Fortune Validates Our Prediction That A Key Retail Story is Amazonification

We don't like the terms, "Amazonification" or " retailpocalypse” but in our predictions for 2018, we felt that a major trend in how reporters cover retail this year would invariably mention the impact Amazon is having on the sector.

Latest example, Fortune magazine's "3 Retail Stocks That Amazon Won't Crush." But check out the original print headline and subhead: "Filing Retail's Empty Spaces: Fundamental changes in the way people shop have driven brick-and-mortar retail stocks down to clearance-sale lows. But the retail chains that survive today's shakeout could pay off big for investors."

Both touch on Amazon and some of the details in our retailpocalypse prediction.

The article does say that "in-store shopping is hardly disappearing -- Forrester Research estimates that 87% of retail sales in 2017 took place in stores," but it continues ominously, "shoppers are shifting their loyalties, seeking out retailers who can compete for their time with low prices and online options in the era of Jeff Bezos's 'everything store.'"

As to which three stores investors should consider, check out the Fortune article itself.

Wall St. Journal's Tech Columnists Validate Our Tech Predictions

On Dec. 14, 2017, we issued a set a trends for 2018 followed by another set of trends the next day and a final set the following week. We touched on a wide range of topics including: retail vs. Amazon, screen addiction, potential for government regulations against big tech, labor shortage, continued conversation about gender issues, a changing media landscape, AI and robotics, bitcoin and cryptocurrency, smart home tech, a shorter news cycle, the continued battle over fake news, cord cutting, VR and AR, IoT (because tech loves acronyms), driverless cars, virtual assistants, and more.

That's not even everything we discussed.

But we're citing those because over at the Wall St. Journal, tech columnist Joanna Stern and Christopher Mims also issued a comprehensive list of predictions for 2018. Their list, published Dec. 27, 2017, "Tech That Will Change Your Life in 2018," includes similar predictions.

Which we say validates the ones we made two weeks earlier.

• We said driverless and electric cars would generate a lot of attention -- because our goal in identifying trends is to figure out the media mindset to help our clients develop stories that matter to reporters they care about -- while Sterns and Mims provided more detail on where driverless cars will go in 2018. They think electric cars will get cheaper, and we hope so.
• They said that Facebook, facing "scrutiny over the fake news," would go back it's roots and "put the 'social' back in social network." We also predicted that Facebook would have to change as a result of the backlash stemming from fake news on Facebook (as well as on Twitter). So glad we're on the same page.
• We talked about Amazonification and Sterns and Mims said, "Amazon Takes Over (Even More)." Again, they dug deeper into the impact -- saying that Amazon will do more with furniture and appliances, office services, pharmacies and supermarkets, and that the company "is on track to employ more than 500,000 people in 2018." We agree with all that. Our take, however, has also addressed the potential huge problem for retail, real estate, employment and small towns if Amazonification really takes hold.
• They said "cryptovurrency feels less cryptic" while we said bitcoin and blockchain, while not mainstream yet (by which we mean: something that everyone has invested in), "finally reaches a point where people who haven’t paid attention at least have heard of the two cryptocurrency terms." 
• They said, "The Net Loses Neutrality" and we asked, "Is the Internet dying?" because ending net neutrality helps Amazon, Apple, Facebook, Google and Microsoft, among others.
• They said A.I. moves in everywhere and we said A.I. continues to be hot but also that we expect to see articles concerned about a takeover by A.I. 
• They said, "The assault on security and privacy continues," and we agreed, saying, "There's never enough cybersecurity and privacy." Frankly, we preferred our phrasing better but their description of what's happening and steps to take is better than our version. (Of course, they are tech columnists.)

We're pleased one tech prediction article by such insightful tech columnists dovetailed closely with our predictions. It means that our insights into the media world based on these trends can be helpful to current and prospective clients.

Let us know if you have any questions about what these trends could mean for your business. Leave a message on this blog or email us at info@birnbachcom.com. Either way, we'll respond quickly.  

Fortune Validates Our Prediction About Bitcoin

Although bitcoin has been around for a few years, it really wasn't a topic in mainstream conversation. It would get written about but it wasn't receiving daily news coverage.

In our predictions for 2018, we said that would change. We said bitcoin would not be mainstream -- by which we meant: cryptocurrencies are not something that most of us will invest in -- but it would generate lots of coverage. A lot more than in previous years.

That prediction came quickly true in 2018. Newspapers have been covering bitcoin on an almost daily basis this year. Fortune devoted its Jan. 18th issue to bitcoin.

Fortune even has a dedicated page on its website to bitcoin.

Check out the cover story: "How High Can Bitcoin's Price Go in 2018?"

For all the coverage and the interest in cryptocurrencies that rise and fall dramatically, we continue to feel they are a niche investment opportunity. Will bitcoin and its sibling cryptocurrencies thrive and take over from government-backed currencies? Certainly doesn't seem likely over the next decade.

But as we move away from using cash -- there are already some restaurants that don't accept paper currency; you have to pay electronically -- that may change, especially for people doing legitimate business across borders. The reason: banks add on fees on both sides of the transaction when American businesses pay international partners/vendors in dollars and that money has to be converted into local currency. Those fees can eat up -- unnecessarily, it seems -- a significant percentage of the transaction. With bitcoin, you avoid those fees because you don't need to convert from one currency to another. So we expect some legitimate businesses to push for the use of paying and accepting via cryptocurrency.

But there needs to be some standardization among cryptocurrency. 

And it needs to not be as volatile as bitcoin currently is. You don't want to accept a currency that drops 50% in a matter of hours, with no discernable reason.

New York Times' Farhad Manjoo Validates Our Prediction About Screen Addiction

In his Jan. 18, 2018 column in The New York Times, "It’s Time for Apple to Build a Less Addictive iPhone: Apple gave us the modern smartphone. Now, it can create a new take on the device by encouraging us to use it more deliberately — and a lot less" by blog-fav Farhad Manjoo validated our prediction about screen addiction issued in Dec. 14, 2017.

A month ago, we said:

The ‘60s may have been the Age of Aquarius but this decade seems to be the Age of Anxiety and Anger. One cause: screen addiction. Constantly clicking our smartphones for the latest news – and it seems that there’s continually breaking news – may help us feel we’re on top of the situation but it leaves most of us feeling more empty, worried and angry than before – despite political preferences. We anticipate more coverage on stress, anxiety, mental health and ways to de-stress, which includes taking a break from your device – aka a technology cleanse or digital detox – which is healthy and a good idea but may seem impossible to do.

In his article, Manjoo observed:

Tech “addiction” is a topic of rising national concern. I put the A-word in quotes because the precise pull that our phones exert over us isn’t the same as that of drugs or alcohol. The issue isn’t really new, either; researchers who study how we use digital technology have for years been warning of its potential negative effects on our cognition, psyche and well-being. 

What is new is who has joined the ranks of the worried. Recently, a parade of tech luminaries, including several former Facebook employees, have argued that we’re no match for the sophisticated machinery of engagement and persuasion being built into smartphone apps. Their fears are manifold: They’re worried about distraction, productivity, how social networks alter our emotional lives and relationships, and what they’re doing to children.

 By the way, when we write that our predictions have been validated, it's only partly for self-congratulations. Mostly, we see this an opportunity to continue the discussion on a topic that already interested us, and to move the story forward.

In this case, Manjoo takes a deeper look at the issue, pointing out the problem is: 

Like air pollution or intrusive online advertising, tech addiction is a collective-action problem caused by misaligned incentives. Companies that make money from your attention — that is, ad-supported apps like Facebook, Instagram, Snapchat and YouTube — now employ armies of people who work with supercomputers to hook you ever more deeply into their services. Sure, we should call on them to act more ethically — and Facebook, for its part, has said it’s willing to lose money to improve its users’ well-being — but I’m skeptical they’ll be able to suppress their economic interests.

That's an important point: a solution may reside within the companies that are not only causing the problem, they also make money because we are hooked on their products. So solving our addiction will cost them money.

Which means: fixing this will be hard to sell to a board of directors and shareholders.

I do like two of Manjoo's suggested fixes:

1. Imagine if, once a week, your phone gave you a report on how you spent your time, similar to how your activity tracker tells you how sedentary you were last week. It could also needle you: “Farhad, you spent half your week scrolling through Twitter. Do you really feel proud of that?” It could offer to help: “If I notice you spending too much time on Snapchat next week, would you like me to remind you?”
2. Another idea is to let you impose more fine-grained controls over notifications. Today, when you let an app send you mobile alerts, it’s usually an all-or-nothing proposition — you say yes to letting it buzz you, and suddenly it’s buzzing you all the time.

The notifications (as we observed in our predictions) are a real part of the problem. Your phone lights up, and your turn to see what it was. Combined with the increasingly fast news cycle (another one of our predictions for 2018), we expect screen addition to get worse this year.

Like us, Manjoo feels that government regulation is unlikely to solve the problem (another of our predictions). He urges Apple, which has a different business model from Facebook and the other advertising-supported social media platforms, to take design steps to reduce our addiction -- since doing so won't hurt Apple's business model.

We agree with Manjoo and hope that Apple will build those common-sense suggestions to reduce our collective addiction to our devices.

Of course, while we think everyone would benefit by being less addicted to their devices, that doesn't mean we want you to stop visiting our blog. Let us know if you disagree with the screen addiction concept or if you have suggestions that could reduce our own screen addiction until Apple and others unveil a less-sticky design.

Wall St. Journal & New York Times Validate Our Prediction About Screen Addiction

In one of our predictions for 2018, published Dec. 14, 2017, we made what we thought to be a longshot prediction: That this year, people would recognize screen addiction as a real issue. Here's what we said:

The ‘60s may have been the Age of Aquarius but this decade seems to be the Age of Anxiety and Anger. One cause: screen addiction. Constantly clicking our smartphones for the latest news – and it seems that there’s continually breaking news – may help us feel we’re on top of the situation but it leaves most of us feeling more empty, worried and angry than before – despite political preferences. We anticipate more coverage on stress, anxiety, mental health and ways to de-stress, which includes taking a break from your device – aka a technology cleanse or digital detox – which is healthy and a good idea but may seem impossible to do.

The reason we thought it was a longshot is that over the past couple of years, there has been the occasional article about digital overload but it hadn't coalesced into something more than a blip. But last year, we felt that could easily change in 2018.

And it has.

Check out:

1. The Wall St. Journal's "Debate over iPhone use by young people reflects the misgivings some in the industry feel toward smartphones' ubiquity: Silicon Valley Reconsiders the iPhone Era It Created"; and
2. The New York Times': "Tech Backlash Grows as Investors Press Apple to Act on Children’s Use: Apple should give parents more tools to curb technology use by children and study the health effects of excessive screen time, two big funds said"; and
3. The New York Times: "It’s Time for Apple to Build a Less Addictive iPhone: Apple gave us the modern smartphone. Now, it can create a new take on the device by encouraging us to use it more deliberately — and a lot less" by Farhad Manjoo.
   

According to the Journal, "a letter to Apple on Saturday from Jana Partners LLC and the California State Teachers’ Retirement System, or Calstrs, which control about $2 billion of Apple shares....urged the tech giant to develop new software tools that would help parents control and limit phone use more easily, and to study the impact of overuse on mental health." And also, the Journal reported, "On Monday, Tony Fadell, a former senior Apple hardware executive involved in the iPhone’s creation, also called on Apple to do more, saying on Twitter that adults are struggling just as much as children with smartphone overuse."

Last year, Fadell apparently began voicing concern, but the media didn't start paying real attention to it until this year.

In it's article, the Times quoted the same letter, describing "a backlash against big tech has been growing for months." Which is another trend we predicted in which we said, "There will be a debate about whether or not and how to regulate Facebook, Google, and Twitter." We did not use the term "backlash," though we should have, and we did not mention Apple specifically but later in that paragraph, we do say that one of the underlying questions would be "Has big tech gotten too powerful." And we think that increasingly, the answer is: "Yes" (and that's part of the backlash).

In fact, check out this front-page (remember that the front-page used to be an indicator of importance) article from the WSJ: "The Antitrust Case Against Facebook, Google and Amazon: Facebook, Google and Amazon dominate their worlds just as Standard Oil and AT&T once did. Critics say they should get the same treatment. The answer to the antitrust question depends on a narrow test: Are consumers worse off?"

For us, screen addiction and big tech backlash and big tech's power are important societal issues. We doubt much will happen to address either the screen addiction or big tech's power (and we think the anxiety and addition they cause does amount to consumer harm) but it is significant that these issues are being raised.

Key Questions Startups (and Others) Should Ask When Developing Their Positioning for a Marketing Campaign

Our approach to helping our clients is to start by asking key questions as they develop their messaging and positioning for a marketing campaign.

For startups, those questions include:

• What do your customers need?
• What is their customers' pain points?
• Are you solving the right problem?
• How does your clients feel about the work they do?
• Do you have the understanding and empathy to see things through your customers' perspective?
• What problem are you solving and what are you bringing to the market that's not already there? Or that's an improvement over current competitors? (Note: sometimes what startups may be solving isn't through a new technology but through a new approach or business model. For example, GE changed how it charged for maintaining aircraft engines, with a pay-by-the-hour that proved to be more cost-efficient than the prior model, and very effective for engine owners and for GE. Really it was a change to how it charged customers.)
• What story can you tell about your company and its offerings? 
• Can you tell that story without hiding behind jargon?
• What is your value proposition? (This is a standard question but we once met with an experienced team and they did not have that answered. It took the CEO about five minutes and three false starts before he nailed this, and we knew that was a problem, and would have walked away except we had worked with them before; they did quickly solve this but it was a big concern for us.)
• Have you stress-tested your assumptions? (It's one thing to go with your gut but you need to test out the market that you're right. And then you have to realize that even market testing won't always be correct or else we wouldn't have the Museum of Failure, which highlights more than 50 failed products from some major, experienced companies.)
• If there are other companies addressing the same pain points as your company, how is your approach different or better? Are you going after a different set of customers? For example, a competitor may target small businesses so you could target midsize or large businesses. We worked with one company whose software integrated directly to other software, like databases or key other applications than its competitors -- the key advantage was easier integration with all the other tech their customers use.   
• How much money do you need to launch or continue? How much money do you have? Do you have sourced for additional funds, in case you need more money, which you will.
• Are you and your co-founders, early investors and first set of employees all on the same page? We've once met with a prospective company that told us they were a month away from launching (which is why they called us in), but when we talked with the CEO, chief technology officer (he was also the actual founder) and VP of sales, they each described a different company.  Even as they described the tech in similar ways, they talked about different customer segments, different ways the technology would be used and different pain points they were addressing. We walked away, telling them that if they couldn't agree, they were more than a month away from launching. Unfortunately, this is not the only time we've encountered a management team that described a vastly different company. We walk away from those situations.
• Who are likely investors in your startup? What do they bring to the table other than money? Can they open up doors to end customers or distributors? Can they help approach key partners? 
• What does your investors' presentation look like? Is it professional? Does it answer questions investors are likely to ask? (We've seen some that focus exclusively on the technology being developed, not on the business. You need to make sure the investors understand your business goals. Also, since investors often decide to invest based on the quality of the management team, does your presentation emphasize what your management team brings to the table -- as in why should investors risk money by betting on you? (When we did a messaging project for one startup, and presented to the board, we realized a few board members really didn't understand the business of the company they had invested in; that's a problem.)
• Are you planning to raise money via Kickstarter or Indiegogo? You'll need a different approach from what you'll need going to VCs and other investors. These are customers, and they will expect delivery of what you describe. Which means, if you get the funding you request, you can't pivot your company or offering -- as you could if you bootstrapped or received angel or VC funding. (There are other challenges in going the crowdfunding route, and this article won't go into depth on that, except to point out that it will be hard to get vendors -- like a website designer, SEO agency, content developer and PR/social media team -- if you don't pay them upfront.
• Do you know how you're going to sell your product or services? Do you have a pricing strategy?
• What's your company's culture? How does it help? (This is important because the bro-culture of startups like Uber have at some point been a big distraction that has lost it good will and customers.)
• What's your Amazon strategy? You don't have to be a retailer to need an Amazon strategy. Amazon has expanded to so many different sectors that you may be competing with Amazon and not realize it. For example, if retailers are using cloud services, they may want to avoid Amazon Web Services (AWS) because, by using AWS, they will be underwriting a competitor. A.I. companies need to figure out how they play with Alexa or compete with Alexa; because even though Alexa may be stuck inside Amazon's Echo speakers, that's true for today but may not be true in 2019. This is a topic/challenge we'll discuss more this year.

There's a good flowchart from Inc. that outlines some other key points for startups to consider. 

This is not intended to be the end-all of questions that startups and more mature companies should be asking themselves. But these questions (and we have many more we ask, like about the company's mission and core messages) can help companies figure out what they need to be asking themselves.

If you have any questions, drop us a line at info at birnbachcom.com.

NY Times' Farhad Manjoo Validates Several of Our Predictions

We're big fans of New York Times' tech columnist Farhad Manjoo. So we're thrilled to see his latest column, "Expect 2018 to Be More Sane? Sorry, It’s Not Going to Happen" (print headline: "In 2018, Expect Chaos To Be the New Normal") because his predictions are in line with ones we made Dec. 14, 2017.

For example, in his Jan. 4th column, Manjoo said, "You're fooling yourself if you think 2018 is going to be any different, sanity- or anxiety-wise, from the roller coaster of the year just concluded." We agree -- especially the part about anxiety-wise because in we said, "People will be more anxious and angry" in 2018. 

Going further, we said:

The ‘60s may have been the Age of Aquarius but this decade seems to be the Age of Anxiety and Anger. One cause: screen addiction. Constantly clicking our smartphones for the latest news – and it seems that there’s continually breaking news – may help us feel we’re on top of the situation but it leaves most of us feeling more empty, worried and angry than before – despite political preferences. We anticipate more coverage on stress, anxiety, mental health and ways to de-stress, which includes taking a break from your device – aka a technology cleanse or digital detox – which is healthy and a good idea but may seem impossible to do.

How does Manjoo describe things?

Chaos is the new normal; the apprehension you feel every time you get a notification on your phone -- the fear that you don't know what fresh horror it could bring -- isn't an overreaction but an adaptation. Thanks to phones and Facebook, anything really could happen tomorrow.

We really like that -- as a phrase, not the reality of it: Chaos is the new normal. And "the fear you don't know what fresh horror it could bring" -- very compellingly written, but his capturing the same thing we did...just we got there a couple of weeks earlier.

This also touches upon another of the trends we identified on Dec. 18th: The news cycle, powered by social media, will continue to speed up.

There were days in which there was major news several times a day. We expect that to continue in 2018 – and that when there’s a slow news day – let’s say only one big news story – consumers of news anxiously click on refresh, thinking they must be missing some additional news. Regardless of political views, people, including late-night comedians are finding this exhausting.

According to Manjoo, the implications of all this is that "Nowadays, because we're hyperconnected, we see butterfly effects everywhere...but it's not just that one-off stories cause huge cascades; it's that in a connected world, there are now so many one-off stories capable of setting off cascades, and no one knows which ones will hit."

The problem with that, Manjoo said, "Technology isn't stopping. The pace of technological change is in many cases too fast for anyone of us to comprehend or get used to; as a result, just as the world seems to get its head around one new force unleashed by tech, another comes along to discombobulate our efforts to respond to it." 

That is one reason many of us are so anxious these days.

Again, we don't like where this is going but we're glad we're seeing the world the same way as Manjoo.

Wall St. Journal Valudates More of Our Trends

In an article about the pressures facing CEOs, and the boards that hire and fire them, "Hackers and a Shrinking Talent Pool Top CEO Concerns for 2018" (print headline: "CEOs Gird for a Year of Disruption"), the Wall St. Journal identified several key trends, including:

• Data breaches and cybersecurity. In our list of Ongoing Trends in 2018, we said, "There's never enough cybersecurity/privacy." According to the Journal, CEOs are recognizing that protecting their companies (and their customers and partners) from data breaches and cyberattacks is a critical risk. One CEO quoted in the article said, "These bad actors keep getting smarter and more aggressive. It's an ongoing war." We think it's an important issue, and that companies all need to bake cybersecurity and anti-data breach measures into their cultures even if they are not even close to being a security company. By that we mean, practically every company needs to have a solution in place, and needs to re-evaluate on a regular basis if they're doing enough.
• Talent battles. Among those we included in our list of key trends for 2018, we identified the labor shortage an important issue. We see the labor shortage already affect the A.I. and biotech sectors, and the Journal says there is a shortage of engineers at financial services companies, noting, "In their quest to build highly sophisticated technology platforms, some financial-services giants now have more software engineers than bankers and traders on their payrolls."

To be fair, we did not cite data breaches specifically in our trends but we think cybersecurity and privacy does cover it. And we didn't go into as much detail about the talent battle in our blog as we have in a subsequent article that we expect to appear shortly. (We focused more on the impact on the nature of work, which is still a story we think will be addressed in 2018.)

Let us know what you think we got right or what we missed.

Wall St. Journal Validates Predictions on Bitcoin & Amazon

Though it's freezing out, we were warmed to come back from New Year's to see that the Wall St. Journal has validated two of our trends.

We predicted that bitcoin would be the subject of daily news coverage, and that seems to be very much to be the case, just check out the latest in a stream of articles about bitcoins: "For Bitcoin, A Year Like No Other In 2017, bitcoin became one of the market’s greatest speculative crazes; it remains to be seen whether it can live up to the hype." We expect this to continue throughout 2018. What's more, we expect to see dedicated columnists and online media outlets devoted to bitcoin. (That said, we're not sure bitcoin is not some kind of trend, and we are not endorsing bitcoin or cryptocurrency -- just saying we expect it to be a subject that gets covered by the news media.)

The other trend is about the market force and impact that Amazon wields. Check out Christopher Mims wrote, "Even Amazon, a Colossus, Has Its Limits," which does say that Amazonification is not inevitable. According to Mims, part of where Amazon is most successful is in driving down prices of commodity items, not in developing premium devices like an iPhone (its success with Alexa notwithstanding). He said, increasingly, Amazon serves as a retail platform for other retailers, taking 15% of their sales via amazon.com -- and that's why Amazon has its limits: because Amazon still needs other retailers to succeed on its platform. 

We think that's true but that Amazon continues to be the major retailing factor in 2018 and beyond. We expect Amazonification to be debated and examined throughout the year.