advice | Paul Wallbank - Communications Professional

Silicon lemmings

How many investors blindly following Silicon Valley’s manias will lose their money?

Despite their self proclaimed belief in thinking different, many of today’s internet entrepreneurs tend to travel in flocks and follow the whichever business model is currently being hyped by Silicon Valley’s insiders.

From the original dot com boom in the late 1990s to today, web entrepreneurs and their investors jump onto the bandwagon of the day – it could be online shopping, photography applications, group buying services and taxi apps which are the flavour of the moment.

The latest taxi app is Click-a-Taxi, a European venture which has raised a stingy $1.5 million in second-round funding, which joins a legion of taxi and hire car apps following in the wake of market leader Uber.

Unfortunately for the investors in these taxi and hire car apps, these services are making some pretty powerful enemies.

Around the world gatekeepers such as taxi companies and booking services do their best to keep drivers in poverty while over charging passengers for a poor service.

The new apps disrupt that business model by offering a better service for customers and a better deal for drivers – most importantly it deprives the gatekeepers of their cut.

Predictably, the backlash is fierce with 15 US and Canadian cities proposing to tighten the rules on the use of GPS and smartphone apps.

These backlashes are going to prove expensive to the investors as Silicon Valley entrepreneurs have a habit of under-estimating the power of regulatory barriers. How the current crop of taxi apps deal with this will determine which lemmings go over the cliff* and which ones survive.

One group of Silicon Valley lemmings lying dazed at the bottom of a cliff face are those who invested in the group buying hype of the last two years.

Market leader Groupon is now reportedly moving away from daily deals to ‘always on’ deals, which kills the whole point of group buying sites. Most of the copycats are already dead.

Former Cudo CEO Billy Tucker predicts that in the Australian market – which was flooded by a wave of Groupon imitators in 2010 and 11 – will only have a dozen survivors out of the top 50 listed earlier this year.

Investors in these look-a-like services had a gamble that a greater fool would buy the operation, usually a big corporation run by executives with a fear of missing out. The ones who missed out quietly swallowed their losses and moved on to the next mania – which appears to be taxi apps.

For the taxi applications, the buyers of the apps will probably be the incumbent gatekeepers, who aren’t really fools at all.

It wouldn’t be surprising to find the smarter look-a-like operators are already talking to the taxi companies about an app which will, miraculously, comply with all the requirements of the local regulators.

As for the rest, they’ll do their dough.

What is going to be interesting though is the battle between Uber and the various taxi regulators around the world, particularly in countries where politicians jump to the whims of their business cronies.

*lemmings don’t really throw themselves off cliffs, that myth was invented by the Walt Disney Corporation. Sadly Australian, particularly NSW, politicians favouring ticket clippers and rent seekers is no myth.

Listener’s questions – ABC Nightlife computers

As a follow up to last night’s ABC Nightlife computers here are some of the promised answers to listener’s questions

As a follow up to last night’s ABC Nightlife computer spot where we looked at who owns our online data, there were a few questions which we’d get back to listeners on.

The entire show can be listened to online through the ABC Nightlife with Tony Delroy website and includes some of the issues we’d get back to listeners on, but first an apology.

Bruce Willis never sued Apple

One of the callers Mark mentioned the story of Bruce Willis suing Apple over ownership of iTunes tracks.

It turns out this never happened as Charles Arthur of the Guardian explains.

While Charles can be a cranky bugger, he’s right in this case that the media didn’t a very poor job in regurgitating an untrue story without ever checking its veracity. Luckily it’s not one that I cited in the program.

Protecting your Twitter Account

One of the topics we discussed was the threat of accounts being hijacked and Twitter is one service that is constantly being compromised because of poor policies. An important part of protecting a Twitter account from being taken over is to make sure an extra level of authentication is used by clicking the “Password Reset” option in the Twitter Account settings.

Recording online

Des asked about recording his own message for an audio Christmas card to his friends and relatives.

On Windows computers, Sound Recorder is the long standing built-in app while on the Mac, Garage Band is the built in application.

There is a free third party application available for both PCs and Macs called Audacity which also allows you to record and edit on your system.

US customer service

One interesting thing about the conversation was how many callers criticised the “US mentality” of providing lousy service. This probably isn’t true as most American businesses provide some of the best customer service in the world.

The lousy service from online companies is more a function of the computer engineering and venture capital background of the entrepreneurs setting up cloud computing and social media services, while the majority of these companies are from the US it wouldn’t be fair to brand this as being an American cultural issue.

Our next Nightlife spot is on December 13 at 10pm and we’ll be looking at Windows 8 and what type of computers should people be considering. Hope you can join us.

ABC Weekend Computers – should you buy an iPhone 5?

On ABC Sydney this weekend we look at whether the new iPhone is for you.

With the usual hooplah, Apple announced their new iPhone last week. Should consumers drop their existing phones and buy the new iPhone?

On ABC 702 Sydney Weekend computers this Sunday, September 16 from 10.15am Paul Wallbank and Simon Marnie will be looking at the choices in the smartphone market.

Some of the topics we’ll discuss include;

What’s in the new iPhone?
Which networks will the phone work on?
Will the iPhone5 have the problems that the iPad 4G had?
Are there already phones with these features?
When will the Microsoft Phone be released?
What prices are customers looking at?
Should people drop their plans for a new iPhone?

We love to hear from listeners so feel free call in with your questions or comments on 1300 222 702 or text on 19922702.

If you’re on Twitter you can tweet 702 Sydney on @702sydney and Paul at @paulwallbank.

Should you not be in the Sydney area, you can stream the broadcast through the 702 Sydney website and call in anyway. Everyone’s views are welcome.

Too good to be true

The same old scams catch us all

As regular as the Olympic Games are, so too are the ticket scams. Every four years we see a ‘scandal’ of vendors, these days online, offering cheap or difficult to get tickets. This year’s London Olympics are no different.

The bait used by these scammers is the almost impossible to get tickets, the frenzy to get along to the opening ceremony or top days sucks dozens, sometimes hundreds, of enthusiastic punters into losing money.

It’s not just Olympic tickets, with the ease of setting up websites scammers can be online quickly with a credible, professional looking site and new services, like group buying and ‘penny auctions’ also offer great opportunities for the enthusiastic spammer.

While it’s sometimes difficult to spot the scams, there are some signs that can reduce the risk of your being caught out.

Check the site

How long has the domain been registered? You can quickly check the details by running a whois search, a kind of online registration check.

For .com sites, the authoritative Whois site is Network Solutions while for .co.uk sites (a likely candidate for London Olympic ticketing sites) it is Nominet. Each country has its own registration list and in Australia, for .com.au it is AuDA who run the My Web Name site.

A recently registered, or long standing, name doesn’t in itself indicate whether a site is a scam or not, but it is a good start.

What are the contact details?

A reputable site that wants your money should have a phone number and street address. A site that doesn’t have these is a warning sign.

Do a web search

The web is your friend. Use your favourite search engine to search the business’ name, for most people this is Google. This can show if there’s been complaints about the site.

Make sure you do a full name search, for instance if you are searching for Joe’s cutprice tickets put the name inside inverted commas such as “Joe’s cutprice tickets”.

Also do a search on the business address, if a company operates from the same location as dozens of others then it’s almost certainly operating from a service office.

While there’s nothing wrong with a business operating from a serviced office, if a company is claiming to be a large reputable multinational then it’s probably telling porkies.

Use a disposable password

If the site asks you to create an account or a password, use something different to your regular banking or other important passwords.

Some of these scammers are actually harvesting login details for online scams so don’t use the same password as your email or social media account as you may find your account hijacked.

Don’t use social media logins

Account hijacking is becoming prevalent on social media sites. The scammers get access to a victim’s Facebook or Twitter account and then contact all the victim’s friends posing as the victim. This is particularly effective for getting more people trapped in the scam.

Increasingly we’re seeing sites using social media logins, that is offering to use your Facebook account rather than a user name or password as a convenient way of signing up. These almost always give the site permission to post on your behalf and you should not do this unless you are totally confident in the site.

Pay by credit card

Even the best of us can get caught out by scammers, so paying by credit card means you have some protection from dodgy deals as you can dispute and reverse the transaction.

Note the words credit card, if you use a debit card many banks won’t give you the same consumer protections.

Avoid direct wire payments or online services like PayPal as you’ll probably do your cash or, at best, be bogged down in the dispute procedure.

Use common sense

The most important part of avoiding scams is common sense; if something is too good to be true then it almost certainly isn’t true.

An offer for hard to get Olympic tickets, fifty dollar iPads or a million dollars from a long lost cousin in Africa always come with a catch that leaves you out of pocket and possibly with your identity stolen.

Many of these scams aren’t new, they’ve just evolved to take advantage the online world.

During the golden era of the snake oil merchant in the 19th Century, the phrase there’s a sucker born every minute was coined. Don’t be that sucker.

Distrusting the cloud

Why are customers distrusting cloud computing services?

The recent KPMG Convergence Report looking at online trends in the mobile web found that nine out of ten Australian consumers are concerned about the security of their online data.

In light of recent corporate security breaches such as Sony’s and Telstra’s this is understandable which creates a real barrier for the adoption of cloud computing services.

For cloud computing to be taken seriously, customers have to be certain their data and applications will be respected and protected.

The corporate sector’s failure to hold senior management responsible these problems shows how big businesses largely aren’t taking user privacy or security seriously.

This is a great opportunity for new businesses, we’ve already seen Amazon become the biggest host for cloud services over storage and Internet incumbents who five years ago would have dismissed Jeff Bezo’s company as a glorified book stand.

For newer companies offering cloud services it’s a chance to build a culture where customer service, privacy and respect comes before management bonuses and perks. Where delivering what you promise is more than waving a vague Service Level Agreement (SLA) document under customer’s noses.

As customers, big and small businesses have much to gain from cloud computing‘s productivity, collaboration and cost saving aspects but trust that data will be protected and the service will be available is essential.

Before choosing a cloud service have a search of the web and popular forums to check what people are saying about the product.

Don’t rely on fancy marketing, or assume that a big company will be better at protecting your data. The evidence is clear that smaller, newer companies are doing a better job at protecting data and ensuring business continuity than many of their bigger competitors.

Over time, customers are going to get used to trusting cloud service providers and the businesses who’ll succeed in the online applications world are those who’ve been shown to be trustworthy.

This is one way the web is changing the way we do business.

Trusting online reviews

How do we spot fake reviews on sites like Tripadvisor, Yelp! and Eatability

Review sites where customers can post their experiences are changing consumer behaviour and bringing a new level of accountability to businesses, but how do we trust the comments on which appear online?

Travel review site Tripadvisor is a good example of how consumers are able to spread the word about their good and bad business experiences, much to the displeasure of the UK hotel industry and its media friends. To make things worse, many of those reviews are further spread by social media services like Twitter and Facebook.

While the travel industry complains about fake reviews from competitors and disaffected customers, the majority of fake reviews are from hoteliers themselves pumping up their own business. It’s always interesting how many gushing reviews are from anonymous posters with only one or two reviews to their name.

Should any of the threatened court cases actually make it before a judge, there may be a few hoteliers finding themselves in an uncomfortable position, a classic case of being careful about what you wish for.

That’s not to say Tripadvisor doesn’t have a problem, the comments in a recent Telegraph story about the service show they have the web 2.0 problem of lousy customer support which comes from a low cost, user generated business model.

A more serious point which is overlooked by most of the critics is that Tripadvisor, like most travel sites, is linked to certain booking services. If you attempt to use the site to book a property that isn’t aligned with the site, it may well falsely report there are “no rooms available”, which is deceptive and will almost certainly fall foul of competition laws in most countries.

For users of sites, it means we have to be careful with what the reviews and the sites themselves tell us. So what should we watch for?

Spotting dodgy reviews

The obvious thing is the planted review. The easiest way to spot this is by the number of reviews submitted by the commenter.

If a commenter only has one or two reviews then it’s almost certain they either have an axe to grind or they have been submitted by the establishment or it’s staff as most rational people don’t have the energy or time to build a comprehensive profile of reviews just to shaft one place.

Another useful tactic is to look at the reviews around it, do others disagree with that reviewer or are they consistent? Outlier bad reviews can indicate a plant, a grudge or simply a bad day in the kitchen.

Dealing with bad reviews

As we’ve pointed out before, consistent bad reviews on these sites usually indicate a structural problem in the business however if you suspect a fake or planted review, most services have a “flag as inappropriate” option or a dispute mechanism.

Be careful using these however as flagging a legitimate complaint as malicious or fake may antagonise the poster and give the poor review more publicity than you would like.

The social aspects of the web, such as review sites and social media services like Twitter and Facebook, are going to become more important over the next few years as internet users use them to help sift through the massive amount of information on the net.

All businesses, whether in hospitality or other industries, need to take these sites and the reviews on them seriously.

Greater fools and lesser fools

Is the Silicon Valley, venture capital funded business model right for your venture?

As Groupon struggles to get its public offering to the market and the startup mania continues in the tech sector, it’s worthwhile having a look at what underpins the modern Silicon Valley business model along with it’s limitations and risks for those who want to imitate it or invest in it.

Distilled to the basics, the aim of the venture capital funded startup is to earn a profitable exit for the founders and investors. While there’s some exceptions – Apple and Google being two of the most notable – most of these businesses are not intended to be profitable or even sustainable, they are intended to be dressed up and sold onto someone else.

This can be seen in what many of these companies spend investors’ money on; in an example where a startup receives 10 million dollars VC investment, we may see a million spent on developing the product, five million allocated customer acquisition and four million on PR. The numbers may vary, but the proportions indicate the investors’ and management priorities.

Focussing on PR and customer acquisition is essential to attract buyers, the public relations spend is to place stories in the business media and trade press about the hot new business and spending millions buying in customers backs the narrative of how great this business is. By creating enough hype about a fast growing enterprise, the plan is prospective buyers will come knocking.

But who buys many of these business? In some cases a company like Microsoft or Google may buy the startup just to get the talents of some smart developers or entrepreneurs, but in many cases it’s fools being parted from their money.

Greater Fools

The greater fool model the core tech start up model; two guys set up a business with some basic funding from their immediate circle; the friends, family and other fools. A VC gets involved, makes an investment and markets the company as described above.

With enough hype, the business comes to the attention of a big corporation whose managers are hypnotised by the growth story and possibly feel threatened by the new industry or have a Fear Of Missing Out on the new hot, sector.

Eventually the big business buys the little guys for a large sum, meeting the aim of the founders and venture capital investors. The buyer then steadily runs down the acquired business as management finds they don’t understand it and find it a small, irritating distraction from their main business activity.

While there are hundreds of examples of this in the tech sector, the funny thing is the biggest examples are in the media industry with Time Warner’s purchase of AOL and News Corporation of MySpace.

Lesser Fools

As a bubble develops we start seeing the Initial Public Offering arrive and this is where the lesser fools step in.

The mums and dad, the retiree, German dentists, the investment funds and all the other players of the stock market are offered a slice of the hot new business.

Usually the results are interesting; the IPO is often underpriced which sees a massive profit for the initial shareholders and underwriters in the first few days then a steady decline in the stock price as the pie in the sky valuations and the realities of the underlying business’ profitability become apparent.

Steve Blank, a Silicon Valley investor and entrepreneur, put the greater or lesser fool scenario well in a recent article asking Are You The Fool At The Table? Sadly too many small and big investors, along with big corporations, are the fools at the table ignoring Warren Buffet’s advice on avoiding businesses you don’t understand and finding themselves the patsies that the Silicon Valley startup model relies upon.

The fundamental misunderstanding of the venture capital driven Silicon Valley model of building businesses is dangerous as our governments and investment mangers are seduced by the glamorous, big money deals. It’s also understandable funding from banks and other traditional sources is difficult to find.

An obsession with this method of growing businesses means that long term ventures with profitable underlying products and services are overlooked as investors flock to the latest shiny startup. That’s a shame and something our economy, and investment portfolios, can’t really afford in volatile times.

For business owners, the venture capital model might be a good option if your aim is a quick, profitable sale to a fool. If your driving reasons for running a business are something different, then maybe the Silicon Valley way of doing business isn’t for you.

Password protection

Our passwords are valuable, how should we protect them?

The suspension of eighty students from a suburban Sydney high school once again illustrates how careless we often are with passwords and the access to our computers. In an era of Internet banking, online shopping and social media sites holding our personal details, we have to take web security seriously.

In many ways the teacher who let their password slip to their students was lucky. In the United States, authorities haven’t always been so forgiving these sort of mistakes, and in this case the kids and the system administrators were a lot more adult and responsible than their Connecticut counterparts.

What the incident does show is how the weakest points of our technology networks are ourselves – the most secure systems, toughest passwords and best anti-virus protection won’t help us if we don’t take care.

We looked at protecting organisations in an earlier post, Protecting your data, and here’s some steps on how to take care with your personal details.

Shut down computers

When you’re finished working, make sure you log out of email programs, secure sites, social media services and shut your computer down.

In an office context, this is very important if you’re going away for a meeting or a break as people have been known to use co-workers computers to access prohibited sites or sensitive information.

Should you be using Internet cafes, hotel business centres or airport lounges you should be doubly careful to make sure you’ve logged off completely before walking away from the shared computer.

Hide your passwords

As the teacher at Prairiewood High found, your password is gold. Do not divulge it under any circumstances.

Often doing so is almost certainly a breach of your organisation’s Acceptable Use Policy and sometimes this can mean disciplinary action or dismissal from a job. With your online banking, disclosing your password or PIN can mean you won’t be compensated if money is stolen from your account.

Even a seemingly trivial social media site can cause trouble for you if crooks can get onto it.

Having a complex password is good and we look at a neat little trick for memorable but tough passwords in our Protecting Your Data post, it’s worthwhile making sure your logins are both easy to remember while being secure.

Understand your AUP

An AUP, or Acceptable Usage Policy, is part of the conditions of you using a computer or online service. Many government and corporate networks have a box pop up forcing you to agree every time you login. Take time to occasionally read this.

Should you accidentally give away your password, say to a site that’s fooled you that it’s your bank or a social media site, the AUP will usually have a clause or a sentence on what to do in that situation. Understanding this will give you piece of mind if something does happen.

We’re now in an age where our personal information is more valuable than ever before and we need to guard what who has access to it. Passwords are going to be part of protecting our data for some time to come so understanding how to use them properly is essential.

Protecting your data

The News Of The World scandals show why our data, and that of our clients, is worth protecting.

As we continue to be amazed at the scope of the News of the World hacking scandals, it’s worthwhile considering how valuable our personal and business information has become.

This is no news to companies like Google and Facebook, who have built businesses worth hundreds of billions of dollars on our willingness to give away personal information.

Even if it’s unlikely that we, or our customers, are going to be the target of the London tabloids or the paparazzi, our information is still worth protecting and here’s just a few ideas on making your business a bit more secure.

Phone message banks

At the core of the News Of The World out is the newspaper’s abuse of other peoples’ messagebank services where reporters, or private investigators hired by News International, have accessed messages left on mobile phone services.

Calling this behaviour “hacking” is giving it more credit than it deserves, accessing mobile phone message banks is usually easy because the victim doesn’t change the default PIN code the mobile carrier uses for mobile accounts.

So the first thing to do when setting up a mobile service is to ask your carrier how to change the PIN codes for your mobile account. While you’re talking to them ask if they offer an SMS service to notify you whenever your phone service is accessed remotely.

With any electronic device you buy it’s sensible to change any default passwords or PIN codes or passwords when you set them up as a matter of habit.

Passwords

One of the biggest weak links in our online business and private lives is the use of passwords.

We tend to be quite careless with how complex we make it and who we give it out to so it’s worthwhile being careful with the sites we use for our critical passwords.

As well as making them complex, say a long phrase with a character acting the space like Mary&had&a&little&lamb, you should change them on a regular basis as we’ve seen many passwords been leaked by businesses this year.

Secret questions

Another thing to consider are the secret answers to questions many providers ask you to set up.

Questions such as your mother’s maiden name could be easily figured out by a professional or determined investigator and social media sites like Facebook can make this even easier.

US Vice Presidential candidate Sarah Palin was caught out by exactly this in 2008 where hackers figured out her secret passwords from public records.

Using hotel and public networks

We should also keep in mind that phone hacking is only one part of corporate security, earlier this year there were allegations Federal government emails had been compromised by Chinese organizations.

This almost certainly happened through plain text passwords being sent through hotel or public networks. It’s wise to make sure that Secure Socket Layer (SSL) access is required on all your remote access.

Tighten your own organisation’s practices

We shouldn’t forget however much of the data in the News Of The World scandal has been accessed through paying off staff, allegedly including the royal palace bodyguards.

It’s difficult to see how you can protect yourself against corrupt workers however you can reduce the risk of your organisation giving out details by restricting confidential data to a “need to know” basis with access logging enabled.

“Blagging” – or to use the horrible American term “pretexting” – is pretending to be someone else to get important data. Again, slack procedures by various government agencies and private organizations have been responsible for much of the data being given away.

There’s no doubt too many organizations are cavalier with their customers’ information and hopefully the recent hacking events along with the News Of The World scandal will force businesses to start taking user privacy seriously.

For smaller businesses, we have to show respect to our customers and have the procedures and trained staff in place to make it difficult for the blaggers to compromise our systems.

Measures can include refusing to give out passwords and identifying data which the customer should know as well as insisting on sending details to a known SMS number or email address.

As reprehensible as the behaviour of the journalists, their editors and the News International management is, we should have no doubt that the tactics employed by their private investigators are widespread in everything ranging from domestic disputes to industrial espionage cases.

Given the value of our, and our customer’s, private and commercial data we need to take security seriously.

For years we’ve been warned that cyber warfare would break out one day, the various corporate data breaches and The News Of The World scandal show the battles have been closer than we thought.

Planning for change

In a time of change we need to be flexible

Last weekend’s ABC Radio spot looked at setting up a blog. There’s a whole range of reasons why you’d one to build one; to start a business, to publicise a charity or to show off your hobby.

We were lucky to get food bloggers Thang Ngo from Noodlies and Rebecca Varidel from Inside Cuisine calling in to tell their experiences of setting up successful websites.

One common factor for both was they had started off using the free Google Blogger service and then moved up to the more robust and scalable WordPress platform as their sites took off.

Rebecca and Thang’s journeys, which is common for many businesses and entrepreneurs, illustrates how our plans have to be flexible and the tools we choose must be able to adapt to changed circumstances.

The nineteenth century German general, Helmuth von Moltke, said “no battle plan survives first contact with the enemy”. The same is true of business plans; none survive first contact with the realities of the marketplace.

As our businesses adapt to the ever changing economy and the needs of our customers, we can’t afford to get locked into static tools and responses. Our choices have to reflect that we will make mistakes, assumptions will be proved wrong or our customers, suppliers and staff will change.

Being flexible and open to new ideas is essential to survival in the 21^st Century economy. The days of doing things because they have always been done this way are over.

Business Web Essentials

A free e-book to help your online presence

In conjunction with Microbusiness Week, a New South Wales government initiative to help smaller and startup businesses, we’re happy to release our Business Web Essentials e-book.

This e-book is free to all subscribers of our newsletters lists the online tools that can help your website be more effective online. While it’s aimed at business users, if you’re a blogger or community group running a website you’ll find most of the information in the book will help you as well.

Business Web Essentials lists the important web hosting, search listing, social media and cloud computing services that will help you promote and track the progress of your online presence.

Subscribe now to our weekly newsletter and receive the e-book free of charge. If you’re an existing subscriber, you’ll get the link in our regular newsletter.