Friday, November 22, 2013

10 People Built an Amazon Competitor for $1 Million—in Just 90 days

If Amazon is the online Walmart, Boxed is the online Costco.

CHRISTOPHER MIMSNOV 22 2013, 12:52 PM ET

“Being a scrappy startup, it’s funny to see some of our designers forklift once in a while,” chuckles Chieh Huang, CEO of Boxed. Unlike most of Silicon Valley, which seems obsessed with multi-billion-dollar valuations for whatever ephemera the kids are into these days, Boxed moves just as many atoms as bits. It’s an online store that, like Amazon, will deliver whatever you buy to your door—but only in bulk. If Amazon is the online Walmart, Boxed is the online Costco.

Boxed began building its e-commerce platform just six months ago, with a little over $1 million in initial funding. Three months later, it went live with an app for the iPhone (there’s now an Android app too but so far, at least, it’s not building a shopping website) and a pilot program delivering in New York and New Jersey. It rapidly expanded, and as of a week ago, it can now ship to everywhere in the lower 48 states of the US. Shipping is free on orders of $75 or more, and they are delivered overnight to Philadelphia, Washington DC, Boston, New York and Los Angeles, and within two days to everywhere else.

Scaling at that rate is easy for software-only companies. Doing it for a nationwide retail operation, with supply chains and warehouses and delivery logistics, using a team of just 10 engineers and project managers who mostly came from building mobile games, feels like a minor miracle.

Part of the secret is that a lot of the physical work can be farmed out to others. UPS handles the “last mile” problem of delivery so well that Boxed doesn’t need a fleet of trucks, just some warehouse space in which to store goods before sending them out. (Amazon, likewise, relies on others for delivery.) The warehouse is rented. The wholesale goods themselves are ordered directly from manufacturers, and Boxed doesn’t re-package them.

Stay Away From the Heavy Stuff

Boxed has been generating revenue from the day it launched, and while it offers free shipping on orders above $75, it has kept costs low by carrying only a limited range—currently about 600 items. Those are the things people are most likely to buy, says Huang.

Except, that is, for things like bottled water and 50-pound bags of dog food. Items that are especially heavy and especially cheap break the business model. ”Bottled water selling for $3 apiece doesn’t make sense right now—we would lose $30 per order,” says Huang. “But detergent, we found a way to make that work.”

But What About Amazon?

New parents love Amazon for overnighting huge parcels full of diapers and other essentials. So it’s curious that something like Boxed needs to exist at all. But in Huang’s view, “Amazon doesn’t do wholesale. If you look up stuff we sell in sizes we sell, Amazon either doesn’t carry it, or they carry it through a reseller who marks it up 25-30% higher than we do. Online, there’s not many things per unit that are cheaper than what we sell right now.”

Like most new businesses, though, the concept isn’t the one it started with. When Huang and his team started Boxed, they thought their most avid buyers would be young, technologically savvy men in cities who would buy things like protein powder and energy bars—but those items barely moved. “It turns out the use case is actually… you’re a mom who would rather spend time with her kids on the weekend than burn a whole afternoon at Costco,” says Huang. As a result, the company’s customers skew heavily female.

In the Future, No One Shops For Toilet Paper

So what next? Having carved out a niche, Boxed now wants to help people shop in a smarter way. The basis of that is a predictive shopping algorithm that Huang’s engineers built from scratch.

Amazon has for years been suggesting things its shoppers might want to buy, based on comparisons between their shopping histories and those of others. Many other online stores do something similar. Huang wants to go further, and understand how customers are living their lives and how fast they consume the things they buy in bulk. The idea is that, as soon as you’re out of toilet paper or granola bars, Boxed will know, and offer to re-supply you before you even think to go shopping.

“With everything going into mobile devices, [in the future] I just can’t imagine us standing in line buying toilet paper,” says Huang. “It just won’t be a part of human behavior. We’re trying to get ahead of that game.”

Tuesday, November 19, 2013

Tipping Is an Abomination

Here’s how to get rid of it.

By Brian Palmer

When wealthy Americans brought home the practice of tipping from their European vacations in the late 19th century, their countrymen considered it bribery. State legislatures quickly banned the practice. But restaurateurs, giddy at the prospect of passing labor costs directly to customers, eventually convinced Americans to accept tipping.

We had it right the first time. Tipping is a repugnant custom. It’s bad for consumers and terrible for workers. It perpetuates racism. Tipping isn’t even good for restaurants, because the legal morass surrounding gratuities results in scores of expensive lawsuits.

Tipping does not incentivize hard work. The factors that correlate most strongly to tip size have virtually nothing to do with the quality of service. Credit card tips are larger than cash tips. Large parties with sizable bills leave disproportionately small tips. We tip servers more if they tell us their names, touch us on the arm, or draw smiley faceson our checks. Quality of service has a laughably small impact on tip size. According to a 2000 study, a customer’s assessment of the server’s work only accounts forbetween 1 and 5 percent of the variation in tips at a restaurant.

Tipping also creates a racially charged feedback loop, based around the widely held assumption—explored in an episode of Louie, in the Oscar-winning film Crash, and elsewhere—that African-Americans tend to be subpar tippers. There seems to be some truth to this stereotype: African-Americans, on average, tip 3 percentage points less than white customers. The tipping gap between Hispanics and whites is smaller, but still discernible in studies. This creates an excuse for restaurant servers to prioritize the needs of certain ethnic groups over others.

Irrelevant or insidious factors will dominate the tipping equation until quality of work becomes the main driver of tip size, but that’s unlikely to happen. And tip size isn’t the real problem anyway. The real problem is that restaurants don’t pay their employees a living wage. The federal “tip credit” allows restaurants to pay their tipped employees as little as $2.13 per hour, as long as tips make up the shortfall—which turns a customer into a co-employer. Although federal and state law requires restaurants to ensure that tips bring employees up to minimum wage, few diners know that. (Hosts/hostesses, bussers, and food runners, who receive a small fraction of the servers’ tips, often fall short of minimum wage on some nights.) The tip credit has turned the gratuity into a moral obligation, and we ought to cut it from our statute books with a steak knife.

The only real beneficiary of the preposterously complicated tip credit is lawyers. Imagine what it’s like for a company running restaurants in multiple states. There’s no tip credit in some states, like California and Washington, where tipped employees must be paid the full minimum wage. Hawaii allows the tip credit only if the combined tip and cash wage surpass the statewide minimum hourly wage by 50 cents. New York and Connecticut have different minimum wages for servers, hotel employees, and bartenders.

Then you have to consider time that employees spend on activities not likely to yield tips. Applebee’s, for example, has suffered a series of legal setbacks in lawsuitsbrought by tipped employees seeking back pay for time spent cleaning toilets and washing glassware.

The laws regarding tip sharing and tip pooling, which occur in virtually every restaurant, are even more complicated. Federal law allows mandatory tip sharing, but only among employees who customarily receive either direct or indirect tips. That means servers, bussers, food runners, and hosts and hostesses can be required to pool their tips with each other, but not with managers. Unfortunately, the line between service and management is fuzzy in many restaurants, and differences between state laws further complicate matters. A California judge ordered Starbucks to pay $105 million in 2008 for forcing 100,000 baristas to share tips with supervisors. Last week, the New York Court of Appeals reached the opposite conclusion, ruling that New York law allows the arrangement. Chili’s has also lost a multimillion dollar judgment over tip sharing.

The entire mess is begging for some certainty and predictability. Restaurants need a clear set of rules to follow. Servers should have a steadier income stream. Hosts and bussers, who have relatively little interaction with customers, ought not to be involved in tipping at all. Customers need more clarity as well, instead of worrying at the end of a meal if the waiter, or your guests, approve of your 17 percent tip.

I’d like to propose a solution. First, ask your state and federal representatives to abolish the tip credit, which would turn tips back into actual gratuities: something given free of obligation. Second, announce your tipping practice to your server as soon as you sit down. Virtually every other employee in America knows how much they’ll be paid up front, and somehow the man who sells me shoes and the woman who does my dry cleaning still manage to provide adequate service. I have no doubt waiters and waitresses are the same. Finally, tip a flat, but reasonably generous, dollar amount per person in your party. Around 20 percent of Americans, mostly older people, tip a flat amount already, so it’s not exactly revolutionary. A server’s pay shouldn’t be linked to whether or not you have room for dessert.

Friday, November 15, 2013

How To Create The Next Jonathan Ive

A NEW BOOK ON APPLE'S ENIGMATIC DESIGN GENIUS ARGUES THAT APPLE OWES ITS SUCCESS PRIMARILY TO BEING A "DREAM ENABLER" FOR DESIGNERS.

Apple's Senior Vice President of Design Jony Ive is simultaneously the most famous and most enigmatic industrial designer on the planet. Quiet, soft-spoken, and self-deprecating, Ive has still managed to democratize high design, bringing the beauty, simplicity, and purity of uncompromised design principles to the lives of hundreds of millions of people across this planet.

Yet according to Leander Kahney, author of the bookJony Ive: The Genius Behind Apple's Greatest Products, Ive is not so different from many designers. "There are a lot of potential Jony Ives out there," says Kahney, "But none of them have access to the sort of resources that Ive has, or have found an advocate for their talents like Steve Jobs." If Apple's success has proven anything, it's that many designers can become the next Jony Ive, if their companies become their dream enablers. And the companies that do so may become the next Apple.

What’s it like to be a designer at Apple? "The designers at Apple have the best jobs on the planet," asserts Kahney, who conducted dozens of interviews with friends and colleagues of Ive to put together his book, the most thorough biography yet of Apple's secretive design genius. "Inside Apple, everyone defers to the design studio. They're called the idea team, and you can't say no to them. And Jony Ive leads not because he's the most forceful personality, but because the team respects him as its most talented member."

Working within Apple's Design Studio is almost a rockstar job. The 17 designers who work for Ive are a disparate bunch, coming from backgrounds designing cars, shoes, and even wetsuits. Independently recruited by Ive, they work with complete freedom, and are rewarded with huge salaries and generous stock options. Designers come into work late, rarely work weekends, and get plenty of time off, including a team ski trip in which the entire design team is flown by helicopter into British Columbia to a remote mountain location for snowboarding.

It wasn't always this way. When Steve Jobs came back to Apple in 1997, says Kahney, the designers at Apple, including Ive had no power: design was driven by engineering and marketing teams, who would cook up long lists of features they thought their customers needed, then give it to Ive and his colleagues for a skin job. "It was the worst possible work flow," Kahney tellsCo.Design. "Apple was creating nothing but middling products that had been designed by committee in the worst possible way."

What Jobs did, says Kahney, was become Ive's "dream enabler." When Jobs and Ive were working on their first product together, the iMac, Ive wanted to put the USB ports on the side, where they would be easily reachable. Apple's engineers said it just wasn't done: they had to go in the back. Jobs settled the argument, siding with Ive and telling the rest of Apple to make his visions a reality, no matter what. It is a balance of power that exists within Apple to this day: even after Jobs's death, design is law at Cupertino.

"Look at Samsung, and it is patently obvious that designers there have no power," argues Kahney. "They are a classic example of an engineering- and marketing-driven company. Look at something like the Galaxy Gear, and it's clear that lists of features define Samsung’s gadgets, but not a simple question like, 'What is this for?' Apple designers start with that question."

Like many designers, Ive is committed to his craft, and obsessed with concepts like simplicity and purity. But what really separates Ive from the thousands of would-be Ive's out there is that he was recognized and empowered.

"Steve Jobs was obviously a genius," says Kahney. "But he couldn't code, wasn't an engineer, never designed anything. The reason Apple came up with as many breakthroughs under Jobs as they had is because he had a genius system: he would set up small teams of silicon pirates within the company and give them as much freedom as possible to get things done."

No other department within Apple better exemplifies Jobs's system than the one headed by Jony Ive. It is the beating heart of Apple that pushes blood into every limb of the company. It is responsible for the iMac, theiPod, the iPhone, the iPad, and has helped make Apple the world's most valuable tech company, as well as revolutionize consumer design. If there's a lesson from Kahney's book, though, it's that more companies can achieve Apple's success, if they simply recognize that quiet designer in the corner and give him more power. Because that's the way you create the next Jony Ive.

Tuesday, November 12, 2013

The Unlikely Alliance That Ended Sunday Mail Delivery ... in 1912

Amazon's new deal with the U.S. Postal Service will reverse a century-old approach to mail.

MEGAN GARBERNOV 12 2013, 11:12 AM ET

A newspaper delivery vehicle for the *Sunday Mail* in Brisbane, Australia (Wikimedia Commons)

With the help of an extremely 21st century company, the Postal Service is going back—in a small way—to its 17th-century roots. When the U.S. Postal Service teams up with Amazon to offer Sunday mail delivery, the move will mark the first Sunday mail delivery the U.S. has seen, with a few exceptions, for a century.
The USPS, as Alexis points out, has long been an early adopter. The system that laid, literally, the groundwork for a growing nation wasn't just about mail; it was also about connection. It was "the sole communication lifeline of the newly formed nation." The Founders and their followers recognized this. Until the USPS was reorganized in the 1970s, the final position in the presidential line of succession was, yep, the Postmaster. And in 1810, Congress passed a lawrequiring that local post offices be open for at least an hour on Sundays; most were open for much longer.

Despite and because of all that, the Postal Service was also … a party. As the historian Claude Fischerputs it, "post offices themselves were important community centers, where townsfolk met, heard the latest news read aloud, and just lounged about." (The offices played that role, in part, because the Postal Service didn't offer home delivery, even in large cities, until after 1860.) On Sundays, that town-center role was magnified. When everything else was closed but the local church, post offices were places you could go not just to pick up your mail, but also to hang out. They were taverns for the week's tavern-less day. "Men would rush there as soon as the mail had arrived," Fischer writes, "staying on to drink and play cards."

Post offices, as a result, were also sources of controversy. In the 1820s, leaders from a variety of Protestant denominations campaigned to end Sunday delivery on religious grounds. Similar movements would arise over the course of the 19th century. And the objection wasn't just to the Sunday-ness of Sunday delivery, to the fact that mail delivery on Sunday was a violation of the Sabbath. It was also to the social-ness of Sunday delivery. The six-day-delivery campaigns, Fischer writes, were "part of the churches’ wider efforts to enforce a 'Puritan Sabbath' against the demands of Mammon and against worldly temptations like those card games." Exacerbating the problem, from the Puritanical perspective, was the rise in immigration among Catholics, "many of whom," Fischer notes, "celebrated 'Continental' Sundays which included all sorts of secular pleasures—picnics, even beer halls—after (or instead of) church."

The Ellisville, Illinois, Post Office, photographed on July 30, 1891 (USPS)

But the many protests that periodically sprang up to challenge Sunday delivery would, inevitably, fail. There was, for one thing, a First Amendment argument to be made in favor of daily mail delivery: To prioritize Sunday over another day—many religions, if they celebrate a Sabbath, do so on Saturday—would be, implicitly, to prioritize one religion over another. In 1828, the Kentucky Senator Richard M. Johnson, chairman of the Senate Committee on the Post Office and Post Roads and a devout Baptist, declared any federal attempt to give preference to the Christian Sabbath to be unconstitutional. The line between church and state when it came to Sunday mail delivery, he argued, "cannot be too strongly drawn."

The more pressing argument for Sunday delivery, however, was economic. "The 1844 invention of the telegraph would eventually put an end to the commercial need for daily mail," Susan Jacoby notes in an essay on religion and the Constitution, "but in the 1820s and '30s, business still depended on the government to keep the mails moving seven days a week." Back then, a significant proportion of business dealings—not just correspondence, but financial transactions—was conducted through the post office. Businessmen argued that they needed Sunday posting capabilities to do their work. And they "found allies," Fischer notes, "among some evangelical ministers, particularly Baptists, and among secular laymen who saw the sabbatarian drive as a power grab by high-status, eastern churchmen."

Toward the end of the 19th century, though, another alliance would arise: Religious leaders would join with organized labor to end Sunday mail delivery. For workers, closing post offices on Sundays wasn't necessarily a matter of religion, but it was a matter of time. A Sunday-less work week was also a six-day work week. (Though, Fischerpoints out, "the church-labor alliance did have its limits. Protestant ministers and the union men disagreed on how the Lord’s day of 'rest' should be spent—in religious devotion or in play.")

It proved to be the right alliance for the right time. By the early 20th century, new technologies—the telegraph, the telephone, the train—had reduced people's urgent reliance on the Postal Service. They could then, better than they could have before, do without Sunday deliveries. In 1912, without any debate on the matter, Congress added a rider to a funding bill. It ordered that "hereafter post offices ... shall not be opened on Sundays for the purpose of delivering mail to the public." On August 24, Taft signed the bill into law. On September 1, it was enacted.

And for just over a century, that law was, with its few exceptions, obeyed. As a result, we've all grown up in a United States that translates the logic of the Bible—Sunday, the day of rest—to the commercial and communicational lives of its citizens. In a small way, thanks to a company that is also an early adopter—and that is also, in its way, reorganizing the nation—that is now changing. The day of rest need no longer be fully restful. If you are, that is, a member of Amazon Prime.

Monday, November 11, 2013

Help Veterans by Taking Them Off the Pedestal

A former infantryman in Iraq reflects on how the culture of military service has changed since World War II. Unhelpful attitudes from civilians and veterans alike, he says, are making it difficult for today's servicemen to transition back to post-deployment life.

ALEX HORTONNOV 10 2013, 7:00 AM ET

Veterans Day parades can reinforce the feeling, for recently returned servicemembers, that their best days are behind them.

My generation of veterans has adopted an odd moniker: The Next Greatest Generation. We grew up watching Band of Brothers and found parallels in this dramatization of World War II experiences to what we saw in Iraq and Afghanistan—brotherhood, sacrifice, the struggle to endure long and bitter conflicts. We’re just as capable as they were, and they changed the world, the thinking goes. We proclaim our greatness at the beginning of the second chapter of our lives.
But there’s a problem with that logic: It means our sense of greatness is derived from that first chapter. While some of the greatest contributions the World War II generation gave this country happened after the war, our self-admiration is based entirely, by contrast, from our time in service. And that troubling attitude means a continued isolation from the society we left behind.
A recent piece written by Raul Felix, a war veteran in college, is a good example. The author takes a patronizing view toward civilian members of Generation Y, suggesting that they are complacent and lacking worldly wisdom. While the standard “think piece” on the civilian/military divide laments the fissure between the groups, this one champions it: “Your major tests were your finals, ours was going to war,” Felix says. “You heard and read about it from the news; we lived it.”
I once talked to a World War II veteran about the experience of attending college after coming home, and asked if it was jarring to sit next to those who never served. I wondered if veterans huddled together under the umbrella of mutual understanding and thought less of civilians who never shouldered a rifle. His answer was surprising. They were proud of their time in uniform, he said, but for many, the war interrupted their lives, and education was a return to normalcy. Instead of a victory lap, they were more interested in getting back on track.

Perhaps the fact that many Iraq and Afghanistan veterans I’ve talked to take precisely the opposite view is due, in part, to current civilian attitudes. I call it the pedestal problem.
For many civilians, veterans are thought about in the span of football halftime shows, where we gawk at troops standing on the sidelines while the camera lingers on flags flapping in the wind. The word hero is tossed around and abused to the point of banality. The good intentions of civilians are rarely in question, but detached admiration has always been a stand-in for the impulse to do “something” for veterans.
So civilians clap at football games. They applaud returning troops in airports in outward appreciation, satisfied with their magnanimous deeds. Then—for many of them--it’s back to more tangible concerns, like the fragile economy. A veteran’s résumé might come across your desk, but if you’re like more than half of these surveyed hiring managers, you harbor suspicion and fear about post-traumatic stress episodes in the workplace.
That’s the problem with viewing something on a pedestal: you can only see one side at a time, and rarely at depth. It produces extremes—the valiant hero or the downtrodden, unstable veteran.
Thank you for your service. But we’re looking for someone else.
The view from the pedestal has warped the perspective many veterans hold when they leave the service. We call ourselves warriors and worship the Spartan ethos, but don’t always appreciate that our society is detached from our conflicts the way Sparta never was.
The superiority complex on the part of volunteer troops and veterans was described as far back as 1997 and has compounded with two conflicts and countless trying moments that have fed our pride. One could walk the earth for decades before finding a sense of worth and belonging that equaled what some of us experienced while in service.
From the first time we walk into a recruiter’s office to our last out-processing brief, we’re told recognition is exactly what we can expect. We’re ahead of the curve. We can lead and train. We are, we tell ourselves, more prepared than our civilian cohorts.
Unfortunately, many of us have found this isn’t the case, but that chip on our shoulder doesn’t tend to fall off. It leads to frustrating feelings that civilians don’t value our experiences in the workplace or the classroom.
I know I’ve felt that way during my undergrad years at Georgetown University, where I’ve constantly championed my own experiences and perspective over others. After some time, I realized this was self-destructive. I’m here in my senior year to learn just as they are, and my frustrations lead me to understand that I’m both more and less prepared at tackling life than my classmates. Younger students, for example, can look at and discuss the world as if seeing it for the first time. There is value in an uncolored perspective. I have to constantly remind myself not to view everything through the lens of a cynical former door-kicker.
The intangibles veterans bring are important—discipline, teamwork, leadership. But those things are the icing when we thought they were the cake.We have a completely different mission to gain new expertise and education that complement our military-honed skills. Our task isn’t simply to cram a military circle peg into a civilian square hole. There’s potentially a high price for trying to do that. Younger veterans struggle with employment because it takes some time to recognize the need to be more than the sum of our military experiences and accomplishments. There’s a natural period of underemployment, of course, as veterans gather new credentials, but I fear too many can and will read it as a sign that civilians don’t appreciate them, and in doing so give in to frustrations that can further delay transition into a productive post-deployment life.
The place to begin is to understand ourselves—and what we need to begin defining success after we leave the service. In addition, our society should be less concerned with freebie giveaways and boilerplate op-eds on Veterans Day, and more concerned about how to provide opportunities for our veterans to flourish after their service. There is a trio of veterans organizations dedicated to exactly that. The Mission Continues and Team Rubiconfocus on rebuilding community and regaining the sense of mission that dissipated after service. The Pat Tillman Foundation provides continued education for veterans who show potential to lead across all sectors.
All three groups have recognized the work isn’t over for veterans of Iraq and Afghanistan, and what we’ve carried so far is of great use to the country. But follow them closely and you’ll find their members match determination with humility. There is much to do, and, much to learn.
If you want to contribute something toward veterans in a tangible way without the condescension of giving us baseball tickets and parades, these organizations are a great place to start.
Moving forward will be difficult; in many ways we’re continuing down a path, but in others, we’re beginning one. But there is great promise in what we’ve accomplished, just as World War II veterans understood when they parlayed their grit into something more at home.
It’s time to climb off the pedestal and view our potential from all sides so we can honestly evaluate ourselves and where we’re headed. Veterans Day can become a time when we look forward—and not simply take nostalgic glances into the past, where we foolishly see ourselves as having been the best we’ll ever be.

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