Category: business advice

Rent doesn’t matter to startups

Rent doesn’t seem to matter for startups — for the moment

Following yesterday’s post about the factors behind cities like New York, London and San Francisco becoming startup hubs, a friend asked “let me gues — cheap rents?”

In truth it’s the opposite; none of the cities cited as startup centres are cheap places to live or work and London is usually towards the top of the most expensive places on the planet.

That rents aren’t a huge factor is possibly because the typical tech startup is a lean operation with a small team crammed into a crowded location.

One suspects though there are limits to how much a business conserving its cash will pay — you don’t see many startups based in A-grade locations alongside big law firms and banks — and this may be the weaknesses of these big cities.

Certainly in London’s Silicon Alley the complaint is the days of cheap rent are long gone and newer startups have to base themselves in other locations across the city.

Overall, rents are important but they aren’t the critical factor in developing a tech sector hub. Whether that remains the case depends upon how the industry develops.

A big reset button on business

Business is like a petrie dish says Internet pioneer and Cluetrain Manifesto author Doc Searls about companies on the web.

“Every large company is just another color of a spore in a petrie dish.”

For the latest Decoding the New Economy video Internet Pioneer Doc Searls discusses The Respect Network, online privacy and the future of business on the web.

Doc Searls is one of the internet’s pioneers who helped write The Cluetrain Manifesto that laid out many of the ideas that underpinned the philosophies driving the early days of the internet.

Searls’ visit to Sydney was part of the rolling worldwide launch of the Respect Network, a system designed to improve internet users’ privacy through ‘personal clouds’ of information where people can choose to share data with companies and others.

A big reset button on business

In many ways The Respect Network shows how the internet has evolved since the days of the Cluetrain Manifesto, something that Searls puts in context.

“We wrote the Cluetrain Manifesto in 1999,” says Searls. “At that time Microsoft ruled the world, Apple was considered a failure – Steve Jobs had come along and they had the iMac but it was all yet to be proven – Google barely existed and Facebook didn’t exist at all.”

“On the one hand we saw the internet, we being the four authors of the Cluetrain Manifesto, and this whole new thing in the world that basically hit a big reset button on ‘business as usual'”

“It did that. I think we’re vindicated on that.”

Resetting business

“What we have now are new industrial giants; Apple became an industrial giant, Microsoft are fading away, Nokia was the number one smartphone company and they’re all but gone.”

One of the key things with today’s markets in Searls’ view is the amount of information that businesses can collect on their customers; something that ties into the original Cluetrain idea of all markets being conversations.

With the evolution of Big Data and the internet of things, Searls sees challenges for companies using old marketing methods which rely upon online tracking. Something that’s a challenge for social media services and many of the existing internet giants.

“The interesting thing is there’s a lot more intelligence that a company can get directly from their customers from things they already own than following us around on the internet.”

Breaking the silos

Searls also sees the current trend towards the internet being divided into little empires as a passing phase, “every company wants a unique offering but we need standards.”

For Searls the key thing about the current era internet is we’re only at the beginning of a time that empowers the individual,  “the older I get, the earlier it seems.”

“Anyone of us can do anything,” Searls says. “That’s the power – I’m optimistic about everything.”

Collaboration and buzzwords

Collaboration tools are changing business but the progress is slower than some of us expected

Today in Technology Spectator, I have a piece on collaboration based around the Google and Deloitte paper released last week.

At the moment Google are on a marketing campaign promoting Apps for Business, for a previous campaign I prepared The Future of Teamwork which examined the benefits of cloud computing for industry.

It’s interesting how the message hasn’t changed a great deal in the last five year, despite it being valid.

Business class syndrome and travelling hard class

Much of the advice from business and political leaders is through a prism of privilege

“Why are you travelling by train?” I was asked by the expat project manager as I planned a site visit to a factory being built by our company on the outskirts of Bangkok.

For me, that two hour third class train trip was an opportunity to get out of the pampered bubble that is life as an expat in a country like Thailand and get a brief, if incomplete, picture of daily life in a rapidly changing nation.

Travelling Business Class

Business Class Syndrome — a view of the world seen through the prism privileged lifestyle that isn’t shared by most people — is a phenomenon that afflicts many of our business and political leaders who are insulated from the real world.

Over the past three days I’ve been dipping in and out of various economic forums as the B20 and the Young Entrepreneurs’ Alliance conference being held in Sydney this week ahead of the G20 Heads of Government meeting being held in Cairns next October.

Both events illustrate Business Class Syndrome as global experts travel the world discussing issues like youth unemployment, third world growth and startup businesses that are beyond their experience.

None of this is to say the speakers at these events were wrong or dishonest, just their ideas — however well informed and intentioned — are developed through a selective view of the world.

Taking the privileged view

That selective view has to be kept in mind when reading the recommendations of such experts. White, middle aged, western men don’t have a monopoly on the planet’s good ideas.

In the case to the Bangkok project managers the expats didn’t really care about what was going on; their job was to build and move on, which they (and I) did.

However I hope those hard seat journeys left me a little more understanding about Thailand than those who wouldn’t leave an airconditioned site hut.

Indian Railways sleeper image by dforest via wikimedia

Small business’ essential online ingredient

The story of Rene Bertagna and the Serbian Lion illustrates how operators in the hospitality industry need to be on top of their listings and online presence.

A Virginian restaurant, the Serbian Lion, went out of business because its Google Places listing was hacked, reports Wired.

The proprietor of the Serbian Lion, Rene Bertagna, wasn’t aware his online listing showed the restaurant as being closed on weekends and as a result customers stopped showing up, he alleges in a law suit against Google.

As a result of result of the drop in earnings, the restaurant entered a death spiral of falling service standards, declining customers and further cuts until the place closed down.

While it’s difficult to judge how true Bertagna’s claim is – it’s quite possible the listing was a mistake by Google’s data scrapers or an oversight by a customer putting the data into the services – the story does illustrate how important getting the correct information into online services like Google Places, Microsoft Bing and Yelp.

Bertagna himself appears to be a classic case of roadkill on the information superhighway with his claims not to be a computer or internet user.

Bertagna immigrated to the U.S. from northern Italy when he was young. He’s 74 now, and, he says, doesn’t own a computer—he’d heard of the Internet and Google but used neither. Suddenly, a technological revolution of which he was only dimly aware was killing his business. His accountant phoned Google and in an attempt to change the listing, but got nowhere. Bertagna eventually hired an Internet consultant who took control of the Google Places listing and fixed the bad information—a relatively simple process.

The sad tale of Rene Bertagna and the Serbian Lion illustrates just how important it is for operators in the hospitality industry to be on top of their listings and online presence. This is where the customers are.

Sadly, this story isn’t news – that customers are using the web to find local businesses and read reviews of neighbourhood establishments has been the case for a decade, the move to mobile has been obvious for over five years.

For all local businesses, it’s a core responsibility to make sure online listings are correct along with having an up to date website. If you don’t, you only have yourself to blame if the customers don’t show up.

Spreading the good news – Canva’s Guy Kawasaki

The tools for building new businesses have never been more accessible says Canva’s Chief Evangelist Guy Kawasaki

“My job is to spread good news,” says Guy Kawasaki of his role as Canva’s Chief Evangelist.

Kawasaki was speaking to Decoding the New Economy about his role in popularising the online design tool which he sees as democratising force in the same way that Apple was to computers and Google to search.

Democratisation is a theme consistently raised by startups and businesses disrupting existing industries and Kawasaki continues this theme.

“The world is becoming a meritocracy; it’s not about your pedigree, it’s about your competence,” states Kawasaki.

Falling barriers to entry

What excites Kawasaki about the present business climate are the falling barriers to starting a venture. “Things are getting cheaper and cheaper, in technology you had to buy a room full of servers, have IT staff in multiple cities. Today you call Amazon or Rackspace and host it in the sky.”

“Before you had to buy advertising for a concert, now if you’re adept at using social media – with Google Plus, Facebook,Twitter, Pinterest and Instagram – you have a marketing platform that fast, ubiquitous and cheap.”

“What excites me is there are going to be more technologies, more products and more services because the barriers are so low.”

Creating a valued and viable product

For those businesses starting into this new environment, Kawasaki believes the most important thing a startup should focus on is getting a prototype to market; “at that point you will know you’re truly onto something.”

“If you build a prototype that works you may never have to write a business plan,” says Kawasaki. “You’d never have to make a Powerpoint, you may never have to raise money as you could probably bootstrap.”

Kawasaki view is the MVP – Minimum Viable Product – model of lean product development should have another two ‘V’s added for ‘Valuable’ and “Validated’.

“You can create a product that’s viable, ie you could make money, but is it valuable in that it changes the world?”

“Is your first product going to validate your vision? If it’s not then why are doing it?”

The story Kawasaki tells is the tools to deliver valued and viable products are more accessible than ever before; that’s good news for entrepreneurs and consumers but bad for stodgy incumbents.

Startups as a dream job

Canva co-founder and CEO Melanie Perkins describes the design service’s journey

“It’s my absolute dream job” says Melanie Perkins of her role as CEO and co-founder of online design app Canva in the latest Decoding the New Economy video.

Since being set up ten months ago, Canva has grown to over a half a million people using the tool to create graphics for applications such as books, marketing banners and website logos.

The idea for Canva came out of the difficulties Melanie found in using design software while lecturing at university and it’s growth has been as a result of the idea catching the imagination of investors like Lars Rasmussen, one of the driving forces behind Google Maps, and Guy Kawasaki, Apple’s original Mac evangelist.

“We’ve got some great things coming in the next few months,” says Perkins. “So stay tuned.

Fighting a loss making business

Uber follows the Amazon tactic of hurting the market with its deep pockets

Having deep pockets is a great help in business as the online cab war in San Francisco shows.

As competition heats up on the streets of San Francisco, Uber is trying to put Lyft out of business by offering fares below what they pay drivers.

This has been the long term tactic of Amazon; raise a lot of money and then run your main line of business at a loss.

Amazon have shown you can do this for a long time if investors stay patient. Fighting it is difficult if you don’t have deep pockets yourself.

In the long term though you can’t see this being good for customers, although in the meantime San Franciscans can enjoy cheap taxis.

Demoting the newspaper

Newsagents are adapting to a digital world which is seeing every industry being disrupted

You know a product has problems when retailers start start moving it out of key retail positions. When the product was the retailers’ core business, you know the entire industry is in serious trouble.

Mark Fletcher describes in the Newsagency Blog how he’s moved his city’s number two selling paper off the main level of his newspaper display.

“Sales are not paying for the space,” Mark says bluntly.

Newsagents relegating newspaper fits nicely into Ross Dawson’s Newspaper Extinction Timeline, in the case of Mark Fletcher’s newsagency Dawson sees the Australian newspaper industry vanishing by 2022.

For newsagents the signals have been clear for some time that they have to adapt to a society where paper based products – newspapers, stationery and greeting cards – aren’t in demand.

The process of adapting isn’t easy or smooth – many experiments will fail and even the smartest business people will make expensive mistakes. That’s the nature of evolution.

Newsagents though are just one example of changing marketplaces, there’s few industries that aren’t being disrupted by the technology and economic changes of our times. All of us are going to have to adapt to a rapidly changing world.

 

Debunking the myth of the digital nomad

The myth of the noble nomad developed during the mid Twentieth Century, today it’s being modernised with the rise of the digital nomad.

Last century’s myth of the proud nomad is being modernised with the dream of the digital nomad. Unlike the Twentieth Century legends, today’s tales are far more mercenary.

“Quit your cubicle” is one of the war cries of the current cult of entrepreneurs. It’s a nice thought that overlooks the real risks of striking out on your own and usually pushed by those selling self help books or related services.

A related concept to quitting your cubicle is the ‘digital nomad’, a quaint idea pushed by the same people.

The theory of the digital nomad

In theory, the digital nomad is a knowledge worker who travels the world tethered only to an internet connection and a power socket. It’s best illustrated by this tweet.

This is a wonderfully privileged western middle class view of the world – backpack around the world in cheap, or free, accommodation while earning a good middle class income through oDesk or Taskrabbit.

Conveniently this view overlooks that making a western middle class income through oDesk or Taskrabbit is pretty difficult. For most, the digital nomad lifestyle is a myth and seated more in long standing romanticism.

Building the nomad myth

The noble nomad myth has a proud history that gained currency in modern times thanks to the mid-Twentieth century stories of Lawrence of Arabia and Sir Wilfred Thesiger.

While the romantic myths about Arab nomads developed, Thesiger and TE Lawrence pulled no punches about the difficulties of nomadic life – it was a tough, hard and precarious existence that suited a spartan minimalist like Thesiger.

For the modern digital nomad life is tough and precarious as well unless you have a trust fund or tolerant, affluent employer.

Western privilege

The idea of sitting on a Boracay beach sipping a cold cocktail while working a four hour work week is lovely, but for clients there’s little reason to hire a privileged westerner at New York rates when they can employ a better qualified Filipino for a fraction of the price.

Most wannabe Digital Nomads will find picking fruit in Australia or teaching English in Bangkok is easier and better paid before returning to their community manager jobs in San Francisco, Melbourne or Manchester.

Thesiger himself would have been appalled at the whole idea of ‘digital nomads’ – entitled middle class people tied down by credit cards, encumbered with expensive laptops and obsessed with Wi-Fi access.

We should remember the romance of the nomad was built around retreating to a simpler lifestyle, the digital equivalent is actually far more complex – and precarious – than its advocates will admit.

The digital nomad lifestyle is a nice marketing line for self help books but for most it’s a cruel myth.

Limits of the black box business

Many of the leading tech companies hide beyond mysterious algorithms or impassive customer support. That may prove to be their weakness.

One of the paradoxes of the modern tech industry is that while its leaders preach openness and collaboration, their own businesses are mysterious unaccountable black boxes.

This website has often looked at how the Silicon Valley business model leaves users and partners exposed to arbitrary enforcement of vague policies and indifferent customer service.

A good example of the black box business model is eBay’s major security breach where it appears millions of users have had their personal and banking details compromised. Instead of informing customers immediately, the company’s management hid the problem and hoped stonewalling inquiries would make the problem go away.

Lacking accountability

In the black box business model, not being accountable is the key – we see it with Amazon’s bullying of book publishers, Google’s high handed identity policies and Facebook’s puritan censorship.

Those high handed attitudes to customers’ and users’ rights is born out of arrogance; all of these company’s managements, and the corporate bureaucrats who enforce the policies, believe their hundred billion dollar businesses are untouchable.

Such arrogance might though be ill-founded as each of these businesses is less than twenty years old and, while they themselves have deeply disrupted existing industry models, there is no reason why their own market dominance and huge cash flows can’t be usurped by new technologies or challengers.

In age where trust is the greatest currency, hiding beyond a block box of algorithms and impassive customer support may not turn out to be a successful management strategy.

The what and the why

SurveyMonkey CEO David Goldberg believes we’re still in the early days of understanding the new economy

“People are drowning in big data,” SurveyMonkey’s CEO Dave Goldberg says in the latest Decoding The New Economy video.

Goldberg sees SurveyMonkey as bringing order to the world of big data in allowing organisations to put their information in context, “We want people to ask the right questions so we can get better data.”

“Here’s a question I need to answer – how happy are my employees? what do customers think of my new product? What are my students doing at school this year?”

Growing the survey industry

One group that’s uncomfortable with the rise of SurveyMonkey, a privately listed company that’s worth $1.3 billion after a capital raising last year, are traditional market research firms who see the service as putting a powerful tool in experienced hands. Goldberg sees it as an opportunity for the market research industry.

“We’re not replacing market researchers,” says Goldberg, “most people who come to SurveyMonkey haven’t used a market researcher before. It actually probably creates more demand for more sophisticated research down the line.”

Goldberg himself isn’t from a market research background, instead he hails from the tech sector having set up LAUNCH in 1994, one of the early music streaming companies which he sold to Yahoo! in 2001 and became the company’s Director of Music.

He left Yahoo1 in 2007 and spent two years in the venture capital industry before joining SurveyMonkey as CEO in 2009.

Understanding the data

From his experience, Goldberg sees understanding data the key business skill for today’s workers, firmly believing that kids should be taught statistic rather than coding.

“Everyone is going to have to learn how to use data.” Says Goldberg, “someone was asking me the other day about sort of skills should we teach our kids to prepare them for the future and I think the thing we’re not doing enough of is teaching them how to use and analyze data.”

To Goldberg we’re still in the early days of understanding how mobile and social media are going to change business with understanding data being one of the great opportunities.

“Implicit data is really interesting but it tells you ‘what’, it doesn’t tell you the ‘why’, believes Goldberg. “We think what we do is the explicit side, we gotta ask people to get the ‘why.”