business news in context, analysis with attitude

by Kevin Coupe

Technology writer David Pogue had an interesting piece in the New York Times the other day about Jonathan Kaplan, founder and CEO of Pure Digital, “the company that made the wildly successful Flip camcorders, the company that Cisco bought two years ago for $590 million, the company that Cisco then shut down last month, without any reasonable explanation.”

Kaplan says, in fact, that there was an explanation - the Flip simply was a bad purchase for Cisco because it simply did not fit the company’s business model. In addition, Cisco’s stock price was in trouble, and management felt it needed to do something to reassure investors that it was focused on its core business. (If the stock price goes up over the long haul, Kaplan says, shutting down the Flip business will be seen as a smart move, even if the consumer public has been denied access to a product that was seen as both innovative and successful.)

In addition, Kaplan makes several interesting observations about how to be an entrepreneur:

“It’s like going into a bar filled with 100 beautiful women. You ask the first one, ‘Will you go out with me?’ And she says no. You ask the second one out, and she pours her drink on you. The third one slaps you. Well, most people would give up at beautiful woman No. 2 or No. 3. An entrepreneur is the one who gets all the way to No. 100. And marries her and lives happily ever after.”

“Most people think the way you figure that out is doing a focus group. But the really really successful ones are ones people never thought they wanted. Figure out a way to delight the consumer; You need to figure out what it is. Then use the focus group to see if you’re crazy.”

“If you hire someone bad, fire them immediately and give them a big severance package so they feel good about you. We gave our workers four to six months’ severance, even if they’d worked only four months. You might think that’s crazy. But it was our mistake to hire that person. And it’s not that much money, really ... You have to be willing to fire people. I’ve been fired three times. You’ll all probably get fired. If you’re a passionate person, you will get fired. But you’ll both be better off parting ways.”

Now that he’s out of the Flip business, Kaplan is focused on another company creating a product that he sees as being “simple, nostalgic, memorable, affordable.”

Pogue writes that Kaplan has founded “a chain of grilled-cheese-and-soup restaurants.

“That’s right. He plans to open five The Melt restaurants around San Francisco this year, then 500 more nationwide by 2015. You’ll order online or from your phone; you’ll be sent a QR barcode, which you hold up to a scanner when you arrive at the restaurant. Your sandwich and soup combo ($8) will be ready in one minute.

“They’re upscale grilled-cheese; the combos will include ‘aged gruyere on wheat with wild mushroom soup,’ he says, or ‘goat cheese and mint with carrot ginger soup.’ With each visit, you’ll be asked if you’d like to round up your purchase price to the nearest dollar, with the difference donated to a charity dedicated to fighting world hunger.”

Sounds like an Eye-Opener.
KC's View: