Behavioral Finance, Product Design and Entrepreneurship

Now that I’m entering my fourth week maintaining this blog, I’ve decided to come back to the subject of why I really believe that these three topics are intertwined.   These three topics are the reason that I named this blog Psychohistory, and these three topics seem to completely dominate my education and professional career.

The reason for this belief is crystalizing, and it’s remarkably simple:
I truly believe that incredible opportunity lies at the intersection of the irrational (human emotion) with the rational (finance, technology, business).

Behavioral Finance offers us the opportunity to design financial systems based on the basic insight that the way that human beings relate to money involves far more emotion than intellect.  To understand economics, you must understand your very human economic actor.

Product Design is based on the premise that deeply understanding the ways that people interact with technology can lead to profoundly more useful (and desirable) designs and products.  To understand product design, you must understand your very human customer.

Entrepreneurship offers us the opportunity to build companies by figuring out how to replicate the economic miracle of creating billions of dollars in new value by unlocking the very human emotions of inspiration, motivation, cooperation, and self-determination.  To understand entrepreneurship, you must understand your very human entrepreneur.

Like all good elevator pitches, I probably need to reduce this in complexity by an order of magnitude before I’ll be happy with it.  But I’m excited about this insight, and more importantly, I’m already seeing incredible leverage from it in my industry, where everyone is talking about the intersection of technology, commerce, and community.

Scott Kleper & SpotDJ

A good friend of mine just updated his personal blog for the first time in months recently, and I thought this was as good a time as any to introduce the very cool startup that he’s been working on.

The company is called SpotDJ, and his blog post about it is here.

Scott has been a good friend ever since I met him through the CS 198 Section Leader program at Stanford, where he was one of the first section leaders I hired.  Scott was one of those great student developers who didn’t just take Computer Science classes – he really wrote code.  Shareware, mostly, for the Mac.  Even then, Scott always shipped.

Scott had the misfortune of having an internship at Apple Computer in probably the most depressing time possible – in the Advanced Technology Group, in 1997, right as the entire group was disbanded.  Since then, he’s done some pretty interesting things – working for several companies and even co-authoring a book.

Doing a startup is something that is very easy to talk about in Silicon Valley, but make no mistake about the fortitude it takes to really quit a good paying job and go out on your own.  Scott is doing it right now, and SpotDJ is evolving into something really interesting.

I love the idea that instead of bidding on keywords (Google/Yahoo), you might actually target content/advertising based on a song.  If they can crack some  success measure like cost-per-click (cost per listen?) and some demand measure like click-through (selection? rating?), it’s a very interesting way to target content/advertising in an environment where keywords aren’t the way people navigate.

In any case, check out the company, and kudos to Scott.

Blogs I Read: Don Dodge

In the spirit of hilighting some of the best blogs that I read and given Google’s product announcement today for “Applications for Your Domain“, I’d like to point you to this humorous press release on Don Dodge’s blog today:

Don Dodge on The Next Big Thing: Google Announces New 24X0 Support Service for Business Users

I find Don’s blog particularly interesting because he:

  • Posts regularly
  • Provides insight from his unique experiences at AltaVista, Napster, and now Microsoft
  • Provides a rare intersection of the “modern” Microsoft point-of-view on Web 2.0 and related technologies and products, with an outsider flavor
  • Seems to genuinely understand the professional Venture Capital viewpoint on key technology trends (based on my experience as an Associate Partner in a multi-billion dollar early stage firm)

A worthy addition to anyone’s RSS feed…

    Blogs I Read: Hitchhiker’s Guide to 650

    If you haven’t checked out this blog, it’s worth adding to your regular RSS reader:

    Hitchhiker’s Guide to 650

    It’s written by a friend and former colleague from eBay, Will Hsu. Very witty and insightful, I like the sharp way he looks at key issues surrounding e-commerce, startups, and venture capital. More importantly, I feel like Will captures some of the real psychology of Silicon Valley.

    Take his post yesterday on a great Web 2.0 CEO anecdote.

    Now, I’m trying not to hold it against Will that he actually does not live in the 650 area code anymore. Still, the blog is a must-read.

    I’ll be posting from time to time the blogs that I really recommend, and adding them to my blogroll on the right.