Starbucks unveiled its “exciting new” rewards program last week. Historically, the program had granted one Star per transaction to Starbucks’ Gold customers, and 12 Stars could be redeemed for a free food / drink. Now, customers receive 2 Stars per dollar spent, but 125 Stars is the new redemption price for a free food / drink. Though Starbucks spent a lot of effort branding the new program as something customers had requested and a good thing for the customers (Gosh, even the url for their new program starts with “morestars”), most customers are unhappy (see: https://secure.marketwatch.com/story/starbucks-changed-its-rewards-program-now-what-2016-02-26). It’s an end to a system that frankly didn’t make economic sense to Starbucks.
Exactly what amount of first-world anger should I direct toward Starbucks? I was curious about how the new program would affect different types of customers (ok, specifically me), and came up with a simple model here:
1. Because of the spend requirement, the new program fixes the % back a customers receives on his/her purchase. In the new regime, one accrues ~8.76% back. This is pretty comparable to other coffee shops (1 free drink every 10 - 12 drinks)
2. The break-even point between the old and new regime is $5.21 per transaction. In other words, those spending on average $5.21 are indifferent between old and new plans. Those who spend more than $5.21 per transaction should actually be happier under the new program. Those who spend less than $5.21 per transaction? Not so much. The $3-latte drinkers are worse off by approximately 5%. The $2-cup-o’-joe drinkers are worse off by approximately 13%.
3. To even start to have purchase count toward rewards, Starbucks has a spend threshold in place. The switch over to dollars spent means that the $3 latte drinker has to spend an additional $55 to even get into the program; the $2 cup-o’-joe drinker, an additional $90.
Such a move is not dissimilar to how airlines changed their frequent flier miles to be based off of dollars rather than miles. It makes sense to the companies running such rewards programs, particularly toward the end-goal of rewarding the most loyal customers, rather than their most frugal / enterprising customers (i.e., those that would split purchases into separate transactions to get more Stars. Guilty as charged! Starbucks even has a special FAQ / go to hell note for these customers here: http://morestars.starbucks.com/). Given 95% of customers likely fall under the $5.21-per-transaction threshold laid out in point 2, I’m surprised Starbucks didn’t go even deeper (say, to a $7 break-even point) under the new system. My two theories:
1. Optics: they adjusted the numbers so that it wouldn’t look to start (125 stars relative to the 12 stars sounds better than 250?)
2. $5.21 is the roughly the minimum per-transaction spend of a big-fish Starbucks customers whom Starbucks would like to make feel special
Based on Starbucks’ push to get customers to adopt the mobile app and the reward system, they continue to see this as an effective program to keep customers “subscribed” to coffee. I wouldn’t be terribly surprised if another change to the program were to occur in the next few years, whether it’s another inflationary Star-value event, or an increase to the purchase threshold for Gold. Since Starbucks has started to offer other benefits that regular coffee shops can’t offer (mobile ordering, Spotify integration), it has less of a need to lead the charge on rewards through its loyalty program.
Edit: The image accompanying this article has been changed to reflect this year's venue, the Seattle Key Arena. The previous picture showed last year's venue, the Seattle Opera House.
For those of who aren't familiar with Dota, Wikipedia informs me that it's a "2013 multiplayer online battle arena video game." Dota was originally created by a fan of Warcraft III (a Valve creation) as a mod(ification); the mod caught the attention of Valve developers, and the fan was eventually hired by Valve full-time to develop the game.
I met up with a friend who was spectating the tournament and was quite surprised to find out the size of the prize pool. This year, the tournament awarded $11 million dollars in total, and the winning team walked away with a cool $5 million. The money was almost entirely crowd-funded through the sale of a $9.99 "Compendium" to fans. Here's the kicker: Valve pocketed 3/4 of the funding and contributed the rest to the prize pool, so the compendium sales grossed $44 million.
To put the prize pool's $11 million in perspective, I looked at some of richest "real" sporting events in the world based on this Forbes slideshow. The result? Last weekend's International would be tied for sixth with the Super Bowl and just behind the UEFA Europa League (four out of the top five richest events are soccer-related). The International is also ahead of the Fedex Cup, the World Series of Poker, and the Dubai World Cup.
Apart from the funding the prize pool, fans of the game paid a significant sum to spectate the game in Seattle. Ticket prices ranged from $99 - $499; at a rough average of $199 a pop and accounting for capacity at Key Arena (~17K), gross ticket sales were about $3.5 MM. Furthermore, spectators were encouraged to purchase related game merchandise at the store set up at the tournament site. Those who spent upwards of $150 would receive a 1/2 body-length tote bag to carry all their swag. By way of very rudimentary observation, nearly half of the spectators I saw (identified by entrance badges swaying around their necks) carried one of these bags. Assuming they spent an average of $199 on swag, I'd say another $1.75 MM of on-site merchandise, coupled with a similar amount online, is in the realm of possibility. This aggregates to ~$7 MM in ticket and merchandising sales during the event, on top of the ~$44 million through Compendium sales.
This year's competition was even broadcasted on ESPN3, the chosen home of many non-athletic events that ESPN understands to be either lucrative or culturally significant (think World Series of Poker or the Scripps National Spelling Bee). Notable here is that a video gaming event was 1) televised on a major cable channel and 2) placed in relatively premium time slots (Fri-Sun). ESPN clearly recognizes the size of the prize -- Dota2 fans represent a huge, untapped audience that doesn't fall into its usual viewer demographic (put politely), and furthermore, this audience is clearly able and willing to pay a lot of money as spectators.
I compared prize pools, ticket sales, and broadcasting presence to demonstrate the rising viability and visibility of e-sports. However, this doesn't paint the complete picture about an event's market value. For other sports, the breadth of events (i.e., full seasons of play / variety of tournaments) and willingness of fans to pay for that entertainment on a regular basis is what eventually sustains an entire league of professional athletes, along with various systems to support the sport (e.g., pre-professional / college / hi-school / recreational leagues).
Recent success, though, suggests that gaming should set its sights higher, both financially and culturally. Is there a day where gaming enjoys the same society-wide adoption and infrastructure as a major sport? The United States is probably further off from that vision than Europe or East Asia (side note: a member of the winning team appeared on a major Chinese dating show recently), but the International's blow-out weekend certainly augurs well. Continued growth of the player and spectator base (daily peaks of 800K players, YoY growth of ~50%), proliferation of well-funded tournaments (even without corporate sponsors), and innovations in channels (e.g., pay per view on Twitch.tv) may pave the way for an international phenomenon that truly rivals some of the world's biggest sports.
When Lebron James announced last week his return to the Cleveland Cavaliers, the response from the Internet was swift and predictably sarcastic, as commenters mocked fans of Lebron who would remorselessly become Cavaliers fans overnight.
This led me to muse: why do we ("pure" sports fans) have such a dislike for bandwagoners?
Conformity is often driven by the informational cascade -- it's impossible to know everything about everything, so one of our heuristics is to notice what others do and adopt the same practice (i.e., follow the crowd). Most of the time, it tells us a lot of information about what the best "thing" is. In sports fandom, bandwagoning allows us to leverage the wisdom of the crowds to inform us who the hottest team is, even if we haven't followed along with any other development in the league.
Sadly, that also means that a lot of details on team history or even team composition are lost in the shuffle for bandwagon individuals, particularly if s/he would rather attach him/herself to the cultural phenomenon and not the team. Understanding the team becomes even harder for new fans of the sport over time, since teams accumulate history and rivalries.
Purist fans, though, are unforgiving: ignorance, even of current team composition, is a common insult levied on bandwagoners.
You can't trust a bandwagoner
"True" fans band together to endure the tough times, and connect on their more-informed perspectives on team sports. Moreover, different enclaves of teams will proclaim the depths to which their fans will go (above and beyond fans of other teams). As with any fanatical organization, they are bound by and must project these principles even if their position is less favored by other groups or even the rest of society. The group, then, must guard against individuals who are likely to defect, even if the fan is an addition to the growth of the fanbase.
Hope, on the bandwagon?
I found thinking about these reasons helps inform those of us in the "know" about any sport on how we should act toward bandwagoners, especially as we apply these exclusions to ourselves.
When evaluating these characteristics against myself, I realize we were all bandwagoners of some sport as some point. It's just impossible for a person new to spectating sports to devote the time and energy to support one team in every major team sport with perfect knowledge and in collaboration with a network of other die-hard fans. (Yes, even if you were a sports genius born into a sports family)
True, bandwagoners are an annoying bunch, especially because the loudest ones can be the least educated. But then again, some of them are just people like you or me, who are just starting to learn what real sports spectatorship is like. Let's spend time and effort educating those guys: fans who are currently bandwagoning, like you or I once did, as a stepping stone toward becoming real fans, and not as a choice of lifestyle.
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Fun data appendix
Separately, I would be interested in seeing whether we can measure the degree of "bandwagoning" of a team. A few metrics that could be measured on a random sample of fans:
a) Avg ranking of team in the years that current fans report support for (long-term support)
b) % of fans who score above a certain score on an exam on the team's history / players stretching back certain years (long-term support + knowledge)
c) % / # change in mix / number of fans supporting team X, YoY (solidarity) (if volume-based, should be indexed to growth of overall # of fans)
Watching post-game conferences makes me understand why Pop is so (in)famously taciturn at the podium. These questions usually break down into three types: rumor-based, borderline rude, and stupid. Rumor-based questions revolve around some unsubstantiated story around the league, and involve asking the person who is most affected and least likely to respond. Case in point – Lebron James, who was asked Lebron about Carmelo joining the Heat, even when it’s crystal clear that this is not something Lebron would declare in a post-game conference, let alone think about after a historic ass-whoopping. Border-line rude questions involve a reporter completely ignoring the acceptable response to a situation to inject a bit of unnecessary emotional tension. We saw Kawhi Leonard field a question about whether he will feel extra pressure to live up to expectations after having won the MVP. How about giving the man some space, to soak in the pure joy of the moment? And stupid questions? I guess I was going classify a new category, but now realize both rumor-based and borderline rude questions fall under the stupid question umbrella. I wish players would follow Pop’s example and exercise their right to remain silent at inappropriate questions.
Sports are at their best when they become greater than their athletic entertainment value. I got a lot out of this Finals viewership experience through the catharsis of the Spurs, but I also realized they’re a great parable for living life with excellence. Timmy teaches us about fundamentals and longevity. Manu and Patty teaches us about acting with fire and brio. Boris teaches us about unselfishness. Pop teaches us about tough love and faith (in the system). The Spurs as a whole teach us about humility, persistence, and recovery from loss. Tomorrow is the first day of the rest of our lives. Let’s use our Game 6s to push us onward, reminding us that nothing can ever be taken for granted.
Watching post-game conferences makes me understand why Pop is so (in)famously taciturn at the podium. These questions usually break down into three types: rumor-based, borderline rude, and stupid. Rumor-based questions revolve around some unsubstantiated story around the league, and involve asking the person who is most affected and least likely to respond. Case in point – Lebron James, who was asked Lebron about Carmelo joining the Heat, even when it’s crystal clear that this is not something Lebron would declare in a post-game conference, let alone think about after a historic ass-whoopping. Border-line rude questions involve a reporter completely ignoring the acceptable response to a situation to inject a bit of unnecessary emotional tension. We saw Kawhi Leonard field a question about whether he will feel extra pressure to live up to expectations after having won the MVP. How about giving the man some space, to soak in the pure joy of the moment? And stupid questions? I guess I was going classify a new category, but now realize both rumor-based and borderline rude questions fall under the stupid question umbrella. I wish players would follow Pop’s example and exercise their right to remain silent at inappropriate questions.
Sports are at their best when they become greater than their athletic entertainment value. I got a lot out of this Finals viewership experience through the catharsis of the Spurs, but I also realized they’re a great parable for living life with excellence. Timmy teaches us about fundamentals and longevity. Manu and Patty teaches us about acting with fire and brio. Boris teaches us about unselfishness. Pop teaches us about tough love and faith (in the system). The Spurs as a whole teach us about humility, persistence, and recovery from loss. Tomorrow is the first day of the rest of our lives. Let’s use our Game 6s to push us onward, reminding us that nothing can ever be taken for granted.
This ESPN article, along with the million other ESPN articles on the Madden Curse this past week, pissed me off. We insist on mythologizing a phenomenon that has pretty much been proven to be a classic case of mean reversion.
I understand the likely reason behind writing about the Madden Curse. ESPN’s core business as a sports site is entertainment -- journalism is merely its vessel. Writing about the Madden Curse is 1) inflammatory enough to draw a response from the player (Richard Sherman, for the record, says he does not believe in the curse), which then 2) allows it to sell articles and consequent page views, especially when the individual in question happens to be one of the most polarizing figures in the sport. Put it differently, ESPN could write a mean reversion article. It’d be the only article on the topic, and it wouldn’t be that incendiary. The alternative is much more financially attractive: mining the dregs of the Madden Curse discussion for eternity. You might even resurface a few athlete names for terribly meaningless and fiercely argued debates!
So I get the practical side of things. But that doesn’t mean I don’t think it’s irresponsible for ESPN, the site where a majority of U.S. sports fans go to get their reporting. In the world of serious news coverage, the publications in the upper echelon (e.g., NYTimes, WSJ, and Economist) are lauded for journalistic excellence despite doing so from the loftiest and most influential peaks. ESPN has similar influence in the sports world and definitely the potential to do so (e.g., 30 for 30, long-form essays). The demand is out there as well (e.g., Grantland). Perhaps predictably, though, ESPN has opted to churn out poorly thought-out, link-baity articles and advertise its anecdote-whoring, data-poor, cognitive-bias-inflicted talking heads (please don’t get me started about Stephen A. Smith and Skip Bayless).
Even as commenters poke fun at ESPN’s obsession with trivial topics that draw glance views (e.g., “Hm…wonder what Lebron would think about this, ESPN”), other commenters realize that ESPN has already won, by attracting even its detractors’ glance views to the site (e.g., “If it’s so stupid, why are you posting here then?). All in all, it’s a bit depressing to think about the new legion of sports fan raised on a site that prides speed over accuracy and volume over nuance, especially since the foregone opportunity to breed a more savvy sports fan is right there.
Comedy speaks to people because it tickles a part of the soul that is very close to us. Being able to reach that level of intimacy with the audience requires being vulnerable about your doubts, confusions, and fears. These are some of the main drivers for spontaneity (and hilarity) on the stage.
We aim for art, but we'll settle for comedy.
Comedy in its greatest form nourishes the soul in a creative tour-de-force, like a brilliant three course meal at a Michelin-starred restaurant. But even in its "lowest" form, it generates an innate sense of joy. It's still soul food.
Fixate on your best idea, and then drop it.
During the first class, this was the hardest part of improv for me. I found myself going through most of the exercises in class thinking about the funniest thing I could say, Despite getting the laughs I wanted, I understood that I betrayed the whole purpose of the class. This class is about confronting the fear of not having the best lines. Achieving that fearlessness will be a struggle, but I know it'll be worth worth the pain of failure...then again,
There is no natural failure in improv comedy.
There is only failure when you stop to acknowledge it.
Wise words to live by.
It takes a lot more effort (several sessions, not one post) and certainly provides a lot less satisfaction than blasting out one's personal opinion to thousands of friends / followers, but really helps crystallize one's experience for someone else. Grab a guy friend you know and really educate him on what's important to you. Demonstrate some counter examples. Most importantly, treat the guy with respect, even though you might think him beyond redemption. No matter how childish you think someone's opinion is, respect for someone else's initial viewpoints is a ground rule for fruitful discussion.
Rodger may have been beyond some point of no return, but let's use the tragic event to rekindle some constructive conversation.
