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Build a Better Mousetrap

High-Tech Chopstick Factory

High-Tech Chopstick Factory

Competition is the driving force that has pushed capitalist economies forward as businessmen and engineers try to produce products that are better or cheaper than ever before. Competition breeds continuous improvement, but consumers ultimately get to decide what they prefer, and sometimes they make curious choices.

Take chopsticks for instance. Why do they still exist? They were probably first invented when people only had sticks and stones. Granted, China was still probably using sticks and stones until recently, when the communists finally realized that capitalism actually did have some redeeming values. But now that they have decided they would rather have modern conveniences, technology, and fashion, why are they still eating with sticks? They had no problem ditching the look-alike Mao hats and clothes, so what’s up with the sticks?

Song Dynasty Silver Chopsticks, Cup, and Spoon

Song Dynasty Silver Chopsticks, Cup, and Spoon

Eating with chopsticks is kind of like going camping. It might be fun for a change of pace, but few of us really want to live in a tent and dig a hole in the woods every day. Sure, I’ve got some chopsticks around for the kids, but it is rarely their utensil of choice, even when eating Chinese take-out.

Ancient Fork

Ancient Fork

Chopsticks originated in ancient China during the Shang Dynasty. The earliest evidence comes from a pair of bronze chopsticks dated to 1200 BCE. Ironically, chopsticks are said to have replaced the fork. That’s right, they replaced the fork! I guess ancient Chinese forks were just too expensive or just weren’t good enough. So, we can’t blame the Chinese for not wanting to go back to that awful, old eating technology again. If it is redesigned, maybe the spork will have a chance of displacing chopsticks as the predominant eating utensil in Asia.

Old Fax Machine

Old Fax Machine

Let’s move on to the fax machine, a low data-rate device that takes an image and sends it through a landline telephone connection. There is no way to be sure the fax on the other end received the image, or that it was readable, or that there was paper in the machine, or that the right person was there to pick it up. You can’t even send a high-quality color image to most machines. Oh, and my favorite reason to hate the fax is that there is no way to stop fax spammers from using up your ink and paper with their advertisements.

The fax lives on for two main reasons. First, it is so simple that anyone who has a phone line can use it. Second, most jurisdictions now recognize a fax as a legal document, but a scanned and emailed copy is not necessarily admissible in court. What the lawyers say we must do will always lag behind what the inventors make it possible for us to do.

Virtual Fax

Virtual Fax

If you can use a scanner and have a network connection, a fax machine is no longer needed to send a fax. If you have the right software, or better yet, an online fax service, you don’t even need a fax machine to receive a fax. You just need an email account, or maybe even just an app. You can easily email, upload or scan a document using a fax service that will send it to another fax service that will convert the fax into a document and send it to your email. That’s right, two people can be faxing each other even if neither of them actually owns a fax machine. The only people who really need a fax machine are the ones who only have a phone line, but that number is shrinking down to almost nothing.

So, why do technically savvy people still use fax machines or services? Mostly, I think it is due to the protection afforded to fax copies and because nobody can agree on how to create digital signatures that are legally admissible in court. Ironically, I file my federal income taxes electronically every year with nothing but a PIN number and my name. I guess the IRS doesn’t have to bother with minor issues like the legality of your signature. If you owe them money, they are going to take it one way or another.

Sometimes a better mousetrap just won’t do. How about a virtual mousetrap?

Virtual Mousetrap?

Virtual Mousetrap?

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Go Time for GoPro

April 28th, 2015 UPDATE:

GoPro Inc. is scheduled to release its quarterly results today after market close. Analyst estimates still don’t make sense to me. If you add up the projected revenue numbers for the first two quarters of this year, which I even think are low, and subtract them from the annual revenue estimate, GoPro would have to fall flat on its face during the Christmas quarter to only deliver $1.73B in earnings for 2015. We will find out after 5PM today how GoPro fared in the first quarter. I’m betting on an upside move. Short seller interest is incredibly high at over 61% of the floated shares. If they are right, the stock will crash tomorrow. If they are wrong, it will soar upward as they all rush to cover their short positions. Go to my previous Beat a Hero post to see the full details.

What About Drones?

GoPro previously stated its intention to produce drones as a way of expanding its product offering. Wall Street pretty much ridiculed that notion, which does sound like a bit of a stretch for an action camera maker. But drones are going to be big business, so it makes sense as a way to expand their market. But if I were CEO Nick Woodman, I would take the easiest and fastest route to market by buying an up and coming drone maker. Like maybe 3D Robotics.

3D Robotics Solo drone with GoPro Camera

3D Robotics Solo drone with GoPro Camera

3D Robotics is a small private start-up company with $99M in venture capital funding. It offers an outstanding open-source autopilot system and control app that anyone can use or customize. It is also about to release the Solo drone, which has a GoPro compatible camera mount that has exclusive direct access to the GoPro camera settings via a connector on the back. Thanks their partnership with GoPro, drone pilots can now remotely control, recharge, and use their GoPros to stream live video up to a half mile via Wifi right to their phones. GoPro is also offering a professional-grade $7,500 HeroCast live video streaming transmitter.

Why, I wonder, would GoPro offer all this exclusive access to a small start-up drone company instead of keeping the technology to itself? For one thing, it makes sense to license their technology to as many drone manufacturers as possible to promote the use of GoPro cameras. It would be even better to make an exclusive deal with a company that can make the drones for you. So, what’s up with 3D Robotics? Is GoPro going to acquire the company using a fraction of its $6B stock valuation? Or did they make a sweet deal to jump-start their drone manufacturing aspirations? I’m betting that Nick Woodman is going to make the smart move and get into the drone business fast. Whatever deal may be in the works with 3D Robotics makes a lot of sense.

April 29th, 2015 UPDATE:

Slam dunk! GoPro results came in as I expected, wildly beating analyst expectations, and the stock soared immediately. Quarterly revenue was $363.1M, up 54% year over year. My estimate was for roughly $364 million, up about 55%. This time, management raised estimates for the next quarter to $380-400M, which is even above my rough projection of $378M and the $334M Wall Street projections. Way to go, pros!