Paul Wallbank – Brilliant Communications

Tag: web2.0

  • Freelancer and the sugar daddy problem

    Freelancer and the sugar daddy problem

    Last week Facebook’s Mark Zuckerberg announced the social media platform will be hiring three thousand content moderators following a string of shocking incidents on the company’s live streaming service.

    Facebook were the most successful of the generation of businesses promising algorithms and the user community – coupled with common sense – would act as gatekeepers.

    That was handy for their business models, as the reduced administration costs would mean a much more scalable and profitable business.

    Managing users’ sins

    Along with Google, AirBnB and Uber, Facebook found that relying on users’ feedback and their own algorithms wasn’t enough to cover the myriad of sins humans commit or one in a million edge cases which occur a thousand times a day when you have a billion daily users.

    Even the biggest of the web2.0 companies, Google, found their core business being shaken as the limits of algorithmic advertising were explored and advertisers didn’t like where their brands were appearing.

    Most striking was AirBnB who quickly found ignoring aggrieved landlords didn’t work when you’re a billion dollar company. Uber, Facebook and Google have similarly found the “we’re just an agnostic distribution platform” doesn’t fly when you’re boasting millions of users.

    Freelancer and the sugar daddies

    Which brings us to Freelancer, the labour sites were always problematic in this space as services are rife with ripoffs, misunderstandings and inexperienced operators – on both the seller and buyer side.

    Another problem though which seems to be appearing is the advertising of adult services on this site, such as this advert which appears to be either an advert for a sugar daddy or a webcam performer – the mangled English makes it hard to tell.

    Bizarrely a Freelancer administrator has removed some of the advert’s content but has left the post itself up.

    Clicking on the related links brings up a whole range of strange projects including someone who needs a photoshop expert to insert an individual into sex photographs.

    Holding the service harmless

    It’s hard to say whether these posts comply with Freelancer’s Terms and Conditions as they are the usual vaguely written screeds seeking to shift all responsibility away from the company which have become the norm with online services.

    The reputational risk to Freelancer though is real, as company listed on the Australian Stock Exchange it has public investor base and, given its competitive market, it has to appear respectable to user – becoming a Tindr for adult performers – is probably not where organisation would like to be positioned.

    Hitting the profit margin

    Ultimately though Freelancer’s problem in this space is the same as most online platform services, the promise of negligible administrative costs is an illusion as managing a large user base brings up legal, regulatory, reputational and even political risks as Facebook is finding.

    Like many of the early promises of the internet, the idea of a hands off platform where users do the work while owners sit back and pocket profits has gone. Where there’s people and edge cases, there’s risk and those profits may not be as great as they appear.

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  • Should Amazon focus on shareholder returns?

    Should Amazon focus on shareholder returns?

    “Shareholder returns” has the been the mantra for the modern manager – particularly when justifying fat salaries and bonuses.

    Amazon though is very different – despite the company’s massive market position it doesn’t make profits, founder Jeff Bezos claims he prefers to focus on customer needs.

    On a fundamental level Bezos is right – the business that delivers what customers want will succeed. The market doesn’t give a fig about shareholders’ returns or management’s KPIs.

    Although making a profit is helpful.

    That Amazon is spectacularly unprofitable should worry shareholders, it’s fair enough for a startup in its early days to incur losses but Bezos’ baby is nearly 20 years old and it still isn’t capable of walking on its own.

    Yet this doesn’t deter shareholders. Comparing Amazon’s stock price against Apple’s and Microsoft’s is instructive.

    Amazon-Apple-Microsoft-share-price

    Microsoft currently trades at a Price/Earnings ratio of 15.8 while Apple’s is 9.7 – Amazon trades at an infinite P/E.

    A school of thought is that Amazon will reap monopoly profits once it conquers the world’s online retail and owns a big chunk of the cloud computing market.

    However these are big markets and its unlikely any one company can ever dominate them. Indeed Amazon has failed to do so for nearly two decades despite undercutting most competitors and buying out nimble new rivals.

    It’s tempting to think of Jeff Bezos being a modern day Nelson Bunker Hunt.

    Bunker Hunt and his brother William spent most of the 1970s trying to corner the global silver market. At the peak of their attempt, silver prices went from $11 an ounce in September 1979 to $50 an ounce in January 1980 only to crash back down to $11 by Easter 1980.

    The brothers were bankrupt by the end of the 1980s.

    It’s doubtful whether Amazon’s shareholders want to follow that example, so it’s going to be interesting to see how long Jeff Bezos can continue to see the story of putting customers before owners.

    Image by By The Cuba Company, New Jersey [Public domain], via Wikimedia Commons

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  • Amazon and the Soviet customer service model

    Amazon and the Soviet customer service model

    We all value our collections of CDs, books and photos, but what happens when we completely lose the digital equivalents?

    The story of Linn, a Norwegian lady who had her account terminated by Amazon, demonstrates the dangers of being locked into one Internet company’s empire. Get cut off and you lose everything related to them.

    A little understood part of the cloud computing and app world is that you, the customer or user – which isn’t necessarily the same thing – don’t really own anything. The money you spend on ebooks, mobile apps or web storage are for licenses to use the services, not the products themselves.

    Should the supplier decide they no longer want to provide you with their service, then you lose your account and everything with it.

    This is what happened to Linn when Amazon’s algorithm decided her account was in some way breaching their terms and conditions.

    We have found your account is directly related to another which has been previously closed for abuse of our policies. As such, your Amazon.co.uk account has been closed and any open orders have been cancelled.

    Per our Conditions of Use which state in part: Amazon.co.uk and its affiliates reserve the right to refuse service, terminate accounts, remove or edit content, or cancel orders at their sole discretion.

    “At their sole discretion” is the key point here. This is a standard term in most online contracts and reflects the legal realities of the physical world where a shopping mall manager or bar owner can ask you to leave their property without having to tell you why.

    When you use a virtual service, which includes e-books and cloud computing software, you are on someone’s virtual property and they can ask you to leave any time they feel.

    Of course those rights are subject to any contract you might have with that e-book seller, cloud computing service or shopping centre but you have to be in a position to enforce them – not an easy task when you’re in Norway and their lawyers are in Connecticut.

    Even if you want to enforce the agreement you believe these services have entered into, the grossly biased contracts attempt to put all obligations on users or customers while freeing the vendor of the distraction of being responsible for anything.

    The real problem though is the lack of notice and fairness – this blog’s previously looked at how PayPal, Facebook and Google will shut down business sites without any warning or due process.

    It’s one thing to get thrown out of a shopping mall but it’s another matter when your car and week’s groceries are still in there.

    Even more worrying in Linn’s case is how ebooks and music purchased with Digital Rights Management (DRM) controls can be erased by companies like Amazon. Which is like walking home from the shopping mall you’ve been banned from to find the manager has called by to confiscate the toaster and TV you bought last week.

    What’s particularly notable in all of these stories though is the Soviet customer service model, the Amazon”Executive Customer Relations” representative Linn dealt with refused to tell her what she’d done wrong or what rules she broke.

    The only thing “Michael Murphy” would tell her was she was effectively banned for being linked to a blocked account and stated;

    “Please know that any attempt to open a new account will meet with the same action.”

    No notice, no appeal, no rights. The computer says no and the bureaucrat cannot help you further.

    Trust lies at the core of all business and this is even more true when buying services like e-books and cloud computing products. If you can’t trust a vendor to provide a service, or to act openly and honest with you when a problem occurs, then it’s unlikely you’ll use that service.

    A lack of trust is what web 2.0 companies like Amazon and eBay risk with hostile, Soviet style customer service. This is the weak point of the entire online business model.

    For individuals and businesses it’s important to understand that those e-book, cloud storage or social media services may appear to be a bargain, but there are risks lurking in the fine print.

    The new Soviets might be doing well at the moment, but their days are numbered just as the USSR’s were.

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  • Creating a service mindset

    Creating a service mindset

    In the Foreign Correspondent report that inspired yesterday’s post about the start up community angel Investor Raval Navikant said  “you don’t need customer service anymore, you have Twitter.”

    While it’s refreshing to hear that Twitter is now rightly seen as a customer service channel rather than a marketing tool, it’s worrying that startup businesses still have such a low opinion of supporting their users.

    This is the mindset for the web2.0, social and cloud computing communities – that user support can be done though Frequently Asked Questions (FAQs), user forums or an anonymous email address that might get read once in a while. It’s the self-help model of helping your users and it’s the biggest weakness of online services.

    A worry for these businesses is that big organisations now beginning to remember the importance of customers. What has traditionally been small business’ advantage is  being eroded.

    At an Australian Computer Society Foundation lunch in Sydney yesterday Testra Corporation’s diector of Products and IT Enablement, Jenny Woods described how her company is moving to a more service centric culture.

    While this isn’t simple in a company the size of Telstra, a task made harder by the telco industry’s customer hostility, it’s certainly a process that’s underway.

    There’s a long way to go for Telstra. Along with that traditional telco antipathy towards their customers, they are big company with plenty of silos and aligning management KPIs so the temptation isn’t simply to gouge customers for short term profit is a big change.

    Changing that ‘soak the customer’ mindset is the biggest challenge in making companies like Telstra service centric and that means management at all levels have to buy into the process.

    Without that senior and middle management commitment, customer support will just be seen as the poor relation to other divisions and will be outsourced to the lowest cost provider at the first opportunity.

    Part of that change to a service mindset is in trusting your staff. Jenny described how Telstra abandoned scripts for their home Internet customers and told the support agents they could use their initiative – as a result customer satisfaction went up, problems were solved faster and the number of modem returns slumped.

    “The people who do the work, know how to do the work” says Jenny and it’s good that Telstra’s management is recognising the skills in their workforce.

    Much of that anti-service culture we see in large organisations is because management don’t respect the skills, experience and knowledge of their workers. Instead they’re treated as naughty children who can be slapped into line with a stern memo.

    Today’s economy doesn’t favour businesses and managements who think like that, the organisations that will do well this Century those who are flexible, value their staffs’ skills and have managers who see their role as more than micro-managing their silos.

    It also means delivering a product you’re proud to support. If you won’t support your products, then your customers will go to a competitor who looks after their clients.

    We fell into a trap into thinking customer service didn’t matter during the late Twentieth Century, it was always a myth and now we have to deliver.

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  • Hanging on the telephone

    Hanging on the telephone

    Ever tried to call an online company about a problem? As the New York Times explains, it’s often hard to find the telephone number, let alone someone to answer your call.

    The NY Times article worries a new type of digital divide is appearing between those happy to do business using email or social media and those who who demand to speak to someone.

    In reality, the truth is more subtle than just generational differences – it’s about the web2.0 service-free business model where few, if any, resources are spent on customer support. The idea is the an assistance can be given out on “self service” basis through a website or, better still, crowdsourced on a user forum where the customers work together to figure out solutions themselves.

    For many of the web based cloud computing and social media businesses, this model is essential to their survival. If you were to add a customer support department answering telephones, the viability of the business would collapse.

    While it’s uncertain if that business model is sustainable for many of these web based companies, it’s interesting to ponder how many phone calls most businesses could avoid by having relevant information on their website.

    It’s worthwhile looking at call logs and asking your staff what are the most common questions to your business. Answering those on the company web site might mean happier customers and fewer staff distractions.

    For some businesses, letting customers discuss issues in an online company forum might be a way of crowdsourcing support and giving ideas for future products or service improvements.

    Rather than leaving customers and staff hanging on the phone, having relevant and helpful information on the website saves everybody time and money.

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