Monday, February 28, 2011

Launch Lessons: Disrupting Networking - and a crazy idea how to go further

At the Launch Conference last week, one of the best lines of the opening day was host Jason Calacanis informing the participants "We figured out how to make Wifi work at a conference - we ran it over ethernet". That got a good laugh from the technical folks in the crowd, all of whom were pleasantly surprized to find that every seat in the main hall had an ethernet connection.

See those white cables? That's right, we all had Ethernet.
That's right, about 1000 ethernet drops in the main conference hall, so the attendees could tweet, facebook, blog, flickr, and generally get the word out. This isn't just about knowing your audience, it's a brilliant marketing play to help promote a first time conference. Trending on Twitter? Absolutely, both days. Real time blog posts and flickr streams? You got it.

Now, it would have been easy to just provide good network connectivity to the press, which would have gotten some of the word out - but if you still think that in this world of high tech, angel investing, start-ups, and business that marketing and social value is in the hands of the few, wouldn't get this point anyway. 

It was the best use of marketing dollars at a conference I'd seen in a long time. Which got me to thinking, can that be innovated any further? Here's what I came up with, and beat about with the gentleman sitting next to me on the first day, Joe Dileo.

Let me start by saying, I don't work in the telecom space, and I have no idea if the cost structures can support this - but if you know these things, leave a comment below. I'd love to learn more about the viability of the idea. For the record, I don't plan to do anything with it, I'd just like to learn.

The Idea
Every person attending the conference gets a Verizon (or insert operator here) USB wireless device, free, for attending the show. In addition, you get the first seven days, free - enough to clearly span the conference, as well as for you to check it out at your hotel.

We immediately have three "feel good" moments for Verizon and the show - I cannot believe this show got me a free device for the week, I'm saving some money not paying the hotel for wifi/network, and, I get a good network connection at the show - and to top it off, the 30% who are flying home also just saved on their airport connectivity solution. Win, win, win, win.

I think the numbers could work, although I do not have the details to prove that. These are rough numbers, but try this out:
  1. Jason said he spent "about 100k on networking" for about 1,000 people.
  2. The cost of a device without a plan is $249 on the Verizon website. You can get it for $99 with a two year plan ($149.00 hardware and additional $50 online discount).
  3. Let's pretend we can get  50% of the show to sign up for offer and an overall conversion of 30% to the 2 year plan.  
Therefore, we have 500 people take one for the 7-day offer (the rest of them have one, don't like the internet, work pays for it, or hate free stuff): Cost to supply that hardware, retail, is $124,000.

Of that, lets assume people that don't convert (200 of the 500) don't even return the hardware, worst case. So sticking with the retail numbers, that's a loss of $49,000, or half the cost of what Launch paid for networking. Again, I'm comparing retail numbers for Verizon - so the loss is not anywhere near that. You could do something like require a credit card before getting one, charge if not returned - but let's go with a more open, good-will approach. It's easy to layer on those vehicles later, if necessary.

On top of that, it means that they got 300 new subscribers - I'm pretty sure that even the top store in San Francisco does not sell 300 in a day or two day span - so isn't that worth it to some operator, if we can smooth out the numbers?

Even more disruptive, I want to BUY their impulse by waving the $99. I'll immediately show them online (with their awesome new modem) that this is the best possible price they can get and focus on getting people to sign up for two years. I'd use the tribal/group feeling of tradeshows, events, conferences to say "this is just for you, because you are part of this amazing event".

The alternative of course is making them sign up before the show, but I think that's a bad idea, and you loose the selling influence of the tribe saying "this is the best deal ever!" I think you can loss (and profit!)-share with the conference  to let people try it out first, and get some excitement around that, rather than the feeling that I've got to buy it first - make this different than the store experience.

Again, I have no data on conversion metrics for this space, or real cost data, but it feels like there is something here. I've not even touched on the marketing angle for the show and for the provider, other than a brief mention of the positive brand association that can occur.

It would seem you could become the one that solved the conference networking problem, and there are no shortage of conferences and conference attendees. Thoughts? Insanity? If you have any information on this space, the possible data or margins, or related comments, I'd love to learn from you.

If you don't agree there is a problem, check out this tweet from the Game Developers Conference (#gdc), going on now, in San Francisco.