Category: business advice

  • Breaking down old technology empires

    Breaking down old technology empires

    HP’s CEO Meg Whitman announced today that the company will be splitting in two with its Printer and PC division being carved away from its consulting services.

    The two new companies will be Hewlett Packard Enterprises and HP, the latter being the old printer and PC division.

    For HPs shareholders this split is a decade too late as the printer and PC division is in an industry where declining margins are the norm.

    It’s not hard to think though that both businesses are ultimately doomed, it wouldn’t be surprising to see the smouldering ruins of both companies being picked up by companies like India’s Wipro or China’s Lenovo in the not too distant future.

    That HP is divesting isn’t surprising as the trend is moving away from the big conglomerates model of the past decade; two weeks ago eBay announced it will be splitting its PayPal division and the float of Alibaba will almost certainly see Yahoo! begin to hive off businesses that have underperformed under their corporate umbrella.

    An era where the key to growth in the technology industries doesn’t involve buying competitors and startups to build online empire will leave the Silicon Valley greater fool business model somewhat lost. It might be time for a few venture capital and seed funds to think about their pivot.

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  • The tough determined business of building a business

    The tough determined business of building a business

    In 2005, Therese Tucker’s company was down to its last three staff when a customer suggested a new line of business. Today BlackLine is valued at over 200 million dollars and about to list on the stock market.

    A few week ago Therese described her journey from a struggling software startup to a hundred million dollar business on the Decoding the New Economy YouTube channel.

    BlacklLine’s business automates financial processes  as Tucker explains, “we have the interesting job of providing software that helps companies automate all the things around accounting and the financial close that they currently do on spreadsheets.”

    At the time of Tucker’s pivot, the business was supplying a wealth management system when that prescient customer asked her to develop an application to manage the ten thousand spreadsheets they were struggling with for accounts reconciliation.

    BlackLine wasn’t Tucker’s first business having been involved in a series of ventures after working as an electrical engineer designing automation systems before moving into the IT industry.

    “There’s a reason for the term ‘serial entrepreneur.” Tucker says, ” it’s a bug that once you catch it you really don’t want to rest until you’ve been successful at it.”

    For aspiring entrepreneurs Tucker’s advice is blunt — “The best advice is ‘don’t do it’. Because if you listen to that advice you’ll never make it.”

    “It’s the people that are crazy and are determined to work themselves to death and to fail and fail and fail until they don’t fail. It takes that kind of grit and determination.”

    “If I tell you not to do it, then that’s great advice for you.”

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  • Alibaba and the rise of chinese companies

    Alibaba and the rise of chinese companies

    Chinese e-commerce company Alibaba floated on the New York Stock Exchange and immediately rang up a 38% gain that values the company at $238 billion, behind only Microsoft, Apple and Google in tech stock valuations.

    One of the major shareholders in Alibaba is Yahoo! who posted a 2.7% drop in value despite picking up a $5 billion windfall from the Chinese companies float.

    For Alibaba’s founder Jack Ma, this float and the stock market’s reaction is a vindication of his business and of China’s place in the modern global economy, something we discussed with early Alibaba employee Porter Erisman last year.

    Alibaba also shows that Chinese companies are now credible international businesses and companies like Haier, Lenovo and Hauwei need to be taken seriously as competitors and suppliers.

    While Jack Ma and Alibaba celebrate, Marissa Mayer and Yahoo!’s management team are going to have to give some careful thought about how to use that extra five billion dollars. Time and investor patience is dwindling away for the once powerful internet giant.

    It may be too soon to draw Alibaba’s success and the fall of Yahoo! as being the parallel of the rise of the Chinese economy and the decline of the US, but yesterday does give a strong signal about how the global economy is changing.

    Image source: alibabagroup.com

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  • Time to strike deals

    Time to strike deals

    It didn’t take long for the competition in the payments market to heat  up after the announcement of Apple Pay last week as PayPal launched a campaign asking if you’d trust your financials to a business who can’t protect your selfies.

    While PayPal  pokes fun at Apple, there are more serious competitive pressures developing as the companies start negotiating with credit card providers and banks to reduce their rates. This is something that will be an immediate benefit for businesses of all sizes who are prepared to renegotiate their contracts.

    Most businesses, big and small, are poor at monitoring what they pay for a service; while they’ll shop around and negotiate when they’re looking for provider, they’ll let often these contracts go for years without reviewing them – something that utilities like banks, telcos and power companies take advantage of.

    I was reminded of this earlier this week at a lunch with some senior Qantas accountants who were quite open about how every supplier’s contract was constantly reviewed and discounts were aggressively pursued. It’s a tough life for the airline’s subcontractors.

    Times are tough for Qantas though, having sustained a 2.8 billion Aussie dollar loss last year along with constant declines in market share and stock prices. So it’s not surprising they have an aggressive cost cutting strategy in place.

    Many other industries are now looking at the same problem as the global economy is now in a phase of at best anemic growth for the foreseeable future, which makes it essential for all businesses to start reviewing their costs.

    With the banking sector now being disrupted by companies like PayPal and Apple, it might be time for all businesses to ask some hard questions of their banks and payment providers. The time is right to strike a deal.

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  • Activating main street

    Activating main street

    The future of retail is being fought out on three fronts believes eBay’s Michael Camplin  — global, local, mobile and data.

    At eBay’s Commerce Innovation Showcase at its San Jose head office Champlin shows visiting partners, media and government officials part of the payments giant’s vision for that future.

    “It’s about connecting buyers and sellers across the globe,” says Champlin. “Local is important for us because even with the growth of the online ecommerce revolution that we’re in the middle of right now we still see 75% of commerce happens within fifty miles of the customer and 90% of that happens in bricks-and-mortar stores.”

    “So to be able to connect buyers and sellers in those local stores is a major push we have at eBay.”

    paypal-innovation-tour-003

    The first presentation in the tour demonstrates a day in the life of an eBay customer from the bedroom of a fictional customer, Reese McLaren, a funky young guy shopping for new equipment ahead of a camping trip. Champlin illustrates how Reese can order, pay and collect through a store’s integrated online service from his home.

    On the other side of the transactions, store employees use the PayPal apps like Red Lazer and Braintree to complete the order. A key part of that is using beacon technologies to log a customer into the store to alert staff that a customer has arrived to collect an order.

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    At the next stage of the tour, we visit some demonstration stores; first we start with the Burger Bistro where eBay’s Eric Armstrong shows how restaurant’s point of sale system is integrated with PayPal services, showing waitstaff who is logged in through the company’s app.

    Integrating PayPal’s services into the establishment’s point of sale system means customers can order through the PayPal Wallet service and waitstaff know if a customer has paid through the app.

    paypal-innovation-tour-012

    The app also speeds up settling customers’ bills as diners can pay the check through their phone and not bother with using cash or swiping credit cards.

    One key point with PayPal Wallet is that users can enter any payment form that suits them and choose whichever option suits them at the time including direct bank transfers and credit cards.

    paypal-innovation-tour-006

    Another area that PayPal are pushing out are coupon offers. At present the company is subsidising them as they test how the services work. The objective is to offer a digital equivalent of everything people currently have in their wallets.

    For staff, eBay are offering the ability to bring your own device for point of sale systems with cloud base apps turning staffs’ tablets and smartphones into POS terminals.

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    Tying into the Point of Sale capability is the PayPal Now service that allows establishments to swipe credit cards directly into the app through a dongle that reads the chip or stripe. Despite the rise of online payment services, swiping credit cards is still the main way US customers pay their bills.

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    Despite the continued popularity of credit cards, eBay are hoping to move customers over to the online services through ease of service; the one stop authentication service means customers are logged into the payment platform as soon as they check into a location.

    One area PayPal sees great opportunity in stadiums and major events where attendees automatically check in and can then access food and souvenir stands without having to re-authenticate or authorise each purchase they make.

    paypal-innovation-tour-039

    A key part of eBay’s retail strategy is the use of beacons to monitor customers entering establishments. The one illustrated is the PayPal beacon that was a limited release earlier this year. The device doesn’t have its own battery, instead relying on a USB socket for power.

    Two weeks after this tour Apple launched its Pay service with its range of integrated APIs to offer many of things shown in this showcase. eBay and its Braintree subsidiary was conspicuously missing from the listed partners.

    For PayPal and eBay the field has suddenly become more competitive, this is a sector that is now at the forefront of the battle between today’s internet empires.

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