Channel Cannibalization

I get that channel strategy is difficult for businesses. If you sell only wholesale, like the ethical-and-stylish shoe company Novacas, you lose out on a direct relationship with your customers. Still, it’s a popular strategy especially for smaller companies that need the publicity and marketing stockists can do, and/or don’t have the size to run its own retail operation.

If you sell only direct, you’re doing all the work of both building your product, and also running the retail business. American Apparel, for example, used to sell only wholesale, but eventually opened its own retail line as well. But they now have to deal with running an entire retail operation, with all that real estate, all those leases, all that payroll, all the liability that comes with running a high-turnover, image-focused company.

And if you sell wholesale and direct to customers, you compete with your stockists. This was a major concern for Novell when I worked there: Many of their customers bought direct from Novell. Others bought from independent systems vendors or consulting companies. Novell was in the awkward position of trying to balance running a consulting team that sold its software to customers, a sales team that sold its software to customers, and then partnership teams that competed with those two teams to sell the consulting and software indirectly to similar customers. Lots of companies, especially big companies, wind up in that situation, for very good reasons. Most of your customers will fit clearly into one of the appropriate channels… but there are cases where the channels compete with each other instead of with your actual rival companies.

And then there’s Nike, which seems to have dozens of overlapping but incomplete channels for everything, so that no one place has access to their entire product line, not even their official direct stores. You can buy Nikes at any online or offline athletic goods store, or any shoe-selling website, or Nike.com or their official Niketown retail locations.

But you can’t get all the shoes at any of those places. Zappos sells more than 500 different Nike shoes, but that’s far fewer than the number of models Nike makes. If you want the unusual exclusive ones, you have to go to an unusual exclusive store, like BDGA in Boston. Not too surprising.

What’s somewhat more surprising is that even Nike.com carries a pretty limited selection of Nike shoes! Click “Sports” at the top of that page: There are 10 sports they offer gear for, including the very general “Training.” Everyone knows Nike makes shoes for more than 10 sports.

If you want, say, the Romaelos 2 weightlifting shoe, which is a pretty specialized shoe but not THAT weird, you’d have to go to their retail channels – the specialized powerlifting shops like Eastbay and Again Faster, or the more general shops like regular old FootLocker.

I assume there’s a very specific set of reasons that they use to determine which channels will get a given product. Obviously, the Kanye West collab will be limited release, because the whole point is that it’s hard to get. Obviously, a plain Nike Free running shoe will be wide release, because it’s for everyone who puts one foot in front of another. But what’s the justification for not selling all your specialized-sport shoes on your official website?

Signs I am Pushing 40

  • Have incurred a genuine dumbass weekend-warrior sports injury (Rhomboid strain. Class of injury: Not painful so much as really, really annoying)
  • Excited about having new gutters.
  • Big plans this weekend include “go shopping for shrubs.”
  • Planning on purchasing some house numbers so that my address is more legible on the outside of my house. In case someone has to find it in an emergency.
  • Read entire brochure about life insurance.

Jay-Z And Kanye Talk Personal Finance

Money’s always been a popular topic in hip-hop, but mostly in in the boastful, “look-how-much-cash-I’ve-got” kind of way. There are some exceptions, though. For example, Macklemore’s “Thrift Shop” won our attention a while ago as a tribute to frugal shopping. And, of course, there are other financial lessons to be learned from some hip-hop songs, even if they aren’t specifically about money.

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Jay-Z’s “Holy Grail” and Kanye West’s “Clique” are examples of songs that offer some useful insight on how to keep your mind on your money and your money on your mind. I used the lyrics-and-explanations website Genius.com to dig a little deeper into the money messages of these two songs.

Exhibit Jay: “Holy Grail”
Jay-Z is undeniably successful and rich (which aren’t always the same thing). But Jay is also keenly aware of the history of rappers getting rich and then losing it all. In “Holy Grail,” he reminds his listeners of what happened to 1980s rap superstar MC Hammer:

Caught up in all these lights and cameras
But look what that s*** did to Hammer

Hammer thought his money would last forever. (Spoiler: it didn’t. Hammer filed for bankruptcy in 1995. The chastened Hammer is now living a more modest life as a minister and music producer).

Jay’s underlying message in “Holy Grail” is that fame and fortune are fickle. No matter how much money he brings in, he knows that it’s always possible to lose it all. Even though he feels invincible now, Jay-Z is aware that ensuring long-term financial security means being a lot more careful than Hammer was.

Exhibit K: “Clique”

Kanye West—who is younger, brasher, and more willing to just straight up burn money than Jay-Z—provides us with a stark contrast in term of his approach to money. K says he isn’t interested in investing, or being careful or prudent. In “Clique,” he brags about spending money recklessly:

… they get money, buy a business
I rather buy 80 gold chains and go ign’ant
I know Spike Lee gon’ kill me but let me finish
Blame it on the pigment, we living no limits

Kanye knows that his peers, mentors, more mature artists like socially-conscious filmmaker Spike Lee will shake their heads at him in dismay, but he simply doesn’t care what they think. In “Clique,” Kanye rejects the idea of “get money, don’t spend it.” Instead he celebrates “living no limits” by enjoying his money now—while he’s got it.

Of course, both artists are exaggerating for effect. Jay-Z isn’t really all that worried about pride coming before the fall, and I’m sure no one is worried about Kanye going broke any time soon. Both of them are invested widely in other businesses—Jay-Z in a mix of fashion, sports, and nightlife, and Kanye in restaurants and fashion. They both must have plenty of money set aside in the unlikely event that dubstep edges out hip-hop in the hearts of music fans everywhere, right?

Exaggeration or not, it’s worth asking yourself a couple of questions while you listen to these lyrics, like:

Would I be OK if I had a financial setback, or am I living a little too close to the edge?

Am I a financial mastermind, or am I “going ignorant” and spending foolishly?
Has Kanye West ever given anyone good advice? Share your favorite money lessons that you’ve learned from pop culture in the comments!

Grad School, Careers, And Children: One Mom’s Decision

Aaron Weber doesn’t know much about babies, so he asked an expert. Amy K. is a user experience designer and mother of two who faced career issues after starting a family and is thinking about going back to graduate school. After the kids were in bed, she talked with Aaron about the decision.

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How old are the kids now?

My boys are 10 and 6, which means they’re on a more regular school schedule. But at this age, they need me even more than they did when they were younger—I have to manage schedules, coordinate babysitting, make sure they’re safe, make sure their homework is done. Any job I take has to be worth being away from those two kids for at least 40 hours each week. And even with adequate afterschool care, they only have one mom, so if there’s an emergency, I’m the one on call.

It’s a huge commitment, obviously.

That’s part of why I left my previous job, actually; it was just too far away. If something went wrong, or a kid got sick and needed to be picked up and taken home, I was 45 minutes away. Getting them to school on time made me late to work more often than not. I felt like every time there was a childcare problem, I was losing face at work. Even working from home wasn’t much help.

My employer was very understanding, but I didn’t like needing to sacrifice family time for work, or vice versa. I loved that job and the people I worked with, but it wasn’t worth the sacrifice.

The place I work now is just a few minutes away, and it makes all the logistics much simpler. I can take the kids to school and get to work by 9:00 a.m. If there’s an emergency, I can drop everything and come back to the office when it’s resolved. And I’m home for dinner and homework help every day. Cutting down that commute has made a huge change in my family life.

And that’s made it possible to consider graduate school?

Definitely. My employer has an education benefits package, so they’ll pay for a significant part of the cost, which definitely helps.

But even if they didn’t, a master’s degree in human factors would help to fill in the blanks in theory behind the work that I’ve been doing for the last 15 years. Many of the techniques taught today were actually developed by cognitive psychologists and computer scientists at DEC and IBM in the ‘70s and ‘80s. Going to school will help me understand why those methods lasted when other aspects of technology have changed so much.

Some of the topics I already know pretty well, like information architecture or usability testing. But in other areas, like design team management, I really need to improve, and having those skills will definitely be part of moving forward in my career.

How will you balance it with your family?

If I’m able to start next September, I’ll go as the kids head back to school. Most of my classes will be in the evening, so I will be missing some dinners with the kids, but not more than a couple times a week. And we can all do our homework together.

Don’t get me wrong—it’s still hard to balance everything, but I’m going to continue to try.

Do you have any advice for juggling family, work, and education? Share some tips!

How Do You Define Success?

Blogger and novelist John Scalzi wrote a moving piece this past winter titled “How I Knew I’d Made It,” about … well, the moment he knew he was doing pretty well in his career. He says it was when he bought a tank of gas and didn’t worry about how much it cost. Just being able to fill up and know that whether he was spending on gas today didn’t really matter. He finally had the cash flow to not be constantly worried about overdrafts.

It reminded me that financial and professional success mean different things to different people.

For example, I once met a financial advisor who worked with people who were already pretty well off. He said almost all of his clients came to him with a goal of increasing their net worth by about 10%. If they had a million dollars, they wanted 1.1 million. If they had a hundred million, they wanted a hundred and ten. The implication is that most people aren’t ever satisfied with the amount of money they have. Just being rich, in other words, doesn’t necessarily equal “success.”

But, if having enough money isn’t the definition of success, what is? And how do you know when you’ve achieved it?

I asked my friends on Facebook what they thought. Here are some of the responses.

My brother, an MBA, agrees with Scalzi. He says success means having enough money to avoid hassles:

“Financial success lets you push problems to the side. The more money you have, the less you have to put up with.”

A neighbor who volunteers actively, in addition to her work at an architecture firm:

“I don’t think you need to be a billionaire to be successful. To me it’s about finding a healthy balance in all aspects of your life (love, work, family, health, diet, friends, etc.)”

A former co-worker who’s moved to New York to make it big in marketing:

“Success for me means ‘I’m in my element,’ which translates to:

    1. I’ve achieved a goal.

    2. The goal that was achieved provided me with a greater sense of purpose, drive, and life satisfaction.”

A friend of my parents (who has held numerous jobs throughout her life and has no intention of retiring):

“A successful life is where you live in harmony with yourself and others, where you manage to meet your own expectations, where your occupation suits your abilities yet allows you to earn enough money to do what is important to you.”

My cousin, a manager at a large hardware store:

“If I could figure out what success was, I’d be able to figure out what I’m supposed to be aiming for. And I probably wouldn’t be in retail.”

My high school English teacher:

“You wake up in the morning looking forward to the day, and you feel you are growing. Both are important.”

As for my own thoughts on financial success: to me it means having enough money to take care of my family and save for the future—but I try to remember that financial success isn’t the same thing as overall success.

What does success mean to you? Share your perspective in the comments.

Every Student Is A Lot More Than What The Admissions Office Sees On Paper

Lori Connor has worked in admissions and financial aid for 15 years. Today, she helps school implement SALT® for parent company, American Student Assistance®. Since we’re right in the middle of college application season, Aaron Weber asked her to tell us about admissions, money, and transferring to new schools.

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AW: What are some common misconceptions about applying to college?

LC: There are three things, really, that I think are tricky for families.

First, people don’t always know how important it is to meet face-to-face with admissions and make campus visits. A lot of students think that they’re done once they finish the application. But it’s more than just the application form. Every student is a lot more than what the admissions office sees on paper, and if you can help us get a better idea of who you are, then we can do a better job. If you can, go to campus, meet the representatives, and do interviews. It builds a relationship with the school. You can still get in without a visit, of course, but it can really help a school understand a student.

Second, fit is really important. That’s another reason I always encourage people to visit campus and meet students and faculty. It gives you more information about the school and helps you decide if it’s the right place for you. The more you know about the campus and what it’s like to be there, the better.

Finally, there’s money. This one’s hard to get right for just about everyone. It’s easy to say “look for the best price” and “money is no object, go to your dream school.” But the reality is somewhere in the middle. What if you like one school almost as much as another—do you let the price be the deciding factor? You don’t want finances to stand between you and your education, but you do need to take them into account.

For students who are applying to graduate schools, or transferring to a new college, how is the process different?

They’re not as different as you might think. Graduate school is a more focused process, because you’re not just applying to a college, you’re applying to a very specific program. There are fewer candidates applying for fewer spaces, so there’s a lot more in-depth review, and more involvement from professors and not just the admissions office. I’ve also found that potential grad students are more likely to ask about the career services office, which is a good thing.

For transfer students, we’ll be looking at both college and high school transcripts. Similar to graduate school, we’re looking at a smaller number of applicants and a small number of spaces, so we can really focus on those applicants. For transfer, it’s even more important to visit the campus if you can. If you can’t afford a visit, call and ask if there’s assistance available. Many colleges will pay to bring promising students out for a tour.

Behind the scenes, what do admissions officers talk about?

We swap stories about micromanaging parents, and about our own kids. My son’s a freshman now, and let me tell you, after helping him apply to college, I really understood where the helicopter parents were coming from. I always swore I wouldn’t be That Parent, but it was a struggle to back off.

You know what surprises me about San Francisco?

There are so many problems that can be solved by money, and so much money, and yet the problems have not been solved.

I got to thinking about this after yet another MBTA breakdown last night, waiting on a freezing outdoor platform for an hour while two different trains forgot how to operate, and trolling the knee-jerk “screw transit” crowd on Twitter. Like you do. I warned people that the T was underfunded, and like clockwork someone came out and announced that no, it was just unions and waste. There’s plenty of money in the budget! They’re just paying pensions and stuff.

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But here’s the thing: The pension mistakes of the 1970s cannot now be clawed back. What are you going to do to make sure that the trains themselves, now decades past their expected lifespan, are capable of running at all, much less running on time? Have you considered just spending a billion dollars on a new set of trains? I mean, it’s a ton of money, but it’s just money. It exists if the willpower exists. Yeah, sure, it would mean a gas tax increase. You know what’s expensive for drivers? Being stuck in traffic. You know what cuts down on that? Reliable transit. It’s politically difficult because people don’t believe it helps them. But there’s a ton of money out there that can be allocated to solving problems that can be solved by money.

And in San Francisco, the great big pool of money is even bigger and the problems are even more money-related. People are fighting about the bus Google runs for its employees. For crying out loud, Google could buy some goodwill here and just run a free or low-cost bus service for the general public. Or help establish a consortium that companies pay into and which then allows any employee to ride for free? (You could charge $5 or $10 to the general public to make it more palatable). The Route 128 business group does that in Boston and it’s totally uncontroversial. Just a series of shuttles from transit stops to office parks that are not otherwise served. If you call it the Bay Area Commuter Network and abbreviate it BACN you’d even have all the hipsters and knee-jerk ironists on board.

Or Google could buy a few county commissioners – I’m sure they’re available for SOME kind of price – and start persuading everyone to upzone everything from San Jose to Marin. It’d go a long way to alleviating the housing crunch and take the pressure off the roads and pressure for the bus system and so on. It’s an eminently solvable problem. All you need to do, frankly, is throw some damn money at it.

In which Aaron gets dragged into conservative media

After links from both Matt Yglesias and Andrew Sullivan, I left the confines of my usual filter bubble and read a piece in (lord help me) the National Review, about poverty in Kentucky, and commentary on it in The American Conservative.

And if I’m looking for thoughtful writing with which I disagree, those are reasonable places to find it. More so than, say, RedState, which I won’t even link to.

The article overall is worth reading and wrestling with, and it brings up problems in both right- and left-wing solutions to the serious problems of rural poverty.

Still, none of the blogs I’ve read on the article, and none of the (often thoughtful, generally well-moderated) comment threads, noted this throwaway line:

Kentucky is No. 19 in the ranking of states by teen pregnancy rates, but it is No. 8 when it comes to teen birth rates, according to the Guttmacher Institute, its young women being somewhat less savage than most of their counterparts across the country.

I’m sorry, did you just call the women of the more prosperous portions of the nation savages? Because they are willing and able to control their fertility in a variety of ways?

Poverty indeed.