Monthly Archives: December 2014

Book Review: Daemon, by Daniel Suarez

Editor’s Note: My last post was about being thankful for our multitude of blessings. I forgot a BIG ONE: The SEATTLE SEAHAWKS. Thank you, Pete, Russell, Marshawn, Richard, and the amazing SEAHAWKS squad for this incredibly inspiring season! See you in the Super Bowl!

Imagine the first human murdered via the Internet. Killed by an Internet-connected device triggered by a software program unleashed by dead man. This is the setup for a story that is both thrilling and thought provoking, Daemon, by Daniel Suarez.

The dead man is a PhD computer gaming magnate, successful and wealthy, but unable to overcome the cancer in his body. Instead of going quietly, he creates a massively-distributed computer daemon (def: self-running process) bent on transforming the world.

The twist – and what makes this story compelling for me – is the transformation angle. It isn’t your typical good vs. evil story, with technology being portrayed as one or the other. Suarez begins with a condemnation of the Western military-industrial complex, then posits a very real scenario for its destruction, and designs a new world order based on today’s emerging and dominant technologies: Internet, computer gaming, virtual reality and social networking.

The main villain, if you can call him that, is the gamer and cyber-criminal, Gragg. Gragg is a villain because he rapes, murders and cozies up to virtual Nazis. Suarez doesn’t condemn him, however. The Daemon uses Gragg to help further its own goals and installs Gragg as a leader in the new world order. This presents us with one of the central questions of the story: What to do about the “disaffected youth” of today – anti-social gamers, hackers, slackers, identity thieves. If you start with the assumption, as Suarez does, that our society has some deep-seated problems, then cast the slackers as victims, then turn them into productive members of a new society; well, then you might just have something.

As a novel, Daemon is nicely constructed, and reads well. Suarez is well versed in Internet and gaming technology, and the book hits the mark for me technically. As you know, I’m a fan of IoT – the Internet of Things. Daemon paints a dark, but plausible vision for how IoT fits in with the next evolution of Western economy and society.

Suarez also gives us a follow-up story, Freedom™, which develops the political and social ideas from Daemon, with less emphasis on the technology. I like to read a book when I know there is a follow-up, in case I’m hungry for more. And in this case I was!

If there’s a downside to the book, it’s that there are some disturbing scenes as the Daemon uses any means necessary to bring about the transformation. Which means you’ll want to make sure the reader’s maturity level is pretty high – middle school and most high schoolers would be too young. But anyone who is a fan of sci-fi, technology, dystopia, politics and good writing, will enjoy Daniel Suarez.

Available for Kindle here.

Happy Holidays, Giving Thanks

Happy Holidays, Dear Reader!

The holidays are upon us and it’s a great time to reflect on the multitude of blessings we have.

I’m thankful for:

  • Another year of good health
  • My loving wife
  • Three healthy & happy boys (young men, actually)
  • Good friends
  • Relative peace in the world

We’ve made our home in the great Pacific Northwest. The photo you see at the top of this page is from my first-ever back-country backpacking trip to Mt. St. Helens, taken in July, with my cousin, Sander, Josh and Eli. How scary to see the destruction caused by the blast in 1980; but that blast opened a gateway for me and many others to appreciate this incredible natural beauty! The cycle of chaos and creation.

This holiday season, I hope you’ll join me and do something to give back to your community. I just scheduled my plasma donation at the Puget Sound Blood Center, and “invited” my son to give for the first time. Blood banks experience a blood shortage each December and January, since the demand remains constant, but people are too busy to donate.

My local blood bank is trying hard to get plasma donations at the moment. Plasma helps in the treatment of trauma patients, burn victims and others fighting serious illness and injury. In addition to providing this additional life-saving resource, you can give plasma more frequently than whole blood – so everybody wins!

I’ve written before about why I think giving blood is so important, but in this season of giving, please remember to take time to go out of your way and help people in need. It only takes a few minutes and it will make you feel great!

Artificial Intelligence: I’ll Take Mine with Extra Cheese (Part 1)

I’ve been thinking a lot lately about Artificial Intelligence (AI). I’m excited about the technology’s potential, but I’m concerned about the direction the business could go, and I want you to think about it, too.

I’m excited about AI for a lot of different reasons. Films, such as 2001, Terminator, The Matrix, Her and Transcendence, are thought-provoking and show the range of possibilities. The augmentation of human capabilities, as described by Ramez Naam, in his book, Nexus, is another interesting view on the future. But I think it’s the potential scale of the business – on the order of the PC or Internet – that makes this topic so much fun to think about.

My concern was crystalized in an article I read recently in Wired, The Three Breakthroughs That Have Finally Unleashed AI on the World. As the title suggests, AI is coming soon, but it will be presented to you and me like a utility served up by Amazon, Google or IBM:

Amid all this activity, a picture of our AI future is coming into view, and it is not the HAL 9000—a discrete machine animated by a charismatic (yet potentially homicidal) humanlike consciousness—or a Singularitan rapture of superintelligence. The AI on the horizon looks more like Amazon Web Services—cheap, reliable, industrial-grade digital smartness running behind everything, and almost invisible except when it blinks off. This common utility will serve you as much IQ as you want but no more than you need. Like all utilities, AI will be supremely boring, even as it transforms the Internet, the global economy, and civilization.

I find the view that AI’s power will be centrally-controlled like a utility, very troubling. Kevin Kelly, the Wired author, is implying that one company or a small number of very large companies can be trusted to create and maintain a singular monolithic standard for AI.

I recently came across the new Domino’s Pizza ordering app, “Dom,” and as crazy as it sounds, I much prefer Dom’s view of the world to Wired’s. Watch the Domino’s 30-second spot. In the commercial, the guy is asking his digital assistant for advice on all sorts of topics. The assistant only knows about one topic. When he finally asks for a pizza, Dom quips, “I thought you’d never ask.”

Why shouldn’t we get our AI from our preferred expert in that field? Why should we rely on Google or Amazon to be expert in all fields? Even in pizza, we may prefer thick crust one day, or thin crust another. Aren’t the values of expertise and intelligence really found mainly in the eyes of the beholder, and don’t these values morph and improve over time as we learn and share more information and experiences with each other?

From the business model perspective, wouldn’t you prefer a world of many competing ideas and services, rather than a few mega-providers? While I sometimes like the convenience of Costco or Amazon, I would find life supremely boring if that was the only place I could shop.

Or think about healthcare. If I’m in pain, I might get very different diagnoses from a Western doctor, a Chinese doctor or an Ayurvedic doctor. Will the Wired model give me viewpoints from all of those medical disciplines, or will its algorithms figure out what’s best for me and filter out the other choices?

I keep coming back to the idea of The Matrix, an all-knowing or all-powerful AI that ultimately lays waste to humanity, because it has no diversity of ideas and is separated from human thought.

In my view, AI-driven intelligent agents should be experts in narrow fields, can share or sell their expertise in real-time micro transactions, and will be subject to the control of human arbiters of right and wrong. My ideal model provides increased sharing of diverse sources of knowledge, with the self-regulatory model of biological diversity, including, and centered-around, human minds.

What can you do to help? Shop small and local. Use Dom instead of Siri. Trust your eyes, ears and gut over the smartphone. Meditate. Help ensure intelligence in the future is artificially augmented, but doesn’t become artificial.

In Part 2, I’ll explore ideas for creating a viable alternative to the monolithic model of AI. Happy Holidays!

Why Prices Ending in “.99” Usually Drive More Sales (But Not Always)

I worked a lot on pricing over the past 5 years, and a question that comes up a lot is whether prices ending in “.99” really drive more sales, and if so, why and by how much?

The academic research in this area says that “pretty prices” (those ending in .99) perform 8-29% better than non-pretty prices.

The reason pretty prices perform better is a mixture of basic psychology – $4.99 reads a lot lower to our reptilian brains than $5.00– and the fact that over time we’ve all become conditioned to see prices expressed in this format. If something doesn’t conform to the expected norm, then we question why. And as soon as a question arises in our brain, it can crowd out, delay or block the urge to purchase.

I recently consulted with a client on a pretty pricing opportunity, and the client made the decision NOT to implement a pretty price change. Since it’s the standard, I thought it would be useful to explain this particular case.

In the study, customers in Germany were randomly shown one of two prices, one pretty, the other non-pretty. The prices differed by 2.5%, and the goal was to see if the client could generate a sales uplift of greater than 5%. Meaning, for a reduction in price of 2.5%, they could show a 100% return in increased sales. However, the results were disappointing. The uplift for the pretty price was only very slight.

The client believes the reason for the counter-intuitive result was that the target customers were European. And Europe has thrown a few monkey wrenches into their taxation system, known as Value Added Tax, or VAT.

The key factors that broke the pretty pricing model were 1) In Europe, prices are required to be displayed “inc-VAT”, that is, including tax; 2) European consumer law requires prices to be consistent across countries; and 3) VAT varies by country, for example, Irish VAT is 23% and German VAT is 20%.

The above means that manufacturers of consumer goods (the rules differ for business-to-business) have generally set standard “ex-VAT” prices (not including VAT), and then display the prices customers see, with VAT. This results in non-standard inc-VAT pricing from country to country (it varies by the difference in VAT) and non-pretty pricing, since a pretty price in Germany would likely translate to a non-pretty price in Ireland.

Here’s the point: it seems that, based on this study, European consumers are now conditioned to expect non-pretty prices. They are no longer motivated by .99. In fact, my client believes that when European customers see a pretty price, their reptilian brains get confused and try to figure out if they are looking at an ex-VAT price, and then do the math to add VAT, then compare an artificially-inflated price with their expectations – what a mess!

I believe the underlying science – consumers prefer consistency and stumble on anything that sticks out – is still good.

By the way, as of January 1, the VAT rules are changing in Europe. Consumers will now be billed for VAT according to their country of residence, NOT the country of the source product or service. More on that later!

A Great Gift Idea for the Cyclist or Outdoorsman in your Life

What to give the guy or gal who has every gadget or gizmo? Give the gift of safety, and show them how much you care about them.

NOTE: This is not a paid endorsement. I just really like this product and want to share the idea.

Imagine this: Your friend or loved one is involved in an accident on the road or trail and isn’t carrying ID. A first-responder is called to the scene and is ready to help. How do they know if your friend has any medical conditions or allergies that would affect treatment? How will they know who to call to let them know your friend is OK or needs help?

In my family, we had a scare this year when one of our sons went off on an all-day hike and wasn’t in touch until after dark. We want the peace of mind that comes from knowing he could get rapid treatment – and we can be notified – if there’s an accident.

The product is called the ICE DOT Band, and it’s a slightly heavier version of the charity bracelets originally developed by LiveSTRONG.

It’s super simple. Each band has a unique ID that links to an online profile that you create. The profile includes who to contact in an emergency, pre-existing medical conditions, insurance info, allergies, etc. First responders can text the ID to a phone number and get back the necessary info. It’s kind of like the old “medic alert” bracelet for the digital age.

I like ICE DOT because they have a simple, easy-to-use system, and get this: It’s only $20 for the first year, $10 each year thereafter. And you can update your profile as often as you like. Additional safety/privacy feature (a hot button for me): the system also keeps a record of any phone number used to access your info.

I wear mine all the time, and now my son will, too!

Check it out at www.icedot.org.

Seven Tips for Protecting Your Digital Identity

The identity theft business has grown to $21B per year. Pretty much everyone reading this is susceptible.

Like many of us, I’ve moved most of my files to the cloud, do my banking and investing online, and have gone digital for all my household records. I travel for business quite a bit, and I really want to make sure I’m safe, and my family is safe and secure.

There are a lot of lists for protecting yourself, so I’ve culled my list to just the most important and unique safeguards and backup plans that I use to protect myself. Please share your own in the comments!

  1. Get a burner email address. This is an email address that you can disclose to anyone and cancel at any time. It’s not the address you give eTrade or your favorite cousins in England! It is the address you give Sports Authority or Godiva when you join their clubs to get freebies. If you get spammed or hacked at that address, who cares!
  2. Avoid disclosure of any of the following: Account numbers, social security numbers, middle initial, birthdate, mother’s maiden name, passwords, PINs. Especially, don’t write any of these down and hand the paper to anyone!! There should be no reason why the doctor’s office needs your SS#. We just leave it blank or cross it out. No one ever asks.
  3. Get a shredder. If you don’t have room or time to shred, keep a separate trashcan under your desk, and load it with shreddables. When it gets full, either shred it yourself or take it to a commercial facility. As for what to shred, I put in anything that has more personal information than just name and address. Items with name and address (or less) go into recycling. Everything else, shred.
  4. Get a fire safe. I have two.
  5. Create an encrypted USB stick with your most important numbers and documents. For example: social security numbers, bank account numbers and bank phone numbers, property insurance, health insurance, credit card numbers and phone numbers (to rapidly report theft if necessary). Make two copies of the stick. Put one in the fire safe and keep one on your person or close by, especially when you travel, especially if you travel internationally. Here’s a Gizmodo article with specific instructions.
  6. Every six months or a year, check your credit report. Don’t pay for a free credit report! Each of the three major credit reporting agencies is required to provide a free credit report to you annually. Here’s how to get it: annualcreditreport.com.
  7. Here’s a tip for protecting your PIN, courtesy of Gail, based on the 2013 Target breach. Did you know that when you use your debit card, you can avoid using your PIN, thereby protecting it from theft? Instead, run the transaction as credit. It takes only a couple seconds more (you may have to sign) but there is typically no benefit for using your PIN. Gas stations are the exception – they generally reward you with $0.10 off per gallon, which you can take, and buy yourself an extra latte every week.
  8. BONUS TIP! For heaven’s sake, change the admin password on your router!

Permission Marketing and Why I’m Not So Sure About Google and Starbucks

I decided to change my routine this morning and start my day at Starbucks. The double cappuccino was delicious. The new Starbucks/Google free Wi-Fi gave me pause.

The value proposition for the Wi-Fi is quite attractive: As free coffee shop internet connections proliferate, a faster, more reliable internet connection could help Starbucks differentiate its in-store experience, swaying coffee drinkers to switch from Tully’s or Peet’s, and to consume more Starbucks goodies while they surf.

My hesitation arose based on my level of trust for Google and other multinational corporations bent on world domination. That sounds harsh, but I say it to emphasize a point: As a consumer, I believe I have a duty to be vigilant about the personal information I share in exchange for “free” services, like the Wi-Fi at Starbucks. And I’m not saying I won’t ever trust Google or Starbucks, or that they’ve done something to harm me – they just haven’t yet earned my trust.

As a good customer and since I was concerned, I clicked on the links for “Terms of Service” and “Google Privacy Policy” on the login screen. I was able to view both documents on-screen. Since I was busy, I decided to click on the link to download PDF’s of the documents to read later. While I was able to download other PDF’s from the Internet, neither of these two documents would download, even after multiple attempts. It may have been pilot error on my part, or it may have been a glitch on their end. In either case, it put me on alert.

I connected to the service, but started thinking about permission marketing. Why is it that I’m willing to give my name, phone numbers, home address and email address, to REI? Why is it that I was happy when Amazon raised the price of my Prime membership from $79 to $99 a year? Why is it that I’m very concerned with Facebook’s new Terms of Service regarding GPS tracking and photo sharing?

But when Starbucks and Google won’t let me have something I need, to help ease my mind, a lahar warning starts ringing in my head.

As a consumer, my level of trust, and therefore the permission level I assign a company, is a complex mix of intellectual and emotional calculations. Do I feel the company’s price/value relationship is fair? Do they have my best interests at heart? Do they value their growth and profitability over their customers’ health and well-being? Are they transparent about policies that matter to me? And, if they’re asking me to potentially share a lot of information about myself, are they extra-transparent about the exchange?

As marketers, we are responsible for choreographing this dance – especially with regard to permissions – to ensure we make it easy for customers to extend us their trust and deepen their affection for our brand. One small glitch and we could compromise that invaluable and ephemeral asset.