March 08, 2011

Predicting Patience

Noticed something interesting today...

If you have an Android phone, you may have noticed that Google updated their Navigation application to include routing around traffic using predicted traffic patterns.  Having this information fed into the routing algorithms is very powerful, particularly if you trust it!

I'm a daily commuter on a painful trip from Bedford, MA to downtown Boston. It's about 21 miles and typically takes me an hour to an hour and fifteen minutes.  The fastest trip at normal commuting hours was 45 minutes, and the worst was 2 hours plus (not counting blizzards).  Bedford is located so that I have a few choices of major highways to get to Boston, and each of these highway routes gives me the options of augmenting the highway with back roads.  I generally take back roads because I prefer to keep moving rather than sit still on the highway. 

Now, Google will figure out which is faster.  I tried it out this morning, and, while sitting in my driveway, Google predicted that its route would get me to work in 58 minutes.  Not bad.  I checked out the route, and it had me staying on the highway almost all the way, but getting off the highway one exit before you would if there was no traffic at all.  I was skeptical, but decided to try it out.

As I went, I kept checking its predicted time of arrival, and it didn't waver by more than one or two minute in either direction.  I arrived at work within one minute of when it was predicted!  And, as I sat in traffic or moved very slowly, I found that I was much more patient than usual.  Being confident of when you'll arrive makes it much easier to take sitting in traffic.  Google won't make the traffic go away, but I'll sit on the highway if I know that I'll get there as predicted.  That confidence of arrival time made me much more patient.

Pretty impressive application, and good for my blood pressure.  I'll keep testing it out and will report any further observations.

November 07, 2010

The View From Afar

My blogging has fallen off of a cliff.  Work at Digital Lumens has been very hectic, with lots of travel.  Lots of sales activity will do that to you.  And, we’ve been busy at home with long-term houseguests from Central Asia, a son applying to college, a daughter’s first year in high school, Patriots and Celtics games, and planning an overdue family vacation!  Before I knew it, almost two months has gone by since my last post.

For the first time in more than 5 years, I took an international business trip this week.  I went to a conference in Lisbon, Portugal (life could be a lot worse), and I had a chance to talk to Europeans in the energy efficiency business.  It was very interesting to compare notes with others in a fledgling industry on a difference continent.

There is a lot of government-mandated momentum around energy efficiency.  They take reduction of carbon footprint very seriously.  Portugal is positioning itself as a clean-tech testing ground, with the government sponsoring all sorts of projects and industries as a way to solve high unemployment in the wake of the global financial meltdown.  Their stimulus was in the form of subsidies for solar and wind power, as well as tax credits to enable solar panel assembly for export to the rest of Europe.  Although there is the threat that the subsidies will soon end, it seems clear that they were really focused on creating jobs that they hope will somehow outlast the government sponsorship.

Is the kind of job creation that we should be doing the US?  Clearly, some of the stimulus dollars went to high-flying clean tech companies to help them build factories and infrastructure.  It’s probably too early to tell if they are creating enough sustaining jobs.  In general, I don’t think that you can justify this type of investment on a $/job basis.  What the government hopes to do is to get some sort of flywheel affect going that allows a new industry to start to create its own jobs, or at least start fully paying for the subsidized ones.  I’m skeptical of subsidizing a business where the core business premise is uneconomic, but maybe some economies of scale will kick in to solve that.

There was a great deal of interest in US politics.  I don’t think we realize how much a large part of the world looks to us to lead.  They want us to lead in foreign policy and in economic policy.  The prospect of the US failing to get things done in the light of post-midterm election gridlock was very disappointing to everyone.  And, the US’s shift to the right over the past 15 years has really been surprising to even the most conservative people I talked to.  European conservatives would almost be considered communists in today’s US political discourse.  And, as they pointed out, so would Nixon and Reagan.

The most embarrassing was trying to explain how people like Christine O’Donnell, Sarah Palin, and Rand Paul could get so much support while seeming to take positions that are so much against the types of freedom that most Europeans associate with America.  Our image in Europe is still one of real freedom.  And, despite their cries of “freedom”, most Europeans associate the tea partiers with a loss of freedom – less tolerance, less help for those in need, and a harsher government.  They are worried that the hard shift to the left for the US will be bad for the rest of the world.  I just hope that the left and right can work together in the coming two years rather than having strongly entrenched views without compromise.

August 31, 2010

At least someone's hiring...

As I've written before, I work at a great start-up company, Digital Lumens.  We make energy efficient industrial lighting and are growing quickly.  In fact, one of our biggest challenges right now is hiring.

We have a bunch of jobs listed on our website. Current listings are:

If you are interested in one of these positions, you can send your resume.  And, even if you aren't the right fit for one of these, you can refer someone to us.  If we hire them, we'll pay you $1500!

And, keep an eye on our careers page.  Additional positions will be added soon.

If energy efficient lighting isn't your thing, maybe you're more interested in working in a great arts organization.  I'm on the Board of the American Repertory Theater in Cambridge, and we're hiring a Senior Financial Manager.  The job description is on Harvard's web site, or your can directly contact them via email.

Please apply if you're interested, or pass along to someone who would be!

August 25, 2010

Numbers don't lie...

...unless you ask them the wrong question.  Then they are merely deceptive.

Here's an interesting lesson on figuring out the right way to present financial analysis.  First some background:

This is based on a sales proposal we recently made at Digital Lumens.  We make energy-efficient intelligent lighting that can reduce lighting energy costs by 90% for industrial customers.  These lights are often eligible for rebates from utilities, and sometimes those rebates are proportional to the amount of energy saved.

Our light uses LED technology, but our current main competition is from fluorescent light fixtures.  These fixtures are an improvement over prior technologies, but not as efficient as LEDs.  What fluorescent fixtures have going for them is that they are a pretty cheap commodity these days.

We had a situation with a customer where their local utility had put a significant incentive in place for warehouse fluorescent lighting.  Because LEDs are pretty new for this application, they hadn't yet put in place a big incentive for LEDs.  So, we were at a significant price disadvantage.  Here's an obfuscated view of the numbers:

Current monthly lighting energy bill: $5,100

Fluorescent fixture upgrade cost, net of aggressive rebate: $15,000

Fluorescent direct energy savings: $2600/month

Simple fluorescent payback calculation: 5.8 months

LED fixture upgrade cost, with only a modest rebate: $70,000

LED direct energy savings: $4700/month

Simple LED payback calculation: 14.9 months

When you only look at energy savings, the LEDs are a tough decision here.  They have a higher initial cost than these inexpensive fluorescent fixtures, partly due to the aggressive rebate.  A customer could easily decide to buy the fluorescent fixtures as they are almost free and are paid for very quickly.

But, there are other components of ownership: tax incentives, maintenance, and the chiller effect.

This application is cold storage -- refrigerators and freezers.  The cost of keeping those cold and frozen dwarfs the cost of light.  And, LEDs have a benefit of running much cooler, greatly reducing the workload of the chiller.  You wouldn't run an oven inside a freezer, so why have a hot light inside?  This allows customers to capture an additional 40% or so of their lighting energy savings as reduced load on the chiller.  Think of this meaning that our 90% savings with just LEDs is really more like 140% savings.  In this case, you can save more than 100%

With this factored in, the fluorescent payback goes out to 18.8 months while the LED payback is reduced to 9.5 months.

If you graph the total cost of ownership month by month, it looks like this:


 

With the total cost of ownership view, the LEDs very quickly become cheaper than fluorescent, despite the significantly higher initial purchase price.  And, with the sort time horizon, we offered the customer a financing proposal so that they could match the lower initial cash flow of the fluorescent fixtures and still eventually get to the lower cost path of the LEDs.  That's a win-win for everyone.

Most importantly, it shows the value of digging into the numbers and understanding all the components of the total cost of ownership, even if industry convention is focused just on the simple payback.

August 24, 2010

I can't resist

If you liked my Jon Stewart reference last week, you'll appreciate this follow-up.  No rant this time, but it's amazing how Jon gets to the point of news stories when virtually no one else in the media can.

 

The Daily Show With Jon StewartMon - Thurs 11p / 10c
The Parent Company Trap
www.thedailyshow.com
Daily Show Full EpisodesPolitical HumorTea Party

August 20, 2010

Is Fox News at the center of global terrorism?

Probably not.  But, last night Jon Stewart presented a compelling case:

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Extremist Makeover - Homeland Edition
www.thedailyshow.com
Daily Show Full EpisodesPolitical HumorTea Party

Despite the politicization that has happened with the Ground Zero Mosque issue (it was covered by Fox News without much hubub until the issue was brought up by some conservative bloggers, and it became a rallying cry), I think that the underlying problem is our diminishing freedom and tolerance in America.

Freedom and tolerance go hand and hand.   If I am going to be truly free, you have to be tolerant of me.  And, vice versa.  We all want our freedoms.  But, are all the people who cry for freedom also willing to be tolerant?  Interestingly, many people who hang their hat on freedom and liberty are also the ones who are the least tolerant of those who are different than themselves.

On the Ground Zero Mosque issue, critics are making a big leap from Muslim religious center to terrorist HQ.  Hey, if you really think that those Muslims are terrorists, why not have a nice centralized location where we can keep our eyes on them?  More seriously, if any Christian or Jewish religious location was being similarly characterized, there would be a lot of backlash.  Timothy McVeigh was both a terrorist and a Christian, so maybe we should be kicking all the churches out of Oklahoma City.

I've been lucky enough to have some international visitors stay with our family recently.  Their own country, Kyrgyzstan, is facing a lot of internal strife.  One of the benefits that our family has received from this visit is a new appreciation of what is greatest about America, or at least the concept of America.

Our strength comes from our diversity, and our tolerance of diversity.  The influx and acceptance of new people keeps us vibrant and entrepreneurial.  Our meritocracy and the rewards of hard work and ingenuity continue to provide incentive and opportunity for us all.  Our multicultural background keeps us creative, relevant, and culturally leading edge.  That freedom and tolerance provide the bedrock of what is special about America.

I've had it with the divisive politics of America.  Both parties succumb to it, regardless of who starts it.  The overall divisive atmosphere creates actions and reactions that are more aimed at trying to appear on the right side of the politics than on the side of freedom and tolerance.

Frankly, this is the area where I am most disappointed in President Obama.  There is no doubt that he's had to face a lot of tough situations, and that he was willing to take on big issues.  But, he was best positioned to take the high road on freedom and tolerance.  Those don't have budget impacts and can appeal to people from libertarians to the far left.

Yet, he hasn't followed through on closing Guantanamo and putting those captive there through some sort of legal process.  This should showcase our legal system and our belief in it.

He was wishy-washy on the Ground Zero Mosque issue rather than strongly defend a group's right to put a house of worship on their own property.  Kudos to Mayor Bloomberg for having the courage to take the right position here.

He hasn't closed the freedom loopholes in the Patriot Act, leaving us all susceptible to having our privacy violated without due cause.

He hasn't take a strong stand in favor of gay rights, including gay marriage.  Someone's love of the Red Sox doesn't threaten my love of the Yankees.  Why should someone's love of another of the same sex threaten my love for my wife?  Overall, we should be lauding people loving each other in committed relationships.  That provides the foundation for our communities and our families.  If you are truly pro-family, as many who are against gay rights claim to be, you should scorn those who get divorced.

Despite my dislike of the views of those of you who may disagree with me on the issues above, I'm very tolerant of your right to hold those views.  If we all practice more freedom and tolerance, it will be easier for us to solve more of the issues we face.

August 16, 2010

Sales Team Compensation

This is another post in my occasional series about Sales, after my recent session at the Momentum Summit in Cambridge.  The first post summarized the session, and the second post talked a bit about sales compensation plans.

One of the most important things you can do in setting up your sales compensation system is to figure out how to get your people to work as a team.  Again, most of my experience is in the area of high-tech business-to-business sales.  Some of these ideas won't apply, or won't apply in the same way, in other sectors or business models.

If you sell your product through resellers or partners, you need to consider them part of your team, at least in terms of compensation.  Whatever discounts or commissions they get will motivate them to work in a certain way, and your own people should have parallel motivations.  One of the surest ways to fail is to motivate your own people to compete against your channel partners.  Your company has many inherent advantages vs. your resellers.  But, if you determine you need resellers, you have to be willing to make some sacrifices in order to make those resellers successful.

Why would you need resellers?  Maybe you need more 'feet on the street' than you can afford the direct cost for.  Or, maybe your product is best sold as part of a total solution with other products.  Maybe you need to take advantage of customer relationships that your channel partners have that you don't have.

If you have resellers in your sales model, you should really commit to them to the exclusion of your own direct sales efforts, at least for the same type of accounts.  Your own people may target larger accounts, accounts in different market segments, or some other segment, but make that distinction clear up front.  What's more effective oftentimes is to have your staff support your resellers' efforts by prodding, answering questions, providing leads, assisting in closing, etc.

Similarly, it works best if your own people are set up to collaborate in some way.   At Digital Lumens, we have sales teams that consist of an inside sales person, a field sales person, and an application engineer.  They work on the same accounts and are compensated as a team.  Deals can be closed by the inside or outside person.  The application engineer can do sales presentations in a pinch.  By collaborating, they can cover more ground, cover for each other, and divide up the work.  Our field people are the most senior, and they tend to lead their teams.  We use salesforce.com to keep everyone on the same page and to capture information about all the sales activity.

The basic rules of our compensation plan is: 1) there is no motivation to favor direct sales over reseller sales, 2) everyone on the team is compensated for all the sales activity in their territory, and 3) if we end up with some sort of complicated commission split situations for sales that cross territories, etc., I use the wisdom of Solomon to figure out what to do.