American Giant and the greatest Hoodie ever made

March 14, 2013

American Giant HoodieAmerican Giant was founded by entrepreneur Bayard Winthrop on a simple idea, to create the greatest Hoodie ever made. The product was so successful it almost bust the company in its start-up year

This is how the story hit the headlines this week [Match 2013]:

After only eight months in business, everything at online fashion company American Giant was going according to plan last year. The San Francisco-based business was enjoying “slow but steady growth”, says founder Bayard Winthrop. Then American Giant got the type of positive publicity many companies can only dream off. Orders rocketed, and the firm was sent into emergency mode. “Four days later we had nothing left,” says Mr Winthrop. “We were down to the sticks in our warehouse.”

Since it is an online-only retailer, customers cannot try on the clothing before buying. And reliant upon word-of-mouth marketing, Mr Winthrop estimated it would take two years for American Giant to really take off. Then the online magazine Slate ran an article that named American Giant’s hooded sweatshirt “the greatest Hoodie ever made”. It triggered half a million dollars of new orders in less than two days, clearing out American Giant’s inventory.

The nature of web-based success

We have become accustomed to the unpredictable explosion of growth as a business idea goes viral. Typically, a simple concept captures the imagination and attracts the attention of millions of people often in the time cycle of twenty four hours as the news spreads around the world.

The precise ingredients for success remain unclear. A few years ago Facebook and then Twitter burst on the scene. Twitter had two factors going for it. It’s brilliant idea was easy to explain: Anything worth saying can be captured in 140 characters or less. The second element was the speed of take up of the idea which becomes part of its success. In other words Twitter became famous for becoming famous.

The New Darwinism of the Web

In the New Darwinism of the Web, there is room for only one species at the top of the food chain. This not a new idea, but it certainly applies in web-based markets, where dominance by one ‘species’ is common.

Which brings us back to American Giant

The story is a sure-fire candidate for study as a Business School case. If it isn’t already, [March 2013] it’s because case writers can’t be as agile as their business heroes.

The greatest Hoodie in the world

The idea of producing the greatest Hoodie in the world has another old-fashioned virtue, the wow factor, which is often accompanied by the famous words “Why didn’t I think of that?”

Not such a simple idea

Part of the answer to the question is that the monstrously successful business idea has to be ‘financialized’. Sometimes deliberately with foresight, sometimes by ‘stumbling upon it, the entrepreneur had to see not just what such a product might look like, but how the idea could be protected and commercialized.

A leadership challenge

If you haven’t come across the history of American Giant, here’s my challenge. If you had the idea of “the greatest Hoodie in the world” how would you turn it into a world-beater.

I’ll offer a few ideas, but you will need to keep a look out for them in future amendments to this post. And I’ll welcome suggestions from LWD subscribers.

To be continued…


Global reach: Does Manchester United Football Club have five hundred million ‘followers’?

February 18, 2013

MUFC red devilTudor Rickards

A market research firm claims that Manchester United Football Club is followed by approximately one of every ten people in the world. This figure has prompted much suspicion.

The claim was made by Kantar Sport, and is featured within promotional material by the football club which also has claims to have the greatest following world-wide.

The story was reported by the BBC [February 18th 2012]

Even the most ardent opponent of Manchester United would acknowledge that the club has fans right around the world. But the statement that the club has a global following of 659 million adults – out of a total five billion adults in the world – is still quite staggering.

The work was carried out earlier, and had already appeared on MUFC’s official website which stated:

The largest global football follower survey ever conducted has today [29th May 2012] named Manchester United the world’s most popular club, with 659 million followers worldwide.

The survey was carried out by leading market research agency, Kantar, and gathered 54,000 respondents from 39 countries. The club that Forbes recently named the most valuable in world sport was identified as the favourite team of 659 million followers around the world. Kantar found that football remains the world’s most popular sport, with 1.6 billion followers globally, reinforcing the results of a recent FIFA survey which produced a similar figure.
Richard Arnold, the club’s Commercial Director, commented on the long-term strategy that has made Manchester United the number one club in the world’s number one sport.

The BBC was more skeptical:

Even the most ardent opponent of Manchester United would acknowledge that the club has fans right around the world. But the statement that the club has a global following of 659 million adults – out of a total five billion adults in the world – is still quite staggering.

When an advertising agency makes statistical claims, it is a good idea to carry out a few simple tests to understand the degree of marketing speak behind the statement.

Schrank’s analysis

The advertising guru Jeffrey Shrank has compiled a list of the methods behind advertising claims in The Language of Advertising Speak. The Schrank article ‘does what it says on the can’ to borrow another advertising claim. Schrank lists ten ways in which advertising claims seek to imply more than the words claim.

The Manchester United Claim

In the case of Manchester United, this will be the owners, The Glazer family. It is worth asking: What part might the ‘one person in ten’ claim play in the strategic thinking of the owners of the club?

Note to students of leadership:

Can you apply the processes of map reading, testing and making to understanding more about the claim? What do you make of the statistical methods applied by Kantor? [intelligent assessment if you are not experienced with stats] How would you advise a competitive club on the significance of the claim for their own strategic considerations?


Self Publishing. The Future for Would Be Book Writers?

January 4, 2013

First Kindle and now the iPad have revived the dream of self publishing. How realistic is it for would-be authors?

A friend confided in me recently that he was thinking of writing a series of books. He was planning his departure from a high pressure job which has accustomed him to long hours. Leisurely retirement was out of the question.

This guy is no fantasist

I politely heard him out. Then he told me he was taking professional advice and coaching in creative writing. This guy is no fantasist. He may well go down the traditional route of dead tree publishing. There again, he might consider self publishing.

An instructive experiment

One published author recently carried out a test, in which he tried both traditional and tablet variants of publishing simultaneously. OK, methodologically he needed to have found a way of publishing the same book simultaneously and testing for various factors such as price. But the experiment was instructive.

The blog post by David Gauntlett outlines a method of pricing e-books, based on the price of lattes.

Digital transformations – cutting out the middle people – are creeping across the face of academic life… So, I put together a collection of previously-published pieces, revised and with some new material, as a Kindle book. I called it Media Studies 2.0, and Other Battles around the Future of Media Research, and put it on sale for £3.80. (Friends had suggested that I shouldn’t make it too cheap, as that would undermine people’s respect for it. Therefore I settled on £3.80 as a price which I thought sounded somehow quite authoritative whilst still being highly affordable).

I publicised the book via my website and Twitter. On one occasion I noted in a promotional tweet that it was ‘cheaper than two lattes’ (16 September 2011), which seemed like a reasonable way of looking at it.
In the same summer I also had a ‘proper’ book out, Making is Connecting, published by Polity. And for some commercial or bureaucratic reason, Polity have so far failed to come to an agreement with Amazon to make their books available on Kindle. Therefore we arrived at a ‘natural experiment’ where circumstances had conspired to have a Kindle book by me, and a wholly paper-based book by me, newly out at the same time, so that we could compare their fates.

What happened next?

The book published by traditional method is currently outselling the Kindle one. The author lists the methodological weaknesses in his trial. Nevertheless I find this a valuable starting point to consider the future of e-publishing for the pioneering author.

Health warning

Writing is a compulsion that can strike at any time. If you find this blog interesting, check for the tell-tale symptoms of the Midnight Disease [I am writing this at roughly 4 am ].

To go more deeply

The LSE also published earlier interesting reports on e-publishing that are worth following up.

Another experiment

In the interests of market research, I have produced two posts on this topic which provide roughly the same information, but dressed up in different formats and with different titles. They have been tagged identically, and have been published on the same day. [ I have avoided adding media images as these might influence hits.] I will be watching with interest to see over time whether one post attracts more visits, visitors, and ‘likes’, than the other.


Would you buy a book for the price of two lattes?

January 4, 2013

e-Publishing is developing apace. One advocate has established a marketing model based on the exchange price of the cost of a high street coffee

The pricing story was told in a blog published from the venerable London School of Economics or LSE [not to be confused with the London Stock Exchange, also known as the LSE].

The blog post by David Gauntlett describes his experiment and suggests a method of pricing e-books, based on the price of lattes.

Until the mid 1990s, people booked holidays via a travel agent, which seemed normal and fine. Since then, the role of ‘travel agent’ has come to seem weird – why would we want to give an extra slice of money to someone for doing a task which we can easily do for ourselves online?

Similarly, if you needed to sell things that you owned but didn’t want any more, you would naturally have to consult a second hand shopkeeper – and probably get ripped off by them; until we reached the point where you would obviously just do it yourself on eBay.

These kinds of digital transformations – cutting out the middle people – are creeping across the face of academic life, but more slowly than you might expect.
So, I put together a collection of previously-published pieces, revised and with some new material, as a Kindle book. I called it Media Studies 2.0, and Other Battles around the Future of Media Research, and put it on sale for £3.80. (Friends had suggested that I shouldn’t make it too cheap, as that would undermine people’s respect for it. Therefore I settled on £3.80 as a price which I thought sounded somehow quite authoritative whilst still being highly affordable).

I publicised the book via my website and Twitter. On one occasion I noted in a promotional tweet that it was ‘cheaper than two lattes’ (16 September 2011), which seemed like a reasonable way of looking at it.
In the same summer I also had a ‘proper’ book out, Making is Connecting, published by Polity. And for some commercial or bureaucratic reason, Polity have so far failed to come to an agreement with Amazon to make their books available on Kindle. Therefore we arrived at a ‘natural experiment’ where circumstances had conspired to have a Kindle book by me, and a wholly paper-based book by me, newly out at the same time, so that we could compare their fates.

What happened next?

The book published by the traditional method is currently outselling the Kindle one. The author lists the methodological weaknesses in his trial. Nevertheless I find this a valuable starting point to consider the future of e-publishing for the pioneering author

Health warning

Writing is a compulsion that can strike at any time. If you find this blog interesting, check for the tell-tale symptoms of the Midnight Disease [I am writing this at roughly 4 am ].

To go more deeply

The LSE also published earlier reports on e-publishing that are worth following up.

Another experiment

In the interests of market research, I have produced two posts on this topic which provide roughly the same information, but dressed up in different formats and with different titles. They have been tagged identically, and have been published on the same day. [I have avoided adding media images as these might influence hits.] I will be watching with interest to see over time whether one post attracts more visits, visitors, and ‘likes’, than the other.


Felix Baumgartner gives Red Bull more wings

October 15, 2012

On 14th October 2012 a new global hero was acclaimed, as Austrian Felix Baumgartner stepped from a balloon-borne capsule 128,000-foot above the Earth’s surface

The feat which broke multiple world records was backed by Red Bull as the Red Bull Stratus project

The ultimate extreme sport spectacle

As Teressa Iezzi, editor of Co.Create put it:

“Red Bull’s idea of risk is that one of its sponsored athlete’s bodily fluids will turn into gas as he plummets 24 miles from space at 800+ miles per hour while his parents, girlfriend, and the rest of the world watch, live. With the Red Bull Stratos Project, the energy drink brand-turned-media company brought extreme sports spectacle to new heights and redefined the idea of content marketing, PR stunt, and brand utility”.

A fitting tribute

The story is a fitting tribute to Chaleo Yoovidhya the inventor of the Red Bull energy drink, who died in Bangkok at the age of 89 earlier this year. Nor is it unexpected that the Company which is headquartered in Austria was able to find an Austrian to play the starring role.

Yoovidhya came from poor origins in the northern province of Phichit, moving to Bangkok in search of work. Showing entrepreneurial flair, he was employed as a salesman before starting his own pharmaceuticals company drawning on Eastern and Western medical traditions.

One of his products was a tonic drink aimed at keeping factory workers and truck drivers awake through long shifts. It was called Krating Daeng, Thai for Red Bull and comprised a complex mix of sugars, vitamins, and health supplements.

In 1982, his business took off after an Austrian entrepreneur Dietrich Mateschitz discovered Krating Daeng on a sales trip he was making to Asia.

The Independent outlined the development of the Red Bull product

“According to the company’s website, Mateschitz tracked down Mr Yoovidhya, and the two men became business partners, setting up the Red Bull company to take the Thai drink to an international market. In 1987, Red Bull was launched in Austria. Twenty-five years on, it is sold in more than 79 countries”.

An international entrepreneur sees the potential for a product, and helps form a partnership. In Austria the potential was seen for developing the brand through Formula 1 racing, and now through the most outrageous of creative marketing projects.


“I need a new tennis racquet …I’m prepared to pay up to £30 for it”

April 3, 2011

“I need a new tennis racquet” I announced to the proprietor of Jim Halls Sports, Bramhall.

“They’ve changed shape since you bought your last one” Jim said rather unkindly

“Nothing fancy…”

“Nothing fancy. Don’t want to pay money for the branding.” I added.

“You’ll have to. Everything’s branded these days” Jim said “Do you want a Murray-branded one or a Nadal one?”

“Just one I can keep in the back of the car winter and summer. Twice a week, used for social doubles. And with strings that don’t break. I’ve never broken a string with my trusty Dunlop Prince 1975 matchplay.”

Jim started going on again, trying to get me to chose from his assorted collection of 2011 models. “Do you see yourself playing more like Andy Murray or Rafa Nadal?” What kind of question was that? No one plays like Andy Murray or Rafa Nadal. Not even my nephew Connor, who has a Rafa racquet, Rafa headbands, Rafa shirts, Rafa baggy long-shorts, Rafa tennis shoes, and Rafa socks (perhaps I’m not right about the socks).

“Just an ordinary tennis racquet” I pleaded “One to replace my old one. I know there’s been inflation since 1975. I was thinking I could go up to even £30.”

Jim looked downcast. “I think you’d better take a seat for a minute” he said. “I’ve got something to tell you.”

Follow the action

What happened next? Will I abandon my trusty 1975 weapon for some new-fangled over-branded over-priced racquet? Watch this space.


Goodbye Airmiles, and you can keep your Lloyds TSB Credit card as well

June 22, 2009
John Daniels (Lloyds)

John Daniels (Lloyds)

Those nice people at Lloyds TSB explained how I could keep my 9000 airmiles by signing up for their Credit Card. After a little thought I decided to bin the offer of their credit card, and write off those airmiles

Another great marketing wheeze brought you by the nation’s favourite industry. Yes, the near extinct banking sector breathes afresh and its members are coming up with even more creative ideas to attract customers to their credit card schemes.

Last week [June 2009] a fancy set of marketing forms plopped through my letterbox. They announced that I could save my airmiles by some rather complicated arrangement which involved me in signing up for a Lloyds TSB credit card.

I rather liked the prospect of using those airmiles, collected over quite a few years of yomping to various parts of the globe. Later I had some peripheral contact with the Airmiles organization through its links to the world’s favourite airline. At that time it seemed an enthusiastic and entrepreneurial set-up open to creative ideas.

But I don’t want a credit card. Even if I did, I would have objected to what amounts to a grudge buy. It must have sounded a winning idea on the corporate deep-diving marketing away-day.

Meanwhile, in an other part of the forest …

Meanwhile, in aother part of the forest, news breaks of the remuneration package agreed for Stephen Hester, the leader appointed to RBS to sort out the mess there. It’s all a bit complicated. Their loan is generally described as coming from money handed over to the Government by taxpayers like me. I still haven’t worked out the various ramifications of the deal cut with the bank to motivate its new chief executive Stephen Hester.

The package is made up of £1.2m in pay, up to £2m in non-cash bonuses and up to £6.4m in long-term incentives. The long-term incentives will only be payable if share price targets are hit over the next three years

The admirable Robert Peston best sums up the matter of Hester’s remuneration package

Now let’s stray into the land of the bloomin’ obvious, to look at why Mr Hester’s package will be controversial.

First and most obviously, Royal Bank is cutting thousands and thousands of jobs, perhaps up to 30,000 in the coming two years or so.

Second, Royal Bank is 70% owned by taxpayers. And at a time when the public sector is expected to be squeezed hard, it may look odd to be paying so much to the boss of a publicly controlled bank.

Third, all the banks are under pressure to increase their lending to businesses and households. For example the governor of the Bank of England agonised in public last week about how economic recovery might be put in jeopardy by the inadequacy of credit made available by banks.

Why is that relevant? Well, for the chief executive of a bank, the safest way to increase profits and the share price at this stage of the economic cycle – apart from slashing costs and cutting jobs – is borrow from retail depositors at close to 0% and then lend to the government by buying relatively risk free long-term gilts paying 4%.

The Treasury is aware of this risk. Which is why it has forced Royal Bank to agree quantitative targets for the amount of credit it will make available to businesses and households. But there is a piquant question whether Mr Hester’s remuneration incentives will deter the bank from providing more than this minimum.

All that said, one paradoxical reason for paying that kind of money to Mr Hester is also – funnily enough – that taxpayers own the majority of the shares.

He is widely regarded as that rarest of animals, an untarnished world class banker. And we surely can’t complain if a competent individual is running a state institution Also, if Mr Hester were to make the full £9.6m, Royal Bank’s share price would need to have risen to more than 70p over a sustained period – which would yield a profit for taxpayers on our 70% stake of £8bn.

Which looks a reasonable deal for the state – unless you think, as many do, that because bankers were to a large extent to blame for the economic mess we’re in, it’s too early for any of them to be earning this kind of money

Mea Culpa

In an early version of this rant, I foolishly mixed up the Lloyds TSB air miles for credit card story with the RBS Bumper payday for Stephen Hester story. The first effort read more smoothly than the second version, but suffered from the slight problem of being utterly confused.


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