Paul Wallbank | Paul Wallbank - Communications Professional

Thinking beyond the group

Varied sources of information are essential to avoid stale, group thinking

It’s nice and comfortable living in an echo chamber and we’re all guilty of it one way or another. An example of how insular echo chambers can be are two surveys done by UK company Apollo Research on who UK and US tech writers follow on social media.

The answer was each other, with most tech writers following a common core of twenty in the UK and thirty in the US. Basically the groups are talking to each other which explains how technology stories tend to gain momentum as variations on the same stories feed through the network.

While technology journalists are bad for this, it could be argued their political colleagues are far more guilty of this group think as their working in close quarters makes them even more insular and inward looking. That explains much of the political reporting we see today which often seems divorced from the real world concerns of voters or challenges facing governments.

For all of us, not just journalists, it’s easy to become trapped in our own little echo chambers and find it harder to think outside the pack as the web and platforms like Facebook deliver us the information we and our friends find confirms our own biases.

Clearly, thinking with the pack creates a lot of risks and for businesses also raises opportunities. At a time of fast moving technology and falling barriers to entry, thinking outside the prevailing group could even be a good survival strategy.

A good example of industry group think is the US motor industry of the 1970s where they dismissed Japanese competitors as being cheap and substandard – similar to how many think about China today – yet by the end of the decade Japan’s automakers had captured most of the world’s market.

On a national level, Australia is a good example of dangerous groupthink as up until three years ago the consensus among governments, public servants, economists and business leaders was the China resources boom would last indefinitely.

Today that consensus looks foolish, not that those within the echo chamber are admitting they made the wrong call, and now governments are struggling to find new revenue streams as the expected rivers of iron ore and coal royalties fail to arrive.

For Australian businesses, governments looking to raise revenues are another factor to plan for and getting one’s tax return and company paperwork in on time might be a good idea to avoid fines from overzealous public servants.

The bigger lesson for us all however is not to think like the group. While it may feel safe in the herd, we could well be galloping over a cliff.

One simple way to avoid groupthink, and that cliff, is not to copy the tech writers or the Australian economic experts who mis-called the China Boom. With the web and social media we can listen to what other voices are saying, most importantly those of our markets and customers.

A varied information diet is something we all need t0 understand what our markets, economies and communities are doing. It might be comfortable huddling down with the herd, but you’ll never stand out from the pack.

The opaque Alphabet

Alphabet’s results are impressive but the lack of detail remains troubling

Late last year Google announced it was restructuring and creating a new holding company called Alphabet, at the time I hoped it would bring more accountability into a business that’s becoming notable for easily distracted management and sprawling bureaucracy.

Yesterday the company released its latest quarterly reports and it appears far from improving transparency, the restructure has resulted in the operation of ‘moonshots’ – termed ‘Other Bets’ in the reports – becoming even more shrouded in mystery.

Other Bets, which includes Google Fiber, Ventures and Google X, made a stonking $3.1 billion loss while 90% of revenues still comes from the advertising business.

Even within the advertising arm there’s little transparency as the division includes Apps, Android and YouTube along with the lucrative Search and Ads business. There’s little information of how these divisions are travelling on their own.

As Dennis Howlett at Diginomica points out, there will come a time when shareholders demand some accountability as the losses in the Other Bets are not trivial but it seems that time is some way off.

For Google, the biggest risk is being disrupted themselves. Their ‘river of gold’ is not dissimilar to that the newspaper industry floated along prior to the web – and Google – arriving.

Another aspect is that of culture where most parts of the business are free of accountability as the lucrative Ad division’s revenues allow disinterested management and needless bureaucracy to thrive.

While Alphabet’s revenues are impressive, this is a company dangerously reliant on one line of business. History has not treated such ventures well.

Securing the drones

British and American spies were able to hack into Israeli and Syrian military drones. What hope is there for ordinary computer users?

While we assume military equipment has far higher levels of IT security, it isn’t always the case reports Ars Technica.

Allegedly the US National Security Agency and Britain’s GCHQ were able to intercept the video feeds of Israeli and Syrian drone aircraft using off the shelf software. While it appears security has become more sophisticated on this equipment, it is a concern that data feeds can be monitored from military equipment.

This is even more concerning given the reliance of software and telemetry systems in modern weapons. The troubled F-35 project shows just how complex computer code has now become in military equipment and it is safe to say some of those bugs will create weaknesses in the systems.

For those of us with more modest security needs, all is not lost though as Rob Joyce, the NSA’s hacker-in-chief, has given some useful tips on how to protect your systems. These are worth following although Joyce is quite clear that you’ll have to work hard to stay ahead of a sophisticated and persistent cyber-enemy.

Google’s locksmith problem and the perils of crowdsourcing

Google’s continued disinterest in local search continues to hurt honest business and consumers

An ongoing frustrations of this blog is Google’s failure to execute in local business search despite the massive advantage it has in that field.

One notable aspect of Google’s failure is the locksmith problem where thousands of fake businesses have slipped into the company’s database. The result is thousands of consumers being ripped off and honest local businesses being overlooked in search results.

Spam in Google’s local business search is not a new problem, Search Engine Land reported it as being an ongoing issue in 2009 and the New York Times ran a feature on it two years later highlighting how genuine local businesses and consumers suffer.

Now, five years on, the New York Times has revisited the problem of Google business listings and finds the problem hasn’t changed a great deal with locksmiths and other local search engine results being hijacked by scammers filing false listings.

It’s hard not to conclude that the local listing service isn’t really a high priority to Google’s attention deficient managers and it isn’t surprising given maintaining databases is nowhere near as sexy as being involved in moonshots or as lucrative as the company’s core adwords business.

Google’s bureaucrats think so little of the service that they give the task of maintaining its integrity to an army of unpaid volunteers. The New York Times tells the tale of one of these ‘Mappers’, an unemployed truck driver named Dan Austin, who proved so good at the role he was ‘promoted’ – still unpaid of course – and then ‘sacked’ when he demonstrated how easy it was to plant a false listing.

That weakness in Google’s system shows how crowdsourced services can be subject to abuse and how volunteers themselves are abused by companies taking advantage of ‘free’ labour.

Another weakness illustrated in the Locksmith story is the collateral damage of the ‘fail-fast’ mentality where features are released without the developers really understanding the consequences. The cost of failure may be felt by innocent parties more than the company that’s ‘failed’, as Search Engine Land flagged in its 2009 article.

Google has continued to release features into local that are open to abuse. Google has used its release early and iterate tactic to gain market share at the expense of more circumspect competitors and on the fragile incomes of small businesses.

The continued failure of Google’s local business service remains frustrating for small businesses, having destroyed the Yellow Pages and local newspaper advertising models most neighbourhood services have few places to advertise. While Google and the other internet giants remain focused on other matters, local business search remains a great opportunity for a smart entrepreneur.

Does venture capital really matter?

Venture capital investments are concentrated in a handful of cities, but does it matter?

Around the world governments are trying to replicate the Silicon Valley startup model. But does that model really matter?

On the Citylab website, Richard Florida looks at which cities are the leading centres for startup investment.

Unsurprisingly eight of the top ten cities are in the United States with San Francisco and San Jose leading the pack. While London and Beijing make up the other two, the gap between the regions are striking with the Bay Area being home to over quarter of the world Venture Capital investment while the Chinese and London capitals com in at around two percent.

While these proportions are impressive, the numbers are not. The total VC investment identified by Florida in 2012 is $45 billion, according to the Boston Consulting Group there was $74 Trillion of funds under management in 2014.

That makes the tech venture capital sector .06% of the global funds management industry.

In the US alone over 2013 small businesses raised $518 billion in bank loans, more than ten times the global VC industry.

What this scale shows is how small the tech startup sector really is compared to the broader economy and, more importantly, how the Venture Capital model perfected in the suburbs of Silicon Valley is only one of many ways to fund new businesses.

Even in the current centre of the startup world, it’s estimated less than eight percent of San Francisco’s workforce are employed by the tech industry although that goes up to nearly a quarter in San Jose.

None of this is to say the startups are not a good investment – Thomas Edison’s first company raised $300,000 in 1878, $12 million in today’s dollars, from New York investors including JP Morgan. The Edison Electric Light Company, while relatively modest went on to being one of the best investments of the 19th Century.

That twelve million dollar investment looks like a bargain today and it’s highly likely we’ll see some of today’s startups having a similar impact on society to what Edison did 140 years ago.

Edison’s success created jobs and wealth for New Jersey and New York which helped make the region one of the richest parts of the planet during the Twentieth Century and that opportunity today is what focuses governments when looking at encouraging today’s startups.

So it’s understandable governments would want to encourage today’s Thomas Edisons (and Nikola Teslas) to set up in their cities. The trick is to find the funding models that work for tomorrow’s businesses, not what works for one select group today.

While the Silicon Valley venture capital model receives the publicity today, it isn’t the model for funding most businesses. Founders, investors and governments have plenty of other options to explore.

Splitting two former internet giants

The results of eBay and PayPal show how combining the two internet companies was a folly

Just how mismatched PayPal and eBay were is now becoming apparent since the two companies separated last year.

Yesterday, PayPal beat the street with 23 percent growth in its payment figures along with an additional six million new users. The company’s stocks rose 17% following the news.

For eBay’s investors the news wasn’t so good with the company reporting no increase in US sales over the key Christmas buying quarter despite the National Retail Federation reporting a nine percent gain for the entire industry.

One of the main criticisms of eBay being part of PayPal was that there were no reasons for the two companies to be joined and so it is proving now they have gone back to separate entities.

For eBay, it’s hard not think that the opportunity has passed with the market moving on from the days of households selling their unwanted items to e-commerce now being a major industry dominated by traditional chains and, most menacingly, Amazon.

While PayPal is travelling better its business is still under great threat from other payment platforms, particularly while much of its revenue is still locked into desktop software. Shifting to more API and mobile based streams is going to be essential for the company wanting to compete in a very changed marketplace.

The failed PayPal-eBay venture will go down as one of the great missed opportunities of the first Dot Com wave as both companies were distracted from growing while the industry evolved over the last decade. No doubt some of today’s unicorns will suffer the same fate as they respond to a changing marketplace.

Reinvigorating Australia’s research sector

How an outward focus might reinvigorate Australia’s besieged research sector

Could Australia’s poor track record in commercialising research be turned into an advantage? Data 61’s CEO Adrian Turner believes so.

Australian research agency Data61 was formed last year following the science hostile Abbott government’s slashing of research budgets coupled with a merger of the National ICT Australia organisation (NICTA) with the long established CSIRO.

The intention behind Data61 was to create a world leading data research agency. At the time of the announcement then communications minister and now Prime Minister, Malcolm Turnbull said, “Having a single national organisation will enable Data61 to produce focussed research that will deliver strong economic returns and ensure that Australia remains at the forefront of digital innovation.”

Having been in the role for six month and now, in his words, having his feet finally under the desk, Data61’s CEO Adrian Turner met with the media last week to discuss the directions he intends to take the organisation.

Business in a data rich world

Coming from a corporate Research & Development background and having spent over a decade in Silicon Valley tech businesses, Turner is conscious how industries are being changed in a data rich world.

For corporate R&D model shifting as industries are changing he says, “their challenge is they can’t hire the digital and data talent that they really need.” Turner sees one of the opportunities for Data61 in providing access to the high level expertise large companies are struggling to find.

Giving Data61 is global focus is Turner’s main objective with an aim of capturing a tenth of one percent of the world’s private sector R&D budget, describing how he will sell the organisation’s scientific expertise to global corporations, “we can plug them into the Boeing and GMs of the world and introduce them to the people to short circuit the sales process.”

“We’re going to go around the world where corporate R&D dollars get allocated and convince these companies that Australia is a place where primary R&D can take place,” Turner continued, “we’ve got the talent and we’ve got the capabilities to do the research.”

Good at the basics

Turner highligthts an ongoing problem in Australian science and industry. The nation historically has been good at basic research but poor at getting those developments to the marketplace, something the World Intellectual Property Organisation’s Global Innovation Report has regularly flagged.

While Australia ranks at 17 overall in the 2015 WIPO report, the nation’s business community flounders at 38th in the world for its collaboration with researchers and 39th for knowledge and technology output. Put bluntly, Australian businesspeople are not very sophisticated or research orientated.

Adrian Turner puts that down partly to the nation’s being weak at product management, “I think it’s a function of global companies seeing Australia as a sales and marketing outpost so we don’t have the product development expertise.”

Inward looking locals

The nation’s inward looking local corporations are also part of the problem, “for us to succeed as a country we have to have a global mindset. We can’t have the zero-sum mindset that I win if you lose in the domestic market,” Turner continued. “In that sense what we’re doing is creating a product marketing function.”

So to meet Data61’s objectives of meeting its own financial performance targets, developing an R&D ecosystem and having an impact on the nation economy, Turner sees the organisation having to go overseas for most of its partnering with private sector researchers.

Sparking the startups

All is not lost though for Australia with Turner believing Data61 has a role in helping the local startup community develop. “We don’t have the infrastructure in place to support the entrepreneurs to go out and build new business,” he says.

“In Silicon Valley over decades you have this infrastructure, you have this workforce, you’ve got the legal infrastructure, you’ve got capital, all of these things that have built up organically over decades and they stack the odds in favour of the entrepreneurs.”

Data61 was born out of an unfortunate period of Australian politics where for the first time the nation was lead by a government that was genuinely hostile to science. Now the political winds have changed and the organisation has a global focus, it may be possible to reverse the long-term neglect of Australian research and build a new business culture.

Bringing the Internet to the masses

In India and Myanmar we may be seeing the effects of the internet on developing economies

For the developing world, broadband and mobile communications are helping

In Myanmar, the opening of the economy has meant accessible telecommunications for the nation’s farmers reports The Atlantic.

At the same time, Indian Railway’s Telecommunications arm RailTel is opening its fibre network to the public, starting with Wi-Fi at major stations.

What is notable in both cases is the role of Facebook. In India, Facebook’s project to offer free broadband access across the nation is meeting some resistance and it’s probably no coincidence Indian Railway’s WiFi project is being run as partnership with Google.

In Myanmar on the other hand, Facebook and Snapchat are the go to destination for rural communities, it will be interesting to watch how this plays out as farmers start to use the social media service for price discovery and finding new markets – as Tencent Chairman SY Lau last year claimed was happening with Chinese communities.

One of the promises of making the Internet available to the general public was that it would enable the world to become connected, thirty years later we may be seeing the results.

Knowing what we don’t know

Cisco’s 2016 security report show businesses are more uncertain than ever about their network defenses. This is a good thing.

The 2016 Cisco Security report is in many ways an encouraging document, while it describes a litany of threats facing the modern business the fact managers are less confident about their defenses is a good thing.

Of the 2432 security executives surveyed 59% claimed their security infrastructure was up to date against 64 percent said the same. Acknowledging this is motivating them to improve their defenses.

For industry, the real concern is the small business sector where there’s a clear decline in the use of IT security tools. As the Target breach showed, trusted contractors and suppliers provide a weakness in an organisation’s systems that malicious actors are keen to exploit.

In Cisco’s analysis, the main reasons for SMBs lack of concern is their belief they are too small to be valuable to hackers and most of their IT management is outsourced.

A shift to the cloud shouldn’t be understated, particularly given many SMBs are shifting their IT functions onto cloud services. While this doesn’t fully protect businesses, the cloud providers certainly offer a far higher level of protection that the local plumbing contractor relying on a mom and pop computer support service.

The bad guys however are responding to that shift with Cisco reporting increased browser based and DNS attacks, both of these are useful in compromising cloud computing services which means both service providers and end users have to be vigilant about security.

At all levels of business though the lack of confidence in security has major ramifications as the Internet of Things is rolled out and common devices start being connected to fragile and often compromised networks.

The good news for vendors like Cisco is this lack of confidence could spur a new wave of business investment as companies improve their network security.

Another important aspect of CIOs and business owners not being confident about their network security is they are far less likely to assume their systems are safe or to passively accept vendor assurances about their safety.

For all of us a customers and users of these technologies, a greater focus on security by the organisations we deal with should be welcomed as well.

Anatomy of an internet exploit

The Angler exploit tells us much about the challenges of internet security

As one does on a weekend, I’m working my way through the 2016 Cisco Security Report.

There are plenty of insights on online security trends which I’ll cover in tomorrow’s blog post but one aspect that sticks out in the report is the case study on the Angler Exploit which takes advantage of hacked domain registrar accounts to create new domain names to serve phishing pages, ransomware sites and malicious advertisements.

Dealing with these sites is a major problem for network administrators and Cisco claims many of the domains registered haven’t yet been used by online criminals.

The Angler exploit shows just how complex internet security has become. The issue of trust is a complex thing and certainly no-one can trust every domain we see. That there are thousands of ‘disposable’ domains available to scammers only makes things more difficult for the average user.