One of the books I’m currently reading is Jason Turbow and Michael Duca’s The Baseball Codes: Beanballs, Sign Stealing, and Bench-Clearing Brawls: The Unwritten Rules of America’s Pastime.  It’s a great read that goes through the myriad of unwritten rules in baseball – from running up the score, when stealing should be done, retaliation and general baseball etiquette.

Halfway through the book, a few insights are apparent.  First, many of the disagreements we see in baseball come from a different interpretation of these many unwritten rules. It is also worth noting the application and interpretation of these rules can change given the specific situation a player or team might be in - exacerbating the potential for disagreement. Secondly, while these rules surely developed over time, they have been in play for most of the history of baseball. Third, while most players don’t know these unwritten rules when they start in professional baseball they learn them quickly (more on this below). Fourth, because of retaliation many players will address issues with their own teammates.

These unwritten rules add a degree of chivalry to baseball and I would contend are one of the things we love about baseball even if we don’t explicitly make note of the rules being adhered to.

In most instances these rules are learned as part of a player’s minor league career.  But increasingly star players aren’t spending sufficient time in the minors where they can learn some of these unwritten rules. In other instances, stars are heavily watched by the media even when they are in the minors.  Bryce Harper’s “kiss” is a great example of that.  Years ago, this would have gone unnoticed by the masses and would have been addressed by teammates or through retaliation from another team.

Earlier this week Bryce Harper again became the center of the application of these rules.  On Sunday night, the Nationals were hosting the Philadelphia Phillies. Phillies start Cole Hamel hit Bryce Harper in the bottom of the first inning with his first pitch to Harper in his first at-bat.  In the third inning, Nationals starter Jordan Zimmermann retaliated (as the unwritten rules would suggest) by hitting Hamels in the left leg with.

Hamels was ultimately suspended for 5 days – not necessarily because he hit Harper, but because he admitted to intentionally hitting him. Quotes after the incident speak strongly to these unwritten rules.

after the game Cole Hamel said the following:

I was trying to hit him. I’m not going to deny it. I’m not trying to injure the guy. They’re probably not going to like me for it, but I’m not going to say I wasn’t trying to do it. I think they understood the message, and they threw it right back. That’s the way, and I respect it

Hamel also said:

That’s something I grew up watching, that’s kind of what happened. So I’m just trying to continue the old baseball because I think some people are kind of getting away from it. I remember when I was a rookie the strike zone was really, really small and you didn’t say anything because that’s the way baseball is. But I think unfortunately the league’s protecting certain players and making it not that old-school, prestigious way of baseball.

The day after Charlie Manuel told WIP-AM in Philadelphia

I wish he’d been a little bit more, what do you call it, not so honest, or dishonest, or discreet, that might be the right word. What I saw was the next time up Hamels came up to bat they definitely retaliated, he got hit on the calf, and he could have got hurt. I like to think it was dropped right there and the rest of it will be done baseball-wise.

Here’s the transcript of a conversation between Billy and Cal Ripken discussing which parts of the incident were consistent with the unwritten rules of baseball.  While they might not agree, it seemed very consistent with the unwritten rules. As Fox Sports’s Ken Rosenthal put it:

Players tend to take care of these things themselves, and Harper sent his own message on Sunday night, stealing home. That is exactly the way the game should be played, the way it used to be played, the way it was played when Frank Robinson would get knocked down and get up and hit a home run.

 

A Day in the Internet
Created by: MBAOnline.com

An interview from a few months ago where Mark Addicks – chief marketing officer of General Mills – discusses the future of the cereal box.  The line that caught my attention, “the wonderful world of packaging, a cereal box, which a lot of people love some of the most well read print material in the world will start to be platforms for all kinds of content.”  As we move more fully to a world of digital data – what I refer to as the second digital decade – it is likely that we’ll see traditional distribution mechanisms – like a standard cereal box – become important platforms for the dissemination of digital data.

 

Daily deals were all the rage in 2011.  Groupon – the leader in the daily deal space – went public last year to much fanfare.  The November IPO raised $700 million and valued the company at $12.8 billion at the time.  It was the largest IPO by a Web company since Google went public.  A few weeks later LivingSocial – the other big player in the space – raised $400 million to give it a valuation of $6 billion.  But are daily deals the next big bubble (behind food trucks)?  Groupon’s valuation is down roughly 60 percent since the IPO just 5 months ago.

Earlier this week, LivingSocial acquired Cleveland-based ONOSYS, a company specializing in ordering software. The software enables restaurants to receive orders over the Web and any number of connected devices (think mobile phones).  Its clients include companies like Papa John’s Pizza, Panera Bread, and Applebee’s. LivingSocial also announced the launch of their first-of-its-kind co-branded Chase credit card. The diversification taking place is both a sign of things to come and a sign that daily deals alone are not the sole direction for many of these companies.  You can also see this diversification within Groupon.  Groupon has recently begun Groupon Rewards which will reward customers for total spend with a retailer based upon the credit cards on file with Groupon.  Discounts and deals are then “unlocked’ like with Amex Sync and foursquare.

Much has already been written about the financials (and subsequently revised financials) of Groupon and so I want to focus on just a few points only tangentially related to their financial statements.  Several insights can be gleaned from their amended 10-K, providing a view into the current structure of Groupon and companies like them as well as a look into what the future might hold.

It is clear the daily deals business has grown significantly.  Groupon reported an increase in the number of active users (unique individuals who have purchased Groupons during the trailing twelve months) from 8.9 million in 2010 to 33.7 million in 2011.  2011 was clearly the year of the daily deal. Groupon financials will shine further light on the continued uptake of daily deals.

One of the great difficulties in growing daily deal-like services is the ability to scale the service or offering.  This involves growing the number of merchant partners and each deal or offer is often customized with the help of a salesperson so in order to scale the service you need to expand your sales force – potentially significantly (Groupon’s sales force is up some 120% in the last year). This is one of the greatest assets of radio stations – they have strong inroads into the local merchant community. Newspapers are the same way.  I’ve always thought radio stations would be good acquisition targets for someone like Hulu because they have strong inroads into the local advertising base.  Things like Groupon Rewards are likely designed to scale the relationship between the merchants and Groupon so that the relationship can extend beyond a single deal or offer.  Something like Groupon Rewards also enables smaller merchants to build loyalty programs.  I also expect we’ll see Groupon and others look to extend their relationships with merchants by creating similar services and ultimately extending what they do for merchants.

Deals and offers are likely to become more segmented.  Technology makes this possible.  A small business often doesn’t have the bandwidth to determine what time of the day or which day in the week they should push selective deals to help drive additional traffic. But technology can help makes those decisions and so I’d expect Groupon, LivingSocial, and others to build technology-based services that small businesses can take advantage of.  Deals will become segmented by time (of day, month, etc) and location (location-based services) at a minimum and I expect daily deal sites will evolve their services to help small businesses tackle these growth opportunities.

 

Good Technology is a privately-held company which offers a mobile solution for corporate and government clients. The core offerings include email, calendar, and secure mobile access to applications and company data.  While the customer base is likely small relative to the entire universe of tablets and smartphones and many end-users are likely bringing personal, mobile tech devices like smartphones and especially tablets into the enterprise directly (ie the consumerization of IT, or CoIT), the companies activations are up 50 percent in the last year.  More, the technology has been deployed with more than half of the Fortune 100 companies.  Each quarter, Good Technology releases a summary of the past quarter’s activation activities so exploring the trends there within can be insightful for understanding some of the trends currently influencing the tablet ecosystem.

Good Technology recently released their Q1 2012 Activation Report.  Here are a few of the highlights:

  1. iOS devices accounted for 80 percent of the activations in 1Q12
  2. the top 6 devices are iOS devices.
  3. iPad (both the new and the old) represent 97 percent of tablet activations in 1Q12
  4. iPads were activated the most in three industries: Financial Services, Business/Professional Services and Life Sciences, with Life Sciences showing disproportionately higher rates of iPad activations when compared to overall device activations
  5. Good released support for Windows Phone 7.5 in April 2012, so activations of Windows Phone devices like the Nokia Lumia might be underrepresented in the Q1 results. Related data will be included in the Q2 2012 activations report

One thing heavily overlooked is how technology shrinks the supply chain.  By supply chain I mean in the broadest and most general sense how a product or service is ultimately delivered through to the end user.

This morning Fred Wilson wrote about Demand It! From Eventful.  With Demand It! the basic concept is simple – users demand a certain service (movie, concert, or other event) and if users can accumulate enough “demands”, the event will come to their location. Historically, concert organizers played an important intermediary role.  Through the use of technology, bands can no identify the most attractive markets and sidestep any analysis previously done by intermediaries.

Technology also helps to capture a more precise quantitative metric and I believe this is an important reason why technology is able to shorten and consolidate the supply chain generally.  Intermediaries in markets like summer concerts would frequently rely heavily on their understanding of how successful a certain genre of music would be within a given market.  Historically bands would be beholden to these intermediaries, but they can now rely on a more quantitative measure of interest within a given geographic market.

There are a plethora of other examples of how technology has shrunk the supply chain.  The move to digital files has allowed content creators to deliver directly to the end market because the move to digital significantly curtained shelf space scarcity. With shelf space no longer a constraint, content creators and end users are no longer beholden to intermediaries like record labels and music stores who have historically provided a vetting process to determined what content passed down the supply chain.  Because of constraints like limited shelf space downstream in the supply chain, these intermediaries culled or funneled the content that actually made it to the end consumer, but with digital files producers can now go directly to consumers.

eCommerce solutions allow producers of a product or service to deliver their product or service directly to the end user – in many instances bypassing several layers of retailing. Airline ticketing provides one of the best examples of how the move to eCommerce shrunk the supply chain between producer and the end-market buyer.

Kickstarter is another example of how technology is shrinking and consolidating the supply chain. The list goes one. With unlimited choice, the importance of search and curation are certainly key.  And creating a relationship with a fickle consumer is clearly easier said than done – but we’ll save these for another day.

With technology shrinking the supply chain and consolidating players within the supply chain, end users can work quickly and easily back up the supply chain.  This is exactly what is happening in the case of Demand It!. End users have the able to push their wants and desires back up through the supply chain. Quirky, which uses a wisdom-of-the-crowds approach to product development is another example of how consumers can push their desires up the supply chain.

The shrinking and consolation of the supply chain will also open up new services and opportunities for end-users to push their preferences up the supply chain. Over a decade ago John Hagel and Marc Singer wrote about infomediaries, which are services that act as a personal agent on behalf of consumers to control their personal information.  Personal.com is an example of these infomediaries. Project VRM is another example of how users might leverage infomediaries to work up the supply chain.

Last week the Social Security Trustee Report reported the Social Security trust fund will be exhausted by 2033. Comparing this date with previously released estimated Veronique de Rugy at the Mercatus Center highlights the estimated exhaust date has continued to decline and is now estimated to happen 20 years sooner than estimated in 1990.  The chart below makes this point clear and should give most pause to any who think we have until 2033 to deal with this political third rail.

Sears Holdings is expanding the availability of its in-store professional apparel shop to 91 Sears and Kmart stores nationwide. Revealing of their core shopper.

A recent NRF study shows about 12.7 percent of consumers plan to buy tech this Mother’s Day. Sixty-six percent plan to buy flowers.

NPD is reporting  85 percent of U.S. consumers say price will be an extremely important/important factor in deciding where to shop in the near future.  This is consistent with CEA research that continuously finds price and feature set are the two primary factors influencing purchasing decisions. While other factors – notably environmental-related factors like use of recycled materials or energy consumption – have increased over time, price and feature set remain the top two factors driving purchasing decisions.

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