Annals of commerce – coffee and pens

A little more than a year ago, I had some snarky reflections about Nestlé pod coffeemakers. Since then, I noticed that the Keurig system’s pods are more reasonably priced, though still a very expensive way to get a cup of coffee compared to starting with bulk coffee and good technology.  The Motley Fool has stepped into a conversation about this started by Oliver Brand at the NYT, and we learn that one reason K-cups are so much cheaper may be that their patent is about to run out.  Hmmm.

In contrast to this overall approach, consider Livescribe.  They make a really marvelous device that records sound while you are writing on special paper printed with a pattern of tiny blue dots; you can then point the pen at what you wrote and hear what was being said at that time.  I can’t say enough nice things about the system, which works exactly the way it’s supposed to and has some other fun tricks, like playing a piano keyboard that you draw on the paper; just go to their website.  Recording interviews, for example, has always been a misery, because you can’t browse the recording,  but the Livescribe fixes that, and generates linked sound and image files you store on your computer or send to colleagues.

When I first learned about it, I immediately said, “razor blades! obviously they really nail you for that paper.”  But I was wrong; they sell the paper at reasonable prices, in a variety of formats, and they  will also give [sic] you the software with which to print your own on a color Postscript laser printer.  A company with a commercial conscience and a wowza product: is it possible you can even make more money doing the right thing than by string-betting your customers?

Looks like a nice day; I won’t need my L.L. Bean Goretex raincoat, my favorite among the many I’ve had, that came from a company whose operating rule is that “a sale is not complete until the customer has worn out the merchandise and is still satisfied.” But it’s in my thoughts.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

9 thoughts on “Annals of commerce – coffee and pens”

  1. that came from a company whose operating rule is that “a sale is not complete until the customer has worn out the merchandise and is still satisfied.”

    Speaking of business operating rules…
    I thought this was a pretty cool summation by Yves Smith:

    The first rule of finance (well, maybe second, “fees are not negotiable” might be number one) is always use other people’s money before your own. So giving the banks permission to modify loans they don’t own guarantees that that is where the overwhelming majority of mortgage modifications will take place, ex those the banks would have done anyhow on their own loans. And the design of the program, that securitized loans will be given only half the credit towards the total, versus 100% for loans the banks own, merely assures that even more damage will be done to investors to pay for the servicers’ misdeeds.

    Altho I think he needs a prequel rule for big finance: Always make sure our guys are sitting around all the important tables in Washington D.C. Even if that means we have to buy the table, the chairs, the food, the girls and the hall. Puff. Puff. Puff.

  2. “A company with a commercial conscience and a wowza product: is it possible you can even make more money doing the right thing than by string-betting your customers?”

    I’m sure this will start a flame-war, but there are plenty of Apple customers who believe this is Apple’s mode of operation — make products that people love, sell them at reasonable prices, don’t try to exploit the brand by selling cheap garbage (meaning people trust that they will be happy with anything they buy), and don’t nickel-and-dime your customers.

    (Yes, yes, feel free to go on about how an Amazon Fire is the equal of an iPad at half the price, or how ultrabooks at $100 less are superior to MacBook Airs. Feel free to complain that Apple charging $30 for OS upgrades — and iOS upgrades are free — is outrageous nickel-and-diming. Feel free to rant about how Apple has screwed you over by not committing to supporting your iPhone1 or your Titanium Powerbook from 2001 for all time.
    The fact of the matter is that there’s a pretty large base of Apple customers who disagree with you on these points, and Apple has the revenues to prove it.)

    There is plenty of nonsense regarding Apple and “fashion”, but I think the reality is a whole lot simpler. In the real world (as opposed to the fantasy world of economics) people do not have infinite amounts of time to research products, or to calculate their expected usage patterns. Thus a reputation that whatever you sell will work will and will be, if not the absolute best in the world, at least pretty good, is a very valuable asset.

    Consider, for example, buying a TV right now. You go to Best Buy. You see a hundred TVs all of which look sorta OK — because they’re running in “Sales mode” rather than “Home mode”. Which do you choose? You don’t even know what to look for. You should look for how the picture diminishes if you look at an angle to the image, but that’s difficult with the way they are mounted at Best Buy. You should see ho it looks under low light conditions rather than under 1 megawatt fluorescents. You should listen to the sound — but you don’t get the sound in Best Buy. After using the TV for a few days you will care a lot about how fast it wakes up from sleep mode — but you won’t see that at Best Buy.

    So what do you do? In the 80s, you might have trusted Sony as a TV brand — but Sony pissed away the value of their brand long ago. No-one else in TVs has a trustworthy brand either. Samsung and Sharp make some good TVs — and some crap. You have no idea if a particular model is a good buy at the price, or is from the crap end of the spectrum. In such an environment if, say Apple, sold a TV, the trust that Apple inspires would make it worth buying an Apple TV even if seemed to be 30% more than the equivalent no-name brand — you would have some confidence that it would work well, wouldn’t let you down in stupid areas that aren’t tested in the store, that the image and sound would be as good as is reasonably possible with today’s tech, etc.

    And THAT’S how someone like Livescribe make their money. They have a population of users who love the product and are willing to tell other people to use it. (As opposed to, say, ATT cell phone users, or buyers of Insignia [Best Buy’s house brand] TVs who, if asked by friends, will tell them — only buy if you have ABSOLUTELY no choice, and have a long litany of complaints and hatred directed at these companies.)

    1. Did anyone read the NYT series on Apple? It’s about abusive factory conditions and the insatiable demands of Apple and its customers. One of the main sources of the problem appears to be that when something is “hot,” you need a ton of them right away. (Well also apparently Apple is Walmart-y about supplier prices.)

      I really really hope Apple steps up to the challenge. I have had such great experiences with their products, and I love that you can get tech support.

      But after reading some of the series, I would definitely hesitate now. (I also am not one of those people who buy every new thing though, so it’s easy for me to go without.) But I’m not crazy enough to go back to a PC. I’ll just go without until Apple fixes the problem, as I think they will. At least I’ll try.

      1. Well, if you read farther, you find that even if Apple isn’t very good, they are better than the rest of the tech companies. So, while we absolutely need to pressure Apple into being better, I see it as a sector issue, rather than one company.

        1. Actually, that’s not at all what the articles say.

          But I do think and hope that Apple will fix its problems. It would just be too stupid not to. It’s not cool to be an a**hole.

        2. Or did you just mean compared to other companies in China?

          Well, anyhow, I still like Apple and I hope they fix their issues. Their products work pretty well and I think people will be okay with waiting a little longer for them. In fact, they maybe should just switch to an all mail order system, to avoid stampedes.

  3. Side note: While the K-cups (and their ilk) are indeed more expensive, there is a niche for one cup of coffee, and not having to throw out an entire pot, and another, when you would like a cup in a few seconds, rather than go through a production. It was these 2 observations that brought me to my Keurig (well, those and the idea that I could have a different coffee in the AM than my wife). Weekends, I still brew a regular pot. This notion, that there are other ways to come to enjoying coffee than the “best” or “most efficient”, is part of what I understand Maynard to be saying.

    1. What John says. My spouse and I have one cup each in the morning, and maybe another cup each during the day. Making a whole pot, or even a small pot, would just mean waste and extra washing.

      The real cost, of course, is the amortized cost of the machine. For $5-10 you can get a reusable filter pod that brings the coffee cost down to the level of a different brewing system.

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