Open up your mind and say, ahh...

NASA astronauts and SpaceX engineers check out the seating inside the Dragon spacecraft. Photo: SpaceX

The taxi’s waiting, it’s honking its horn, time to go to the airport.

Yes, the passport is in my pocket. I checked five minutes ago.

Of course, the cost of checking again, just one more time, is tiny. Hardly worth discussing with myself. And compared to the cost of being wrong, of missing the flight… go ahead, check again.

And like giving into a toddler every time he whines for ice cream, this is the problem.

The lizard brain seeks constant reassurance. It will wheedle and argue and debate with the rest of your head, pushing for one tiny bit of evidence, some sort of proof that everything will be okay.

Don’t do it.

When you indulge the lizard, it gains power. It doesn’t walk away ashamed, humiliated at its anxiety. Instead, it merely sidesteps and looks for the next thing to worry about, because, ready for this? It’s nice to be reassured.

Developing the reassurance habit is easy to do and hard to kick. The problem is this: there are some ventures where no reassurance is possible. There is important work for you to do where no proof is available.

If you’ve trained the lizard brain that reassurance is forthcoming, it will scream even louder when those projects that don’t come with proof are at hand.

Two things every business and non-profit needs to know:

• How much does it cost you to get one new customer.
• On average, what’s that customer worth over the relationship you have with her?

The internet revolutionizes both sides of the equation.

Facebook and Twitter are marvels because for each, the cost of a new customer is vanishingly close to zero. When you can get people into a relationship for nothing, you don’t need to make much on each one to be delighted with the outcome.

Note that the ongoing, digital connection with a customer can dramatically increase the lifetime profit as well. Netflix is far more likely to have a higher average lifetime value than the local video store. Musicians are moving from making a dollar a listener from CDs to hundreds of dollars a true fan in collectibles and concert tickets–things they can only deliver because they know who their best customers are.

On the other hand, legions of unsophisticated marketers are getting both sides of the equation wrong.

They invest a lot in hoopla, spin and hype to get strangers to notice them (once), making the cost of a connection high, and then, once they borrow a little attention, they put everything into a one shot transaction, which few people engage in, and those that do create little value, because the permission asset is then discarded.

Dates, not singles bars. Subscriptions, not vegomatics.

It’s tempting to believe that any website can become a perpetual motion machine of profit. But before you start one, invest in one or go to work for one, a few things to ask:

1. What’s the revenue per visit? (RPM). For every thousand visitors, how much money does the site make (in ads or sales)?
2. What’s the cost of getting a visit? Does the site use PR or online ads or affiliate deals to get traffic? If so, what’s the yield?
3. Is there a viral co-efficient? Existing visitors can lead to new visitors as a result of word of mouth or the network effect. How many new visitors does each existing user bring in? (Hint: it’s less than 1. If it were more than 1, then every person on the planet would be a user soon.) This number rarely stays steady. For example, at the beginning, Twitter’s co-efficient was tiny. Then it scaled to be one of the largest ever (Oprah!) and now has started to come back down to Earth.
4. What’s the cost of a visitor? Does the site need to add customer service or servers or other expenses as it scales?
5. Are there members/users? There’s a big difference between drive-by visits and registered users. Do these members pay a fee, show up more often, have something to lose by switching?
6. What’s the permission base and how is it changing? The only asset that can be reliably built and measured online is still permission. Attention is scarce, and permission is the privilege to deliver anticipated, personal and relevant messages to people who want to get them. Permission is easy to measure and hard to grow.

Do the math on successful companies online and compare it to those that are struggling and these six metrics will help you understand the difference. For example, if the RPM is less than the cost of getting a new visitor, you’ve got trouble. If the site is relying on fads and occasional PR but isn’t building a permission base, that’s trouble too.

The good news is that each of them can be changed if you’re alert and willing to do surgery on the business model and structure of the site.

The ideal structure is a business that’s a platform, not merely a place to stop by. Once people move in and become members, they’re hesitant to leave, they share permission over time, they tell their friends, their RPM goes up and the cost of acquiring and hosting members goes down. The real question is: are you on that path?

How expensive do you think it is for a fast food chain to switch to sea salt on its french fries? Even if we assert that sea salt costs twice as much as the competitor (dirt salt?), it’s easy to see that the impact on the cost of making each order of fries is tiny, since salt is probably 1% of the cost of the item.

That means that upgrading a high-leverage component of your product might not have any real impact on your costs. It just feels that way to the purchasing department.

On the other side of the ‘twice’ coin, you might discover that you’re falling behind the competition. So you spend twice as much on ads, or twice as much time on social media, or devote twice as many of your resources to a problem.

The challenge, of course, is that twice as much of your time or money is irrelevant. Who cares where you started? The correct comparison is to what the competition is investing, and how well.

Most of the big news at the Paris Air Show usually is about what’s being unveiled at the industry’s big event that begins next week. But this year both Boeing and Honeywell are getting a leg up on the flurry of news by talking up how they are getting to Le Bourget Field.

Later today, Honeywell will fly its Gulfstream 450 on the first transatlantic flight using a biofuel blend. And on Monday, Boeing will fly to Paris with its new 747-8 freighter (above, during first flight) also on a biofuel blend. Both companies are flying to Paris with a biofuel produced using a process Honeywell developed. On each flight a blend of fuel derived from the camelina plant will be used without any modifications being made to the aircraft.

Earlier this month the use of biofuels in aviation took a significant step forward when ASTM International issued a provisional set of standards for the production aviation biofuel. This begins the regulatory process for the commercial use of biofuels in airliners and other aircraft.

There have been numerous demonstration flights in both commercial and military aircraft using biofuel. But the wide spread use of biofuels in aviation is still many years off says analyst Richard Aboulafia. But he says pressure from outside the industry, especially in Europe, makes it important to get the word out early.

“It’s important given the political pressure and regulatory climate to message there’s something coming” he says.

Honeywell’s Jim Rekoske acknowledges the widespread use of biofuels in aviation is indeed not going to happen next week. But he says with the provisional ASTM standard now available, commercial facilities can now be built, something that was difficult up until now.

“Finding somebody who would put up their money in order to build a facility to produce a fuel that is not approved for use is a bit of a challenge.”

The next big challenge for the industry if it ever hopes to use significant quantities of a blend of biofuels in jet aircraft is the cost of the biofuel. Jet fuel is a significant portion of the cost of doing business in the airline industry, as well as for air forces around the world. Every penny fluctuation in the cost of jet fuel has massive implications on the bottom line.

According to Rekoske Honeywell’s production process will be licensed to fuel producers. Currently he says the cost differential between converting petroleum oil into jet fuel versus converting a biomass derived oil is about four to five dollars a barrel – about 10 to 12 cents per gallon. That’s significant for an industry that counts the number of peanuts in a package.

Beyond the construction of the conversion facilities, the availability of a feedstock is the next challenge in reducing that price differential.

“Last year there were about 40-50,000 acres in the United States that were cultivated with camelina plants” Rekoske says. “That produced about 500-600,000 gallons of camelina oil.”

Camelina has been the dominant feedstock for jet fuel blended biofuel so far. But algae based fuels are also being looked at as a way to produce the quantities of oil needed to have a significant impact in the industry. World wide Rekoske says more than 50 billion gallons of jet fuel were burned last year.

Honeywell’s Gulfstream will be flying on a 50/50 blend of camelina derived fuel on its way to Paris. The Boeing 747-8 will be burning a blend using 15 percent of the same biofuel.

Photo: Jason Paur/Wired.com

One of the biggest issues with hydrogen fuel cells, aside from the lack of fueling infrastructure, is the high cost of the technology. Fuel cells use a lot of platinum, with is frightfully expensive and one reason we’ll pay $50,000 or so for the hydrogen cars automakers say we’ll see in 2015.

That might soon change. Researchers at Los Alamos National Laboratory have developed a platinum-free catalyst in the cathode of a hydrogen fuel cell that uses carbon, iron and cobalt. That could make hydrogen fuel cells “two to three orders of magnitude cheaper,” the lab says.

Although the discovery means we could see hydrogen fuel cells in a wide variety of applications, it could have the biggest implications for automobiles.

Despite the auto industry’s focus on hybrids, plug-in hybrids and battery electric vehicles — driven in part by the Obama Administration’s love of cars with cords — several automakers remain convinced hydrogen fuel cells are the best alternative to internal combustion.

Hydrogen offers the benefits of battery electric vehicles — namely zero tailpipe emissions — without the drawbacks of short range and long recharge times. Hydrogen fuel cell vehicles are electric vehicles; they use a fuel cell instead of a battery to provide juice. You can fill a car with hydrogen in minutes, it’ll go about 250 miles or so and the technology is easily adapted to everything from forklifts to automobiles to buses.

Toyota, Mercedes-Benz and Honda are among the automakers promising to deliver hydrogen fuel cell vehicles in 2015. Toyota has said it has cut the cost of fuel cell vehicles more than 90 percent by using less platinum — which currently goes for around $1,800 an ounce — and other expensive materials. It plans to sell its first hydrogen vehicle for around $50,000, a figure Daimler has cited as a viable price for the Mercedes-Benz F-Cell (pictured above in Australia).

Fifty grand is a lot of money, especially something like the F-Cell — which is based on the B-Class compact — or the Honda FCX Clarity.

In a paper published today in Science, Los Alamos researchers Gang Wu, Christina Johnston and Piotr Zelenay, joined by Karren More of Oak Ridge National Laboratory, outline their platinum-free cathode catalyst.

The catalysts use carbon, iron and cobalt. The researchers say the fuel cell provided high power with reasonable efficiency and promising durability. It provided currents comparable to conventional fuel cells, and showed favorable durability when cycled on and off — a condition that quickly damages inferior catalysts.

The researchers say the carbon-iron-cobalt catalyst completed the conversion of hydrogen and oxygen into water, rather than producing large amounts of hydrogen peroxide. They claim the catalyst created minimal amounts of hydrogen peroxide — a substance that cuts power output and can damage the fuel cell — even when compared to the best platinum-based fuel cells. In fact, the fuel cell works so well the researchers have filed a patent for it.

The researchers did not directly quantify the cost savings their cathode catalyst offers, which would be difficult because platinum surely would become more expensive if fuel cells became more prevalent. But the lab notes that iron and cobalt are cheap and abundant, and so the cost of fuel cells is “definitely two to three orders of magnitude cheaper.”

“The encouraging point is that we have found a catalyst with a good durability and life cycle relative to platinum-based catalysts,” Zelenay said in a statement. “For all intents and purposes, this is a zero-cost catalyst in comparison to platinum, so it directly addresses one of the main barriers to hydrogen fuel cells.”

Photo: Daimler. The Mercedes-Benz F-Cell hydrogen fuel cell vehicle roaming Australia during the round-the-world F-Cell World Tour.

Aaron Maxwell is founder of mobile web design agency Mobile Web Up. You can find him on their mobile business blog, where he writes about mobile and social media.

Almost every business is gearing up their mobile strategy. No secret why: Mobile is really taking off. There are already more people on the planet who communicate with text messages than with e-mail, and more people who own phones than have credit cards, according to the latest statistics.

The difficulty is that there are many facets of mobile technology. Apps, websites and SMS form the broad foundation. But mobile payments and advertising are rich topics on their own. Where do you focus first?

For many companies, the answer has been “an iPhone app”. (Notice I said “iPhone app,” not “mobile app.” More on that later.) But people have also been looking into mobile-optimized websites. That has led to a kind of debate in some circles about which is more important. If you’re going to only do one, is it better to make a mobile app, or a mobile website?

Apps have one clear advantage. In general, a well-made app can provide a far better user experience than even the best mobile websites are capable of right now. I don’t think this is controversial.

Really, though, what I often see missing from such discussions is cost. It’s often not that hard to make a web app that will work well on most smartphones (depending on the nature of the app — things like graphics-intensive games being an exception, etc.).

But making just a native iPhone app is usually harder than making an equivalent cross-platform web app. And if you want Android and BlackBerry users to be able to have a native app too, you often have to build for each platform from scratch.

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Types of Apps

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Let’s make an important distinction here. Apps can be divided into:

• Those that are meant to directly generate income, and
• Those that are built for purposes of marketing, branding, or customer service.

The first type is the topic of all those heartwarming stories about some enterprising developer creating an iPhone app in his spare time, from which he is making more than enough to quit his job coding TPS report generators at BoringBigCo. There are also real companies that do create and sell apps, quite successfully. The income comes from charging for the app directly, in-app purchases, and subscriptions, or less directly, through advertising (think Angry Birds on Android).

If you’re charging for your mobile product, a native app is the way to go. A mobile website can’t integrate with iTunes billing, which — in addition to providing a ready market of 125 million mobile users — makes payment a snap. Charging for access to your mobile website will require rolling your own payment solution… a tall order on mobile right now.

While interesting and exciting, this category of mobile app is not really what we’re talking about in this article. What’s relevant is when companies produce apps in the second category, for the purposes of marketing, branding or customer service. Good examples are the Starbucks or Target Stores apps.

These are normally free, since the whole point is to get them distributed as widely as possible. And that changes the discussion completely. If we make an app, how many prospects and customers will it reach? That puts a ceiling on the potential success of the app as a marketing channel.

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The Reach Of Different Mobile Channels

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From a pure “how many prospects can I reach” perspective, the best mobile marketing tool is text messaging. About 68% percent of American cell phone subscribers sent a text message in late 2010, according to comScore’s mobile market share report.

Of course, you can do things with apps and websites that you can’t do with SMS. So how many people can you reach with an app? And how many with a mobile website?

For mobile websites, it’s easy. The best indicator is how many people actually browse the web on their mobile phones. As of late 2010, it’s currently over 36% of all U.S. mobile phone subscribers. So, about one half as many people as you can reach with a text message.

There is more to the story for apps. I was at the San Francisco de Young museum a couple of weeks ago. They threw a little shindig to celebrate the release of their official mobile app.

The only hitch: You could only install it if you had an iPhone. Those of us with Androids and BlackBerrys couldn’t play. That reflects a current reality with apps. An iPhone app only works on, well, iPhones. Your app has to be made separately for each platform.

In North America, the most important smartphone platforms right now are iOS, Android, and BlackBerry. How many mobile users are on each? Here are the ratios in the U.S., as a percentage of all mobile phone users, for the last quarter of 2010:

• iPhone: 6.75%
• Android: 7.75%
• BlackBerry: 8.53%
• TOTAL: 23.0%

In other words, if you decide to only make an iPhone app, fewer than 7% of all mobile phone users will be able to use it. If the app’s primary purpose is marketing, you’ll need to decide whether this reach is big enough to be worth it.

And if you develop three different apps to cover these three most common platforms, you’re going to potentially triple your cost. All so you can reach only a fraction of the number of people you can get with a mobile website.

To make things worse, I’m ignoring Windows Phone 7. A year from now it may have a very significant market share, thanks to Microsoft’s joint venture with Nokia. Most mobile websites will work fine on the new Nokia/WP7 phones the day they are released. But creating and pushing out a Silverlight mobile app is no small task.

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Apps Aren’t Free

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The costs for this can add up. There’s no such thing as a “typical” app, so it’s hard to give a meaningful average cost. But as a general working figure, we can say it costs at least $30,000 to design, implement and deploy a brand-quality iPhone app. I haven’t found published studies for the equivalent costs for Android and BlackBerry, but since the device fragmentation is greater, it would makes sense that the costs are at least similar.

All the above means that, at the end of the day, creating a set of mobile native apps that reach, say, 80% of smartphone users is going to be far more expensive than creating a mobile web app that reaches 90% of smartphone users. I don’t even mean twice the cost; I mean more like five, maybe even ten times the cost.

In many situations, that’s acceptable. As noted, sometimes you want to do things that just aren’t possible with a mobile website, at least with good quality. Or maybe it is possible, but you know you can create something of better quality with a native app, so that the result is more engaging. For enterprise-scale organizations like consumer banks and nationwide retail stores, they have the capital, and the ROI justifies it. But if your budget for mobile is under $100,000, it may not be a good approach.

How does a mobile website compare in cost? I haven’t found any published study of the typical cost for mobile web design and development. But from my experience running a company that does just that, I can tell you that it’s almost always less than the $30,000 for an “average” iPhone app.

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What’s the ROI?

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Given all this, how many prospects will a venture reach per dollar? At a conservative estimate of 234 million U.S. adults with mobile phones, here’s the breakdown:

In other words, you can reach nearly five times as many people per dollar invested with a mobile website rather than a native mobile app. And that’s conservative, assuming it costs just the same to create the BlackBerry app as it does to create the iPhone app (it doesn’t), or that a mobile website will cost the same as an equivalent iPhone app (generally, not even close).

Does this mean you shouldn’t do an app? Of course not. There are many other factors involved. If an app user converts 10 times more frequently, for example, the difference is more than justified. But that’s a big hurdle to clear. And if you want to reach users across more than one mobile platform, you have to consider the extra capital investment as well.

Whether you go with a mobile website, a native mobile app, or both, you’ll probably benefit. The continued mobile explosion will make sure of that. Just take care that you get the most bang for your buck by doing what’s best for your business.

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