and disrupt their own business to survive.

Similar development is ongoing, at a faster pace, in the hosting industry. Amazon Web Services has publicly stated and promoted the amount of times they have lowered prices of their public cloud services. Despite the new lower prices, many (me included) believe that AWS has actually managed to dramatically improve their margins due to Moore’s Law. In short, the cost of IT infrastructure has lowered faster than cloud providers have dropped their prices – thus the increase in margins over time.

For what I have gathered, the price wars have somewhat slowed down. Regardless, innovator’s dilemma is an ongoing state of business in the cloud industry. If you stay constant and wish to focus on running your business as it is – you’re going to lose your revenues. You constantly need to innovate and also have a certain share of your revenues up for grabs, to successfully overcome the innovator’s dilemma.

This has also been one of the key principles in running UpCloud and we’re currently in a very good position, going forwards. Our innovator’s dilemma hasn’t been so much of one regarding revenues directly, but our lack of possibility to build obvious features into our service. We’ve simply been too busy building a completely new innovation – our new storage backend MaxIOPS.

Having said this, I do realise we have a lot of backlog to catch up with. Then again, having gone down this road – I believe we’re much better suited to tackle the future going forwards. While AWS, Azure and other big boys have just moved to SSD (DigitalOcean and CloudSigma slightly earlier), we’re already going beyond it with performance increase north of 300-500% of regular SSDs currently available (plus an array of other benefits I won’t mention here). That’s definitely something to look forwards to.

BitTorrent Sync is awesome

I noticed a post on GigaOm this morning about BitTorrent Sync. I had checked it out some 12-18 months ago when it first came out, but it has moved a ton forwards since then and deserves a little more attention.

The file sharing and storage space competition has increased dramatically in the recent years as Google and Microsoft have entered the game to add alternatives to Dropbox and Box. Dropbox has since announced it is diversifying its offering and moving to innovate in the space of productivity apps, with the launch of Mailbox and likes. This is the clearest form of competition and acknowledgement that they need to re-innovate themselves or the industry will commoditize itself with a race to the bottom.

BitTorrent is known for its less legal use cases and is usually connected with illegal file sharing. However, the technology behind it is phenomenal and greatly improves the usability of internet infrastructure in general. Files are not downloaded from a single node, but a network of computers sharing the files amongst themselves.

This same technology has been put to use with BitTorrent Sync, a file sharing service that individuals and companies can use – free of charge. The technology is the same – your files are shared between the network of computers you have chosen to share them with. Therefore, there is no single server that needs to push it out and keep all the versions in sync.

In addition to faster downloads and synchronisation, BitTorrent Sync allows encryption and you can use private keys, either read-only or read-write, to share folders between computers. The application on Mac OSX is super fresh and incredibly beautiful (at least to my liking).

The setup also works ideally for me as I have an old Mac Mini at home serving the function of a media centre. It’s online 24/7 and also functions as an external hard drive I can connect to. It further syncs and saves its contents to AWS Glacier through Arq.

I installed BitTorrent Sync in about 5 minutes to all my three computers and syncing was on its way. A couple of hours later I had almost 6GB of data synced across my three devices. It’s incredibly fast as it doesn’t have to pass long distances either.

I was previously on an OwnCloud installation on my server at UpCloud, but OwnCloud disliked .htaccess files and some other types as well. OwnCloud was a little slower as well, not crucially, but it did add up a little.

I’m incredibly happy with BitTorrent Sync so far and I wish them all the best in their development going forward. It’s a great show of talent and I’m excited to see what future holds for them.

In addition, I believe they’ve also shown the world that initial uses of technology (which almost always are border line illegal as there seldom is legal jurisdiction in place for pioneers) should not be judged how they are initially used. BitTorrent is a great internet infrastructure technology that definitely deserves more kudos.