Paul Wallbank | Paul Wallbank - Communications Professional

Managing the great transition

How can countries manage the great economic transition?

At present the global economy is beset with low expectations; trade is at its lowest point in 20 years, many of the worlds economies are teetering on the edge of depression and investment is barely keeping ahead of depreciation.

The world is slowing and The Great Transition report by Colonial First State Global Asset Management looks at the reasons and some of the effects of this change.

Senior economic and market research analyst James White suggests in the report that the current state of affairs is a permanent shift as global productivity rises due to Chinese production and the widespread digitisation of most industries.

Compounding the problem in White’s view is the traditional measures of economic growth understates the size of the service economy as between ten and twenty percent of transactions go through the ‘black economy’ in most countries.

In looking at their own field, the Colonial First State researchers suggest that investment strategies are going to change as ‘capital light’ industries begin to dominate advanced economies.

While White and his co-author Stephen Halmarick are optimistic about what the changes mean and suggest a focus on people and attracting global capital as the key to competing during the Great Transition, the challenge is on policy makers to increase human capital in their economies.

The question though is what can individual countries do to be competitive in this context? While nations like Switzerland and Singapore can quickly develop pro-investment policies, it’s harder for larger and more diverse societies.

Perhaps the services driven economic model is really only one for high wealth, small nations with well trained and skilled workforces? If that’s the case, then the Great Transition might be a tough time for many of the world’s developed economies.

Data driven lending

Square enters the small business lending space, will be they successful in a very competitive field?

Banking has always been a data driven business, understanding borrowers and the risks they present is one of the essential skills in making money from lending.

The new wave of payment startups present a new way for lenders to analyse risks; with real time data aggregated across businesses and regions, lenders can quickly decide wether a borrower is likely to able to pay the money back with the conditions asked for.

Payments company Square in its latest pivot has partnered with Victory Park Capital and claims to have extended more than $100 million in capital to more than 20,000 merchants writes the New York Times.

Like other payment companies that have entered this market, Square uses their own deep understanding of their customers’ incomes to be able to make a data based decision on the creditworthiness of applicants.

Square also offers ancillary data-driven products created for small businesses. The new instant deposit product, which is still in testing and will be fully available in the spring, will give businesses faster access to money they put into a debit account. And the company’s new charge-back protection service will cover some disputes between consumers and merchants.

Those products also rely on data that Square has collected. They will be available only to small businesses that have a solid financial track record, based on a history of accepting payments with Square.

Square is by no means the first business to do this, last year we wrote of PayPal’s move into small business lending and Point of Sale hardware manufacturer Verifone retreated from the market two years ago calling it ‘fundamentally unprofitable.’

The competition in the space and the fact assessing financial risks isn’t exactly a core competence of Silicon Valley start ups indicate Square’s and other companies may find small business lending a tough business as well.

Despite that, small business lending is a field that is overdue for disruption. With companies like Apple, Google and Amazon all offering payment services, the logical expansion is into evaluating risk and profit.

It may not be Square, Verifone or PayPal who ultimately redefines the sector, but it will be one of today’s tech businesses that does.

Using beacons to help the visually impaired

Transport for London trails a beacon based system to help the sight impaired.

Transport for London is trialling a scheme where visually impaired passengers on the Underground can use NFC beacons to navigate the system reports the BBC.

Using beacons and smartphones to assist the disabled is exactly the sort of applications we can see being rolled out to help all members of the community.

These services are illustrations of how newer technologies are going to help level the workforce and make our cities more accessible for those who are less able bodied.

Copying the Silicon Valley Bubble

Is the Silicon Valley funding model creating a bubble in tech investments

Staying private sucks if you’re a tech company writes Felix Salmon in Fusion magazine.

If you’re giving away stock in lieu of wages to employees or taking early stage funding for equity, then listing, or selling to a larger business, makes sense as staff and investors need to see a return. It’s the unspoken truth of the Silicon Valley funding model.

The Silicon Valley model though doesn’t come without risks, investor Mark Cuban warns a valuation bubble greater than that of the Dot Com Boom has developed as angel investors and early stage venture capital firms have thrown money at startups after Facebook’s massive buyouts of Instagram and WhatsApp.

While Silicon Valley and the US tech market might have plenty of opportunities for buyouts and IPOs, most other places around the world don’t have the deep financial markets and the cashed up software companies to make similar exits possible for local startup businesses.

Again that difficulty in successfully funding exits shows that simply trying to copy the US tech industry model is probably not going to work for most places tying to building their own Silicon Valleys, although it seems China is about to try.

The other message is that the IPO or buyout route is not necessarily the right path for every business, as Salmon says: “Maybe the best solution is not to take any outside funding at all, and not to try to grow too fast.”

“Some family companies have been around for hundreds of years: if you own your own business, and you don’t get greedy, you can build a very pleasant life for yourself. You just won’t end up on any list of young billionaires.”

Clawing back our data – Telstra makes metadata available to customers

Australia’s Telstra responds to government data legislation by opening metadata to users

Today Australian incumbent telco announced a scheme to give customers access to their personal metadata being stored by the company.

In a post on the company’s Telstra Exchange blog the company’s Chief Risk Officer, Kate Hughes described how the service will work with a standard enquiry being free through the web portal with more complex queries attracting of fee of $25 or more.

The program is a response to the Australian Parliament’s controversial intention to introduce a mandatory data retention regime which will force telcos and ISPs to retain a record of customer’s connection information.

We believe that if the police can ask for information relating to you, you should be able to as well.

At present the scheme is quite labor intensive, a request for information involves a great deal of manual processing under the company’s current systems however Hughes is optimistic they will be able to deal with the workload.

“We haven’t yet built the system that will enable us to quickly get that data,” Hughes told this website in an interview after the announcement. “If you came to us today and asked for that dataset it wouldn’t be a simple request.”

The metadata opportunity

In some respects the metadata proposal is an opportunity for the company to comply with the requirement of the Australian Privacy Principles that were introduced last year where companies are obliged to disclose to their customers any personally identifiable information they hold.

For large organisations like Telstra this presents a problem as it’s difficult to know exactly what information every arm of the business has been collecting. Putting the data into a centralised web portal makes it easier to manage the requirements of various acts.

That Telstra is struggling with this task illustrates the problems the data retention proposals present to smaller companies with far fewer resources to gather, store and manage the information.

Unclear requirements

Another problem facing Hughes, Telstra and the entire Australian communications industry is no-one is quite clear exactly what data will be required under the act, the legislation proposed the minister can declare what information should be retained while the industry believes this should be hard coded into the act which will make it harder for governments to expand their powers.

What is clear is that regardless of what’s passed into law, technology is going to stay ahead of the legislators, “I do think though this will be very much a ‘point in time’ debate,” Hughes said. “Metadata will evolve more quickly than this legislation can probably keep pace with so I think we will find ourselves back here in two years.”

In many ways Australia’s metadata proposals illustrates the problems facing governments and businesses in managing data during an era where its growing exponentially, it may well turn out for telcos, consumers and government agencies that ultimately less is more.

Formulas for successful crowdfunding

Crowd funding is proving to be a great way to raise funds for projects, but it isn’t without its risks

Pebble have achieved the biggest Kickstarter fund raising in the service’s history with a $14 million fundraising for its latest smartwatch.

Over at competing crowdfunding service Indiegogo Flow Hives, a Tasmanian beekeeping invention, has raised nearly five million dollars for its innovative beehives that put honey on tap.

Crowdfunding is fast becoming the way for smaller manufacturers to secure preorders from the market and secure scarce capital for the business.

Pebble and Flow follow the success of Ninja Blocks who have had two successful crowdfunding ventures and their CEO Daniel Friedman spoke to Decoding The New Economy last year about raising money for hardware projects.

Not every hardware crowdfunding project works out well though as Mark Pesce described in relating his experience with the failed Moore’s Cloud fundraising. Mark said he’d “rather eat a bullet” than engage in another crowdsourcing campaign given the pressures upon manufacturers to deliver.

As Moore’s Cloud shows there are risks and complexities in looking to the crowd to raise project capital. Even a successful campaign faces potential problems in completing the project and delivering a product that meets the expectations of those who’ve contributed.

Crowdfunding has opened a new way for artists and entrepreneurs to raise funds for their projects, like all tools though it does have it’s risks and isn’t for everyone.

Apple continue to win the smartphone wars

It remains to be seen if Apple win the watch market however they safely have the smartphone business firmly under control says Kantar Worldpanel ComTech

As the annual Mobile World Congress begins to wind down in Barcelona, Kantar Worldpanel decides to stir things up with its quarterly report on the market share of mobile phones.

The news is mixed; Apple continues its rampage in the Chinese market with a quarter of phones sold in the PRC being iPhones while Android slips in Europe but picks up market share in the US.

At the top end of the market it’s clear Apple is beating Samsung and the other manufacturers are deciding to avoid entering the battle of the market at all, instead focusing on lower and midrange devices.

Competing at the price points which don’t interest Apple may not be easy though suggests Carolina Milanesi, ComTech’s Chief of Research & Head of US Business; “while mid-tier consumers might be more accessible than high-end ones, manufacturers will have to work harder than ever to stand out in an increasingly crowded marketplace.”

Diversifying away from a tough smartphone market is one reason for the focus on watches at Mobile World Congress although even in that market Apple is about to launch a blitz around its upcoming product.

It remains to be seen if Apple win the watch market for the moment though they safely have the smartphone business firmly under control.

Toilet trade wars

Chinese toilet seat buyers find globalisation is a complex business

Chinese luxury goods buyers are upset that their top end toilet seats aren’t manufactured in Japan reports the Wall Street Journal.

It turns out these technologically advanced toilet seats are largely made in China – like many other Japanese, and American, products.

Which creates a problem for those Chinese advocating a boycott of Japanese goods warns the China Youth Daily.

“Japanese goods have permeated every aspect of our lives. If you want to boycott everything, I’m afraid you’ll have to throw away your identification cards, cellphones, land-line phones, elevators, some of which have Japanese components.”

Such are the complexities of globalisation.

Will the tech industry beat the car makers?

Can Silicon Valley reinvent the motor industry or will others disrupt the market?

Despite the current hype over wearables and smartphones at Mobile World Congress, the real battle in tech is increasingly in the automobile industry; it’s no accident that smartcars were the start turn at the Consumer Electronics Show at the beginning of the year.

It may be however that the tech companies might take over the automobile industry as Timothy B. Lee in Vox suggests.

Lee’s argument rests mainly on the tech industry’s superior supply chain management – this is questionable as automotive manufacturing is several orders of magnitude in its complexity than PCs or smartphones – and the changing role of the motor car in modern society.

That latter aspect is probably the more crucial aspect, as car ownership falls and sharing vehicles becomes commonplace, design and manufacturing imperatives change along with the economics.

While it’s stating the obvious to say the incumbent automobile manufacturers currently have the advantage due to scale and experience, the same was said when Apple introduced their smartphone to compete against long established incumbents such as Nokia and Motorola.

Re-inventing the global automotive sector is a far bigger task than changing the smartphone or personal computer industry, although it certainly is going to happen. It may be though that Chinese or Indian groups end up dominating rather than Silicon Valley.

Lost in the crowdsourcing masses

Wine review app Vivino illustrates how the world is changing for experts

The crowd is as smart as wine experts claims review app Vivino in a blog post comparing its users’ ratings of wines against the long established industry standards of Wine Spectator and Robert Parker.

Crowdsourcing’s advantage claims Vivino is “the experts can’t rate everything. But 8 million (and growing) Vivino users just about can. Will a 4.0 wine on Vivino be the new ’90 point wine’?”

Although Vivino are talking up their book on this, the message here is that the wisdom of crowds – or the Cult of the Amateur as author Andrew Keen described it in 2007 – is taking the place of all but the highest profile experts’ opinions.

Removing the informed commentator

This is true in almost every critical field from journalism to food and travel writing, if you don’t have, or a can build, a big following in your chosen niche then you’re just one of the crowd punching out a blog, Facebook posts or Instagram feed.

Wine writers and experts are in the same position, if the aggregated opinions of eight million users can give you an informed opinion about a vintage then why spend good money to consult someone who has spent years studying and working in the industry?

In some ways this is the downside of blogging; suddenly anybody with an internet connection can hold themselves out as being an informed critic. A case that stands out is an Australian food blogger who criticised a Sydney cafe for it’s ‘weird sushi sandwiches’ and strange Japanese fusion food without realising he was eating a Scandinavian open sandwich.

One of the effects of the web is that it’s both diffused and concentrated influence – a vast array of informations sources meaans small international group of high profile experts find their standing grows as they become more accessible while most of the industry is drowned out by forums, apps and social media sites.

The challenge for many of us is how are we going to stand out from the crowd.

Exporting the good life

The story of Australian satellite project Newsat shows the risks in government export subsidies

It’s tough being in export markets, particularly high tech ones were government supported industries are competing with each other with taxpayer funded and subsidies and guarantees.

A great example of this is the story of Australia’s Newsat, a company formed to launch the country’s first privately owned satellite.

The satellite business is tough industry with high costs, substantial risks and a number of state backed organisations competing for work.

So Newsat found willing partners – dare one call them distressed investors – who were prepared to put taxpayers’ money on the line to get a slice of the project. In Newsat’s case the US Exim bank and France’s Compagnie Française d’Assurance pour le Commerce Extérieur (COFACE).

Together the French and US agencies tipped in just short of four hundred million US Dollars, with Exim tipping in $280 million as a direct loan to support the company’s choice of American contractor Lockheed Martin to build the satellites.

Exim bank has featured on this website before in the discussion about the perverse result that US airlines get subsidies from European export agencies to buy Airbuses while European Airlines get support to buy Boeings. The result is a zero sum game where the big loser is the taxpayer.

Newsat shows again the flaws in this export model; despite early optimism, particularly around the provision of lucrative communications services to remote mines in regional Australia, the company has never really looked like delivering on its promise with the stock price bouncing around 15 Australian cents and valuing the entire company at just under a hundred million Aussie dollars.

While the big losers in this scheme appear to be Australian shareholders along with the US and French taxpayers – the Australian government had no interest in the project and Newsat was flatly rejected as the satellite provider by the country’s National Broadband Project – it turns out the executives will do quite well from the project.

Fairfax Media’s Business Day reports the Newsat project is mired in various legal and management problems not helped by the chief executive Adrian Ballintine and investor relations manager Kahina Koucha travelling the world in first class.

Koucha accompanied Ballantine and a handful of other NewSat executives on their 2013 and 2014 global sales missions. There is no doubt the NewSat team worked very hard drumming up support for Jabiru-1. But it also appears that Ballintine and his team used company funds to travel in opulent style.

Koucha’s Instagram snapshots of the NewSat trips to New York, Washington, Paris, Dubai and London look like the setting for a clichéd, blinged-out hip hop music video. There are the first class airline cabins, luxury hotels, French champagne, a Rolex watch and lavish dinners. The NewSat crew from Melbourne were clearly the coolest in the satellite sphere.

In the past two financial years, NewSat has spent almost $1 million on travel, according to its published accounts. As Koucha wrote on one of her Instagram posts of herself relaxing in an airline’s first class cabin while on a NewSat trip: “We travel in stylllleeee (sic)”.

When the US and French taxpayers are picking up the tabs, why not live like a gangsta?

Despite the hard work of Ballantine, Koucha and the rest Newstar’s executive team, the company continues to struggle in the search for customers for it’s already launched Jabiru-2 and the Jabiru-1 project is now in jeopardy due to missed payment deadlines.

At least somebody had some first class travel and good meals out of the venture and no doubt in the scheme of things, Newsat is small beer compared to many of the export projects being funded by the US and French taxpayers.

Management struggles with the Internet of Things

The Internet of Things is proving to be a management challenge reports Microsoft

Exactly what benefits does the Internet of Things offer businesses? A survey of Australian businesses by Microsoft claims there are benefits but few companies have deployed the IoT in their operations as managers struggle to understand the technologies.

In the survey “Cut through: How the Internet of Things is sharpening Australia’s competitive edge” carried out by research company Telsyte, Microsoft found two thirds of businesses that deployed IoT technologies have achieved an average cost saving of 28 percent while half the businesses have improved efficiencies of around the same amount.

A poor take up rate

The devil however is in the details and most notable only a quarter of the 306 companies surveyed admitting to using IoT applications.

While the sample size is small, and the Australian business community has been relatively slow in adopting the IoT, the survey indicates managers see the value but are struggling to see how they can adopt the technologies in their organisations.

Although fewer than one in 20 organisations said they could not foresee any business benefit from IoT, an alarmingly high 48 per cent still have no plans to implement the technology.

This reluctance comes largely from a lack of resources and expertise with the top five reasons for not adopting the IoT being technology challenges, affordability, security concerns, lack of skills and no management support.

Lack of management support

Management’s lack of understanding and support for IoT solutions presents a risk for businesses as the next generation of industrial machinery – from cars to tractors – will have some connectivity built into it. A failure to understand the technologies built into equipment opens a range of operational and security risks for an organisation.

Another aspect about the implementation of the IoT that comes from this survey is exactly what are we talking about? Microsoft’s emphasis in this report was clearly on the Big Data analytics, something else that might confuse the discussion with management.

What’s clear from the Microsoft’s survey is companies do realise there are benefits from the IoT but managements are struggling to understand the technologies and how to implement them into their operations. This is an opportunity for the savvy integrator or reseller.