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Right. The decline in manufacturing is a tricky subject. First off, in developed economies the manufacturing employee makes up less than 1/5th of the population. Let's be honest, manufacturing will never come back to developed nations like it was in the early 20th century.

We aren't "declining" in productivity. We've continued to increased productivity at the same historic rate as previous industries. (http://www.bls.gov/lpc/prodybar.htm)

We are accomplishing this productivity gain with less people. Increased productivity allows for companies to increase their output with less people.

As Peter Drucker predicted, if these productivity gains aren't matched in the service and knowledge worker sectors, then we'll see an increase in social tensions and class warfare. No one can deny the social acrimony that continues to surface in the news.

This will be the challenge of the 21st century. What to do with a nation that doesn't require a majority of its workforce employed in moving or making things.


They can still cut hair. Or teach. Or spend time with children. Or do comedy.


I think the take away lesson here is that you can't judge an idea until it is market tested.

On the surface, I would say this idea would fail - I don't like it since it seems trivial.

However, I'm not the target customer segment so my opinion doesn't matter. As Peter Drucker says: "you don't define what is value, your customers do". The only way to figure this out is by releasing and shipping products.

The true test will be the # of reoccurring purchases for the service.


The one argument goes that if you simply view your customer as a data point you tend to lose the 'customer perspective'. However, data doesn't lie, if you can augment your results with qualitative customer feedback, this is the best scenario.

This makes me think that the tool of using personas in product development might go away.

For example, this is from the Wikipedia article on personas:

"Personas are said to be cognitively compelling because they put a personal human face on otherwise abstract data about customers.

Before we had the means to collect data and easily reach certain customer segments they played an important role, but now that we have powerful analytics to measure our decisions and new ways to interact with customers I could see personas being used less often.


I think they go hand in hand. You can only treat someone as a guest if you know something about them. It is the influx of data that has given character to customers. The more data you have, the more you will build their persona.


What if you asked for a follow up email address / phone number? The survey would then act as a screening device that would identify those who are really interested.


The typical organization goes through 100 "investigations" or idea concepts to get to one success*. They have a larger pool of resources to execute those 100 investigations, but I think the larger point is that you need to get through a lot of muck to get to the one success.

As long as you're learning lessons along each project I say more power to you. You'll known when you hit upon a project that you're passionate about.

To that point, have you read “The Dip: A Little Book That Teaches You When to Quit”? The summary is (taken from Amazon):

- Winners quit (regroup. cut their losses, switch gears) whenever necessary on the path to winning.

- Be the best, and the world comes knocking at your door.

- Work through the pain, because the reward is waiting for you further down the road.

Sounds like keep doing what you’re doing.

Source:The Human Side of Managing Technological Innovation: A Collection of Readings


Anything planned for the Midwest?


Sadly, no. There are definitely entrepreneurial/startup-minded people in the Midwest, but they are scattered and not organized, there's nothing approaching the concentration of talent and events that exists in the Bay Area.

That's one of the main reasons why I'm dropping everything and moving to San Francisco in about a week to work on my startup. As much as I like Chicago, the connections and resources just aren't there yet.




So, no then? I'm pretty sure he didn't ask his question because he was unaware of the existence of flight. Your link initially led me to believe that there is actually some other conference called Hipmunk in the Midwest, but instead it was a LetMeGoogleThatForYou.com-style flight search page.

For those of you actually interested in events in the Midwest, I can tell you that we're doing some interesting things in Cleveland that I can scrounge up more information about. Nothing conference-level that I'm aware of, but events with founders and incubators are becoming more and more frequent.

Edit: Cleveland Startup Weekend is in November and there's some sort of kickoff party in a few days. http://cleveland.startupweekend.org/


I think PG hears a lot about location ("We're the YC of Alaska!", "Do we have to move if we get into YC?") and is getting tired of it. If you want to start a startup, moving to a startup hotspot will help a lot. If you want to attend cool conferences, move somewhere that frequently has cool conferences, or be willing to get on a plane for a good event.

The Midwest won't have a successful Startup School clone (at least not with speakers of this caliber) because it's not dense enough with startup people. Maybe there are enough people to make the event worthwhile in all of the Midwest, but it's such a huge area that a lot of people would still be facing very long drives or flying.

When people say "I want an event like this in <my region>", they really mean "I want an event like this within a 2 hour drive of my house, preferably closer." They don't mean "I live in Ohio and would happily travel to Kansas for this event." If someone were to announce an event like this in, say, Minneapolis, a lot of people form Indiana and Ohio would realize that that's not what they had in mind when they asked for a Startup School clone in the Midwest.

And now PG's invested in a flight comparison startup, so just as people sometimes link to http://www.justfuckinggoogleit.com/, he can link to Hipmunk to say "just fucking fly here."


I didn't mean anything quite so rude. I meant it more as invitation. Lots of the people who come to Startup School fly in to do it. That's why we have 2 weeks between acceptances and the date of the event-- so people can buy cheap plane tickets.


No cheap tickets from Chile on such short notice though... :(


just fyi, the cheapest fares typically have 21-day advance purchase restrictions.


I think asking why Silicon Valley almost completely ignores the midwest when there is engineering talent here in spades (I'm in Chicago and we have the population and the top flight engineering schools to, I believe, merit some attention) is perfectly legitimate and saying "just go to SV" is a "let them eat cake" answer which misses the fundamental issue.

Even if the answer is as simple "YC's plate is totally full just keeping up with the SV scene" or "pg hates the cold", that would be more compelling than just a brush off and link to some plane tickets.


pg's written entire essays on the subject. But the bottom line is: if you're into startups, Silicon Valley is the best place. It'll take more than a conference or two to make Chicago a startup hub.

If you want a different opinion, read 37signals' blog and books. They're right there in Chicago.

"Why does Silicon Valley ignore the Midwest" strikes me as missing the point entirely. Regions don't become entrepreneurial by the careful attention of people from other, more entrepreneurial regions. They do it themselves. That is the point of entrepreneurship!


One of the most often forgot story of Ford was the failure of the Edsel. They designed the hell out of the product. They researched design, interiors, market segments, price points, ect. At the time, it was known as one of the best designed prodcuts.

They 'launched' it and it was a complete failure.

It was a unexpected failure - they thought it was going to be huge. But, the information they obtained from the failure was that the market changed. Their assumptions were incorrect. Instead of blaming it on a 'irrational customer', they "pivoted". They went out to research why and found out that customer segmentation had changed. Instead of based on economic customer segmentation ('low', 'middle income', ect.) there was a change towards a 'lifestyle' segmentation. They incorporated this new information into their development, and shortly after they successfully released the Ford Thunderbird - an American classic.

Great story.


Instead of saying that "free" plans don't work outright, I argue that they work for some type of products and don't work for other products.

He provided examples of niche products that so far, serve small markets. LessAccounting, Crazy Egg, - what is their user base numbers? One example he gives has a user base of 5,000 users. If you are a niche product, I don't think the free plan is ideal since you are serving a small market and need to build a user base before it makes sense.

Conversely, if you have an app that is going to get a really large user base, and I'm talking 'millions', then it probably will work (i.e. google, twitter, facebook, ect.). The example of those are far and few.

The other comment I would make is, maybe you aren't creating a compelling enough product to get a user demand that supports a 'freemium' biz model.


maybe you aren't creating a compelling enough product to get a user demand that supports a 'freemium' biz model.

That sounds backwards to me. It seems that most web startups are not creating a compelling enough product to get people to pay for it. So instead, they are trying to get famous by giving it away for free and try to run the business on measly conversion rates until they can sell the money-sink to a big company.


Conversely, if you have an app that is going to get a really large user base, and I'm talking 'millions', then it probably will work (i.e. google, twitter, facebook, ect.)

Actually, not. None of those are using a "freemium" model; they are all ad-based products. If your business model is dependent upon giving advertisers eyeballs, "free" is a great way to go-- but that has nothing to do with the topic at hand.


"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base."

From Fred Wilson's mouth (he coined the term "Freemium")


acquire a lot of customers very efficiently

First of all, people who don't pay are users, not customers. Secondly, how are conversion rates of less than 2% considered efficient?

In the freemium model, even if cost of customer acquisition (COCA) for a free "customer" can be considered to be zero, Life Time Value (LTV) is increasingly negative.


Its amusing that none of these comments even touch on the articles premise, which is that you need to be solving problems that someone (i.e. customers) else believes is important.


Great job on charging for service right out of the gate.

My assumption would be that someone with a flair for showmanship can excel at this even if they are a mediocre performer. However, I could see this being useful for real time.


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