Rajesh Jain

Thinks 1105

Economist: “In the rich world, workers now face a golden age. As societies age, labour is becoming scarcer and better rewarded, especially manual work that is hard to replace with technology. Governments are spending big and running economies hot, supporting demands for higher wages, and are likely to continue to do so. Artificial intelligence (ai) is giving workers, particularly less skilled ones, a productivity boost, which could lead to higher wages, too. Some of these trends will reinforce the others: where labour is scarce, for instance, the use of tech is more likely to increase pay. The result will be a transformation in how labour markets work.”

John Gray: “When something comes along which contradicts my expectations, I’m pleasantly surprised. I get pleasant surprises. Whereas, if you are an adamant optimist, you must be in torment every time you turn the news on because the same old follies, the same old crimes, the same old atrocities, the same old hatreds just repeat themselves over and over again. I’m not surprised by that at all. That’s like the weather. It’s like living in a science fiction environment in which it rains nearly all of the time, but from time to time it stops and there’s beautiful sunlight. If you think that basically there is beautiful sunlight all the time, but you’re just living in a small patch of it, most of your life will be spent in frustration. If you think the other way around, as I do, your life will be peppered, speckled with moments in which what you expect doesn’t happen, but something better happens.”

Philip Howard: “The ability to do things in our own ways activates the values for which America is well-known: self-reliance, pragmatism, and loyalty to the greater good—what Alexis de Tocqueville called “self-interest, rightly understood.” For most of American history, the power and imperative to own your actions and solutions—the concept of individual responsibility—was implicit in the idea of freedom. Americans didn’t abandon our belief in individual responsibility. It was taken away from us by post 1960s legal framework that, with the best of intentions, made people squirm through the eye of a legal needle before taking responsibility. Individual responsibility to a broader group, for example, was dislodged by a new concept of individual rights focused on what’s best for one person or constituency. The can-do culture became the can’t do culture. At every level of responsibility, Americans have lost the authority to do what they think is sensible. The teacher in the classroom, the principal in a school, the nurse in the hospital, the official in Washington, the parent on the field trip, the head of the local charity or church . . . all have their hands tied by real or feared legal constraints.” [via Tyler Cowen]

Don Boudreaux: “It’s long past time that economists (and other social scientists) quit not only assuming that that which is possible to be achieved only by creatures with superhuman knowledge supplies relevant benchmarks for assessing real-world outcomes, but also to quit treating such outcomes as being theoretically achievable. They’re not achievable, not even in theory. When theory is properly done, such outcomes are prohibited. No one would dare say, “In theory it’s possible to reengineer porcine genes so that pigs will fly.” Yet just as silly is an economist saying, “In theory, government officials can impose tariffs and dispense subsidies in a manner that will result in economic outcomes superior to those achieved by free markets.” Or, at any rate, such a statement by an economist will remain silly until someone offers a theoretically compelling reason to believe that government officials can gain access to all the detailed knowledge that is routinely used by the millions of individuals in markets.”

WSJ: “Billions of dollars worth of goods are regularly transported in corrugated cardboard boxes, so it’s no surprise that there are many scientific papers on the material’s strength—equations, computational modeling and detailed consideration of humidity, temperature, paper type and box shape. They are the sorts of structural calculations you would do to design a building. It’s like paper architecture. Corrugated cardboard is made of a wavy internal layer that’s sandwiched between two flat layers. The outer layers are important because they make it harder to bend—to curve that structure, you’ve got to stretch the outer layer, and as the experiment with the weight demonstrates, that’s very hard to do. The farther apart those layers are, the harder it is to make it curve, so the first job of the corrugations is to hold the sides apart and stop them from sliding over each other. But the most interesting bit is the corrugations themselves. They’re made of a flat surface that has been bent back and forth repeatedly as it moves laterally. It’s a useful and fundamental rule for anything that starts as a flat sheet: It may be easy to bend it in one direction, but you can’t also bend it in the other direction at the same time without stretching or squashing it.”

How to Boost eComm Profit Margins by 1000 Basis Points (Part 2)

BRTLNG

Let’s begin by considering the customer segments every business has.

Best Customers: This elite group represents the top 20% of the base, contributing to 60% of revenue and a remarkable 150-200% of your profits. They are the cornerstone of the business, exhibiting high loyalty and purchasing frequency.
Test Customers: These are part of a significant segment, roughly 40% of the customer base, who have engaged with your brand on a trial basis but have not made subsequent purchases. They are currently dormant and represent a re-engagement opportunity.
Rest Customers: This segment constitutes the middle 40% of your customers. They are neither the most loyal nor completely inactive, but they consistently contribute around 30% of the revenue, playing a supportive role in the business’s financial ecosystem.
Left Customers: These are the individuals who have churned from the brand after a single interaction. They are the ‘one and done’ customers, whose journey with the brand was short-lived, whether due to unmet expectations, dissatisfaction with the product or service, or simply because they had a singular need that was fulfilled.
Next Customers: This segment encompasses the potential customers who are yet to engage with the brand. They are the prospects and the key to the business’s future growth.
Guest Customers: These are the anonymous/unidentified visitors. Successfully enticing them to reveal themselves and opt-in for communication transforms these hidden prospects into potential profit-centres.

We can sequence these as Best-Rest-Test-Left-Next-Guest (BRTLNG). Understanding these segments will help us solve the mystery of the missing profits.

Next and Guest Customers: ‘Next’ customers are pivotal to the profit conundrum, often being a primary cause for profit erosion due to disproportionate spending on customer acquisition. A substantial portion of the adtech budget is squandered in this pursuit, resulting from misdirected acquisition efforts and the inefficient reacquisition of past customers. Moreover, without timely identification and engagement, ‘Guest’ customers risk slipping through the cracks, especially as a cookieless future looms, which could sever retargeting opportunities and erode potential revenue streams.
Best and Rest Customers: These groups harbour significant untapped revenue potential for the brand. Unfortunately, the current engagement strategies fall short. The ‘Best’ customers aren’t receiving the exceptional, differentiated experiences they deserve, which I have coined as “Velvet Rope Marketing,” akin to a VIP treatment. Meanwhile, the ‘Rest’ customers are missing out on the compelling, personalised omnichannel experiences necessary to inspire more frequent purchases.
Test and Left Customers: Efforts to address customer dormancy and attrition in these segments are often inadequate. Brands typically overlook direct re-engagement tactics with these groups, inadvertently relegating them to reacquisition campaigns where significant funds are expended just to re-establish contact. This not only forgoes new revenue possibilities but also results in costly attempts to reinitiate dialogue with customers who may have otherwise been retained more economically.

Enhancing engagement with the Best and Rest, deploying cost-effective retention strategies for Test and Left customers, and optimising acquisition spends to not only optimise for Next customers but also to identify and convert Guest customers are strategic imperatives to stem the leakage of profits and foster sustainable growth.

Thinks 1104

Madanmohan Rao recommends my book as one of 2023’s top 10 for Entrepreneurs: “Not all startups need external funding from investors – they can grow from customer revenues alone, as explained by Rajesh Jain, who has been an entrepreneur for over three decades. Hard-earned lessons from his ventures IndiaWorld and Netcore are shared in a storytelling format. He defines a ‘proficorn’ as a private, bootstrapped, profitable, and valuable venture (worth $100 million). The 16 chapters cover his experiences learned in ideation, team building, revenue generation, managing growth, creating a flywheel, and learning from failure.”

FT: “There are no better guides to how the country might best leverage its potential — and manage the obstacles — than Raghuram Rajan, former governor of the Reserve Bank of India, and Rohit Lamba, an economist at Pennsylvania State University. In Breaking the Mould: Reimagining India’s Economic Future, they expertly devise a new growth model for India, offering detailed recommendations for reforming the country’s industrial strategy, healthcare, education and democracy. Their arguments are bolstered by several illuminating case studies — from online MBA classes in which students use virtual reality headsets, to a sari outlet combining manufacturing and services — that highlight the nation’s entrepreneurial zeal. They suggest India should not attempt to follow other countries by walking the low-skilled manufacturing path to economic development, since many nations are now competitive in building and processing. Instead, they say that India should leverage its expertise in direct services exports, from IT to education, as well as services embedded within the manufacturing sector. Importantly, the authors argue that India must also work to bolster its democracy — after all, the ability to think and speak critically is a cornerstone of innovation.”

Avishai Abrahami: “A lot of the time, I talk to entrepreneurs, and most of the time, younger entrepreneurs, they talk to me about the fact that they make a lot of decisions every day. And I usually say, “Well, I make probably four every quarter.” And I think the number one thing is to understand that it’s much better to make four every quarter than a dozen every day because I mostly try to delegate and to make sure that we know: What are the rules? How do we measure success? How do we enable other people to make smart decisions? And they’ll come and tell me what they want to do, but essentially, it’ll be mostly their decisions and not mine. It’ll be my responsibility but their decisions. We have a full method of how to make decisions. Everything is measured. This is number one. We are fanatic about it. We measure everything. If you did something that cannot be measured, then nothing happened. That’s our philosophy. In fact, a lot of the time, don’t tell us about it. Don’t come and show off a project that cannot be measured. You can come, by the way, and show us a project that you measured and had a negative effect, and you’re going to get the same amount of cheers as you would for a project that had positive effects because we want to encourage that aggressiveness in testing and going to new places.”

George Will: “Many of today’s anticipatory anxieties about artificial intelligence might be well-founded, but not its threat to cause enormous joblessness. Until the middle of the last century, many women were telephone operators. Displaced by mechanical switching technology, they moved on to other jobs. Pethokoukis says ATMs led to increased bank teller jobs as it became cheaper to open bank branches. He imagines finding ways to employ the energy around and beneath us. The Earth’s molten core is about as hot as the sun’s surface (11,000 degrees Fahrenheit), and will generate heat for billions of years as radioactive elements decay. “The continuous energy flow is roughly thirty terawatts” — trillions of watts — “almost double all current human energy consumption.” And: “There are no theoretical obstacles to placing tech in low-Earth orbit that would convert some of the 173,000 terawatts of solar energy continuously striking Earth, an amount ten thousand times annual global energy consumption.” Vitality that translates into economic growth can be transformative. “The difference between an economy growing at 2 percent for the next fifty years and growing at 4 percent over that span is,” Pethokoukis notes, “massive — a $60 trillion economy in 2076 versus $160 trillion.” A prudent society does not assume that such things are achievable. However, a dynamic society does not allow anxieties about the future to constrict is horizons, or to seek security in the embrace of the state.”

WaPo: “Conceived in 2016 by Carlos Moreno, the 15-minute city imagines putting “humans and their well-being as the main purpose of urban organization,” Moreno, an urbanist and professor at the Sorbonne University in Paris, told The Washington Post in March. The idea is “to promote sustainability and health by reducing car dependency and increasing physical activity,” primarily through walking, biking and mass transit. This decentralized urban planning model has become a rallying cry for politicians and urban activists around the world fed up with exclusive single-use zoning, car-centric development and homes segregated from work, retail shopping and other amenities. Yet the discussion about 15-minute cities obscures a central tension at the heart of the idea: How can all of us live within 15 minutes of all amenities and jobs in cities housing millions of people?”

My Columbia Engineering Talk Video

I had given a talk at Columbia Engineering in New York in mid-November, as part of their Tech CEO Lecture Series. I spoke for about 45 minutes, followed by 45 mins of Q&A with the students. Here is the video.

How to Boost eComm Profit Margins by 1000 Basis Points (Part 1)

Mystery

The digital landscape initially seemed to offer boundless opportunities for brands to expand from local to global entities. The promise of direct customer relationships and hyper-personalised online shopping experiences, driven by data analytics, suggested a future of immense growth and profits. However, the anticipated simplicity of establishing a digital business has been overshadowed by unexpected complexities.

The digital market, once perceived as a blue ocean, quickly became saturated, igniting a fierce competition for consumer attention. Regular discounts and aggressive marketing strategies evolved from occasional tactics to survival necessities. Advertising costs on platforms like Google and Facebook soared as the battle for visibility intensified.

Customers became more discerning, raising the bar for customer service and driving up the cost of technological innovation. Logistical demands tightened, leaving no room for error, and even minor product flaws could result in returns and lost profits.

Marketplaces like Amazon and Alibaba offered access to large customer bases but exerted significant control over brands, sometimes undermining their autonomy and identity. Facing these challenges and the plateau of digital growth, D2C brands are now reconsidering physical stores to enhance customer experience and reach new markets, though this requires substantial investment. The digital dream, while still alive, has proven far more complex than originally envisioned.

As I wrote in “Mystery of the Missing Profits”: “Even as digital/B2C/D2C/ecommerce companies are growing rapidly, their profits are not keeping pace. Every B2C/D2C CEO must be thinking: “I’ve integrated every digital facet—from an optimised website and app to a seamless omnichannel experience and prompt delivery. What’s missing in this equation? Why aren’t the profits pouring in?” Even traditional retailers who have invested in digital transformation initiatives would be asking themselves the same question: “Where are the returns on my investment?”… while digital and eCommerce platforms were once hailed as the democratising force for businesses, the evolving landscape paints a more complex picture. The mystery of the missing profits isn’t really a mystery at all when one understands the intricate web of costs and dependencies in the current digital ecosystem.”

I have had scores of conversations with CXOs of these companies in the past few years. What surprises me is a complete lack of understanding in most cases of how much money they are wasting on new customer acquisition and not generating from their existing customers – a double whammy. As I have analysed customer and sales data, I have come to a stunning conclusion: eCommece brands can increase their profit margins by 1000 basis points. In other words, if they make a 2% margin, they can increase that to 12%. If they are losing 5%, they can convert that into a 5% profit, in essence, they can generate ten additional dollars (or rupees) in profit from every 100 dollars (or rupees) of revenue. This can be transformative for the eCommerce industry which has been struggling with profits for an extremely long time. It can ensure long-term survival of many digital brands and additional funds for innovation. It can fulfil the true promise of the Internet in delivering low-cost and convenience for billions of customers globally. In this series, I will show how and why eCommerce companies can make this happen. It is a theme I have covered in many of my past essays. This essay moves the story forward – quantifying gains, offering a playbook, and recommending the first steps – and thus solving the mystery of the missing profits.

Thinks 1103

Mint: “As Brian Dovey’s book title says, The Idea is the Easy Part. Given that more than 95% of startups don’t survive five years (between 80-95% in India, depending on how you cherry-pick your data), we can’t agree more. Part of his motivation for writing this book was that myths and false impressions about entrepreneurship and startup culture had continued to spread. Fans of reality TV shows like Shark Tank still think they can make a fortune from a clever idea and a slick elevator pitch. And detractors really think the startup world is full of egomaniacs and dishonest ‘vulture capitalists.’ Both camps are mistaken. As it stands, the startup world is a captivating realm, filled with innovation, ambition and the promise of disruptive change—even if copied and pasted. It is also a world rife with myths and misconceptions that can mislead aspiring entrepreneurs. That the idea is the most critical aspect of a startup’s success is one such myth.”

WSJ: “LLMs are capable of producing responses with huge variations. The trick is to tweak the “input” to maximize the “output.” Here are three approaches learned in White’s class that I now use regularly: Persona prompt: Tell the AI system to assume a role. For example: “Act as an assistant helping a financial analyst.” Then when you ask your question, the bot will frame the response in that role. New-information prompt: You can add new information that the LLM might not know. For example: “Here’s the transcript of Microsoft ’s last earnings call. Summarize all the mentions of AI and Bing in five bullets.” The more specifically you describe your desired output, the better it will be. Question-refinement prompt: You can ask the LLM to suggest improved or alternative questions to get more refined answers. Example: “When I ask a question about Microsoft earnings, suggest a better version of the question and ask me if I would like to use your question instead.””

FT: “Google DeepMind researchers have discovered 2.2mn crystal structures that open potential progress in fields from renewable energy to advanced computation, and show the power of artificial intelligence to discover novel materials. The trove of theoretically stable but experimentally unrealised combinations identified using an AI tool known as GNoME is more than 45 times larger than the number of such substances unearthed in the history of science, according to a paper published in Nature [recently]. The researchers plan to make 381,000 of the most promising structures available to fellow scientists to make and test their viability in fields from solar cells to superconductors. The venture underscores how harnessing AI can shortcut years of experimental graft — and potentially deliver improved products and processes. “Materials science to me is basically where abstract thought meets the physical universe,” said Ekin Dogus Cubuk, a co-author of the paper. “It’s hard to imagine any technology that wouldn’t improve with better materials in them.””

James Gwartney and Richard Stroup: “Income is simply compensation received in exchange for productive services supplied to others. People who earn large incomes provide others with lot of things that they value. If they did not, other people would not be willing to pay them so generously. There is a moral here. If you want to earn a large income, you had better figure out how to help others a great deal. The converse is also true. If you are unable and unwilling to help others very much, your income will be quite small.” [via CafeHayek]

HBR Qs on how to create the life you want: “How do I define a great life? What is my life purpose? What is my life vision? How do I assess my life portfolio? What can I learn from benchmarks? What portfolio choices can I make? How can I ensure a successful, sustained life change?”

Email 2.0 Progency: eCommerce’s Profit Powerhouse (Part 6)

Gen AI Pre-mortem

So, how could the Email 2.0 Progency idea fail? I asked ChatGPT and Claude.

ChatGPT

Over-reliance on Email as a Platform: With the rise of multiple communication platforms, including messaging apps, social media channels, and push notifications, relying heavily on email could be a misstep. The younger demographic is increasingly distancing itself from traditional email, favoring instant messaging and other modes of communication. While email might still be prominent among older audiences, it may not be the ideal platform for engaging the whole spectrum of customers.
Potential Invasiveness and Perceived Spam: The concept of “interactive, personalized, and actionable” emails can be a double-edged sword. There’s a fine line between personalization and intrusion. Emails that seem too tailored might creep users out or feel invasive, leading them to ignore the emails or, worse, mark them as spam. A high frequency of such interactive emails can further exacerbate the issue, potentially tarnishing a brand’s reputation in the eyes of its users.
Technical Challenges and Integration Issues: Interactive emails that function like mini-applications need to be compatible across a vast array of email clients and platforms. Not all email platforms might support the features Progency is proposing, leading to inconsistent user experiences. Integrating these advanced email features with existing eCommerce systems could also present challenges, both in terms of compatibility and ensuring data security.

Claude

Low engagement rates: The essay assumes high open and click rates for dormant users. But engagement rates for inactive users are often very low. If emails go unopened, the innovations are useless.
Email fatigue: Consumers face email overload already. More emails, even if gamified and interactive, may simply lead to more fatigue and ignores.
Privacy regulations: Stricter privacy laws and regulations around data usage and email marketing consent may restrict how brands can re-engage dormant users. Progency’s data-driven targeting may face legal hurdles.
Changing consumer behaviors: More communication occurs on channels like social media, messaging apps. Email engagement is declining, especially for younger demographics. So email-centric strategies have inherent limitations.
Internal resistance: Marketing teams are incentivized for acquisition growth. Progency’s profit focus means shifting budgets from acquisition to re-activation. This may face internal political resistance.
Speculative outcomes: The profit increase estimates are speculative. Actual results may be much lower, making the economics less compelling for brands to undertake this change.

In summary, low engagement, email fatigue, privacy regulations, channel fragmentation, internal resistance, and uncertainty over actual outcomes could all hamper Progency’s vision of profitably re-engaging dormant customers via Email 2.0. Overcoming these challenges will be key.

What actions could be taken to address these issues?

ChatGPT

Diversifying Communication Platforms:
- Hybrid Approach: Rather than focusing solely on email, consider a hybrid communication strategy that integrates email with other communication platforms like messaging apps, social media, or push notifications. This can ensure the engagement of both older and younger demographics.
- Segmentation: Use user behavior analytics to segment the audience based on their preferred communication platform and tailor your communication strategy accordingly.
Striking the Right Balance in Personalization:
- User-Controlled Customization: Allow users to set preferences about the kind and frequency of emails they wish to receive. Giving users more control can reduce feelings of invasiveness.
- Transparency: Be open about the data you’re collecting and how you’re using it. A clear privacy policy that’s easy to understand can build trust.
- Optimal Frequency: Use data analytics to determine the optimal frequency for sending these interactive emails. If users are engaging less, consider reducing the frequency.
Addressing Technical and Integration Challenges:
- Universal Design: Design emails that degrade gracefully. This means that if an email client doesn’t support a certain feature, the email still looks good and is usable, even if not all interactive features are accessible.
- Regular Testing: Continuously test emails across a variety of platforms and devices to ensure compatibility. Using tools like Litmus or Email on Acid can help preview how emails render on different clients.
- Secure Integrations: Ensure that any integration with eCommerce or other systems is done securely, using best practices. Employ end-to-end encryption and work with IT experts to routinely check for vulnerabilities.

Claude

Low engagement rates – Use AI and analytics to identify micro-segments with higher propensity to open and click. Send targeted content that is highly relevant. Use subject line optimization and personalization.
Email fatigue – Limit email frequency and avoid over-communication. Make unsubscribes easy. Focus on value-add through interactivity and utility.
Privacy regulations – Build robust consent management and provide transparency around data practices. Shift towards anonymized data usage.
Channel fragmentation – Take an omnichannel approach beyond just email. Use SMS, messages, web push etc. based on user preferences.
Internal resistance – Start with small experimental budgets. Demonstrate incremental profits without cannibalizing acquisition. Get executive buy-in on profit goals.
Speculative outcomes – Set realistic targets based on pilot tests. Take an agile approach with continuous optimization. Build statistical models to refine projections.
Churn prevention – Use insights from re-engagement efforts to improve retention and prevent future churn.
Value exchange – Offer incentives and value to re-activated users to maintain engagement. Don’t over rely on interruptive communications.

The key is to take a targeted, personalized, and omnichannel approach. Combining the creativity of Email 2.0 with robust analytics and optimization can overcome many of these challenges. Testing and iteration will be critical to demonstrate tangible upside and make the economics work.

Now, it is for martech platform entrepreneurs to take over!

Thinks 1102

WSJ: “Virtually every major streamer, from Netflix to +, has launched a service tier that includes ads. They are joined by an exhaustive list of corporations—many of whom are far afield from media—that are plotting or have started ad-sales businesses. United Airlines is the latest company to consider expanding its ad business by using passenger information to help brands serve targeted ads to its customers…If the airline follows through with its latest venture, it would be joining a growing number of companies working to cram even more ads into every nanosecond of people’s lives—a list that includes retailers, streaming services, hotels and delivery apps. This new market dynamic even has its own slogan: “Everything is an Ad Network,” a catchphrase coined by mobile-marketing guru Eric Seufert. “Attention is the new oil well of money making, so companies are creating more and more attention mediums,” said ad-industry veteran Tim Armstrong, a former Google executive and AOL chief executive who now leads Flowcode, a direct-to-consumer platform company. “It’s easy money.””

Vitalik Buterin: “My own feelings about techno-optimism are warm, but nuanced. I believe in a future that is vastly brighter than the present thanks to radically transformative technology, and I believe in humans and humanity. I reject the mentality that the best we should try to do is to keep the world roughly the same as today but with less greed and more public healthcare. However, I think that not just magnitude but also direction matters. There are certain types of technology that much more reliably make the world better than other types of technology. There are certain types of technlogy that could, if developed, mitigate the negative impacts of other types of technology. The world over-indexes on some directions of tech development, and under-indexes on others. We need active human intention to choose the directions that we want, as the formula of “maximize profit” will not arrive at them automatically.”

WSJ on Charlie Munger’s success secrets: “‘Invert, always invert’. Know your circle of competence. Think in multiple dimensions. ‘Destroy your own best-loved ideas’.” Munger passed away recently. More: “What did high-tech entrepreneurs think they could learn from a 99-year-old notorious for ridiculing overpriced technology stocks? “Duration,” said Patrick Collison of co-founder of digital-payments company Stripe and a frequent visitor at Munger’s gatherings. “Duration enables compounding. If we’re to be successful into the future, we will have to get really deft at thinking and investing on long-term horizons.”” Economist: “For him, curiosity was a lifelong project, and he believed that business people should constantly refresh their knowledge, challenging their assumptions and learning from mistakes more than successes. As he said on the first page of “Poor Charlie’s Almanack”, a compilation of his writings and speeches: “Acquire worldly wisdom and adjust your behaviour accordingly. If your new behaviour gives you a little temporary unpopularity with your peer group…then to hell with them.””

NYTimes: “Perhaps you smile and shake hands with a new acquaintance, and then promptly forget the person’s name. Or maybe you walk into your kitchen to do … something. What was it again? Exasperating as it is, this type of forgetfulness is usually normal, said Dr. Sharon Sha, a professor of neurology at Stanford University. When we blank on information we just learned or thoughts we just had, it’s typically because our brains didn’t save them as long-term memories to begin with, Dr. Sha said. When going about your daily life, your brain holds information in a temporary state called working memory, said David Gallo, a professor of psychology at the University of Chicago. Having a phone conversation while following a dinner recipe, for instance, involves juggling multiple tasks in your working memory at once, he said. Most people can only hold about four or five thoughts or tasks in their working memories at a time, Dr. Gallo said. But unless those thoughts go through a brain process called encoding, he added, they won’t be saved permanently in your long-term memory.”

Dev Shah won the Scripps National Spelling Bee in June 2023: “The secret to spelling is understanding the “how” and “why” of language. Most words have patterns based on the sounds they make. For example, words that derive from French often substitute “ch” for the “sh” sound, as in the word “chagrin.” The part of speech can clarify how to spell the end of a word. Adjectives prefer “ous,” such as in the word “egregious,” and nouns typically use “us” like in “abacus.” And studying alternate pronunciations can keep you from agonizing over multiple letters, like in “GIF” and “JIF.” The letter G can mimic a J sound, but never the reverse…Winning the spelling bee is worth more than having an impressive line on my résumé. Spelling has better prepared me for life. Competitive spelling teaches you to be unafraid to take risks. No matter how well we may think we know something, eventually, we all have to take a guess.”

Email 2.0 Progency: eCommerce’s Profit Powerhouse (Part 5)

Upside

The economic argument for the Email 2.0 Progency is compelling. Here is what success looks like:

A 700 basis points increase in profitability!

So, why is this not happening? I think there are three reasons:

Marketers are too focused on the Next, Best, and Rest customers. The Test and Left customers are not on their radar. The workload is high, the cost is not insignificant, and the RoI is not clear. Dormancy and churn are seen as problems to live with, rather than frictions to be fixed.
Martech SaaS companies, who are the only entities who can create the Progency, are not interested in services. They do not want to risk today’s guaranteed revenue for an uncertain future payoff, even though it may be a big.
In fact, there is an easy solution for Test and Left customers that marketers resort to: reacquisition via adtech. Sure, it is expensive, but no one questions that spending.

Progency will not be an easy sell. CMOs are focused on growth, not profitability. And CEOs and CFOs who worry about profitability don’t get involved in the marketing function. Everyone’s trapped in a low equilibrium situation and the status quo persists. This is the problem Progency will need to solve.

The good news is that there is pressure eCommerce companies face to grow profitability. There is only so much that can be squeezed from the rest of the business. The Email 2.0 innovations provide a ray of light which can transform the end customer experience. But just offering piecemeal solutions is not good enough. The need is for entrepreneurial Martech 2.0 companies to go beyond the red ocean of competing based on features in their stacks to providing real solutions which impact profitability, and where they have skin in the game. Progency is the game changer – for brands and the martech industry. Instead of competing in a $10 billion market, they can focus on the $100 billion reacquisition AdWaste segment. The time for Email 2.0 Progency has come!

Progency offers a revolutionary opportunity to amplify eCommerce profitability. This software and service solution targets and revitalises a significant, often overlooked segment of a brand’s customer base: the dormant (Test) and churned (Left) customers. By reducing AdWaste and implementing “Email 2.0” innovations, Progency seeks to engage this “Blue Ocean” of users interactively and efficiently. These innovations make emails more personalised and actionable, thereby addressing funnel frictions and optimising the potential for sales conversion. The Progency model, which only charges for successful outcomes, presents a compelling economic argument for brands seeking to maximise profits, especially when tapping into the unused potential of inactive customers.

I asked Claude to provide a short summary of the essay. Here it is.

Progency is a proposed software and service solution that can increase eCommerce profits by 500-1000 basis points. It does this by targeting dormant/churned customers that brands currently ignore.
Progency would use innovative “Email 2.0” tactics like gamification, AI personalization, in-email payments etc to re-engage these customers profitably.
This would eliminate wasted ad spend on re-acquiring dormant customers (called “AdWaste”). Progency would also drive incremental revenue from this “Blue Ocean” of ignored customers.
For brands, there is no risk or upfront cost. Progency only gets paid on successful outcomes through revenue share.
However, Progency faces challenges because brands focus more on acquisition than profitability. Martech companies also prefer predictable revenue over uncertain outcomes.
But the economic potential is huge – a 700 basis point profit increase by saving on AdWaste and unlocking revenue from dormant customers.
Progency is a gamechanger that can move martech companies beyond feature competition. Instead of a $10B market, they can target the $100B AdWaste segment.

In summary, Progency leverages Email 2.0 to profitably re-engage a brand’s ignored customers. Its pay-for-performance model and profit focus make it compelling for brands seeking to amplify profits.

Thinks 1101

Brad Stulberg: “In researching and reporting for my most recent book, “Master of Change,” which explores how to navigate periods of disorder and endure life’s inevitable chaos and flux, I came across countless individuals who underwent harrowing life disruptions from grave injury to illness to profound loss. The vast majority said that when they were in the thick of these experiences what they were going through often felt meaningless and as if it were going to last forever. But they got to the other side and could look back on their struggles without a sense of their being all consuming, though sometimes this took many months, sometimes many years. And with the benefit of time, most people found at least some meaning and growth.”

Ann Patchett on advice that’s been important to her: “One of my very favorites was from my father, who said, “If you don’t want to engage with someone, don’t engage with them.” He was really wonderful. When you think, “Oh. Well, I should answer that. I should explain why. I should…” and it’s like, no. My father was always just like, “No. Just don’t say anything. Just walk away.”

WSJ: “With the Cybertruck, sought to break from convention by cladding its electric pickup in ultrahard stainless steel, a material that doesn’t need to be painted, resists dents and adds to the vehicle’s distinctive look. The stainless steel, which is being used for the truck’s outer shell, has proven challenging to bend and manipulate, testing Tesla’s ability to shape the material into body panels that line up correctly and don’t result in large gaps when installed, according to people who have worked on the pickup. On top of that, it is so hard and strong that it can be difficult to flatten, these people said. The metal is produced in coils that resemble giant rolls of toilet paper, and even when unrolled, it has a tendency to spring back into its earlier, curved form. These difficulties are among the manufacturing hurdles Tesla has wrestled with leading up to the rollout of its first new passenger model in more than three years.”

Tom Bowe: “At the risk of sounding mawkishly positive, I think I’ve discovered a cheap, simple fix for our fraying social, emotional and political health. It’s easy to bemoan our problems as intractable, blaming familiar culprits like rising wealth inequality, technology (including social media) and the corporate capture of our political system. But what if our alienation stems, at least in part, from a profound failure of our educational system to teach the habits of connection, most of which boil down to thinking of others before speaking to them? So let’s put kids together and teach them how to talk, to hear and be heard, to resolve differences and forge consensus without flameouts, rupture, vituperation. This solution is hardly new. Invented by educators and philosophers in ancient Greece, the discipline of rhetoric — originally defined as the study of persuasion and now more commonly known as the art of public speaking — remained the cornerstone of education until the 1700s.”

New Yorker: “[nVidia’s CEO Jensen] Huang has a practical mind-set, dislikes speculation, and has never read a science-fiction novel. He reasons from first principles about what microchips can do today, then gambles with great conviction on what they will do tomorrow. “I do everything I can not to go out of business,” he said at breakfast. “I do everything I can not to fail.” Huang believes that the basic architecture of digital computing, little changed since it was introduced by I.B.M. in the early nineteen-sixties, is now being reconceptualized. “Deep learning is not an algorithm,” he said recently. “Deep learning is a method. It’s a new way of developing software.” The evening before our breakfast, I’d watched a video in which a robot, running this new kind of software, stared at its hands in seeming recognition, then sorted a collection of colored blocks. The video had given me chills; the obsolescence of my species seemed near. Huang, rolling a pancake around a sausage with his fingers, dismissed my concerns. “I know how it works, so there’s nothing there,” he said. “It’s no different than how microwaves work.” I pressed Huang—an autonomous robot surely presents risks that a microwave oven does not. He responded that he has never worried about the technology, not once. “All it’s doing is processing data,” he said. “There are so many other things to worry about.””