A big opportunity for Amazon's Alexa powered Echo devices

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Update: On May 9th, 2017, Amazon announced the release of Alexa Calling, their device-to-device communication feature. While the feature appears to allow the equivalent of a phone call from one device owner to another, as I hoped they would do, it does not appear to offer the intercom like functionality I propose below.

The Amazon Echo, and Echo Dot come in white and black, and are powered by Alexa. The larger Echo offers music quality sound.

I love my Amazon Echo. I first bought the device because I wanted a small but good music speaker for my small studio apartment, and I liked the idea that I could play music from my Amazon music library. The Echo solved that need beautifully, and I soon fell in love with Alexa, the voice/AI software that powers Echo. I now also own an Echo Dot for my bathroom, and I use both of my Echo devices to do things like set a morning alarm, hear the news, get the weather, call an Uber, create shopping lists, get live updates on sports scores, assist me when cooking, hear my schedule for the next day, listen to recent tweets, and so, so much more. I believe we are still in the early days of what Echo/Alexa can do, we'll see an exponential addition of capabilities over the next couple of years.

This Christmas, I bought my parents an Echo Dot, and my sister received one for her home as well. I quipped to her that she'll love the Echo Dot so much, she'll soon end up with an Echo device in every major room of her house. I know I'd have more than 2 if I didn't live in a studio apartment!

The thought of my closest family members all having Echo devices, and the idea of my sister having one in each room of her bustling family home gave me an idea. Echo devices could do for voice-based communication what Apple's FaceTime did for video calling. In a world where we have an increasing reliance on text based communication such as SMS (texting) and Email, Amazon has the opportunity to usher in a new age of the telephone with device-to-device communication.

I'd love the ability to call my parents by simply speaking to my Echo and telling Alexa to connect me with them. On the other end, their Echo could tell them that I'd like to talk, and they could command their Echo to answer or take a message. As ridiculous as it sounds, removing the friction of dialing and holding the phone to my ear would lead me to more voice communication with my family, and less texting.

Anyone alive in the 70s, 80s, or 90s will recognize this!

Another device-to-device application is as an instant home intercom system. With Echo devices in each room of my sister's home, she'd have a network of devices that she could use to communicate with her children and husband, no matter where they are in the house. Using her voice to call the kids down from the playroom for dinner, or asking her husband to bring a screwdriver in from the garage, at just $49.99 for the Echo Dot, the Echo family of products could inexpensively and less obtrusively do what so many electronics companies and home builders did in the 80s and 90s with ugly, in-wall intercom systems.

Amazon has a lot of opportunity ahead with Echo/Alexa, and a lot of tough decisions to make about what to/not to build. I'd love to see them add device-to-device voice communication, would you? Like this post and share on social media if you agree!

Solve problems with "why"

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In my last post, I talked about the importance of having a "hair on fire, pay anything to solve" problem when you are building a product or business. For a lot of entrepreneurs, this is hard to get to. You'd think it would be easy, but it's not and I get why. Entrepreneurs have passion, they have ideas, they have drive. All important qualities and a great way to start, but those qualities often lead to blinders that keep you from focusing externally on the customer and the problem you can solve faster/better/cheaper.

There is actually a very simple technique to help you find the real problem customer's will pay you to solve. It's a technique that comes from conflict resolution/problem solving. The technique is called "5 whys" and it's the idea of asking why 5 times. The theory goes, within 5 questions of "why," you'll get to the root of the problem or issue.

Let's look at an example that is common is many of your personal lives:

Your significant other (S/O): "I'm mad at you."

You: "why?"

S/O: "Because you didn't take out the trash."

You: "Why does that make you mad?"

S/O: "Because I shouldn't have to ask you to do some of the work around the house."

You: "Why is that a problem now when it hasn't been before?"

S/O: "Because you know I am working long hours this week at work, and the kids started school again this week so there is so much to keep up on."

Based on that interaction, with just 3 questions, you've learned that the problem isn't that you didn't take out the trash, the problem is that you didn't recognize your significant other's need for more help. They don't necessarily need you to take out the trash, they need you to have some empathy, understand the situation and be proactive.

If your significant other was a customer, they wouldn't pay you to take out the trash, but they would pay you to have empathy, understanding, and be proactive. The problem isn't the trash! Had you not asked why, you'd think it was the trash. Had you not asked why 3 times, you wouldn't know the real problem is empathy, understanding, and being proactive.

At this point, you might think I'm a bit crazy with this example, but it does have a direct relationship to you and your customers. The first problem you discuss is probably NOT the problem they'll pay you to solve. The problem they'll pay you to solve is often deeper, and understanding the real problem will lead to significant business and financial success.

The best way for me to drive this point home is to share a real life example. I'm lucky to be called an advisor to an exciting startup named TalentIQ. They are in the big data space, and can be described as a "people intelligence" company. They keep databases about people up-to-date with current and relevant information that can't be easily found, verified, or understood otherwise. They sell this value to talent recruiting, sales, and financial organizations. The product that customers pay for today is not the product the founders started with.

Sean and Henry originally recognized that hiring top talent is hard, in part because the best talent already has a job and isn't applying for a new one. So they built a sourcing tool, a search product that recruiters could use to easily find the best talent based on specific criteria, regardless of employment status. They had success with this product and dozens of customers, some household names, started using the software.

The sales were coming in, but not at the rate they wanted. So they continued to interview their customers, and asked "what makes your job as talent recruiters difficult?" When they got an answer, they continued to ask "why?" They dug deeper. Then they learned that while customers did indeed have a need for their original software, they actually had a bigger problem. They had stale databases with thousands of past applicants, and the perfect candidate for a new role may be in that database. However, the information in that database was likely wrong...if for no other reason than it was old...out of date. Even better, TalentIQ's technology could easily solve that problem, it was an easy shift and was inline with their original vision.

Sean and Henry had their "ah-ha" moment, because they had the perseverance and humble nature to go beyond the surface, and dig deeper. They asked why. Over and over again. The sales started rolling in, at a rate even greater than they had imagined. Today they enjoy a rapidly growing business, with mind-blowing revenues that most companies would envy for the first year of their existence.

What Sean and Henry did may seem simple, but it's hard. Really hard. As entrepreneurs, we have to be open to changing the original product we envisioned, in order to meet our customers needs. We also need to remain unsatisfied with initial traction. It's easy for a few people, a few customers, to say our product is good. Great business aren't built on a few customers, they are built on hundreds, thousands, even millions. You won't get to that level unless you are willing to ask "why," over and over again. Get out of your own way, dig deep, and get to the real problem.

Don't just take my word for it, or the example of TalentIQ. Look at other companies. Uber's most popular product is UberX, but their original idea was town cars/limos driven by professional drivers (Uber Black). Twitter started out as a group text messaging concept, but I doubt anyone uses their text messages features today. These examples go on and on, as do the examples of companies that were never smart enough to dig deeper. Which category will you be in?

The startup problem

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Recently, I had the rare and exhilarating opportunity to meet with 7 different startups in a single day. I heard seven product pitches. Seven teams of entrepreneurs so passionate about their companies, they are wiling to risk it all. Do you know what I didn't hear? Seven problem statements. Seven reasons the world needed what they were building. Seven reasons that the risk was worth it.

Its not that none of the seven were solving a problem, its that some of them didn't (or couldn't) articulate it. Instead, they focused on the solution. The cool new thing they were building. The software that would make something happen. Frequently jumping right into the what and how, without the why.

If you are a startup entrepreneur, your #1 job is to passionately and convincingly explain the problem you are solving. Can't do that? Stop everything you are doing, and obsess over this requirement. Your goal should be a 1-3 sentence problem statement. So clear that someone not familiar with the industry you are in, can understand it. I don't care if you are in the nuclear physics or open source software industries, you should be able to clearly explain the problem to the average person you encounter in your life.

Why does it matter? Because as an entrepreneur, you are always selling. Not just selling to your customers, selling to everyone. Selling the opportunity to investors and potential employees. Selling board members, mentors, and advisors on helping you. Selling your spouse on why its worth the risk to put it all on the line for this. Sell your friends on the reason you haven't seen them in ages. Selling the stranger at the cocktail party on the fact that you actually do important work, and aren't crazy.

Now, if you are a high growth startup entrepreneur, knowing the problem you are solving and passionately telling everyone about it is just the first step. The next step is to make sure you are solving a 10x problem. A 10x problem is one you can solve 10 times better than the alternatives, or solve the problem for 1/10th the cost of your competitors. You sell your product for 20% less than the competition? So what, thats not enough. Your product is 30% faster than the competition? Get out of here, not good enough.

Your customers have an alternative to your product. Maybe its not a direct competitor, but at the very least the alternative is the status quo. Doing nothing or continuing the way they've always dealt with the problem.

Now, you are asking them to make a change, to switch to your product instead.  The price of your product isn't the only cost to the customer. There is a switching cost. Not just the real costs to switch, but the inferred costs as well. The cost associated with taking a chance on you, the risk that you'll actually deliver on what you say you will. That you'll be around in the future and be able to grow with them. That you'll be the partner they need.

Customers won't switch to a startup for 20% cheaper or 30% faster. You need to be 10x better.

In my next post, I'll share with you a crazy simple technique to help get past the surface an opportunity, and down to the 10x problem.

The gig economy as income redistribution

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Today, while listening to TED Radio Hour on OPB, I had a small revelation. The gig economy could be a form of income redistribution. Not the scary, communist kind of income redistribution, but income redistribution none-the-less. Allow me to explain.

The gig economy refers to the new set of opportunities individuals have to earn extra money. Typically not full-time jobs, but rather significant sources of income that supplement a regular income or fill an income gap during regular unemployment. Sometimes these income opportunities are those that leverage assets, such as a home, car, or skill. Examples of the gig economy include Airbnb, Uber, and Taskrabbit.

While its common to make a few hundred dollars a month, some people make really good money in the gig economy. Today while listening to TED Radio Hour, I heard about someone that makes as much as $5k/month by listing their Ikea furniture assembly services on Taskrabbit. I've met people that bring in $50k-$100k per year renting out property on Airbnb. The opportunities don't end with the household names Airbnb and Uber. In cities like San Francisco and New York, you can pay for just about anything to be done for you. You can pay for on-demand car washes, yoga classes, marijuana delivery, laundry service, and of course food delivery.

I've always felt a mix of joy and discomfort with using these services. On one hand, it makes life so much more easy and efficient. On the other hand, its pretty disgusting that I can pay someone to do tasks that I could do myself. Only the richest people can afford to have someone come to their house and wash their car or hire someone to assemble Ikea furniture. Those services add up, spending hundreds each month on what many in America would consider luxury services. While many of my peers and colleagues don't consider themselves rich, the truth is that we are very well off and don't know life like the average American does.

So, today it dawned on me, this is a form of income/wealth redistribution! I certainly spend a decent amount of my discretionary income with companies that pay out to the people doing the gig. Its a stimulus of sorts. Instead of stashing away my income, I'm giving it to others in return for services. Every time I spend money on burrito delivery, someone that makes less money than I do is providing that service.

Maybe the gig economy isn't so bad after all? They more top earners in America spend discretionary income rather than save it, the more money we put into the pockets of lower income earners.The idea of wealthy people paying others to do things for them is not new. I do wonder though of technology makes these sorts of "luxury" services less expensive, enough so that the top 40% of earners can justify the spend, when it was likely just the top 5%-10% that could in the past. Is it enough to even the playing field, and distribute income more evenly?

Oh, and the best part? If I am right, the gig economy is in fact income redistribution, but without violating the fundamentals of a free market economy. No communism here!

The simple cause of city traffic with a nearly impossile solution

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As an adult on the west coast of the US, I've been driving for many years. On the freeway, in the suburbs, in the city. While I'm lucky to live in a relatively low traffic major city, I've felt the experience of traffic frustration many times over. For the last couple of years though, I've been living in the heart of the city, and walking as my primary form of transportation.

I still own a car, but it sits in the garage nearly all of the time, with use about once per week. So, now I see the world a little differently. With my point of view as a pedestrian and my many years behind the wheel, I have led to a theory of what causes much (most?) of the traffic jams major cities experience.

Pedestrians. Pedestrians like me are why city streets experience traffic problems.

I can't tell you how many times I've sat in traffic where it took two, three, four, even five cycles of a traffic light before I got through an intersection. Only to be stuck at the next one. How many times have you turned a corner, often onto a major street, only to see a line of cars in front of you, barely moving?

Blame pedestrians.

See, nearly every traffic signal includes signals for pedestrians. They tend to indicate: walk, a warning not to walk, and then don't walk. Walk means go ahead and step off the curb and start crossing the street. Its often a green hand, green/white icon of a person, or event he word "walk." The next symbol is a countdown to the changing of the traffic flow. It is often indicated by a flashing red hand, or flashing red icon of a person. It means do not step off the curb, do not enter the intersection. If you are already crossing, you have a limited amount of time to get to the other side of the street. And of course, there is the 'don't walk at all' sign, indicating that you shouldn't be in the intersection at all, typically because of the oncoming traffic.

Unfortunately, pedestrians don't interpret the signs as I've described above, with three stages. My observations show that pedestrians look at those signs in a very binary way. Two stages. Cross, don't cross. The subtle difference between what is intended and how its interpreting is that much of the time, the signal is indicating not to step off the curb, but continue crossing if you already have. Yet, many pedestrians will continue to step off the curb as long as they think they can cross before the countdown is down, or in some cases they'll step off the curb as long as the countdown is still going, even if its down to 1 second before the signal changes.

I'm not trying to be a stick in the mud, or a grumpy old man, but there is a practical implication here. Those signs are set as such in order to allow cars, trucks, buses, and bikes to have an opportunity to turn right or left. As long as pedestrians are in the intersection or stepping off the curb, traffic cannot turn. When they can't turn, they do not move. When they don't move, traffic backs up. On and on and on it goes.

So, to ease traffic we need to clear the way for traffic to turn. To do that, we need pedestrians to follow the signs, and thus following the law. Easy, right?

Nearly impossible.

I think about this problem nearly every day that I walk to and from work, and I haven't landed on a reasonable solution. Hand out traffic tickets to pedestrians? Install physical barriers at crosswalks? Shame pedestrians for stepping off the curb when they shouldn't? Change the symbols on the signals? None of these options seem to have both the intended result while also being practical/realistic.

It appears that the solution employed by some cities, at select major intersections, is to place a traffic officer in the middle of the intersection with white gloves and a whistle. I always thought that they were there to direct vehicle traffic. Now I realize that they are there to direct pedestrian traffic. Stopping them from entering the intersection so that vehicles can make their turns, reducing traffic down behind them. It seems to work, but its not practical at the large scale. Traffic on the streets of downtown Portland is terrible during rush hour. The city would have to deploy dozens of officers, give days a week, to manage these intersections. Not a good use of police officer time, if you ask me.

So, do you agree? Are pedestrians a significant reason city streets experience traffic? Are there ways to solve this problem, which are both effective and practical? Let me know over on Facebook or Twitter, using the links below!

I wonder how a firm like IDEO would approach the solution?