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CHAPTER 8 – SQUIRTS | PROFIT | TRAFFIC

I first heard of the sea squirt phenomena from Dan Dennett, who also briefly mentioned it in his book Consciousness Explained (Boston: Little, Brown, 1991). The sea squirt is explained more broadly in psychological context in a July 2012 Psychology Today article by Sian Beilock called “How Humans Learn: Lessons from the Sea Squirt.” A contrarian viewpoint, arguing that sea squirts don’t actually eat their brains, can be found at Fast Company in a surprisingly rich April 1999 article by Lisa Chadderdon called “Brainless Fish in Topless Bar.” The counterargument is that a portion of the brain is digested, not literally eaten. Regardless of the semantics, the point is still clear: if something is costly and not useful, it will be selected out (or eaten).

Proganochelys (Greek for “early turtle”) is the official name of these ancient turtles from the late Triassic period. They look like modern turtles except for their spiked necks and tails.

The relatively lightweight internal structure of sharks makes it easier for them to stay buoyant, and means that they require less energy to swim than they would if they had heavier bones. Here, again, we see that evolution favors energy efficiency throughout nature.

Duke University’s Dan Ariely and his colleagues have shown that people do not behave rationally when things are offered for free. Ariely devotes a full chapter to the topic in his book Predictably Irrational: The Hidden Forces That Shape Our Decisions (New York: HarperCollins, 2009). See also Kristina Shampanier, Nina Mazar, and Dan Ariely, “Zero as a Special Price: The True Value of Free Products,” Marketing Science 26, no. 6 (2007): 742–757. For a general interest overview, see Daniel Kahneman’s Thinking, Fast and Slow (New York: Penguin, 2011).

Dr. Ilias Leontiadis and Dr. Christos Efstratiou from the Computer Laboratory at the University of Cambridge conducted the study of free versus paid apps. They surveyed apps on the Android platform, though it’s reasonable to guess that numbers would be similar for all smartphone users. Their research focused on privacy concerns: they found that free apps request more permissions (and are more invasive—such as asking for a user’s friends list and contact info) than paid apps. They concluded that the price of a free app may not be exactly free after all. See Ilias Leontiadis and Christos Efstratiou, “Don’t Kill My Ads!: Balancing Privacy in an Ad-Supported Mobile Application Market,” in Proceedings of the Twelfth Workshop on Mobile Computing Systems & Applications, p. 2. ACM, 2012.

There are many different sources and much folklore for the success rate of a venture fund, just as there are many numbers for the success rates for start-ups and small businesses. Because many of these investors and businesses are private, there is no good source to reference. For the book, I went with a general average, but feel free to review “The Venture Capital Secret: 3 Out of 4 Start-Ups Fail” by Deborah Gage in the Wall Street Journal from September 19, 2012.

See George Nichols’s discussion of Webvan and Peapod’s respective values in his 1999 article “Can Webvan Milk a Profit?,” Morningstar, November 12, 1999. Peapod’s announcement of shipping costs was covered by Barry Janoff, “Peapod Delivers New Shipping Costs,” Adweek, August 22, 2001.

In The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business (New York: HarperCollins, 2000), Clayton Christensen notes the idea that sometimes a company can kill its bigger competitor by doing something less well. He says, “Occasionally disruptive technologies emerge—innovations that result in worse product performance, at least in the near term…..generally disruptive technologies underperform established products in mainstream markets. But they have other features….they are typically cheaper, simpler, smaller, and frequently, more convenient to use.” While price does not work well for start-ups as a competitive differentiator in mature markets (where the product will be seen as cheap), it can be used effectively in the growth phase of an emerging market as a competitive strategy.

III

Stephen Budiansky wrote a detailed article called “The Physics of Gridlock” about the science of traffic jams for The Atlantic in December 2000.

Jonas Eliasson outlined the concept of a traffic tax in his 2012 TED talk “How to Solve Traffic Jams.” Scientific results can be found in his articles “Lessons from the Stockholm Congestion Charging Trial,” Transport Policy 15, no. 6 (2008): 395–404, and “Do Cost-Benefit Analyses Influence Transport Investment Decisions? Experiences from the Swedish Transport Investment Plan” co-authored with Mattias Lundberg in Transport Reviews 32, no. 1 (2012): 29-48. Also of interest may be one of his original articles proposing the idea prior to the institution of the tax: “Transport and Location Effects of Road Pricing: A Simulation Approach,” Journal of Transport Economics and Policy 35, no. 3 (2001): 417–456.

Tech bloggers were up in arms about Facebook’s charging $100 to message Mark Zuckerberg. The least alarmist articles were the best ones, including this one by Matthew Lynley: “Mystery Solved: Why It Costs $100 to Send Mark Zuckerberg a Facebook Message,” Wall Street Journal, January 11, 2013.

Google’s financial tables can be viewed here.

The story of Nick Bergus’s joke about personal lubricant that turned into a Facebook ad was reported by Somini Sengupta in an article entitled “On Facebook, ‘Likes’ Become Ads,” in the New York Times, May 31, 2012.

For an interesting article about more private social networks, such as Edmodo, that cater to educators, see Jason Tomassini’s “Social Networks for Teachers on the Rise As Popular Social Media Raise Concerns,” Huffington Post, January 8, 2013.

Naked Pizza is one of the best recent case studies of a company that leveraged social media with truly astounding results. Read how the founders did it in Fawn Fitter’s 2010 article “The Sizzling Success Of Naked Pizza,” Entrepreneur, October 8, 2010.

LinkedIn noted on its website in January 2013 that it had surpassed 200 million users. Many of Reid Hoffman’s investments can be seen on his LinkedIn or CrunchBase profile.

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