179. How to Run A Business: Superbrand Secrets From The Technology Industry

13 takeaways from this video:

00:00:01 Kids today (Millennials and Generation Z) know a lot about technology, and have at least one technological device on them at all times. Social media sites like Facebook and Twitter are even provoking political revolutions.

00:003:13 Apple was founded in 1976 in Cupertino, California making personal computers. In 2010 Apple had a brand valuation of £51,970,000,000. As of March 2015, Apple had 453 retail stores in 16 countries and employed 115,000 people (Wikipedia).

At every new Apple store opening, they very carefully maintain an aura of mystery, playing the press, social media, and its consumers right up until the last minute. Their strategy is the opposite of a conventional public relations strategy where brands do their best to maintain a positive working relationship with journalists as much as possible.

[EDITOR’S NOTE: A June 2012 article on Huffington Post by Dino Grandoni explains that Apple’s marketing technique is, rather than advertising, to actually not advertise and instead capitalize on that aura of mystery and design while the media, social media, and consumers go crazy trying to find out more.

“Marketing in the future is like sex. Only the losers will need to pay for it.”

– Jon Bond,

cofounder of Kirshenbaum Bond Senecal]

00:10:15 Your emotions cause your brain to release electrical impulses which can be monitored through a functional magnetic resonance imaging (fMRI) brain imaging scanner. Loyalty to a brand, a person, or a religion causes an increase of activity in the person’s orbitofrontal cortex – the part of the brain involved in ‘cognitive processing and decision-making.’

[EDITOR’S NOTE: Recall in the BBC documentary Superbrand Secrets From The Fashion Industry that most of human behavior is driven by unconscious brain processes. The human brain evolved to make us better at surviving and breeding:

• The limbic system is where humans feel emotions. This is why the acts of eating and having sex are so enjoyable.
• The neocortex is the intellectual part of our brains and developed on top of our limbic system. While your neocortex allows you to make sense of your decisions and explain them, it doesn’t change the fact that deep down your decisions, reasoning and preferences originate with your emotions.

Humans do things, and for the most part they have no idea why they are doing them. Your neocortex is the puppet, and your limbic system is the puppet master.This is the part of your brain brands are after.]

00:13:10 Brands attain the status of religion by:

1. Having a story.
2. Having an enemy.
3. A place for users to commune
4. A messiah (typically the CEO or founder)

[EDITOR’S NOTE: For more on brand storytelling, read/watch:

• LESSON 26: Steven Brinlee on Storytelling
• LESSON 49: Olivier Hubinois on Up-Selling, Going Niche & Selling An Experience
• LESSON 113: How to Create A Successful, Long-Term Company Culture
• Conversely, watch Tyler Cowen’s TED talk on Why You Should Be Suspicious of The Stories You Hear.]

But not all technology companies rely on the same mind control tactics as Apple does, and yet they manage to permeate the business marketplace.

How? Enter Microsoft…

00:17:04 Microsoft was founded in April 1975 in Albuquerque, New Mexico making personal computers. In 2010 Microsoft had a brand valuation of £47,715,000,000. As of March 2015, Microsoft has made over 194 mergers & acquisitions (Wikipedia). As of this documentary publication, 93% of all computers run on Microsoft software. Microsoft’s communication style was, at that time, almost exactly the opposite of Apple’s, in every manner.

“How can a company this ‘uncool’ be on all of our computers and making so much money?” By not putting their name on many of the popular products they create.

00:18:48 Contrary to Apple’s aura of mystery technique, Microsoft has been open and willing to speak to journalists. But first:

Recall from above that brands attain the status of religion by:

1. Having a story. In the 1980s, business computers ran on IBM, but they needed software, which is where Microsoft saved the day. Being a noob to the industry, IBM naively let Microsoft maintain most of the rights to the software they had created for IBM. As of this documentary, Microsoft aggressively spends 5.5 billion £/year on R&D.
2. Having an enemy. Since the 1990s, Microsoft have been prosecuted multiple times for running an illegal monopoly, and Bill Gate’s responses during those trials could have used at least some form of coaching.
3. A place for users to commune. Online through the Xbox and online gaming console forums
4. A messiah (typically the CEO or founder)

[EDITOR’S NOTE: For more on effectively managing monopolistic business models, check out the Ycombinator lecture Competion Is For Losers by Peter Thiel at Stanford University.]

00:27:10 Sony was founded in April 1946 in Tokyo, Japan making rice cookers, radios and tape recorders. In 2010 Sony had a brand valuation of £5,091,000,000.

Sony’s newest, limited edition PlayStation 4 bundle can currently be pre-ordered for $400, but how much does it cost to actually make the machine? According to Andrew Rassweiler, Sony’s Playstation 3 console cost $805 to build, nearly double its retail price, meaning Sony actually loses money selling the product.

Why? Because…

00:31:52 In the 1980s format war between Sony’s Betamax and JVC’s VHS, the VHS tape format eventually won the war because:

• JVC allowed others to make VHS compatible machines
• Porn

00:33:34 Digitalplayground.com (NSFW), as well as many other adult entertainment studios was originally availble on High-Definition (HD) formatting until Sony finally learned their lesson with VHS, broke with tradition and permitted porn on their Blue-ray format. To avoid losing this digital format war, Playstation loses money by placing the expensive Blue-ray readers into their machines.

00:38:17 Nokia was founded in 1865 in Tampere, Finland making rubber shoes and toilet paper. In 2010 Nokia had a brand valuation of £9,291,000,000. But Nokia, which sells over a million phones per day, has found themself in financial trouble in part because of:

1. The sheer amount of knock off phones available on the market; knock offs which are often even better than the original phone.
2. Apple’s invention of the game changing iPhone.

00:44:14 Facebook was founded in 2004 in Cambridge, Massachusetts as a social media platform. In 2011 Facebook had a brand valuation of £32,300,000,000.

00:48:02 “One day there might be some advertising on Facebook’s mobile application,” Chris Cox, Facebook’s Chief Product Officer explains, “but at the end of the day that’s not what most people are asking for.”

[EDITOR’S NOTE: At the time of this documentary Facebook had no ads on their free mobile application. This is no longer the case.]

00:49:29 Google was founded in 1998 at Stanford University, California as a search engine. In 2010 Google had a brand valuation of £71,412,000,000.

[EDITOR’S NOTE: This documentary has been cut short. I regret that I cannot find the full version of this documentary online, and had I realized this wasn’t the full version, I wouldn’t have taken notes on it until I had found the full version.]