Leaving a dentist near you...

.. Invisalign.

In what could be the dumbest business decision I've heard of in a long time, Align Technologies (NASDAQ: ALGN), makers of Invisalign® has decreed that all dentists offering Invisalign must start 10 cases per year and complete 10 CE credits related to Invisalign per year (copy of letter sent to one dentist here).

What this means for the consumer:

• The consumer experience will undoubtedly improve. Those who truly want Invisalign will now have a limited set of very experienced dentists to choose from.
• However, competitive pressure may change that - see notes on ClearCorrect below.
  

What this means for the dentist:

• The national average for a case is $5,000/year(source). Convincing 10 patients per year to fork over $5,000/year for a truly elective procedure is very, very hard in the vast majority of markets out there. Only the ones that market heavily and whose business consists of a very high percentage of cosmetic dentistry will make this quota.
• Every dentist who became certified in the past 5+ years was required to pay $1K-2K to become certified. This, combined with a mandatory reduction in services, is going to lead to a large number of very unhappy dentists at this decision (I know a few myself). And, you can be sure that unhappy dentists across the country will do whatever is in their power to keep a patient in the door. A few choice quotes from the online dental community DentalTown:
  • "Absolute idiots IMHO !!! I wonder if they will be refunding doctors certification costs as they decided to change the rules in the middle of the game?"
  • "While there are many doctors that may not submit many cases to Invisalign, I suspect these same doctors talk alot about invisalign and are a terrific advertising/referral source for high volume invisalign offices or orthodontists. I'm sure many of us won't have very many nice things to say about Align right now."

What this means for Align Technologies:

• I would expect that this knocks out 50-75% of their dentists (by number), but only knocks out 10% of revenue in year 1*. They can align sales/admin costs against this expected reduction in revenue to minimize the impact to net income. This, however, does not include the general softness expected in their business due to offering an expensive, elective procedure during a severe recession, which analysts have already identified.
• Beyond intentionally cutting revenue during the recession, their timing is poor. Between being found as violating patents by one competitor (Ormco Corporation) and seeing another upstart invade their turf (ClearCorrect), they are leaving dentists with plenty of options that are not Invisalign.

How long will they have until this newfound exclusivity takes a toll on their brand strength and share price? I don't think their 2Q earnings will reflect the change, as the few fringe dentists are likely pushing Invisalign hard to hit their quota, but I would be surprised if they don't have to lower guidance again in future quarters, partially as a result of this policy.

Comments? Thoughts?

*These are gut-feel numbers, not based on financial analysis.

Google Voice (today) --> AT&T (1980's)

This is a great opinion piece by Judy Shapiro at Advertising Age. It draws parallels between the widely acclaimed Google Voice service and the breadth and reach of AT&T's investments in the '80s and '90s. The conclusion is that this is a dangerous path for Google, as it takes it far afield from its core business, and that while the core business may not suffer today, it may (will?) in the near future as a result. From the article:

Much like AT&T did 20 years ago to maintain its growth, Google is trying to do the same -- control the data distribution channels. In the case of AT&T, it was all about information delivery to business and residential users. In the case of Google, it's all about advertising delivery to its "product" -- the users of its services.

The trouble with wanting to dominate all delivery channels (whether it be information or advertising) is that you are forced to go further and further afield from your core competency. And while playing in disparate businesses is something a leader brand can afford to do, over time the core business tends to suffer -- slowly but inextricably. Then at some point, you are willing to throw out the knitting needles. AT&T did, and it did not end well. Google looks like to be headed in the same direction.

Nerdy Chicago Weather Joke

From Cheap Talk:

Q: How do you prove the existence of Spring in Chicago?

A: By continuity.

In February it was zero Farenheit. Today it is muggy and approaching 90. By continuity, Spring happened somewhere in between. But note that this existence proof is not constructive. It is of no help in telling us exactly when it was that Spring fluttered by. I must have been sleeping at the time.

Podcasts on your Blackberry with Mediafly

Mediafly just released the beta version of their player for BlackBerry devices. For those of you who don't know, Mediafly is a free service to enable you to manage all of your podcasts and discover new podcasts, across all of your devices (iPhone, iPod, Sansa, Zen, Squeezebox, chumby, PopcornHour, Zune, CastGrabber, and even plain old RSS). That may sound complicated, but it's enormously useful once you realize how it works.

I listen to This American Life from Chicago Public Radio quite often - at the gym, on the bus, etc. In the past, I would have to remember to sync my iPod to iTunes to ensure the podcast is loaded onto it. With Mediafly Audio Edition for Blackberry, however, I can simply stream new and recent episodes quickly through the application's interface whenever I want.

When you open the application, you are given a list of channels with default shows within them. Lots of great exploration here. There are a lot of audio programs I recently started listening to that I did not know existed before starting to use Mediafly. I've become a fan of Gordon Deal's dry wit on the Wall Street Journal podcasts. And, the Chicago Booth Graduate School of Business puts out CareerCast, interviews with professionals on various career-related topics. I find these to be excellent as well.

Next, you can customize your own channel list. If you want to customize the list, you can register for free at Mediafly.com and link your BlackBerry to your device. You can then add and remove shows and episodes from both the BlackBerry and from the website.

Finally, there is a version that supports video podcasts as well in the works.

It's definitely worth trying out, at the very least to see what kind of content you can find. The release is a beta, so please let them know if you encounter any bugs or other issues (you can do so right from the application, it seems).
To install, point your BlackBerry browser to: http://www.mediafly.mobi

Are expensive running shoes a waste of money?

A fascinating article in The Daily Mail about running shoes and whether they are worth their money. If you are a runner or even like to walk a lot, it is well worth the read.

My favorite quote:

Dr Craig Richards... revealed there are no evidence-based studies that demonstrate running shoes make you less prone to injury. Not one.

It was an astonishing revelation that had been hidden for over 35 years. Dr Richards was so stunned that a $20 billion industry seemed to be based on nothing but empty promises and wishful thinking that he issued the following challenge: 'Is any running-shoe company prepared to claim that wearing their distance running shoes will decrease your risk of suffering musculoskeletal running injuries? Is any shoe manufacturer prepared to claim that wearing their running shoes will improve your distance running performance? If you are prepared to make these claims, where is your peer-reviewed data to back it up?'

Dr Richards waited and even tried contacting the major shoe companies for their data. In response, he got silence.

And also,

Runners wearing top-of-the-line trainers are 123 per cent more likely to get injured than runners in cheap ones.

Antidote du jour

One of my favorite blogs of the day is Naked Capitalism. The blog offers an almost increasingly despairing look at the economy and the politics behind making it better, and makes you want to crawl into a hole and hide for a couple of decades after you read it.

It is topped off by posts of "Links", which contain a barrage of interesting and usually pessimistic links from across the news and blogosphere. At the end of each of these "Links" posts, however, contains a picture that author Yves Smith entitles "Antidote du jour", usually contributed by a reader. Instead of describing the picture, I'll post a few below.






Given the starkly negative (/realistic?) tone of the blog, "Antidote du jour" always makes me smile.

Banks were profitable in January and February... because of AIG

Wow.

AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.

Helmet use in skiing

Given the death of someone in the news while skiing this week, I was able to find numbers on what I have been looking for that justify my suspicion: use of helmets by skiers has increased dramatically recently.

When I first started skiing yearly in 2003, the only people I saw wearing helmets were two of the other three people skiing with me. I was acutely conscious of this and other equipment/fashion trends on the slopes, as I literally had almost no idea how warmly to dress, what good or bad equipment was (save determined by price), etc.

We adopted helmet use for our 2007 trip, and intend to continue it for the foreseeable future. I've put a lot of money into making my head smarter, I should protect that investment.

This year, on our trip to Steamboat Mountain, helmets were far more common than I've ever seen. The quote below from a CNN article helps justify that sentiment.

Forty-three percent of U.S. skiers and boarders wear helmets, according to a 2008 survey by the National Ski Areas Association, the trade group that represents ski resorts as well as ski gear manufacturers. That's up from 25 percent in 2003.

Looks like it will be a banner year for the ski helmet manufacturers and distributors.

TARP, in pictures

Forwarded from a friend.

TARP

How to make AIG executives give up their bonuses

The government claims they are contractually obligated to pay 400 AIG executives and employees their $165M in bonuses.

How do we get these people to do the right thing and forgo these completely undeserved bonuses?

The administration can play hardball. Make a public statement that states, yes, you can take your bonus as the law dictates. However, if you do, we will make your names, addresses, and the amount of your bonus public. Not hardball enough? Then, make this policy apply in perpetuity (e.g. if you move, we will keep your address up to date). Too hardball? Limit it to those taking home >$500K from this bonus pool.

This will certainly make them think twice about accepting this money.

Of course, none of this would have been a problem if we hadn't bailed them out in the first place - they would enter bankruptcy and these contracts could be void.