Before I jump in, I just created a category for my posts called “Half Baked Ideas.” I usually have a random idea a day while aimlessly surfing the web, I wanted use my blog as a forum to share them. Some will be applications, utilities, plugins, and other might be actual product ideas for new OR existing companies.

Only 1/30 deserves some serious thought. While only 1/1000 (if I’m lucky) deserves to be real businesses/products. I just wanted to share my thoughts and have other people pick holes in the ideas so feel free to tear them apart. Lots of times, someone will probably be doing it already, I’ll be interested to know who too. Lastly, I don’t really believe ideas in of themselves are proprietary, it’s in the execution anyways. In an efficient market (with the amount of smart people in the technology industry, its probably is pretty efficient) no one should know any better than anyone else, as a result, ideas will rarely be unique. (execution and strategy are) So I’m not afraid of someone “stealing” these ideas, if not from me you can steal the same exact idea from someone else I actually encourage readers to take the ball and run with it if they want, I’ll be glad to help out anyway I can so please let me know if you are.

So on to today’s random musings. Since Fred is a Podhead, he got me thinking about the implications of podcasting on the music industry.

He writes,

iTunes is going to include a podcast aggregator in the next version, due out this summer. Then everyone with an iPod is going to be able to get podcasts. That’s a lot of people, probably north of 6 million people by now.

(also read this by John Furrier)

Both bounced around in my ahead a little bit before I decided that,

Podcasting is going to be the “Trojan horse” that changes the music industry economics and business model forever.

With Apple essentially acting as publisher (aggregator) for Podcasts of independent producers, it will not be long before the end users leverages that technology to publish music and circumvent traditional publishers like Sony and BMG. Apple can’t do that with music right now, ie let independent musicians distribute music via iTunes, because they need the major publishers for their catalog of music and the major publisher certainly do not want Apple helping out the little guys. Podcasts, seemlingly innocent to the major labels, will not seem like a threat to labels allowing Apple to furtively revamp iTune’s business model. This will allow iTunes to tweak their infrastructure and payment system (like what brightcove is trying to do with video) for direct distribution and royalty remittance. With any “long-tailed” business model, iTune will have critical mass in the head of the tail to successfully funnel revenue to niche podcasting content and eventually music. In the end, bits are bits/audio is audio, podcasts are mp3 files anyways. Labels wont go way but the long tail of the music industry is about to get fatter and longer, siphoning revenue away from the mainstream.

Furthermore, I believe there will be an opportunity for a startup (Odeo?) or an innovative incumbent (Apple? Feedburner?) to create an audio advertising syndication network for podcasts. Ala adwords/adsense but more like “adAudio” or “adSound.” Radio has shown that listeners are somewhat tolerant of inter-temporal interruptions to their music listening experience by advertising. Music or podcast feed aggregators can splice in audio advertising into the MP3 feeds relatively easily. Like adsense, revenue can be remitted to the independent producers themselves.

So ya, podcast is niche within a niche within a niche. But music is not. Technically the difference between music and sound is zero (all audio). Wasn’t Fred listening to a podcast with music embedded in his post? Podcast is the Trojan horse, the music industry watch out.

First of all, I didn’t know Fred is a fellow Wharton MBA alum. Kinda cool since most of the OLDER Wharton alums end up on Wall Street (buy or sell-side) rather in the trenches. (I think of early stage VC’s as operators, later stage VC’s and buyout guys as bankers). Having graduated from Wharton not too long ago, I know that this is no longer the case. My class was as diverse as it can get (comparatively to HBS or Stanford atleast).

More importantly, Fred’s post:The Five Things I Learned in Business School got me thinking about how little people seem to learn at business school or value their MBA compared to my personal experience. I cannot speak for any other business school since I’m not sure what is taught there, but as for Wharton, it was an incredibly educational and intellectually challenging 2 year. Definitely worth my time (although I’ll have to back to you in about 10 years on the financial ROI on the 150K I spent).

Prior to Wharton, I wasn’t new to the business world. The “5 Things” Fred had talked about I was already quite familiar with due to the fact that 1) Stanford prepares their students well for the real world regardless of which major he/she ends up with 2) starting my career in banking & raising venture capital helped me scale up the learning curve rapidly. Thus, not being a newbie to business like some of my “PHD in ChemE” classmates, I needed to learn about business above and beyond the common MBA experience to justify my time. Wharton did not disappoint.

My current theory is that given 2 years of freedom to explore their passion (in this case business) in an environment with all the incredible resources (professors, conferences, PHD research, technology licensing office, etc) available to them at any the top MBA programs; ANYONE who say they did not learn anything from their MBA must not have the passion and drive for their chosen profession to go above and beyond the daily requirements of getting by. This is not about pedigree, it is about exploiting opportunities and succeeding, learning, growing regardless what hands we were dealt. MBA is a test of one’s character and ability to search out opportunities to make ourselves better. I might not have learned anything “useful”, but I did learn and grow for the sake of bettering myself.

So the million dollar question: what did I learn. I was surprise to find the Wharton MBA to be quantitatively and statistically as rigorous as my engineering degree. (of course this depended on the classes I took) To me, Wharton gave me an engineering degree in business. I found a way of looking at business decision making as a science rather than as art. (Very comforting for an guy with an engineering undergrad degree) To anyone that read Moneyball, Wharton is Moneyball for business (ironic analogy since Moneyball was about bringing sophisticated finance & management techniques and tools to an inefficient industry) The Wharton MBA attempts to systematically quantify business decision making from past history of business to help rapidly instill discipline in its students that otherwise would requires 30 years of experience to learn holistically.

Throwing out some buzzwords, I know how to use statistical clustering techniques to segment a seemingly homogenous customer base. I know how to use factor analysis to discover latent customer preferences. I know how to use probabilistic models to determine the most profitable customer profiles. I know how to predict profitability of new features and products using logistic regression models. I know how to quantify & model channel marketing decisions. The list goes on and on.

In the end, I recognize that most of these techniques are not applicable for the start-up world where there a little customer history and past results to mine insights from. But I hope one day, when I am running or helping to run a larger company, I can add value above and beyond the person I am before the MBA. At the very least, the Wharton MBA was an intellectually challenging experience; the student in me appreciates learning for the sake of “knowing” and the quest for “truth.”