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How Apple Crushed Netflix and Spotify

4/26/2018

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How Streaming Video / Audio Powered Apple Past the iPhone

APPLE STRATEGY REVIEW

DATE: April 7, 2018

LOCATION: 401 W 14th St. NYC

ATTENDEES:

Angela Ahrendts
Tim Cook
Eddy Cue
Jonathan Ive
Luca Maestri
Phil Schiller
Jeff Williams
And
Steve Dowling
Deirdre O’Brien

Tim Cook:
“Good morning and thank you for being here.”

“Ten years ago we acknowledged the need to innovate, to move into new areas of opportunity, as we saw the eventual maturity of the iPhone.”

“Today we can look back with great pride on our achievements.  Today we’ll look back at our results.  Also, we’ll kick off a new five year innovation plan.”

‘Eddy, if you would take us through the Apple Streaming iMusic service.”

Eddy Cue:

“Thanks Tim.   We launched iTunes in 2001.  At that time we recognized that one day the customer consumption may change and the delivery method may need to be augmented. So we built the streaming utility, technically it was iteration 4, following the initial successful rollout of iTunes 1, 2 and 3.”

“It was natural that we offer other delivery methods beyond digital download.  We had the music rights. We had strong loyalty among our users. We had a large and growing customer base.”

Taking On Spotify

“And most importantly, we owned the digital music delivery business.  It was our platform, iTunes, that launched digital. We created the business model with the music publishers and only Apple had contracts for digital distribution. And so, it was our responsibility to continue to evolve with our customers - and we did.”

“When Spotify and others came along, we were the service of choice.  Our existing base was not going to move to Spotify. So the competition was for new customers.  They offered a free service with ad based revenue. We offered 31 days of free service - no ads - and then the same price as Spotify.  Our audio quality was excellent from the start, our interface was simple and elegant and our ability to understand individual user music preferences got better and better.”

“We crushed Spotify and all of the others.  Our market share for streaming music is 66% and has never fallen below 60%. Our 2017 revenue was $11 billion with a 33% margin.  And streaming music led to streaming video.”

“And for that, I’ll turn the meeting over to Phil Schiller.”

Phil Schiller

“Thanks Eddy. We began work on streaming video in 2005, when the streaming feature was added to iTunes.  We tested for 2 years and began testing inside Apple in 2007. We really saw the future of streaming video with our initial work on the iPad.“

“Netflix launched in 2007.  It was a help to us as movie studios understood streaming when we began partnerships in early 2007.  We launched Apple Streaming iVideo in mid 2007 by offering three free movie downloads to our music members - the top three were ‘Little Miss Sunshine’ ‘Batman Returns’ and ‘The Chronicles of Narnia.’ In 2008 Apple’s Streaming iVideo revenue totaled $1.5 Billion with a 27% margin.  In 2017 revenue totaled $15 billion with a margin of 33% and we’re still growing. Our 2017 original production consisted of 12 movies, 12 Series, 6 concerts, 3 boxing matches, 3 Broadway plays, 1 Live Streaming Opera from the Royal Opera House in London and 1 Live Political Debate. And of course we won our 6th and 7th oscar.”

“In 2017, we had a 60% market share for streaming video. Netflix is behind us at 20%.

“The key to success was leveraging very early our iTunes platform.  Our growth was organic as our customers streamed both music and video with a super easy interface and an economical monthly automated subscription - which is deducted from the Apple Visa card.”

“Tim?”

Tim Cook

“Thanks Phil.”

“Before we head to lunch, please accept my thanks and appreciation for your work on these company changing projects.  Apple is the innovation leader in technology.”

“As we won the marketplace for streaming music and video, we’re hard at work on new subscription based services.  I’m excited about our “Apple All In” $129 per month subscription service offering an iMac, iPad, iPhone, Streaming iTunes and iVideo as a service.  We’re testing now and will learn if the pricing and product offering is right.”

“A final thought.  Our critics said that we were a one-trick pony - the iPhone and no other technology.  Thank you critics! Ladies and Gentleman - we love a challenge.”

“So let’s head to our working lunch and we’ll start by going around the table, please take five to ten minutes, and let’s discuss your thoughts on technology service introductions for the next 5 years.”

“And if you will lift your glass, let’s toast a great technology innovation past and an even better technology innovation future.”

“Cheers!.”  

(A Work of Fiction by Gordon Lawrence.  Thank You For Reading)


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“YOUR BANK”  Amazon to Test In-House Finance Products

8/30/2017

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by: Gordon Lawrence
_________________________________________________________________

Location:  Conference Room on 44th floor at Doppler


Attendees: Six Amazon Executives

(Speaker: Vandy Balinshar / Amazon Director of Financial Services)

_________________________________________________________________


“Thanks for your time.”

“Has everyone completed the six page preread?”

“Great.  I will give you a brief summary and then request your input.”

“Your Bank will offer financial services to all of our Amazon members.”

“For individuals, we will offer checking, savings, investments, insurance, retirement accounts, direct deposit, bill pay, mortgages and wealth management.”

“For small businesses, we will offer all the needed financial services, including merchant services and loans, which has been successfully initiated,  and will ramp up the volume.”

“Your Bank gives us unprecedented data which enables us to better serve the needs of our members.”

“Also, we have the very best opportunity to build trust; safeguarding members money transcends everything else on the scale of importance in a relationship.  I should add that our initial member input meetings showed that a trusted bank relationship was the top request when we listed possible new benefits for members.”

“We will purchase a small bank and operate online only, following established precedent by Ally Bank, Bank of the Internet, Everbank, First Internet Bank, Bank 5 Connect, FNBO and others.”

“Trust is priority one now and will always be priority one to members.  Understanding that, we will also offer excellent rates on deposits, about 1.25% which is 100 bp above average deposit rates.  We will offer market leading rates on loans.”

“We will offer a call to action with free Prime service, testing six and twelve months.  Existing Prime members will receive an additional twelve or six months.  We will also test six months upgrade to unlimited music and a free rental movie.”

“The ROE is north of 19% and our payback is 17 months; these projections are approved by the controller and are in section R of your package.”

“I love this product; our team has been working on it full time for 4 months.  We’re passionate and we’re ready to fire up the alpha. And my time is up so I’ll stop here and answer your questions.”

Q1: “Is Your Bank Credit Cards Competition to our Chase Card?”

A:  (All Answers by Vandy Balinshar) “Complimentary, not Competition.  We told Chase from the start that when we have exclusivity with all the purchasing by members then they will have exclusivity with our members for credit card choice.  So our members will have a choice.”

Q2: “Will Your Bank have in-person banking?”

A:  No. We meet all of the needs on-line.

Q3:  “How About Mutual Funds?  ETF’s?

A: ETF’s from the start.  

Q3: “What Will the Funds, Deposited by Our Members, Be Used For?”

A: “To finance debt. To finance company expenses. To replace going to the market for funding.  If we had started five years ago, we could have self-funded Whole Foods (laughs).

Q4: “The Projected Savings for the Interchange are Surely Overstated.  How Will You Negotiate Incredibly Lower Rates”

A: Thanks for the question.  We don’t use the interchange. We don’t use Visa, MasterCard, Amex or Discover.  Your Bank transfers funds internally. Remember that we are the depository of the member’s paycheck. The funds are transferred internally to the provider of goods or services. This starts with all purchases on the platform: in-house Whole Foods and extends to our third party sellers on the platform.  We will add large companies to the platform, offering transactions at a fraction of the interchange.  And we will market directly to our members, who will use “Your Bank” as their payment method of choice.    

Q5: Explain the Initial Testing.

A:  "Amazon team members will be selected to use the service.  And that includes everyone here.  Your accounts are ready to use."

Q6:  “You Are Telling Us That We Will Have Our Own Credit Card System?”

A: I”m saying that we will have our own instant funds transfer system.  Your Bank members will deposit their paycheck automatically with us.  We will use those funds - in nanoseconds - to fund purchases, or fund debt, or fund internal projects. Our sellers, Third parties, will receive funding in real time for completed purchases in comparison to days for interchange. Our cost is de minimis.”

Q7: “We’re Going to Save Billions.”

A: “I think of it as cost avoidance and low cost funding for the Company. See section R for the details."

Let’s Take One More Question:

Q8: “Could the Payment Platform Be Extended?”

A: “That’s Phase two.  Yes, indeed, Your Bank is ideal for all third parties to process payments at a fraction of the interchange fees."

“Does anyone have an objection to proceeding with the test?"

"Seeing none, I thank you for your time and input and we will reconvene in about two weeks with an update.”


Thanks again.”

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CALIFORNIA GOES AFTER TEXAS FOR NEW BUSINESS STARTUPS

7/28/2016

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​(I'm in the conference room of the California Governor's Mansion on H Street in Sacramento with Governor Jerry Brown and Secretary of State Alex Padilla)

CALIFORNIA GOVERNOR JERRY BROWN:

"Alex, we need a bold move.  More than ever we need to make California the most business friendly state.  I heard Texas crowing again about how many new business registrations they had.  And I'm tired of hearing about Toyota moving to Texas."

CALIFORNIA SECRETARY OF STATE ALEX PADILLA:

"We're with you governor.  Over the last month, our team has met to brainstorm ways to get new businesses.  I've got a great idea for you that we are ready to test immediately."

BROWN:

"Alex, we're not cutting taxes"

PADILLA:

"No Governor, our program is not about cutting taxes or services.  In Texas, it costs $300, upfront, to register a new business.  Let's test paying new businesses $300 to register in California.  We would have no fee up front, and then in 90 days pay them $300 via funds transfer (which enablers electronic payment of taxes after we verify that they are open for business.  Let's test it, here in Sacramento.  We'll get feedback from the owners, adjust as needed, mine data, run P and L's and earn if we can expand."

BROWN:

"And we've got a great story to tell.  I like it.  Let's get it started. And get with communications to get the word out tomorrow to all state employees.  I'll have word to all elected officials by noon tomorrow."

PADILLA:

"Yes sir.  My staff is ready to start the program on Monday."

BROWN:

"Great.  And have several one-line marketing slogans to me by 10 tomorrow.  Something like "California, where we invest $300 in each new business startup."

PADILLA:

"I'm on it.  See you tomorrow at 10:00."

BROWN:

"Can't wait to see what Texas does.  Great to have them responding to us." 
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STARBUCKS TO TEST WORKSPACE RENTAL (For Non-Revenue Customers)

7/22/2016

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(I'm in the conference room with Starbucks Senior Managers at their HQ on Utah street in Seattle)​

SCOTT MAW 
(Chief Revenue Officer)

"Team, This meeting is to get your input for a revenue opportunity.  On the big screen, and in your passouts, you can see we 30 U.S. stores in 3 markets in which 33% to 40% of our patrons are non-revenue.  Our takeaway from this meeting is at least one, and as many as three, actionable items, tests if you will,  beginning within the next two weeks.  I'll have our meeting notes to Howard later today."

AIMEE JOHNSON
(Customer Relationship Manager)

"Scott, have we fully quantified the value of a client?  Our non-revenue clients speak to neighbors, family and friends positively about us.  Non-revenue customers may revisit as paying clients.  And I know of several who became partners."

MAW:

"Thank you Aimee.  Noted.  However our goal is to generate actionable ideas for a test.  Will you be providing input?"

JOHNSON:

"Yes, Scott, but let's let other team members jump in."

CLIFF BURROWS:
(President)

"Scott, what if we took the lead of WeWork and other co-locate firms and made our tables available for an hourly rate.  For example, sales men and ladies could reserve their favorite table, on-line, in advance and be sure that the table was waiting when they arrived. And of course, many will also purchase food and drink.  And for pricing, may I suggest $7 per hour?"

MAW:

"Adam, do we have a big hit in IT"

ADAM BROTMAN
(CIO)

"No.  The solution would be rudimentary to meet the two week deadline, but that is helpful as we get data before a big commitment.  The idea makes great sense to me, however does it address non-rev?"

MAW:

"Let's see this to the end.  Does anyone have input to the reserved table proposal?"

LUIGI BONINI:
(Global Product Innovation)

"I'm in.  And I would like to help with the training video and ops support."

CHRISTINE BARONE"
(SVP Stores)

"I like it. I'm in - assuming that we test multiple price points, payment in advance and rewards."

KEVIN JOHNSON
(COO)

"I'm in.  And let's discuss how to adapt the idea to our non-rev clients.  And I appreciate that we need to be very sensitive to our clients and present a solution that honors them."

SCOTT:

"Kevin, please continue."

K. JOHNSON:

"LED sign holders on each table. Thank you for visiting Starbucks.  We are testing a program for patrons who choose not to make a purchase to rent this table for $3 payment per hour."

A. JOHNSON:

"With all due respect, that's clunky" 

What about: "Dear Patrons. If you will not be joining us for a beverage, we would appreciate a $3 payment per hour.  This is voluntary. Thank You."

MAW:

"That's got the essence of our proposal.  Luigi, would you have marketing develop 6 sample table top LED signs as well as six value propositions to cover both suggestions in ten stores each. We'll go live in test mode in two weeks starting on a Tuesday.  And we'll meet here in two days, same time, to review the marketing and fine tune the programs. 

"Let's go around the table."

(All nod heads in agreement).

"In that case, we're wrapped up.  Thank you for your input and support."
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HILLARY CLINTON DEBATE PREP:  TAXES, TAXES AND WHEN WILL YOU RELEASE YOUR TAXES?

7/18/2016

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ROBBY MOOK:

"Let's stop for a minute.  Madam Secretary, we must include more references to Trump's Taxes.

I suggest a minimum of 4 references in the debate.  

We can turn any economic question into taxes."

HILLARY CLINTON:

"Robby, I need to show the difference between my programs and his lack of programs. 

That's number one."

MOOK:

"No.  Number one is the fact that you released seven years of taxes on July 31, 2015.

Where are his?

What is he hiding?

When will he release them?

That's number one."

JOHN PODESTA:

"Hillary, I agree.  

He calls you 'Crooked Hillary and he does not release his taxes?

We need to emphasize and re-emphasize.

If the question is Iraq, your answer is, 'I'll get to that in a minute.  But first I've got to ask, why will Trump not release his taxes?'

Turn to him when you say it.  

And refer to him as Trump.

Taxes - that's number one.

He's not getting a free ride on this.

And that's what we want the 100 million viewers to focus on.

Joel?"

JOEL BENENSON:

"Agreed.  His biggest weakness is failure to release taxes. Mitt created it as an issue. It's our #1 opportunity."

CLINTON:

"Got it. Got It. Got it. 

Let's get back to work.

Taxes. Taxes. Taxes"
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​TRUMP TO PENCE:  I WILL LIVE AT TRUMP TOWER.  YOU WILL LIVE AT THE WHITE HOUSE.

7/16/2016

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by Gordon Lawrence

(I am seated against the wall in the Trump Tower meeting room on the 26th floor)

DONALD TRUMP:

"MIke, thanks for meeting with us.  

There are some things that you need to understand before we offer you the position of Vice President."

MIKE PENCE:

"Thanks Donald.  I appreciate the opportunity to wrap this up and get to work to elect you."

DONALD TRUMP:

"First, we see you as the COO.

As Chief Operating Officer, you are responsible for all of the day to day decisions involved in running the government.

I'm the CEO.  I decide on wars, and I sign laws and I make all of the CEO decisions.

After the election, you will work with Congress and the White House staff every day.  

I'll work with you.  

Of course, there will be times when I meet with Congress but that will be rare.

That's your job."

"Second, based on this arrangement,  I'll be living in Trump Tower. You will be living in the White House.

When I stay in Washington, I'll stay at Ivanka's new project,  Trump International Hotel at 1100 Pennsylvania Ave.

I can walk to meet you at the White House."

"Third, I'll have a TV show taped at 6:30 and shown live at 8:00 pm Monday through Friday.

I'll tell the citizens who is doing their job to help us get our goals accomplished.

And I'll tell them who is blocking us.  And I'll tell them who to call to complain.

Now for my show, I'll need your input.  Donnie or Eric will be in touch during the day.

So Mike, what do you think?"

PENCE:

"Donald, it's a great plan.  I have nothing to add at this time.  

However we will have a lot of work to do to get on the same page.

And I need your word that when I need to speak with you, that you will be available immediately.

TRUMP:

"Mike, I guarantee you that we will be on the same page.  

Sooner than you think.

And yes, when you call, I answer. 

Just be sure that it is a matter that needs the CEO's attention."

Donnie, Eric, Ivanka, Paul: anything to add?"

(silence, heads shaking no)

TRUMP:

OK, Mike, anything else?"

PENCE:

"No Sir. Let's get to work."

TRUMP:

"Right.  Paul, take some time to cover our schedule for the next week."
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"Madam Secretary, We're Projecting 70 Million Viewers for Debate One"

6/30/2016

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(I am a back bencher in a Hillary Clinton staff meeting)

HILLARY CLINTON:

"OK, Robby, what do we have?"

ROBBY MOOK

"Joel Benenson has an update."

JOEL BENENSON

"Madam Secretary, I'm projecting an audience of 70 Million for the First Debate."

CLINTON

"70 million, that is far too high.

JOHN PODESTA

"Hillary, it's 70 million.  It's 60 million.  It's 80 million. Whatever, it massive and it's important because it's the largest gathering of independent and undecided voters we will have.  And the first 10 minutes could make or break the campaign."

CLINTON

"How many people watched Trump's first debate?"

(Everyone turned to Benenson)

BENENSON

"25 Million."

CLINTON

"And this will be three times larger?"

PODESTA

"Yes.  Because it's you and Trump.  Because it's been back for forth for three months and now it's live and in person.  And because it's on every channel - all over the air and all the cable shows - not just Fox which carried Trump's first debate, alone."

"Hillary.  The buildup will be enormous.  The start of the debate will be electric."

(Everyone turns to Clinton)

CLINTON

"Got it.  Robby what time is today's debate prep?"

MOOK

"Madam secretary, that would be 1:30."

CLINTON

"Great.  I'll see everyone there. Now I'll be having lunch with my daughter and grandkids.  Thanks all.  And Joel - I appreciate you."

BENENSON

"Madam Secretary.  You are very welcome."

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Donald Trump Announces: "From Now On, We Only Do Live Interviews."

6/26/2016

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(I'm a back bencher in the Monday morning Trump for President Staff Meeting

DONALD TRUMP:

"From now on, we're taking charge of the interview process.  I'm not allowing editing, I'm not allowing taping, I'm not allowing the media to take my responses and use them to different questions.  So Hope, get the word out.  Live or No Interview."

PAUL MANAFORT:

"Donald, sometimes they are speaking to you and they are not live on the air.  We could miss a lot of media."

TRUMP:

"Paul, they will change.  We're the content.  We're drawing the ratings.  And when I make a speech, they cut into regular programming and come to me.  That's how it is."

"And this applies to you,  Donnie, Eric and Ivanka.  If it's taped, walk out.  No exceptions, without my approval."

"OK, that's it. Thanks everyone."




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"Paul, I Just Don't Know How Much Longer i Can Be RNC Chairman" 

6/17/2016

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(I'm in the office of Reince Priebus as he meets with Speaker of the House - and Old Friend - Paul Ryan)

REINCE PRIEBUS

"Paul, I was on the plane trip to Dallas with Trump.  I wanted to ask him to tone it down, to be more presidential and discuss how we can take action now to unify the party and strengthen the down ticket."

PAUL RYAN

"Sounds like a Plan.  How did it go."

PRIEBUS

"Couldn't have gone worse.  He complained the whole time about bad press, about how I was not doing my job, about how I need to get McConnell and the Senators to back him on every issue."

"Hell, I never even got around to my agenda"

RYAN

(starts laughing.  Quietly, at first, and then loudly)

"Reince, that's the first meeting you've ever not been in charge.  So how are you and the Donald getting along?"

PRIEBUS

"Terrible.  He is under the mistaken idea that I work for him and that I'm constantly waiting for his orders."

RYAN

(laughs out loud)

"Well Reince, isn't that your job as RNC Chair?"

(Priebus throws a magazine at Ryan, who catches it with his right hand)

PRIEBUS

"No Paul, that is not my job.  But every day I have less and less control.  And believe it or not, I know exactly what is going to happen to me."

RYAN

(still laughing) 

"Let me guess, a best selling book and a great screenplay for a three year show that replaces House of Cards." 

PRIEBUS


"If we win, Trump fires me - If I make it to the election - and says he won in spite of the RNC.  If I lose, Trump fires me and blames me for the loss."

RYAN

(laughing)

"And if we lose the White House and Congress - You are practicing law in Kenosha.  You may need to consider part time work because your lawyering might be a bit slow.  Or you could teach at Whitewater, your alma mater. The fishing is great in Lake Koshkonong."

PRIEBUS

'Having fun Paul? Having a good time here?  Are you really into schadenfreude?

RYAN

"Impressive vocabulary!  Maybe you should teach high school English."

"Listen, no one can help you.  You are in charge of a once-in-a-hundred-years hurricane."

"And you're right. It's not going to end well for you." 

"So stop complaining and do the best job you can."

"Do I wish Jeb or Marco, or even John, won?  Yes.  They didn't.  And now Trump is all yours."

PRIEBUS

"Thanks!"

RYAN

"Don't mention it."

"Can I buy you lunch?" 

"You could use some protein - a lot of protein."

PRIEBUS

"Sure, and words can't express my appreciation for your words of wisdom."

"Now I see the wise counsel that got you the Speaker job."

(They both start laughing),

RYAN

"Right - I didn't want this job either."

"So you came to the right place. We're the champions of wrong place at the wrong time."

(both laugh out loud - and proceed to lunch)

----Gordon Lawrence

  


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"Madam Secretary, It's Time for Debate Prep"

6/10/2016

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(I'm in the main meeting room at the Clinton for President HQ in Brooklyn. I'm seated in the back)

ROBBY MOOK

"Madam Secretary, next is our one hour debate prep meeting. I have..."

HILLARY CLINTON 

"Robby, I'll be passing on debate prep today.  What else do we have?"

JOHN PODESTA

"Hillary, we are committed to daily debate prep.  We agreed, you and staff, that this was a top priority."

CLINTON

"Yes, John, and that was before my foreign speech in San Diego.  We agreed that was a home run and now we'll pick up debate prep after the convention."

MOOK

"Madam Secretary, today's meeting includes a visit by Senator Schumer. He will fire twenty-five questions and we're well served to hold this meeting."

CLINTON

"Call Chuck and tell him we're rescheduling. He will appreciate the found time."

PODESTA

"Hillary, this is too important.  And this is one event that we must invest the time.  Please look at the first debate with Trump as we do  - the election is riding on it."

CLINTON

(Staring at Podesta)

PODESTA

"OK John, you win.  Let's go have a debate."

And Secretary Clinton smiled, and then everyone in the room smiled, and laughed.

And Mook texted the debate prep team, and the lecterns were brought in.  And Mook received a text from the driver that Senator Schumer was 10 minutes away.  Mook nodded to Podesta, and Podesta returned the compliment.

​

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