Paul Wallbank – Brilliant Communications

Category: entrepreneurs

  • Billion Dollar Babes

    Billion Dollar Babes

    “It changed everything. It changed the game for a lot of us and you know it made a lot of people feel very anxious and sort of compare their own success.”

    Lisa Bettany, the founder of Camera Plus lamented how Facebook’s billion dollar purchase of photo app Instagram purchase changed the start up community on Australian current affairs program Foreign Correspondent.

    In the program  Foreign Correspondent also spoke to Australian and Italian startup founders looking to make it in Silicon Valley. On being asked what they hoped their business was worth they all had the same answer – a billion dollars.

    There’s no doubt Jindou Lee’s Happy Inspector home inspection app or the Timbuktu kids’ story website are great products and should be successful business. But is business success only measured by a billion dollar exit?

    In Garrison Keillor’s Lake Wobegon every child is above average, it seems in Silicon Valley every successful business is worth a billion dollars.

    Every founder in the current app or web 2.0 craze says “it’s not about the money, it’s about changing the world” yet scratch them and they are all on the lookout for the greater fool buying them out for an improbable sum.

    One could say that a billion dollar cheque does change the world of the person cashing the thing although exactly how a iPhone photo app changes the world may escape some of us.

    At the same time the Foreign Correspondent story was being aired the founder of Y Combinator – Silicon Valley’s most successful accelerator ‘s founder – warned the heat is now out of the market after Facebook’s market flop.

    Paul Graham was elaborating on a letter he wrote three months earlier where he said, “If you haven’t raised money yet, lower your expectations for fundraising.”

    If the billion dollar valuations are going out of the startup mentality then it might be better for all of us. It might mean our youngest, best and brightest really are focused more on building things that will change the world rather than buying mega-yachts for themselves and their VC investors.

    Similar posts:

  • Fleeing the group buying market

    Fleeing the group buying market

    As Apple becomes the highest capitalised stock in US market history, former daily deals site and market darling Groupon continues to sink into misery.

    Groupon led the group buying mania of 2011 and its stock market float in November of that year valued the business at 13 billion dollars, ten months later the business has a capitalisation of three billion, wiping out three quarters of its IPO shareholders’ investment.

    To make matters worse for the daily deals site the New York Times features a story looking at deal fatigue, where customers tire of the daily emails offering discounted cafe meals or personal training while businesses find the deals just aren’t worth the trouble.

    “I pretty much had to take a loan out to cover the loss, or we would have probably had to close,” the Times quotes Dyer Price, owner of Muddy’s Coffehouse in Portland, Oregon. “We will never, ever do it again”

    In a straw poll, the Times correspondent visited neighbouring businesses who had similar stories.

    The common factor with all the business horror stories surrounding group buying or deal of the day sites is high pressure sales tactics that blind the merchant to the downsides of these offers.

    For these services, it’s essential to move through as many deals as possible so salespeople are driven to sign up as many merchants as possible. When you put pressure on sales teams, they tend to behave in ways that aren’t always good for customers.

    Most of the customers Groupon attracts – or those of other deal of the day sites – are price sensitive and fussy. Having demanded their deal, most of these customers are not coming back so it may well be that daily deals are the most expensive, disruptive and pointless marketing channel ever invented.

    The results of the high pressure tactics are shown in a Venture Beat story which claims Groupon is now threatening to sue unhappy merchants as payments slow and the daily deals struggle to attract customers.

    What was always misunderstood during the group buying mania was that Deal Of The Day sites weren’t really technology plays – they were reliant on good sales teams driving deals. The technology being used was incidental to the core business concept.

    In this respect, services like Groupon had more in common with the Yellow Pages or multi-level marketing schemes. It was about salespeople delivering orders and taking a percentage off the top.  To compare Groupon with Google, Facebook or any tech start up was really missing the point.

    This isn’t to say that group buying or deals of the day services don’t have a role in business. For retailers clearing inventory, hotels working around quiet periods or new businesses wanting to get attention in a crowded marketplace, there’s an argument for offering a deal on one of these sites.

    For most though it was an expensive and pointless exercise that attracted the picky, price sensitive customers that most business would avoid rather than encourage. That’s the harsh lesson learned by many of the businesses who fell Groupon’s fast talking salesteams.

    Similar posts:

  • Driving agendas

    Driving agendas

    A feature of the new question and answer service Branch are “featured questions” highlighting popular or interesting conversations on the service.

    One of those early featured conversations was a question from investor Michael Arrington, “when is it good for founders to leak stuff to the press?”

    Strategic leaks have become the staple of most news services, time poor journalists are desperate for scoops and clicks which gives an opportunity for companies and governments to feed information that suits their agenda of the moment.

    As the answers in the thread indicate, this style of reportage is very common in the Silicon Valley tech press. The greater fool business model of many web start ups require they get lots of media coverage in order to attract buyers.

    That media coverage includes ‘leaking’ stories that one big company – a Google, Microsoft or Facebook – is interested in the business. This always creates credulous headlines on the tech media sites and one of these leaks prompted Arrington’s question.

    Strategic leaking isn’t just a tech media phenomenon. Australian politics was paralysed at the beginning of the year when numerous stories that “un-named Labor Party sources” were plotting against the Prime Minister dominated the headlines for weeks. All of these were pointless leaks from various minor politicians try to push their agendas. Often to their long term detriment.

    In the sports world the agendas often revolve around contract negotiations – remember this next time you read that a star player may be going to another team, almost certainly that story has been planted by that player’s agent in an attempt to increase his client’s value.

    The same thing happens in the business, property and the vacuous entertainment, travel and dining pages.

    Agenda driven journalism fails the reader and the writer, it also damages the publication as once readers start asking what the motivation is for a story, then the credibility of that outlet is failing.

    Increasingly this is happening to all the mainstream publications.

    Resisting the push to agenda driven journalism is tough as editorial resources are stripped from media organisations and as journalists come under more pressure to write stories that drive traffic.

    One of the great assets of big media is trust in the masthead. A hundred years ago people took what was written in their city’s newspapers as truth, a few decades ago it was what was on the evening news. If Walter Cronkite or your city’s news anchor said it was true, then that was good enough for most people.

    In the race for clicks, that trust has been abused and lost by all but the most dedicated fans. It’s probably the greatest loss of all for the established media giants.

    For readers, the web and social media is their friend. They can check with their peers to see if a story stands up and if it doesn’t they can spread this across their networks.

    Agenda driven journalism fuelled by pointless leaks helps no-one in the long term and it will probably kill many established mastheads. It’s another opportunity for smart entrepreneurs to disrupt a market that’s failing.

    Similar posts:

  • Good critic, bad artist?

    Good critic, bad artist?

    With the passing of art critic Robert Hughes I’m re-reading a passage of his autobiography, Things I Didn’t Know.

    In Hughes’ passage describing his leaving Australia he talks of attempts at painting and makes an observation about art criticism that is true of every field.

    “You do not have to be a good painter to be a good art critic,” he said. “But there is, to me, something a little suspect about an art critic who has never painted and who cannot claim to grasp even the rudiments of intelligent drawing.”

    The same could be said of any critic – knowing the technicalities, skills, difficulties and effort enables a critic to make informed judgement. That isn’t to say they are superior at their trade than those they criticise.

    It’s been said that we are all two bad decisions from ruining our lives or careers. That’s true in the artistic or professional fields – many managers, entrepreneurs, politicians, artists or just men going through middle aged crises have come unstuck from making the wrong choice at the wrong time.

    It’s why we always have to view the stories of great success with caution, as the winners’ tales are tinged with survivor bias and for every winner there a field of skilled, hard working people who didn’t succeed.

    In some fields, like arts and sport, the winners have to have skills before they will even get a chance of winning. Although there are many who could have be successful but weren’t because they never had an opportunity to pick up a paintbrush, guitar or ball at a key moment in their lives.

    That isn’t quite so true in more subjective fields like business, politics or journalism. In those callings it is possible for a suburban apparatchik, dour accountant or talentless hack to rise because of their mentors, rat cunning or just pure dumb luck.

    One of a critic’s roles is to call out those talentless but lucky hacks and in doing so they do society a great favour.

    In a world where spin and PR often trump good policy or ethical behaviour, we have to pay attention to the informed critics who help us filter out the misinformation and lies that is part of our information diet.

    Similar posts:

  • Are IT workers the new loom weavers?

    Are IT workers the new loom weavers?

    “There are IT workers who can’t put food on their table,” complained an industry representative at an outsourcing conference.

    It’s true – there are hundreds of once well paid project managers, technicians and support staff staff who can’t get work in their industry as some tasks go offshore and others are supplanted by new technologies.

    None of this is new, we only have to think back to the heady days of the Dot Com boom when any punk with a basic knowledge of HTML could pull down six figures a year.

    Just like the loom weavers of the 17th Century who became the Luddites, the HTML coders of 1998 and the project managers of 2008 have had a short period of affluence before been overtaken by change.

    It’s something that today’s hot shot coders should keep in mind, bubbles burst and technology changes.

    Similar posts: