Paul Wallbank – Brilliant Communications

Category: business advice

  • Amazon’s death grip

    Amazon’s death grip

    Hachette Book Group is the latest victim of Amazon throwing its weight around the bookselling industry reports the New York Times.

    While it’s not the first time this has happened, Amazon’s willingness to bully suppliers – and disappoint customers – is a taste of what happens when one company controls a choke point in the distribution network.

    In the early days of the internet we believed the web would eliminate the middleman, instead the net put the existing intermediatries out of business and gave us a new, global breed of gatekeepers.

    The galling thing about Amazon is the company has barely made a profit in its 20 years of operation, one wonders how profitable it will be once should the operation manage to wrest control the entire bookselling industry.

    In many ways, Amazon is a cautionary tale for everyone trading online; beware of allowing any one platform too much power over your business.

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  • Business as a commodity

    Business as a commodity

    What happens when your hot startup turns out to be in a commodity market?

    According to Danny Crichton at TechCrunch two of the hottest startups of the last five years, Box and Square may be finding out.

    You can make good profits out of a commodity operation – supermarkets around the world have shown you can earn good money from 2c profit on every can of baked beans you sell – but it’s hard work and it’s definitely not glamorous.

    It’s also not particularly attractive for investors looking for the next big thing and commodity businesses struggle to justify the massive burn rates

    The truth for most startup businesses is this is as good as it gets; no billion dollar buyout, no adulation from the tech press and no buying a yacht to rival Larry Ellison’s. Just a decent return from hard work.

    While many of us blinded by the billion dollar success stories of Facebook, Google and Amazon, it’s worthwhile considering that most successful businesses are far more modest ventures.

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  • When should a founder step down from their business?

    When should a founder step down from their business?

    Earlier this month, Sydney video streaming company Viocorp changed leadership with founder Ian Gardiner stepping down as CEO.

    For Gardiner, the decision was tough and in a blog post he described how the company was founded and grew and why it was time to step away. That decision though was not without some pain.

    I have nurtured and loved this little startup as it has grown up like one of my children.

    And like my children it can occasionally be frustrating, difficult and highly erratic and unpredictable. But most of the time it is fantastic and hugely rewarding. And I love it with a passion that is hard to describe.”

    However children one day grow up and leave home. Viocorp is not a start-up any more. It is a serious business with massive potential. And I feel that my skills as a product innovator and fire-starter are not the ones that Viocorp needs for this next stage of our journey.

    I spoke to Ian Gardiner in a noisy Sydney Cafe in February for the Decoding The New Economy YouTube channel shortly after he’d made the decision to step down as CEO where he elaborated on the reasons for the change.

    “I ended up getting further and further away from the stuff I’m actually good at,” he said. “You end up as the founder and entrepreneur in a place that is not good for anyone.”

    “As a result of that the business doesn’t go in the direction you want.”

    The right manager for the job

    Gardiner’s decision illustrates an important truth about business; different management skills are needed at different stages of development.

    A good example of this was with the corporate slashers of the 1980s – CEOs like GE’s Jack Welsh and ‘Chainsaw Jack’ Dunlap here in Australia were the right men to shake moribund organisations. A decade later both were out of favour as the needs of the business world and their companies had moved on.

    Similarly the skills that are needed to found and grow a startup are very different to those required to steer a more mature business. This is why Facebook’s experiment with retaining founder Mark Zuckerberg as CEO of a hundred billion dollar company is so fascinating.

    With Viocorp, Ian Gardiner and his investors have made a very mature decision about where they see the future of the business, as the now retired CEO told me earlier this week: “The punchline is that I’m happy about it, and very excited about the future of Viocorp.

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  • Playing the startup lottery

    Playing the startup lottery

    Silicon Valley is in the grip of a mass delusion says Reuters’ Felix Salmon in a blog post that dissects the reality of life as a startup founder.

    The Most Expensive Lottery Ticket in the World starts with nod to Gideon Lewis-Kraus’ No Exit: Struggling to survive a modern gold rush that examines the harsh truths and brutal realities of building a new business.

    Salmon though goes further in skewering some of the myths around startups; pointing out that with 90% failure rates not everyone can be ‘killing it’, yet few startup founders will admit their venture are doing anything else but crushing the market, despite the mantra of ‘celebrating failure.’

    Possibly the most telling point Salmon makes is on the myth of the engineering entrepreneur, the truth is most coders value stability over the uncertain life in startup.

    There is no reason whatsoever to believe that computer engineers make particularly good entrepreneurs. Quite the opposite, in fact: engineers tend to do quite well in structured environments, where there are clear problems to solve, and relatively badly in the chaos of a startup, where the most important skills are non-engineering ones, like being able to attract talent and investors. No Exit makes it very clear that the life of a startup founder is a miserable one, and that engineers are invariably happier when they’re working for a big company.

    Life in a startup, or any small business, can be miserable if you don’t have the skills – and most importantly the risk appetite – for doing your own thing. This is a point often missed by those hyping the start up world.

    Salmon’s piece is a good read and it illustrates that founding a business or taking the risk of working in a startup is not for everyone. It’s a timely reminder for anyone looking at liberating themselves from their cubicle and making the jump into self employment.

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  • No country for small business

    No country for small business

    Facebook’s latest changes to its layout creates more problems for small business using social media as the real estate available on its site for eyeballs gets smaller.

    The social media giant has been catching criticism recently for changes to its algorithm that make it harder for businesses to be seen online.

    In the hospitality industry, discontent was articulated by the Eat 24 website which closed its Facebook Page down after finding the problems too hard.

    With the changes to the online advertising feed, it makes it even harder for small business to be seen on the platform as reduced space means higher prices for the space that remains available.

    It’s hard to see small businesses getting much traction with the changes when they’re up against big brands with large budgets.

    On the other hand for the big brands, the importance of proper targeting becomes even greater as wasting

    A challenge for small business

    The big problem now for small business is where do you advertise where the customers are?

    A decade or so ago, this was a no-brainer – the local service or retail business advertised in the local newspaper or Yellow Pages. Customers went there and, despite their chronic inefficiencies, they worked.

    Now with Facebook’s changes, it’s harder for customers to follow small business and this is a particular problem for hospitality where updates are hard.

    The failure of Google

    Google should have owned this market with Google Places however the service has been neglected as the company folded the business listing service into the Plus social media platform.

    Today it’s hard to see where small business is going to achieve organic reach – unpaid appearances in social media and search – or paid reach as the competition with deep pocketed big brands is fierce.

    Services like Yelp! were for a while a possible alternative but increasingly the deals they are stitching up deals with companies like Yahoo! and Australia’s Sensis are marginalising small business.

    So the online world is getting harder for small business to get their message out onto online channels.

    For the moment that’s a problem although it’s an interesting opportunity for an entrepreneur – possibly even a media company – to exploit.

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