Trends in Design for Financial Services, April 2014

I frequently design financial services, and having just rolled off a project took some time to reflect on trends I’ve noticed. Here’s the first three that came to mind:

  1. Active participation by the affluent: Sometimes financial services companies assume the affluent don’t want to interact with computer services themselves. In reality, the affluent don’t want to feel like they have second-class tools compared to their less-affluent friends who use sexy mass market services. I first saw this in 2008 doing international research for the private banking unit of a giant bank and again more recently with an insurance company.
  2. Breakdown of client vs. consultant views: It used to be common to pour all the design work into the client-facing screens and rush through the consultant-facing screens. With the spread of smartphones and tablets everyone expects top-notch design, and consultants will work on their tablets alongside the client.
  3. Breakdown of mobile vs. desktop: When mobile was new a lot of attention was paid to what it meant to design for mobile. Now people expect services to just work on whatever device they’re using.

Good Design Can Make the Elevator Pitch Futile

I had a five-minute conversation with an angel investor last week and described the product I’m working on. His response: “Similar things are being done by bigger companies with giant marketing budgets, so you’ll need a very clever marketing idea to succeed. What is it?”

There was an uncomfortable pause. On one hand, I haven’t thought up any great marketing ideas yet and wondered if that was a hole in my plan. On the other hand, I was pretty sure this investor and I had very different perspectives on product development, but I didn’t have the language to succinctly express that gap.

I did understand what he meant. A few years ago I managed a large online dating service. We radically updated the design and added great features, but it was the online marketing that kept the revenue coming in. Why? I believe that while the design was good, the product wasn’t positioned to differentiate it from the competition. By contrast, if you design a product that’s different and more exciting than the competition, like the Anki DRIVE, there will be a lot more free media exposure and word of mouth to complement paid marketing.

My downfall, I think, is that I was trying to tell this investor about the product rather than show him. If my new and improved positioning is a result of product design, I need to show the product. For example, if I verbally described the Anki DRIVE as, “a racing game that combines an iOS app with physical race cars” that’s sounds mildly exciting. Watching the video is so much better…

Agile Ain’t Wishy Washy

As I write this there’s a group of about 15 developers and designers standing near my desk in a heated but constructive argument about how to check the design is right before the code heads off to QA.

Occasionally the dichotomy of agile vs. waterfall is raised, and sometimes “agile” is used as a euphemism for “flexible” as in, “well, there was an update in design document X, and we’re agile, so you should be able to integrate that.”

If there’s one thing I’ve learned from doing agile it’s that agile ain’t wishy washy, i.e. it’s not really some sort of flexibility nirvana. Any software development process relies on firm lines drawn around what, when, and how the work gets done. Otherwise, shit don’t get done.

Yes, agile is better at responding to change. But it is effective, somewhat counterintuitively, because it responds to change with a high degree of rigidity. For example, if the stories aren’t written in a way that makes it clear to developers how to code a feature and how to test it, it doesn’t get accepted into a sprint. Once stories are accepted into a sprint nothing else can start until the next sprint. And so on. When I first encountered all this rigidity I thought the developers were acting like self-involved prima donnas. Actually, they’re just enforcing the rules that make the process work.

Agile responds to change, not wishy washiness.

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Categorized as Agile

Startup Legal Straight Dope

A benefit of being a speaker at Failcon was getting an invitation to a talk hosted by Anit Guha of Orrick Legal. Here’s some of his wisdom that I noted down:

  • When choosing a name use the uspto site and a 3rd party search service
  • Avoid incorporating in California; use Delaware C Corp. Not only because of the company-friendly laws in DE, but because everyone incorporates there so everyone is familiar with the legal aspects involved.
  • Founder vesting: vesting important if someone leaves. Typical is four years with a one year cliff, maybe some acceleration too. Can backdate the start of vesting if significant work was done before company was formed.
  • Worker classification: consultants vs employees; employees involve more overhead. But you must follow legal definition, state and federal laws when bringing someone on (you can’t avoid the employee overhead if the person is actually working as an employee).
  • Invention assignment – very important that everyone signs and agrees that ideas and inventions belong to the company; it’s pretty broad, it’s negotiated individually
  • Use offer letters for everyone
  • Use release agreements for involuntary terminated employees. They can refuse to sign; you need to pay them to make it enforceable.
  • Investor “finders” must be a registered broker dealer, otherwise you can’t pay them for that service.
  • Rule 701 disclosure obligations, options valued over 5 mil in 12 month period should be disclosed.
  • Only raise from accredited investors.
  • Taxes at acquisition can lead to a liability if you’re not careful.

RealNetworks and The Trap of Binary Thinking

While I was researching my book Why We Fail: Learning from Experience Design Failures I spent some time reading about people’s experience with RealNetworks, particularly the RealPlayer, and wondering if they were worthy of inclusion in the book, particularly the don’t be evil chapter. At that point there was no smoking gun, no hard evidence that Real intentionally did the wrong thing.

But this week a story was published which confirmed my suspicions. It’s called The Graph That Changed Me. Here’s an excerpt:

One day my manager showed me a horrible graph. It was pretty simple: the graph was steady, then it dropped straight down, then after a short period, the line shot straight back up and stayed level again:

Artist’s rendering of why you probably don’t like RealPlayer much
“That’s what happens when we do the right thing”, he said while pointing at the drop, “and that’s how much money we lose. We tried it just to see how bad it was for our bottom line. And this is what the data tells us.”

“Wow,” I said, taken aback. My employer clearly had two options: “do the right thing” or “be profitable”. That was the position they had maneuvered themselves into through a series of bad management decisions.

That “series of bad management decisions” may involve a slippery slope of subtle temptations and minor rationalizations, not one big bad decision to be evil. But having been there I know it’s all too easy to fall into the trap of binary thinking. You can hear it in that story:

two options: “do the right thing” or “be profitable”.

Design thinking is abductive, inventing new options to find new and better solutions to problems. In the universe of all possible businesses, were there more options than just “do the right thing” or “be profitable”? Of course. We just need to be willing to try harder, apply our creativity, and make “do the right thing and be profitable” two constraints of the design problem.

“We are going to make one computer for each quadrant”

Love this Steve Jobs story:

…Jobs turned around Apple and did it pretty quickly. He did two primary things as far as I can tell. First, he got his people into the top jobs and got rid of the executives who had been calling the shots before he showed up. And second, he brought focus to the product line, and thus everything else.

There’s this great scene in the book where Jobs draws a classic four quadrant chart, consumer and pro on one axis, desktop and laptop on the other. And he says “we are going to make one computer for each quadrant and we are going to kill all of the other product lines”.

Are Amazon’s Drones Crazy or Awesome?

Rosenfeld Media asked me my opinion of Amazon’s idea to use drones to deliver packages. Here’s a short excerpt from the interview:

Say what you will about Jeff Bezos, the man knows how to touch off a media storm. Which is precisely what ensued after Bezos told 60 Minutes that Amazon is testing the use of drones to deliver goods. Immediately, everyone was discussing the prospect of ordering a box of tissues from Amazon and having a drone arrive at your doorstep in half an hour. We’ve asked some Rosenfeld Media experts to join the fray on this audacious idea.

It’s a longshot that this will ever happen.  But let’s imagine for a moment that Amazon pulls this off.  A terrible road to go down, or awesome?

Victor Lombardi: The danger is in trying to answer this question using reason rather than experimentation. And that’s because drone package delivery is so new we have no idea if it’s awesome or not. To find out, we need to test it. The reason we fail to get these things right is because we fail to treat them as experiments. We fall in love with ideas, with visionaries, with progress for the sake of progress. And that leads to failure.

Read the the full interview at Rosenfeld Media.

My book, Why We Fail, is out!

This blog has been quiet for so long because I’ve been working on my first book, and it’s finally published. Why We Fail: Learning from Experience Design Failures is about websites and consumer electronics that were successfully launched and hailed as great designs, but failed unexpectedly when people used them, plus my attempt to explain why that happened and what people who make them can do to avoid failing.

The Skinny on Life Insurance

As I work on Nickel I realize that normal people don’t understand life insurance. It’s so important to protect our families from financial problems and yet frustratingly difficult to understand.

So I tried setting down in as few words as possible the process of getting basic coverage. Here’s my first draft:

Life insurance pays your family a large sum of money when you die (or pays you when your spouse dies). These days most of us have some sort of debt (for example, a mortgage) and expenses (children’s college tuition) that our family could have trouble paying without our salary. Life insurance solves this problem.

It works like other insurance: you get a policy, you pay for it every year, and when something bad happens the insurance company pays up.

How to buy life insurance:

1. Figure out how much life insurance you need so your family doesn’t have to pay it all off without you. Add these together:
* How much you owe on your mortgage
* How much you owe on any other debts you have

Then figure out how much more insurance you would like. Add these together:
* The cost of big expenses now or in the future, like college tuition
* Extra money to help your spouse. Remember, she/he will be grieving after you die and not necessarily ready to start hunting for a better job.

Add all of the above. That’s the “coverage” you need, the amount of the policy. For some people $100,000 is enough, others need $1 million or more.

2. Ask friends and family for a life insurance agent or financial planner they trust. Buy the insurance through them. Do not pay them. They are paid a commission by the life insurance company, so you are essentially getting free advice. Also, ask him or her to explain how to deduct the cost of the insurance on your taxes.

3. Sign up for a simple “Term Insurance” policy (start simple; you can always get more coverage later). You’ll fill out some forms, answer questions about your health, and maybe have to get a physical. Answer all questions honestly. And pay your bill every year.

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When reliability doesn’t tarnish the brand/experience

In another case of it’s the experience not the design, Consumer Reports found that BMW and Harley Davidson motorcycles were three times more likely have have serious mechanical problems versus a Japanese brand, but their owners were more likely to buy that brand again.

On the other side of the coin though, when asked whether they would buy their bikes again, 75% of Harley-Davidson owners said “definitely yes” while 74% of BMW and 72% of Honda owners made a similar remark. Meanwhile, only 63% and 60% of Yamaha and Kawasaki owners, respectively, said the same about their motorcycles.

We don’t know if this surprising correlation is due to brand loyalty or a different overall experience of the product that goes beyond reliability, but it’s an interesting data point.

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Categorized as Design

Uncertainty, Argh!

I just heard a talk at Lean Startup Machine NYC by Jonathan Fields, author of the book Uncertainty: Turning Fear and Doubt into Fuel for Brilliance. It was only about 20 minutes but had maybe the highest useful content density of any talk I’ve ever heard. Here’s a few notes:

A startup at the beginning is filled with uncertainty about your product, market, everything. We experience uncertainty as pain. Usually we react by changing speed: we slow to a crawl because we’re paralyzed by imperfect information, or we rush to the end to make the pain stop.

As you conduct experiments, data replaces uncertainty; the process eases us down the uncertainty curve.

So, don’t freak out. Get data, Focus conversations on the data.

Other excellent advice:

  • We are not made to concentrate for more than 90 minutes. Our brain is wired to take breaks, that’s why ideas come to us in the shower. So, do 90 minutes of work, then 20-30 minutes of something unrelated. This reminds me of the Pomodoro Technique which helped me crank out several book chapters.
  • We can manipulate intelligence by priming the brain, either positively or negatively. You could say to a group of men, “Men do 50% worse on this test you’re about to take” and they will! So, create positive priming, e.g. start meetings with 60 seconds of a story about something cool that happened today.
  • Meditation and exercise are the two best innovation techniques anyone can practice, but ironically people in startups give them up first to do more work. Instead when we’re working hard we should double down on meditation and exercise. Spending quality time away from work improves the work, helping us do better work in less time.

How to Look and Feel Marvelous

My friend Alex asked me how I recently managed to lose some weight and I thought it was a good idea to record what I did so I can refer back to it.

My goal, starting in March, was to be able to take my shirt off at the beach this summer without feeling that I let another year go by and didn’t work off my gut. But there’s more to it. I didn’t want to hurt my back shoveling snow or during the treacherous twisting+bending motion of inserting a 45 pound toddler into a car seat. In the end, I achieved more than that.

In three months I managed to build a significant amount of muscle and lose 10 pounds. Of course I have product and service design threads running in the background of my head, methods that could make all of this easier and more fun. Here’s a dump of that:

Exercise

  • Strength training builds muscle, and muscle burns fat, so strength training is my main focus. I don’t have time for designing a routine every day or month, so I simply go to the YMCA and do the circuit of stationary machines three times a week. I get a full body workout in about 45 minutes. The trick is to regularly challenge myself and add 5 or 10 pounds to each machine every week or so. Across nine machines I was lifting 750 pounds on March 12, and by the end of April I was up to 1130 pounds, an increase of 50%. After those six weeks I could see and feel the difference too.
  • The heart is a pretty important muscle, so I don’t ignore cardio. Recent research suggests you get most of the benefits with relatively little time spent, and that intervals rock. So I follow my strength training with 20 minutes on the elliptical machine set to intervals at a difficult level. The elliptical doesn’t pound my knees which have suffered running injuries. Putting on the headphones and cranking up the volume makes this more about a fun, sweaty session of rocking out.
  • I’ll take an occasional bootcamp-like class at the Y to work on balance and agility.
  • Otherwise, I adopt a French Women Don’t Get Fat mentality of generally living an active lifestyle. Taking the stairs, cycling to work, etc. I’ve tried to minimize sitting because research also suggests sitting is bad for you. For me, this means minimizing computer time. To do that, I unsubscribed from most mailing lists, eliminated aimless Facebook and Twitter browsing, and ignore mobile apps that don’t provide value. Next I plan to try writing standing up.

Eating

  • I’m just not a good dieter. It’s been hard to get used to feeling hungry sometimes, which is physiologically normal but rare in our world of plentiful calories. The act of denying myself food I want is incredibly difficult psychologically. What has worked for me is substitution. When I want something sweet, I make a fruit smoothie instead of eating cookies or ice cream. Or I’ll have a couple squares of dark chocolate.
  • Smoothies are my usual breakfast, though I’ll sometimes have oatmeal or eggs for variety. I follow this algorithm, though most of the time it comes down to water or rice milk, banana, frozen blueberries, spinach, peanut butter, and whey powder.
  • I usually have mini cliff bars in my backpack and eat one as a snack in between meals, they’re a good balance of protein, fat, and carb and they’re yummy. I order key items like this and peanut butter using Amazon’s Subscribe and Save program so I never run out.
  • Another meal should be primarily a salad (in the warm weather) or soup (in the cold). Basically: veggies.
  • I adjusted my diet to include fewer ‘bad’ carbs, as all the new science tells us it’s sugar not dietary fat that makes us fat. I like the idea of Paleo, but culturally it’s too hard to go without the foods I’m used to. So I make carbs a side dish rather than a main dish, for example ordering a dish of pasta just doesn’t happen but a little next to my protein is alright. Carb substitutions include:
    • Wraps instead of bread. With kids it’s hard to avoid buying factory bread, but Arnold makes a good whole wheat with no high-fructose corn syrup.
    • Bourbon and gin instead of beer. See Get Drunk Not Fat. I don’t drink much in the first place, so it’s not much of an issue.
    • Rice milk instead of milk. This is my biggest area of uncertainty, I need to do more research to figure out where to get these vitamins without making me fat. But going with espressos and Americanos instead of lattes is a start.

Besides the fat lost and muscle gained, I feel great. I feel like when I was a kid and was fit as a natural consequence of running around with my friends. I feel young.

Throughout this process, I want services that don’t exist. I want regular delivery of fresh foods (like we used to have for milk). I’d love the gym to look at what I’m doing and suggest other forms of exercise I might be missing (e.g. balancing muscle group development). And I’d like to process to be a bit more social, like an easier way to join an informal sports team.

The single biggest lift would be a way to buy meals instead of groceries. The most cognitively taxing and time consuming part of this process of figuring out what to cook for two adults and two kids that fits the adults diet and the kids preferences, mixing up the meals with enough variety, and having all the ingredients on hand. I think the solution lies with the market and how we order our food.

Update: After discovering that animal and dairy protein may not be good for you, I’m trying to eat a more plant-based diet. One fun way I’ve found to make foods without fat taste better is simply to add hot sauce. This isn’t a new weight loss idea, and has the added benefit of giving you a small high: “The capsaicins trick the nerve endings in your mouth, nose, and throat into thinking you’ve just singed yourself. Your brain, eager to please, responds by releasing endorphins.” Totally rad, dude.

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Update!

Have I really not updated my blog in almost a year? Apparently so. The blog quietly turned 13 years old while I’ve been doing other things, namely writing a book which is in the editing stage and should be out this Fall.