Paul Wallbank – Brilliant Communications

Author: Paul Wallbank

  • Shops of doom

    Shops of doom

    “Location, location, location” is the mantra for real estate investors and property speculators, that rule is just as true for those setting up a shop or cafe.

    When you pay attention to the retail strips or malls in your suburbs you’ll notice how some locations are doomed to fail.

    The featured picture in this post is what should be a good location in the centre of a dining strip in an affluent Sydney suburb. Just fifty metres either side of the premises are successful and long running cafes.

    However this spot has had five different business fail in the last three years and in the past decade hasn’t had a single stable tenant.

    The question is what causes this? Is it because the landlord’s are greedy?

    In some cases it is, the featured premises had a stable tenant in a very nice and well priced fish restaurant for many years. When the landlord jacked up the rent, the seafood cafe moved out and the place has struggled ever since.

    Something many people have mentioned to me over the years is how difficult they find it to negotiate on price with landlords over commercial space with the owners very reluctant to budge on rents.

    Often, the letting agents are prepared to throw in sweeteners like fitout costs, rental holidays or paying utilities but it’s very rare that the headline rent will be negotiated down.

    Part of this could be due to the properties being valued as a multiple of their monthly rents; so if the leasing rate falls, so too does the property value which is bad news for the landlord and their bank.

    When landlords get too greedy properties lie vacant for a long time. A good example is nearby to the featured property.

    closed-bike-shop-in-bad-retail-location

    The bike shop that occupied this unit for about 12 months moved out over two years ago and before that it had been vacant for a long time. Despite being on a busy commuter strip in an affluent suburb, it’s a lousy location with poor visibility, truly awful parking and lousy amenities.

    In a genuine free market the rent should fall until a business that can operate in such a low turnover location can afford it, that no entrepreneur can make the numbers work indicates the asking price is too high.

    Although even the cheapest rents won’t help a truly blighted location which is why it might be a good idea to ask around the local shops and residents to see how a location has performed before signing that lease.

    It would be a shame to doom your business because of a lousy choice of location.

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  • How did San Francisco become the darling of the tech scene?

    How did San Francisco become the darling of the tech scene?

    Regular visitors to San Francisco would notice how the city has changed in the last few years.

    Companies that were setting up in Silicon Valley are now basing themselves downtown, the business community is energised and the seedier parts of the town are looking substantially spruced up.

    To understand the change I interviewed Laurel Barsotti from the City and County of San Francisco as part of the Decoding the New Economy series of video clips.

    Laurel is the council’s Director of Business Development and we discussed how the local government has worked with the community and business leaders to drive San Francisco’s economic growth.

    The shift from Silicon Valley

    A striking change in the tech industry is how the startup focus has shifted from Silicon Valley fifty miles away to downtown San Francisco. Laurel puts it down to a shift in the priorities of the sector.

    “I think we benefited from a shift in the tech industry, being much more focused on design and user experience,” says Laurel.

    “The people who are investing in that are people who want in San Francisco and people who want to live and work in the same city.”

    “A lot of the entrepreneurs creating those companies are concerned their employees see people using their products, they want them riding the bus to and from work and see people interacting with their products.”

    Changing the tax code

    Like Barcelona, the Global Financial Crisis shook the city up, “with the economic downturn our whole city made jobs a top priority.”

    Part of that review focused on the disadvantages of basing a business in San Francisco.

    “It was bought to our attention that we were the only city in California that taxed stock options.” Laura says, “companies that wanted to go public were having to leave San Francisco to afford it.”

    “We did an entire revision to our tax code which showed to investors they could count on San Francisco to be business friendly.”

    Regenerating communities

    Along with the problem of city taxes, the city was facing the problem of regenerating blighted neighbourhoods and the administration decided to address both problems together by offering incentives for businesses to setup in the mid-market district – I’d been warned not to call it ‘The Tenderloin.’

    “We had a neighbourhood that was facing a lot of blight and we had not been able to successfully increase business and we had companies like Twitter telling us that our payroll tax was causing them problems and making it hard for them to grow in San Francisco,” Laura tells.

    “So we combined those two problems and made it so a San Francisco company was able to move into a neighbourhood that needed more investment and business and it would be able to save some money while helping us improve the neighbourhood.”

    The future for San Francisco

    A common point when talking to city leaders and economic development agencies around the world is the focus on building a diverse economy and Laura sees that as part of the future for San Francisco.

    In that vision includes manufacturing, biotechnology and tourism along with the internet based industries that are today’s investment and media darlings.

    The focus though is on the city’s residents and how life can be improved for everyone, not just the business community and high tech investors.

    “We are really focused on creating an economy for all,” says Laura. “We want to remain as diverse as possible.”

    “Every San Franciscan, from no matter what socio-economic background, has a place that they can be.”

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  • It’s tough in YouTube land

    It’s tough in YouTube land

    For owners of YouTube channels life has been tough in the last few months as Google plays with the service and its features.

    The first irritant for YouTube administrators was the integration of Google Plus into the comments that now requires commenters to have an account on Google’s social platform.

    Google’s reasoning for this is some transparency in YouTube’s comments will improve the services standards of conversation and there’s no doubt that YouTube comments truly are the sewer of the internet with offensive and downright deranged posters adding their obnoxious views to many clips.

    Unfortunately the objective of improving YouTube’s comment stream doesn’t seem to have worked which casts the effectiveness of Google’s identity obsession into doubt, but it has had the happy – and no doubt totally unintended – effect of boosting user numbers for the struggling Google Plus service.

    The latest blow for YouTubers has been Google’s copyright crackdown where the service is removing posts it claims are in breach of owners rights. Many channels, particularly game review services, are being badly hit.

    Of course the Soviet attitude to customer service that Google shares with many other Silicon Valley giants doesn’t give these folk many options of getting their problems resolved.

    All of which illustrates the risks of being dependent on one social media service which the poor YouTubers are finding this the hard way.

    Watching this play out, it’s hard not wonder how vulnerable services like YouTube are to disruption, while they have the network effect of being the leader it’s not hard to see how alienating the people who create the platform’s content opens up opportunities for new players.

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  • Cities of Industry

    Cities of Industry

    The latest Decoding The New Economy interview feature Laurel Barsotti, Director of Business Development at the City of San Francisco discussing how the city refound it’s entrepreneurial mojo.

    A notable point about Laurel’s interview is how she has similar views to Barcelona’s Deputy Mayor Antoni Vives about the importance of industry to San Francisco.

    For some time it was an article of faith in the Anglo-Saxon world that the west had become post-industrial economy where manufacturing was something dispatched to the third world and rich white folk could live well selling each other real estate and managing their neighbours’ investment funds.

    “Opening doors for each other” was how a US diplomat described this 1980s vision according to former BBC political correspondent John Cole.

    It’s clear now that vision was flawed and now leaders are having to think about where manufacturing, and other industries, sit in their economic plans.

    Barcelona’s and San Francisco’s governments have understood this, but others are struggling to realise this is even a problem as they hang on to dreams of running their economies on tourism, finance and flogging their decidedly ordinary college courses to foreign students.

    For some political and business leaders this is a challenge to their fundamental economic beliefs. It’s going to be interesting to see how they fare in the next twenty years.

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  • Crowdsourcing jet engines

    Crowdsourcing jet engines

    Crowdsourcing, harnessing the wisdom of crowds, has been a buzzword for probably the last five years.

    It’s often cited as a way for companies and entrepreneurs to access skills that have been largely unattainable in the past.

    Much of the talk about crowdsourcing has revolved around consumer or marketing projects, say designing logos, and all too often the conversation revolves around getting people to do creative projects for free – the real opportunity though may well lie in the industrial sector tapping into that group wisdom.

    Open innovation and jet engines

    An example of how the industrial sector is using crowdsourcing is GE’s Open Innovation project where the company is offering prizes for the best ideas in developing jet engine parts and advanced 3D printing techniques.

    Like the Kaggle data analysis platform, GE’s project shows that crowdsourcing isn’t just about getting a cheap logo or comparing shoe designs, it can be used to develop high tech equipment.

    Another example of high level crowdsourcing is the DARPA Robotics Challenge where the US military research agency found that enthusiastic amateurs, motivated students and wily entrepreneurs were able to get results that decades of consulting from major defense contractors could achieve as a New Yorker story on Google’s robotic cars describes;

    In one year, they’d made more progress than DARPA’s contractors had in twenty. “You had these crazy people who didn’t know how hard it was,” Thrun told me. “They said, ‘Look, I have a car, I have a computer, and I need a million bucks.’ So they were doing things in their home shops, putting something together that had never been done in robotics before, and some were insanely impressive.” A team of students from Palos Verdes High School in California, led by a seventeen-year-old named Chris Seide, built a self-driving “Doom Buggy” that, Thrun recalls, could change lanes and stop at stop signs. A Ford S.U.V. programmed by some insurance-company employees from Louisiana finished just thirty-seven minutes behind Stanley. Their lead programmer had lifted his preliminary algorithms from textbooks on video-game design.

    The maturing of various technologies like 3D printing, big data and collaboration software are making it easier to democratise and open the innovation process, as DARPA found this can also save costs and accelerate development cycles.

    Balancing crowdsourcing

    GE’s Chief Economist Marco Marco Annunziata sees engineering crowdsourcing as an opportunity to move faster and harness skills even companies as big as his struggle to find, “how much of the innovation process do you keep in house?” He asks.

    That’s a balance many managers are going to consider as they find their markets evolving faster than the capabilities of their own designers and development processes. It may well be that many will find their future innovations come from outside their organisations.

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