Sunday, January 20, 2008

From grass to cheese, a study in differentiation and branding

While on a day trip to Pt. Reyes National Seashore with my wife and daughters to enjoy a day hiking and searching for migrating whales and elephant seals, my curiosity was centered on the numerous historical ranches (called the alphabet ranches, named A-Z) that we drove through between the town of Olema and Pt. Reyes Station and the shore. At the end of the day, we stopped and had dinner at the Olema Farmhouse Inn (highly recommended) and after some outstanding mac n' cheese and a Blue Burger with local Pt.Reyes Original Blue Cheese, I knew I had a good topic to blog about.

The local dairy ranches were clearly old, and each ranch center had a sign displaying the date established, most in the 1860's. The ranger said that the ranches were originally owned by a San Francisco law firm. My thoughts were on a course I took (seems like) long ago from Prof. Gary Larson at the New Mexico Military Institute about Economic Geography, or the economic development of places based on local resources, transportation, and technology.

Upon some reading at the National Park Service Website, in the late 19th century, the majority of the pasture land property extending from the beaches to Mt. Wittenburg where owned by the Law Firm of Shafter, Shafter, Park, and Heydenfeldt of San Francisco (my guess because of their ability to figure out the complex legal issues complicated by the contradictory Mexican and Spanish land grant titles and generally poor documentation). They formed a cooperative dairy splitting up the property into a bunch of different ranches and recruited immigrant farmers from around the world to bring the best practices in dairy production to their land. This is quite an interesting story in itself.

Even though the cool wet climate and natural pasture lands produced by hundreds of years of burning and clearing by the local Mi Wok indians were ideal for dairy production, there was no way to bring fresh milk from Western Marin to the markets in San Francisco, so the farmers had to turn their milk into butter and some cheese. The dairy cooperative was sure that their fresh grass fed cows were producing top quality butter, so they created the Pt. Reyes Brand and symbol and used it on their products signing up the finest restaurants and markets in San Francisco for their premium butter. They may have been the first dairy ever to use a brand to distinguish their products.

Later, technology, poor land management, and even the 1906 earthquake all attributed to a waining local dairy industry. Refrigeration and government regulation made the production of cheese and butter only profitable at large scale reducing most local dairies and coops to commodity milk producers shipping their product off to large regional commercial dairy facilities.

Luckily, 100 years later, local ranchers and business men rediscovered the formula for profitability. Tie the differentiating qualities of your product to a brand and position that brand to command a premium price.

One such example is the Pt. Reyes Farmstead Cheese Company. I only know the company through a fantastic Blue Cheese Burger and their equally fantastic web site (though it seems a crime to compare a website to good food), but their story is compelling. The patriarch, Bob Giacomini, ran a successful dairy on their property since the 1950's. When nearing retirement, the family had a new idea on how to maintain the family business. Instead of selling off their milk as a commodity, they would produce high quality artisan blue cheese. Their brand is built by marketing their unique compeitive differentiators, the grass, the climate, the salty air, and a freshness generated by a process where cows are milked at 2:00 AM and cheese is set to dry only hours later. (I apologize if I am short changing the art of making cheese.)

Today, they are the only California producer of traditional Blue Cheese, and their product is distributed around the world and served in the finest restaurants; very similar to the high quality producers of Pt. Reyes brand butter that introduced branding to the industry over 100 years ago.

Monday, January 14, 2008

Pano Logic takes the "Silver," how appropriate

We (all of us here at my employer, Pano Logic) just heard that the Pano Logic Virtual Desktop System took a silver from the Tech Target Search Virtualization 2007 product awards. While I hate to be positioned as "hardware." We are extremely happy to see that our message of a built from the ground up, integrated, simple, and complete solution for desktop virtualization is resonating in the marketplace! It is certainly working with our customers and we're already off to a fantastic 2008.

Sunday, January 13, 2008

Selling Heat

Last week I was challenged by our CTO here at Pano Logic if I had ever heard of selling heat. I assumed immediately he didn't mean selling electricity or gas, but I have never heard of just selling "heat." So I turned to Google, as I was sure this must be a common practice somewhere. Strangely, it wasn't.
I figured someone out there must have sunk a geothermal well and sold off excess capacity (cooling or heating) to their neighbors, but I didn't come across any examples. I soon realized that such an agreement could be very difficult given the lack of a market for "heat energy." How would you put value on it?
Finally, I found this. A shopping mall built in 2001 in an old Telegraph building in Norway.
The designers of the new mall worked out a plan to connect their heat pump system to the data center of a near by Telco facility. During the Winter, the data center heats the mall, and during the cooling season, the mall uses the heat generated by the server room to preheat a local hotel's sanitary (showers, sinks) water system.
What is interesting about this system, is not just the logical efficiency, but that the entity in the best position to profit is the mall that installed the heat pump and exchanger system that allows the system to operate. There are not a great deal of details on the business model or financial relationship between the 3 entities in the story above, but it does get me thinking.
To make these these types of "symbiotic" trade relationships to work at any type of scale, there must be some price put on heat energy, rather than the energy it costs to heat and cool water from systems described above. Rather than the simple logic that the Data Center Operator can save money by shipping off heat rather than cooling it on their own, if the Data Center was instead "selling heat" they could recognise revenue on this very real and valuable bi-product of their primary business. Of course, the value of that heat fluctuates throughout the year. The system would have to get bigger to find more uses as the ambient temperature rises during the summer, and arguably, the value would go negative. But what if another facility decides to drill a series of Geothermal wells around their property. Instead of sizing their wells for the cooling of their property, they drill as much capacity as the space permits, selling that "heat" capacity in a local market of interconnected heat pumps and exchangers?
At the end of the day, it would be easy to imagine urban "heat markets" where interconnected heat exchangers and a control system drives a commodity market for "heat energy." Efficiencies and investments would be driven by the local market, rewarding individual property/business owners for decreasing their consumption of fossil fuel energy while creating a framework for cost/benefit analysis that can guide designers to make balanced systems that go beyond their own facilities.
So what's the opportunity? As in the control center of the mall, it is the control system that could make the market "work." How could a business "build" such a market and extract profits? Worth some thought, but enough for tonight.

Friday, January 4, 2008

How do you rate on the Spicemeter?

Welcome to my new blog. To see my previous posts, go to

Spiceworks is one of those new "Systems Management 2.0" companies that provides IT pros a quick to setup, easy to use, powerful and free, (as in beer,) management tool that allows its users to discover hardware in their environment, collect management data, discover new software installed on user's systems, allow users to submit trouble tickets, etc. For a certain size of IT shop, Spiceworks delivers some pretty incredible value. More interesting to me, is how I rate on the Spicemeter!

Their business model is interesting on its own. A free to use ad supported revenue model, now including a "store" function allowing their customers to use the service as an IT procurement / management tool in addition to systems management. Presumably, they have worked out channel/referral agreements with their vendors, leveraging their relationships with purchase- influential staff to build a credible business. I can't help but root for a company like this. Build good product, develop a loyal community and credibly monetize the relationship.

That said, it is a simple little thing called the "Spicemeter" that captured my attention. The Spicemeter is little widget that grades the user according to how much functionality of the Spiceworks product they have explored. This might be thought of as an ego feeding ploy to get people to engage in the product, but on a a simpler level, it is an immediate feedback to the user that they might not know everything the product has to offer.

With a zero-touch - no sales force - go-to-market model, it is critical for the Spiceworks marketers to not just get in front of users, or even get downloads, but ensure that users really understand the full value of a relatively complex tool (and hopefully then promote happy customers.) If users don't actually get the full value, likely out of ignorance, they walk away and Spiceworks goes down in flames. A traditional product might not care how much functionality gets used, as long as they sell the license.

There is so much partial overlap in the systems management space, it is hard to know where one product starts and another ends. What better way to ensure that the full value potential is digested by evaluating IT pros than to grade them on their thoroughness of the evaluation. Cool stuff.