Paul Wallbank | Paul Wallbank - Communications Professional

Amazon Web Services and the new rules of business

Amazon Web Service CTO Werner Vogels lists the lessons from a decade of AWS operations. These could be the new rules of business.

The one company that has driven both the adoption of cloud computing and the current tech startup mania is Amazon Web Services.

Later this week AWS celebrates its tenth birthday and Werner Vogels, the company’s Chief Technical Officer, has listed the ten most important things he’s learned over the last decade.

The article is a useful roadmap for almost any business, not just a tech organisation, particularly in the importance of building systems that can evolve and understanding that things will inevitably break.

Importantly Vogels flags that encryption and security have to be built into technology, today they are key parts of a product and no longer features to be added later.

Most contentious though is Vogels’ view that “APIs are forever”, that breaking a data connection causes so much trouble for customers that it’s best to leave them alone.

Few companies are going to take that advice, particularly in a world where changing business needs mean APIs have to evolve.

There’s also the real risk for businesses that their vendors will depreciate or abandon APIs leaving key operational functions stranded, this could cause major problems for organisations in a world that’s increasingly automated.

Vogel’s commitment to maintaining APIs may well prove to be a competitive advantage for Amazon Web Services in their competition with Microsoft Azure, Google and an army of smaller vendors.

Werner Vogel’s lessons are worth a read by all c-level executives as well as startup founders looking to build a long term venture, in many ways they could define the new rules of business.

Home delivery services fail to pass the Uber test

It appears the attempt to corner the home delivery market has failed

One of the group of businesses most affected by the downturn in Silicon Valley investments are the home delivery services.

For the last three years services such as Instacart and Doordash have attracted billions of investor dollars on the promise of become the “Ubers of home delivery.”

Like all Silicon Valley VC plays, the investors in these delivery services were prepared to throw vast amounts of cash at the businesses in the hope they could achieve a monopoly position.

“All these companies are massively subsidized to support growth and restrain growth of competitors.” Quartz magazine quotes Tim Young of San Francisco’s Eniac Ventures, “there’s a point at which the music stops, and investors are no longer willing to see their money go to those subsidies.”

That point seems to have been reached as it becomes apparent none of these businesses will dominate the industry which appears not to be so big after all.

History shows what happens when the money runs out as not being pretty. Already with cash problems looming, the companies are looking at ways to slow their cash burn through reducing contractor rates and slashing overheads.

Instacart is unlikely to survive and if the company does it will be as far smaller business than its investors hoped. Those are the risks when staking money in a tech mania.

Bringing cybersecurity into the mainstream

The corporate world is taking security seriously says Cisco’s Chief Security and Trust Officer, John Stewart

“Cybersecurity is out of the dungeon and now selling itself as a business service,” says Cisco’s Chief Security and Trust Officer, John Stewart.

Stewart was discussing his company’s security challenges at a Cisco Live briefing at their Melbourne conference yesterday.

The shift to security as a business service follows the pattern of computerisation in business believes Stewart, “at first businesses said you can’t keep important documents on computers, then they said you could only keep important data on computers”

For Stewart, the fact c-level execs recognise the importance of cybersecurity is a positive sign that indicates organisations are taking IT and communications security seriously.

When asked what keeps him up at night, Stewart said it was worries about infrastructure security, the Ukrainian power network’s experience after an attack from a seriously motivated group of hackers indicates just how serious this is.

Interestingly Stewart remains focused on the risks of security breaches, as the Internet of Things rolls out it may well be the integrity of data streams becomes a far greater focus for system administrators and security officers.

Paul travelled to Cisco Live in Melbourne as a guest of Cisco

When software ate the network

Software is eating the IT hardware industry which is a lesson for other businesses

I’m attending the Asia Pacific Cisco Live in Melbourne Australia this week which is starkley illustrating the shift in communications technologies and the business models around them.

To kick off the press program Cisco made a joint announcement with Australian incumbent telco Telstra on the rollout of a smart software defined networking product.

Software Defined Networking uses basic computer hardware, basically glorified personal computers, to do the jobs of the expensive routers, switches and network appliances that were insanely profitable for companies like Cisco a few years ago.

It wasn’t so long ago when Cisco executives were taking technology journalists out to earnestly explain how Software Defined Networking (SDN) was feasible.

Today, SDN is defining both the telco and communications industries as companies like Telstra look at bundling IT networking and software services into their offerings to prop up their falling margins. India’s Reliance Communications are a good example of how providers are trying to shift into new marketplaces.

For telcos, communications vendors and IT hardware sellers the changing technologies illustrate what Silicon Valley entrepreneur Marc Andreesen meant when he described how “software will eat the world.’

Software is eating the IT hardware industry and telcos are seeing – hoping – it’s another lucrative opportunity. Businesses in other sectors should be thinking about how software is going to change their world.

Paul travelled to Melbourne for Cisco Live as a guest of Cisco

Cutting customer support

Uber cuts customer service, a worrying move for consumers

One of the greatest mistakes made by companies is cutting customer support. Nothing shows more a management focused on KPIs and financials than reducing its service staff.

According to Buzzfeed, this is what Uber is doing as the company struggles to contain costs and compete in China.

The ironic thing in Uber’s actions is the startup was so successful because in many cities the incumbent taxi operators had a culture of dire customer service.

It may be that having seen Uber win the battles, the poor consumer is about to lose the war for better transportation services.

Should that be the case, then Uber’s customer service woes shows the new generation of tech startups isn’t so immune to the old rules of business after all.

The cost of media disruption

The price workers pay when an industry is disrupted shouldn’t be understated

What happens to journalists when no one wants to print their words anymore?

The Bill Moyers website has striking accounts of sexism, ageism and exploitation of younger journalists as the industry deals with its Twentieth Century business model collapsing.

Much of the dislocation Dale Maharidge describes could have been written about factory workers twenty years ago and will be probably written about a whole range of white collar occupations over the next two decades. The disruption being felt by journalists is not unique to the media industry.

While the media industry struggles to find the 21st Century’s David Sarnoff, the human cost is real. The price workers pay when an industry is disrupted shouldn’t be understated.

Gen X and the big economic shift

The costs of the 1970s economic shift are beginning to be recognised.

The single economic event that defines Generation X was the 1973 Oil Shock, the OPEC embargo on the west bought the post World War II era of economic growth to an end.

With stagflation gripping the western world, new solutions were sought and by the end of the decade governments touting ‘business friendly’ economic policies – more accurately ‘corporation friendly’ – were seen as the solution.

As Robert Reich described in the New York Times, these policies were not only a disaster for workers but also for the middle classes and business productivity.

A notable aspect missing in the above graph is US productivity growth has since stalled as corporations have focused on stock buy backs rather than investment. The problem has been compounded by the use of tax shelters that have resulted in huge amounts of American corporate profits being locked away in offshore bank accounts.

While those stock buy backs and arbitraging tax regimes have benefitted executives and a small cabal of fund managers, the diversion of capital from productive investment has weakened the US and global economy.

For the baby boomers, even those of the Lucky Generation who preceded GenX, that lack of investment now threatens their retirement lifestyles as incomes and government spending stagnates.

The ‘big business friendly’ ideologies of Thatcher and Reagan defined the late Twentieth Century and continue to dominate government thinking in much of the western world, it may be though that we a reaching the end of that era as the costs to the broader economy are beginning to be recognised.

For GenX and their kids, the costs are being borne now but their parents may be about to feel the costs too.

Cutting through Australia’s innovation rhetoric

Investor Steve Baxter talks about some of the strengths and weaknesses in Australia’s innovation statement

Four months ago, the Australian government launched its innovation agenda with the noble ambition to put the nation “on the right track to becoming a leading innovator.”

The keenly awaited innovation statement was seen as a defining the new Prime Minister’s agenda after two decades of complacent political leadership. At the launch of the paper Malcolm Turnbull said “our vision is for Australians to be confident, embrace risk, pursue ideas and learn from mistakes, and for investors to back these ideas at an early-stage.”

One of the early stage investors currently investing in Australia’s startup sector is Brisbane based entrepreneur, and Australian Shark Tank judge, Steve Baxter who spoke to Decoding the New Economy last week about where he sees the strengths and weaknesses in the proposals.

Beating the rhetoric

“Competitive threats are far more effective than rhetoric from a Prime Minister,” says Baxter in observing what really drives adoption and change while emphasizing that the announcement is a welcome shift, “the change in messaging from the government has been very important. It’s having an impact and a future looking message has been fantastic.”

While Baxter is positive about much of the incentives on offer and the importance of changes to regulations around bankruptcy and treatment of business losses, he flags the the delay in implementing the tax incentives as being a problem.

Too focused on commercialisation

Baxter though has been a long standing critic of Australia’s research sector and the emphasis on commercialisation of academic work is in his view one of the Innovation Statement’s major weaknesses, “commercialisation is a concept that we’ve failed at. It’s dead. We’ve put so much money into it, it’s actually embarrassing. We need a new mindset towards it.”

“there are seven hundred million dollars of a billion going to the research sector. That’s not entrepreneurship. In fact universities and research institutes are the least entrepreneurial organisations you’ll ever come across.”

“We need more business model innovation, we’re seeing too many people in lab coats with synchrotrons, square kilometre arrays which we have to do,” Baxter states. “What we’re not seeing the Dropboxes and the Instagrams and the Facebooks and the Wayze’s, the cool stuff that doesn’t need a two hundred million dollar building.”

Thin pipelines

As an early stage invest Baxter sees the real challenge for Australia lies in encouraging individuals to launch their own ventures, “I don’t think we’ve done enough yet to prove we have an investment problem when it comes to early stage companies,” he says. “I don’t believe we have a lack of capital”.

For those starting their own ventures, Baxter sees the word ‘innovation’ as being a barrier in itself.
“The entrepreneurs I back aren’t those who say ‘I’m going to innovate’ but those who say ‘I can see a problem’.”

While Baxter doesn’t say this, the real challenge lies weaning Australians off property speculation and encouraging investment and risk taking, something that requires major tax and social security reform.

Sadly, the Turnbull government has abandoned the prospect of any immediate taxation reform and even the Innovation Statement’s more modest agenda is now in doubt as the nation’s febrile Parliament prepares itself for an early election.

Baxter’s views, and his optimistic but guarded outlook towards the Innovation Statement reflect the opinion of many of those in the Australian investment community, it would be a shame for the country if the current opportunities are lost for short term political maneuvering.

The limits of corporate journalism

There are limits to most of new ways of running a media company

One of the new models for journalism is being sponsored by corporate interests.

This works well until the news turns against the corporate sponsor, as Australia’s ANZ now discovers.

For companies there are many good reasons for to have their own media centres, but to pretend they are twentieth century style Washington Post, Watergate journalism is probably hoping for too much.

How the old advertising models fail on new media

Online display advertising is broken. Which should surprise no-one.

Understanding how a new technology will change industries is a challenge that has faced every generation in modern times.

Two of the industries most challenged by the rise of the internet have been the publishing and advertising sectors which have seen their established and wildly profitable ways of doing business demolished.

One of the mistakes almost every industry and business facing technological disruption makes is trying to apply their old models to the new methods which almost always produces poor results, the transition from live theatre to movies and then to television through is a good example of this.

So it’s not surprising that the advertising industry is now admitting that display ads on web pages have never worked and from that follows the maxim that print dollars equate to digital dimes.

For the online publishing industry, we’re still waiting for our modern day David Sarnoff to figure out how to make money online.

Virtual reality hits the market

The first virtual reality viewers start entering the market, but only early adopters will want these devices for the moment

After virtual reality viewers being the big item at both the Mobile World Congress in Barcelona and Las Vegas’ Consumer Electronics Show earlier this year, it’s not surprising they are appearing on the market.

Yesterday both Microsoft’s HoloLens and HTCs Vive were made available to the public. At $3,000 for the Microsoft viewer and $800 for the HTC device, these products won’t get much traction in the mass market.

For those wanting a cheaper VR device, Google Cardboard has also come onto the market for $15 and while it depends upon a smartphone with the right software and lacks the features of more expensive and sophisticated devices, it is an affordable consumer product.

Like all early stage technologies, the current crop of VR viewers are expensive and somewhat cumbersome but over the next few years we can expect the price of these devices to collapse and become far more usable.

We’re in early times for the virtual reality industry. What we’re seeing today is laying the ground for much more exciting things.