Going one step further. "How do we meaningfully calculate the total life cost of products? "
Externalities, clean up costs etc are currently not being charged which makes some products economically viable when they probably shouldn't be.
For example in China Coal plants keep getting opened, because despite a cheaper lifetime cost for solar, coal has a much lower upfront cost and without meaningful costs for environmental damage well you can always sell the fully profitable plant before the late life costs come and bite you. (There is more to it, but thats the simplified version of it).
Same with single use plastics. They are really cheap to make, but what about cleaning them up, recycling them etc. Without counting that cost, yeah manufacturing plastic is extremely cheap compared to like a well made pottery plate. But in 50 years the clay plate is still around and the plastic one is just microplastics in the ocean forever.
You can always sell it at the current price, but with further environmental commitments by country the price of operating or closing a plant will probably only go up.
But due to the hypothetical nature of those new environmental regulations they are probably not considered during the buyout process.
But the current trend would point towards their cost only going up, and no regulation making fossil fuel plants any cheaper to run or decomission.
A business asking this question without a corollary question about how to recoup the cost somehow (e.g., through market access, product positioning, brand value, or subsidies) is shooting themselves in the foot. Additional questions:
Who is computing our environmental footprint? Are our interests aligned?
Do our competitors also have to pay it? Is it computed the same for them?
What is the penalty if we refuse to pay?
Do loopholes exist and will they be exploited by our competition?
Do tax programs already exist at a national level that go towards paying this footprint?
Does such a cost necessitate operating above certain economies of scale to be in business at all?
If we do business internationally, will we pay different costs in different jurisdictions?
Is our footprint a net-bad thing or is our product a net-good whose footprint should be subsidized but isn't?
The question is likely one that many business will have to answer (whether they ask it or not) given the regulatory and financial controls being implemented by supranational governance.
Is it? EU talks a lot about national carbon footprint, and GCP launched carbon calculator https://cloud.google.com/carbon-footprint. Sure, noone asks this in explicit way but given current trends it feels like we are going in this direction very fast.
well, EU talks a lot about national carbon footprint and normally the solution is to send the carbon footprint overseas, then the national problem is solved.
Have they fixed the wood burning loophole, where you can burn overseas wood without recognizing any carbon emissions because the carbon accounting places the emissions at the place where the wood was harvested?
>In 1996, scientists at the United Nations devised a method to measure global carbon emissions. To simplify the process and avoid double counting, they suggested emissions from burning biomass should be calculated where the trees are cut down, not where the wood pellets are burned.
>The EU adopted this methodology in its Renewable Energy Directive, allowing energy companies to burn biomass produced in the US without having to report the emissions.
>The accounting method– which was never intended to assign national responsibility for carbon emissions, according to climate experts has created a lot of discussion and disagreement among advocates, scientists and policymakers. But ultimately it is not the accounting of carbon that is the problem, it's the emissions.
>"It doesn't change the physical reality." said Tim Searchinger, senior research scholar at Princeton University. "A law designed to reduce emissions that in reality encourages an increase in emissions... has to be flawed," he said, referring to Europe's directive.
I don't think wood-burning is a real emission issue since wood growing/burning is a carbon-cycle and not a fossil taken in the ground and injected forever in the atmosphere...
As long as the wood is coming from tree plantations, not from deforestation of course, which I expect to be mostly the case in North America and Europe.
Even if the forest is replanted and eventually stores the same amount of carbon as was released in burning the wood you end up behind. You release a bunch of carbon today and it takes decades for the new growth to recapture that. Plus you burn additional fuel for the harvest, processing, and shipping, which is never recaptured.
Burning and replanting forests is not carbon neutral. Not even close. It's an accounting gimmick that the EU uses to make themselves look good.
I would be careful with "actually being changed". They pushed it to start on 2024, so there is nothing being changed. They still can rollback it because of the war, because of the economy, because we have to protect our kids, because Hungary doesn't like it, you name it.
In another hand, it's a market, as stated in their website, "It is the world's first major carbon market and remains the biggest one."[0], so for sure it will be a huge source of income and therefore the countries will have much more incentive to do it. I saw already the same in another countries and the results weren't so spectacular, but instead the whole supply chain just got more expensive, which meant the prices raised to the customers.
Raised prices are an expected result of these changes. You're paying for the emissions and it becomes part of the cost of production, so in effect raises the price.
That's a good thing and helps "green" products compete.
The example why "nothing is being changed" just because EU signed a compromise to do it in 2024. https://www.euronews.com/2023/01/10/belgium-extends-life-of-.... Belgium extends life of its nuclear power industry by 10 years regardless of previous European agreements.
yes you can. Because it will likely be decades before the environment kills people but you can save a life today. Oh, don't drive that ambulance to go pick someone up and rescue them, it pollutes! Where as other solutions may exist for the environment in the future.
Here's another. Maybe no one should go hiking/camping/mountain climbing because the few that need to be rescued generally require cars/helicopters the burn fossil fuels to come to their aid, not to mention all the fossil fuels used to get them to their camp/hike/climb site and all the materials for their gear, all for "entertainment".
Also, you yourself are likely a net negative on the environment. Do you have an obligation to kill yourself?
I don’t hold most startup accelerators in high regard, but the one very stimulating activity we did was based on the ‘business model canvas’. It’s a marginally useful thing in itself to document all the moving parts of your business (real or imagined) but I really enjoyed a session we spent just working on hypotheticals like in this article, like what if this key resource is no longer available? What if you need new channels? You immediately realise that your business is a vector in a high-dimensional space and you can explore in any direction you like looking for some sort of fit. It was a great way of shaking us out of linear thinking, and instilling a sense of agility all the way down in a company.
I like this. In the past, we've considered making our B2C products completely free, as a way to drastically increase our rate of adoption and spur further adoption of our B2B product (which is much more lucrative).
But we've never pulled the trigger, out of a fear that we'd be giving up existing revenue, and because it would make it hard to start charging again later if we decided it was the wrong decision.
Although I like this, I'm still not quite sure what to do with my answers to these big questions. That is, I shouldn't just go and do things because it popped into my head as an answer to an extreme question. If it were a low-risk great idea, on the other hand, I should obviously do it. But what about all those ideas in the middle, which seem like they carry a significant risk, but could also yield a significant reward?
> because it would make it hard to start charging again later if we decided it was the wrong decision.
You don't have to tell people it's free. Tell them it's free for the first year, and don't actually charge them for future years. Automatically extend their subscription at 30 days.
Or only charge some people. Or cut them off when it expires, and then extend them 7 days after expiration.
Lots of options if direct revenue isn't super required and you've got room to expirement.
Great suggestions. We've experimented with a free "student pass" (1/4 our users are university students), but it hasn't had a huge impact. This might be because there's some friction involved.
Our current focus is on revamping our freemium structure, so that instead of 2 weeks of unlimited usage and then extremely limited functionality thereafter, it would instead offer indefinite usage on a limited number of websites (it's a browser plugin that enhances text to make it easier/faster to read). Previously we've (not surprisingly) seen a ton of uninstalls at 2 weeks, and with the new structure we're hoping to hang onto more users for the long haul. Some of them would eventually convert, and some would just continue to think about us and recommend to friends. But another side effect is we could increase the number of 'favorite sites' that people get, up to some arbitrarily large number so it's effectively free unlimited usage.
Interestingly, the development that got us to pull the trigger on this change is the manifest v3 transition, which required us to revamp a lot of stuff about our extension so we figured we'd go for it. If this turns out to be a big plus for adoption, I guess we'll be thankful for being forced into the transition?
An idea about the student pass: The friction you mention is probably to provide verification, right? What if you removed that part entirely, and just trusted the user? There would certainly be customers lying about being a student, to use it for free - but you want more consumers to use your product, and after a few years you can still ask them to provide student verification / start paying.
You're nearly there. You've got a large uninstall base because you're giving two weeks unlimited features and then scaling back, but some specific features are "core" to the usage of the product.
Switch the model, after 2 weeks it is limited to 1-3 sites unlimited and anymore requires upgrading.
You'll retain your students who are probably using it for specific sites to summarize papers or class information. Create the habit over a long period and then people will be willing to pay.
If you want a no code/less code approach allow to opt into an extension of 3-6 months if they click cancel.
Assuming COGS are low and the compute cost is on your side and not third party the goal is forming habits and then converting. The goal is not short term 2 week conversions to profit.
Would you like 25% paying after 2 weeks or 25% paying after 2 weeks AND an additional x% paying after 3-6 months?
Or put an "Early Access" label on that product. This will justify about any change that you do later. Fortnite was "Early Access" until 2020, when it had already made an estimated $15 billion (yes, with a "b") in revenue.
My two cents is that it feels like you've had an answer to an extreme question, but that answer had more extreme questions that needed to be answered like;
- If your company were to suddenly lose all B2C revenue (without the benefit of increasing your rate of adoption), what would happen? Would your company survive? If not, what would need to be done for your company to survive with only B2B revenue? (More sales training? more enterprise features? resource cuts? or more aggressive growth to fulfill client requirements? etc)
- Compared to those things you said you've needed, how important would be the increased rate of adoption from making your B2C free of charge?
High-risk high-return problems are never easy, but I guess asking these different extreme questions lets you find some low hanging fruits to high-returns or get a plan going to make those moves less risky.
You're right, I didn't ask these follow-on questions, probably because it's scary to think about them! The organization would survive either way, but it would feel like a pretty big failure to have nuked B2C revenue and then regretted it. But making business decisions based on emotional considerations probably isn't the wisest way to go.
I guess what I really need is to talk to someone who's had to make this call in the past and get a sense of how scary this should be, and how to know when I've asked all the important follow-on questions. I imagine it's the sort of thing that one gets braver/better at after having just done it once or twice.
You should look for examples of other companies who did something similar and see how that went. I personally have the feeling that giving away free of charge a previously sold B2C spells the end of that product and is a signal that the product is not commercially viable.
Good point. We don't want to signal that it's not viable, since it absolutely is. We just want to figure out if B2C is a better channel for growth than for revenue, as we'd keep the B2C tools running no matter how much revenue the B2B side brings in. We plan on lowering the price as the B2B side ramps up, but the question we're pondering is whether making B2C free (like we were at launch, when we grew very quickly) would massively accelerate B2B uptake. But we would have to be careful not to send the signal that you mention.
Answering the last bit: "What about those ideas ... which carry a significant risk, but also could yield a significant reward?"
This is perhaps the key question for developing any strategy. This dilemma is not limited to this one exercise! It's the classic "risk/reward" question.
There's a lot of literature on this, some of which is conflicting (of course!). One common example is "Three Horizon Planning," which (I'm bastardizing it for the sake of simplicity) asks you to separate work/projects/ideas into three "future horizons": H1=running the business, zero-risk stuff you know is useful, selling the same product to the same customers; H2=new products sold to the same customers and market, so more risk but more reward; H3=new products sold into new markets, new customers, so maximum risk but also maximum reward, potentially entirely new business units. So for example, Google optimizing search is H1, Google adding "Diagrams" to the suite that already contains "Docs and Sheets" is H2, and Google launching GCP or buying YouTube is H3. Then the idea is that you should have proportional investment in these areas; for example 70/20/10 on H1/H2/H3. Finally, you want different processes and expectations for each thing, since "stuff we should be able to predict" should not carry the same expectations as "stuff with high variance that we cannot predict."
Another rule of thumb I like is to find bets that are very asymmetric, i.e. the potential upsides are orders of magnitude larger than the potential downsides. The stock market or VC works like this, because the most an investor can lose by buying stock is 100% of the investment, but there is no limit to the upside. If possible, you'd multiply those by the probability that they occur, but in my experience, we're all very bad at knowing the probability. :-) So, maybe not so much about the specific numbers, but the broad notion that one should be _orders of magnitude_ larger, not just a little larger -- that's something which should be apparent even without a lot of analysis.
In any event, this is a great question, and it's important for any strategic thinking, not specifically connected to this exercise.
How would one limit a free offer to a certain country? We could definitely to a user-limited free pass, but we'd want to have it exposed only to new users, so we don't lose existing recurring revenue.
"We could definitely to a user-limited free pass, but we'd want to have it exposed only to new users, so we don't lose existing recurring revenue."
That sounds like a recipe for alienating loyal customers, if they find out they still have to pay, but everyone new does not. Then they will just cancel their subscription and also become "new users".
Yeah, it could burn a lot of goodwill. The other option is to tell existing customers that we're trying out something new and pausing everyone's subscription for 3 months while we see what kind of growth we can get as a free tool. That would incentivize people to spread the word a lot, and if it does go well then we would feel comfortable cutting off the B2C revenue. But it would be weird messaging to hear from a company, which could just be confusing to people.
> How would one limit a free offer to a certain country?
You could choose a country with a unique language and limit the free version to that language.
Though I'd question a limitation to a single country itself. Cultural aspects do matter, and by doing so you pin down two variables at once, so the results are much harder to interpret.
The application of whatever conceptual model was being used here doesn't encompass the biggest innovations of the last few decades, open-source and user-generated content.
Or in terms of the language of the article:
how can we enlist the customer to work for us for free?
One question I do wonder at times, and is probably applicable here is: "what if I removed all the constraints, what would I do differently and how would things change?". Eg: Suppose nuclear fusion is successful, and you can actually power whole of earth for 800 years with 1 cup of hydrogen. That is, you don't have to worry about energy anymore. How would that change the human behavior both in short and long term? Or to go to a more individual level, "If time wasn't a constraint for me, would I ship it differently?" and so on.
> power whole of earth for 800 years with 1 cup of hydrogen
And no capex? I mean, renewables already consume zero "fuel", but they do have considerable capital investment.
"Cheap" energy in a box would obviously be completely transformative given how much of society is structured around extracting energy and using it efficiently to move things around or heat people or things. Depending on how cheap this is an even bigger transformation for developing countries.
> "what if I removed all the constraints, what would I do differently and how would things change?". Eg: Suppose nuclear fusion is successful, and you can actually power whole of earth for 800 years with 1 cup of hydrogen.
Build cheap and plentiful desalination plants on the west coasts of Africa, South America and Australia, and possibly re-green the Sahara and Outback.
How would you keep the Outback green? I'm no climate scientist, but I've wondered why it is the way it is. Is it due to the lack of a mountain range on the Australian west coast, so the air doesn't get pushed up to cool?
Edit I forgot in this imagined world we have 'free' energy, so you can just pump water in.
I can't find a link, but there's a theory (and I don't know if it's been discredited), but once again, because humans settled into Australia they displaced mega-fauna and generally ruined the ecosystem in Australia and the Outback now is what it is. Even today, there's a story doing the rounds about how free roaming bison in the US double the plant biodiversity of the plains just by trampling on stuff.
It's not extreme, but it's somewhat naive. If you want to make the world a better place, there are usually better ways to do so than via a for-profit business.
PR stunts aside, a business is where you allocate capital that needs to generate a return. Why overload this concept? Invest your money in a nonprofit or a charity instead. If you want to ride a horse, don't argue with a cow because it isn't a horse. Milk it, sell the milk, and buy a horse.
...And if this is not a discussion about how you personally are allocating your capital, your best next step is to go generate more capital because then you can invest it however you damn well please. :)
Au-contraire, I think its naive to think that when such a large fraction of our lives (and economic activity) is built around particular types of for-profit businesses that we can somehow achieve our broader goals without them.
We must break that spell. For-profit business are not structured according to some immutable laws of nature. Everything about them is a legal construct and it can be tweaked. Corporate entities didn't even exist until a few centuries ago. There is probably an entire spectrum of entities one can have between a charity and a typical modern corporate.
Who's this "we" you're referring to that will enact these changes? Is it the shareholders of the companies? That's a no go - they won't go much beyond making token sacrifices for the sake of PR.
Is it the government? The regulators and the executives of the companies they regulate are frequently the same people - they do their time in private enterprise and then they become policymakers for the industry they were working in. The justification for this is that an industry needs to be regulated by people who understand that industry in depth (if you're a programmer - do things go well when all the rules around your work are made by non-programmers?).
Is it the people? Depends on the country you're in frankly. In the US popular opinion doesn't really support heavy-handed corporate regulation. There are some high impact issues like anti-trust where the public is fairly sympathetic to reigning in the biggest bad guys and I think those are good places to put your resources. Again, the best use of those resources is putting them into an organization dedicated to working on that issue. And the more capital you acquire from your business, the more impact you'll have.
My point of view isn't that we should have no corporate governance. But I have the hard-nosed realist view that the wishful thinking of "we" is ineffective. It has a poor track record. I'm saying a better approach is to go make money and then use it to alter the fabric of reality directly. Maybe network with other people who've made their money and convince them to do the same. This is easier than most people realize, I mean it takes a lot of work and time, but it's the type of work that will prepare you to vet organizations and make smart decisions about who can do the most with your contributions anyway.
By all means go ahead. People thinking and acting on these concerns mostly "have made their money", or at least feel secure enough to do so. The (large) complement of people who didn't are too distracted by daily struggle to relate.
Another reason for empowered individuals to act on their hunches is that there is no sure fire prescription of how to achieve change. We feel that things are "not alright" and we can reasonably suspect "nearby" alternate realities. Yet finding the pathways from A to B is basically by trial-and-error. In such context, the more trials and the more orthogonal to each other, the better.
More systemic processes might be slow but they are not "ineffective". Its a matter of timescale and perspective. The slowest of them all, the educational system, is actually the most effective in the long run.
"What would you do if you discovered that your company's core product or service has a net negative influence on the world?". This is a hypothetical, so assume the evidence you have is clear and the conclusion correct.
Interestingly, while from the beginning the word utopia was used to refer to a desirable (perfect) society, etymologically it simply means a place that does not exist.
In contrast to dystopia, which is clearly a bad place.
etymologically it simply means a place that does not exist
This isn't true, I think? Assuming that it derives from the Greek τόπος (location), it literally means "good place" (εὖ-τόπος). The no-such-place translation in Greek would probably be ἄτοπος, but that's an existing word and uses one of the other meanings of τόπος (it means uncommon or absurd).
This is a really good one. Could also apply the concept to the whole business in keeping with the pattern, i.e. "What if we _had_ to 10x revenue in the next 12 months, no matter the cost or impact on existing customers?"
This might be related to "what if we had to 10x prices," but of course revenue = price X N, so it brings up the N question, which is fantastic to do.
I'll consider how I might be able to add this to the article without too much overlap with "10x prices".
“Brainstorming” is hard—staring at a blank whiteboard, wondering whether someone could make a real-life “dark mode” whiteboard, then realizing that’s what a blackboard is, only dustier - this cracked me up!
If you were never allowed to provide tech support, in any form, what would
have to change?
Am I the only one who thinks that the answer to that question, for quite a few companies, is, "Nothing. Absolutely nothing. In fact, that's pretty much what we do right now."
What if we switched the question around: you have to provide individualized tech support for each customer? Essentially, they would get hand-holding. What would need to change?
With high enough margins, you get customers who are willing to provide an engineer or two specifically to travel to you and learn how your product works.
That's true. That kind of does happen actually. I let my business partner take all the calls and he sometimes asks me to change stuff based on recurring confusion.
In B2C, yes; in Enterprise B2B, it's the opposite -- you get dedicated account managers, quarterly business reviews, sometimes even weekly product reviews (we have those with our largest vendor).
Since so few ask it in a meaningful way, I dare to say it is still, unfortunately, a pretty extreme questions for those it should be asked to.