Category: Investment

  • The freeways of the future

    “I don’t see why the Internet is important to me” said Maggie, the first caller to our “is the Internet the ultimate consumer’s revenge “ radio program.

    Maggie’s question is a very good one at a time when governments, businesses and households are investing heavily in Internet technology. Just a few hours before the radio show I’d been invited by television program A Current Affair, to discuss if Australia’s 43 billion dollar investment in a National Broadband Network is worthwhile.

    For Maggie and ACA’s viewers, the answer is “yes, it is very important” — the Internet today is what the motor car was to the early 20th Century and railways were to the 19th Century. Communities that aren’t connected will miss the benefits of the 21st Century economy.

    To illustrate how important it will be, let’s have a look at Maggie’s life. We’ll assume she’s an older person living in a regional Australian town or one of the fast growing fringe suburbs of a big city.

    Probably the most immediate change the Internet delivers for Maggie is how it is giving her a stronger voice as a consumer and citizen. This is what we discussed on the ABC program, how Internet tools like social media are giving customers and voters their voices back.

    With reliable broadband Maggie can be researching products and voicing her dissatisfaction with government and private organisations to the world in a way that would have been impossible a few years ago.

    Those Internet tools also growing communities around her as like minded people across the world and in her own district are connecting online then meeting in real life at events like Coffee Mornings.

    Not only does the Internet connect communities, it connects families — one lady recently described to me how she speaks more to her daughter living in Brazil through Skype than she did when they lived nearby. The net brings friends and families back together and helps overcome social isolation.

    Exclusion in education has always been a pressing issue, once upon a time you had to be in Cambridge or Oxford to access the world’s great minds. With a fast reliable Internet connection, the kids in Maggie’s neighbourhood can listen to a Harvard or MIT professor’s lecture without leaving their hometown.

    Bringing knowledge to local communities will also help Maggie should she have to have to go to the local hospital, the local doctors will be able to consult specialists without Maggie having to travel long distances to get specialist advice.

    Importantly for Maggie and her local hospital, the access to online training resources mean the local staff will be up to date with their professional development and across new trends, ensuring Maggie’s standard of care will be equal to the big city teaching hospitals.

    Solving staff training issues also delivers benefits for the local business community. It means the Maggie’s son Tim, the owner of a local plumbing business, doesn’t have to pay for expensive training courses or to travel into town to attend business conferences.

    The net also means Tim can access the world’s best business minds without leaving his office. Which gives him benefit of running his business more efficiently and profitably.

    For Tim’s kids, it also means they aren’t excluded from the entertainment world. They can stream and download the latest things happening and share equally on social networking sites. They may be in a small town, but they can play in the big world.

    Having these education, business, training and entertainment resources strengthens communities. It means kids and entrepreneurs can live in their home towns and still participate in the global economy. It means Maggie is a valued and important citizen of her country and the world.

    Fast accessible Internet is more than important, it’s vital just in the ways roads, railways, canals and the telegraph were in their eras. The investment in these freeways of the future is necessary to grow strong and dynamic communities.

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  • Commander appoints receivers

    Last January I commented on Commander’s problems and made the point I thought they were doomed. Today they appointed official receivers.

    I’ve made a comment on my Cranky Tech blog about the tragedy that companies with brilliant assets like Commander managed to squander them, but there’s many other lessons for Australian businesses which I’m mulling over at the moment and will post here later.

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  • Commander takeover

    Commander takeover

    The saga of Commander’s slow demise raises some questions about the ability of Australia’s technology companies to meet the needs of the small to medium sized business market.

    Commander, or Plestel as they were previously known as, were the monopoly provider of small business telephone systems prior to deregulation. At the time of being spun off from Telstra they had a marvellous position in the market.

    For most small businesses, the term “Commander System” was synonymous with small business telephones and PABX systems and they had a ready made customer base of over 100,000 small businesses.

    You’d think with hundreds of thousands of customers, an incumbent position and such a level of name recognition, it would be impossible to mess up a business like this.

    Somehow, through a combination of overcharging and poor service, Commander’s management blew it. In the last nine years their customers have fled to other providers.

    This year the share price has fallen from over $2.00 to around 40 cents. The 42c closing share price last Friday was half their issue price when they were floated in December 2000.

    The final humiliation was their 18 day suspension from the stock exchange due to the auditors not being prepared to sign off the annual report.

    So it’s funny we now see Australian IT reporting AAPT and Optus are looking at buying the company. The rationale being that Optus and AAPT have failed to get into the SMB market.

    Commander failed because management didn’t understand the small business market and the economics of selling to the sector. Optus and AAPT have continually struggled with exactly the same issues.

    So it’s hard to see how Optus or AAPT buying Commander could add anything to either company’s expertise (0r lack of it) in this field.

    The other prospective buyers of Commander are various private equity groups. AVCAL, the Australian Private Equity & Venture Capital Association Limited, cite Commander as one of their success stories.

    One hopes the next owner of Commander’s going to give AVCAL a real success story to crow about.

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  • Should Australian tech startups head to Silicon Valley?

    Paul Graham’s VC blog has a provocative story on why startups should move to Silicon Valley to improve their chances of success. This raises the question should Australian startups follow his advice.

    My view is a firm “yes”. Not only are Australian investors inexperienced in finding and nuturing startups but they are notoriously reluctant about putting money into anything remotely innovative or “outside the box”.

    So it’s probably even more important Australian innovators to go the US than it is for their British, Irish or Indian counterparts.

    What’s always amazed me with Australian investors is how they will keep backing known dogs. The best example was One.Tel where the founders repeated the mistakes they’d made in previous ventures but we’re able to keep the investor’s cash coming in because they were the right people who’d gone to the right schools.

    For an unknown kid without connections and with a truly original idea (and One.Tel was certainly not an original idea) it’s difficult to see how they’d have any reason not to be on the first plane to San Francisco.

    Interestingly, Paul Graham’s follow up blog post on the future of startups says “you don’t beat the incumbents; you redefine the problem to make them irrelevant”.

    It’s going to be interesting to see how the incumbent Australian investors are going to deal with the new economy. Will they just sit on their behinds and enjoy the blessings of the current commodities boom and wait for the next housing boom? Or will they learn new tricks?

    Or will a new generation come along and redefine the problem?

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