Decoding the new economy

Growing your business with Tweetups

Like most social media meetings in any big town these days, people from all walks of life gathered to meet and become more than just a Twitter handle or obscure forum name.

It’s hard to resist the offer of a free sandwich in Sydney’s Hyde Park on a beautiful spring day, so a“tweet up” offering was always going to be successful.

Like most social media meetings in any big town these days, people from all walks of life gathered to meet and become more than just a Twitter handle or obscure forum name.

Any idea that your average internet user is a pasty, overweight, underemployed 20-something is quickly dispelled as you meet all sorts of interesting people who are doing interesting things.

The hundreds of “tweet ups”, coffee mornings and social media dinners across the land are creating new networks which are changing business and society.

This is opposite of the stereotype being used to reinforce the mindset that blames the internet and social networking sites for everything from schoolyard bullying through to street riots and arrested brain development.

Over the last few days we’ve been treated to stream of stories about the views of professors and researchers detailing how the world and our minds are being destroyed by the internet.

My favourite is an English professor currently visiting Australia who claims computer game addled 20-something market traders may be responsible for the global financial crisis.

Perish the thought that good old-fashioned greed and hubris, the cause of every market crash since the Bronze Age, may have had something to do with the GFC.

The weekend press mentioned the professor applying for a study grant from an American university to prove her theory.

If that is true, it’s a shame the she didn’t take the time to check out the Twitter hashtag to join us for a sandwich in Hyde Park.

Had she done that she’d have had a nice sandwich, caught some sun and seen her theory disproved.

She would have met a far more diverse group than a bunch of stuffed shirts huddling in a cosy lunch club, desperately trying to validate their deliberate ignorance of the changing world outside.

It’s those stuffed shirts, along with their newspaper columnist friends, who are isolated. By choosing to demonise the internet and ignore the opportunities social media tools present, they are being left behind in a fast changing world.

The options for entrepreneurs and business owners are clear – you can lock yourself up with the stuffed shirts and rage about your dying business or you can use the net to help your business grow. The choice is yours.

Buying friends online

Over the last few weeks we’ve been treated to the running saga of a Brisbane-based service fighting the big social media sites over their claim to have thousands of rent-a-followers available for businesses wanting to build a quick fan base. The whole idea of this sort of business baffles me as I can’t see where the benefit lies in buying a Twitter or Facebook following.

At school, kids who tried to buy friends always found it ended badly. There is little reason to believe things are any different for grown ups running a business.

The whole idea of this sort of business baffles me as I can’t see where the benefit lies in buying a Twitter or Facebook following. The only scenario I can think of is where somebody is trying to boost the value of a business to a gullible buyer on the basis of how many Twitter followers the enterprise has.

This sort of thinking is a fallacy – social media isn’t some sort of contest to boast how big your following is, it’s about being part of a community that trusts and values your contribution.

If you’re really trustworthy and have something useful to offer then a community will grow around you. Buying followers runs counter to that as it shows you’re not really trustworthy and what you have to say offers so little value, you have to pay others to be your friends.

Noone has to be on Twitter, Facebook or LinkedIn and it isn’t compulsory to have a blog or even a website. As useful as all these services are, they remain simply tools to get a job done.

When your business has to buy fans, it’s worthwhile asking if social media offers the right tools for your company, as the best thing that will happen is you’ll be ignored.

If you have to stoop to gaming the system, then perhaps it’s quicker and easier to stick to traditional forms of advertising which offer less risk and will probably be cheaper.

The most popular kids in the playground didn’t have to buy friends, while those who did found their friends didn’t last. The same applies for businesses.

In a world where a few blog posts or tweets can expose an untrustworthy business you need to have genuine fans and friends.

The five stages of product recall

In an eerie way, a company’s response to a product recall is like Dr. Elisabeth Kubler-Ross’ five stages of grief. Lets have a look at them;

A weekend of research into exploding iPhones didn’t come back with much in the way of firm evidence, but what came out is a pattern in responses to past debacles from exploding batteries to filmsy laptop screens, dud operating systems, support failures and the Leyland P76.

In an eerie way, it’s like Dr. Elisabeth Kubler-Ross’ five stages of grief. Lets have a look at them;

1. Denial and Isolation

“There is no problem. Go away.”

“You still here? Damn. Well the claims are product is crashing randomly, exploding, setting fire to people’s balconies and scaring their cats and toddlers is a figment of a few anonymous bloggers and a media beat up.”

2. Anger

“Our product is designed to the highest Engineering standards and manufactured to .0001 micron precision. Any failure in them is due to operator misuse and will void the customer’s warranty.”

“Claims the product has a design flaw are unsubstantiated claims by journalists in the thrall of our competitors and proof of the left wing, anti-business bias of certain media organisations.”

3. Bargaining

“We have no comment as to whether we are compensating customers for the damages allegedly caused by our product.”

“Accusations we’ve offered Caribbean holidays to the entire tech journalist and blogger communities are totally unfounded.”

4. Depression

“Yes, we have discovered an usual and unexpected flaw in our product. As a consequence we have fired three contractors in our Mount Gambier sales office and senior management will go on a five day dealing with crisis course in Tahiti.”

“We still maintain our products are designed and manufactured to the highest standards and are considering legal action against scurrilous bloggers and those media outlets that misreported this unfortunate chain of events.

5. Acceptance

“Okay, we messed up.”

“We’ve dropped the lawsuits, paid the fines to EU consumer protection authorities, plea bargained a five year prison sentence for our North American managers, compensated our injured customers and are now working on a better product that won’t lose your data, catch fire on your back balcony or break down in Lane 6 of the Harbour Bridge during a wet winter morning peak.”

“We’ve learned our mistakes and won’t repeat them.”

“Honestly. You can trust us.”

No fear of failure

Failure is the biggest test of friendships and trust. Being in a sinking business is a stressful time and you quickly find who can be trusted, who’ll stand by you and who isn’t as reliable as you like. Once you’ve established who you can really trust in business, you then have the foundations for a wildly successful second business.

Most IT support businesses are doomed to failure and that’s why they are such a good training ground.

“My friend cannot find work so he wants to start a computer repair business. Do you think this is a good idea?”

When a taxi driver or anyone else asks me this, my reply is “why does your friend think it’s a good idea?”

Most people think computer repairs and IT support is easy and anyone can do it – after all it’s just a matter of clicking a few buttons and if you know how to use email, you can fix most PC problems.

Strangely, the only industry that shares this mentality seems to be coffee shops. Many people seem to think they can run a café because they can drink coffee, but at least setup costs are a barrier to entry which doesn’t exist for the mobile computer support businesses.

The funny is were you to ask the same people if they could be a swimming pool cleaner because they go swimming or if they would be a good motor mechanic because they drive a car to work, they’d think you were crazy.

That said though, I usually don’t discourage friendly taxi drivers or anyone else from telling their friend to go ahead and set up that computer business.

Even though I personally think the computer support sector is a graveyard for most entrepreneurs, it’s a great training ground. You learn about the importance of cashflow and how it’s different to profit – although some techs take a while to pick up they arent’ the same thing.

More importantly, you learn how customer service is the greatest challenge in most business. As a proprietor of a computer repair business you learn quickly how to politely explain the customer’s problem lies between the keyboard and chair or that the error is really a code ID10T.

But the main reason for recommending an IT support business precisely because most are doomed to failure.

Once you’ve established who you can really trust in business, you then have the foundations for a wildly successful second business.

Watching those software licenses

The recent story of how Skype may be forced to shut down is straight from the Bill Gates textbook on how to do business.

This article originally appeared in Smart Company on August 4, 2009.

The recent story of how Skype may be forced to shut down is straight from the Bill Gates textbook on how to do business.

In late 1980, IBM were casting around for an operating system suitable for their new line of personal computers. The obvious choice was the CP/M program. However, IBM couldn’t come to an agreement with Intergalactic Digital Research (seriously, that was their name) over using the software.

So they ended up on the doorstep of a small company in Seattle who specialised in programming languages, not operating systems, who’s main product was previously highway traffic counting systems.

Microsoft didn’t have an operating system so they bought one from a nearby computer store, modified it slightly and did a deal with IBM.

Most of us would have sold the system to IBM and happily congratulated ourselves on making a quick couple of million dollars or so, but that wasn’t Bill Gates’ style.

Rather than selling the program outright Microsoft licensed it to IBM and so millionaires and one or two billionaires were made.

It also set the course for the world’s software industry. By and large software is licensed, not sold. Buying a disc at the local computer superstore gives you nothing but permission to use the program.

That’s the same model Skype’s founders, Niklas Zennström and Janus Friis used when they sold the business to eBay for $3.1 billion US dollars – the underlying software that actually drives the service was licensed to eBay.

Now Zennström and Friis are claiming eBay have breached that license and want to withdraw eBay’s rights to use the technology.

For eBay this is a big problem as they were hoping to sell Skype and the founders’ move makes that almost impossible.

Both the Skype and Microsoft stories show licensing can be a lucrative option with the bonus of a steady cashflow if you have the right product.

For business buyers, the lesson is stark – do your homework, talk to your lawyers and understand exactly the ramifications of licensing and similar arrangements.

If you’re a Skype user, you don’t need to worry as the case isn’t expected to be heard until June next year. By then either an agreement will have been reached or your Skype credits will have long expired.

Twitter 101

To help businesses establish themselves on Twitter, the service has released a free guide to show companies how to use it, to help them build relationships, along with some of the best practice tips and case studies.

Twitter 101 opens with a basic description of the service and illustrates how Twitter can be used by businesses, most of which we’ve discussed previously. There are also a few cute stories, such as ice-cream-deprived workers in the empire State Building sending out tweets to a delivery service.

Having established what Twitter can do for your business, the next page goes through the set up process.

One important flag they raise is how they don’t support name squatting and supply a contact link to report people who are trying to hog names, so if you find your business or trade name has been pinched by someone who doesn’t have a valid claim to the name, you can take action.

Once online, Twitter 101 takes you to the basic terminology. If you wanted to know what a hashtag, trending topic or Tweetup is, this is the page to visit. Probably the most valuable page is the Best Practices section, which details the good, the bad and the spammy. It also provides a link to report spammers and other dills who abuse the service.

If you are going to only read one section, Best Practices is the bit to read. You’ll avoid many mistakes and get more from the service, both as an individual and a business.

Finally, the site finishes up with some case studies. Along with the well-known Dell and JetBlue stories, is the description of how Dave Brookes of Teusner Wines in the Barossa Valley started using Twitter after watching Lance Armstrong in the Tour Down Under.

Finally, there’s some links to useful resources on using Twitter. The guide continually emphasises how it is all about building relationships. Twitter may not be the right tool for you or your business, but the Twitter 101 guide will certainly help you decide one way or the other.

Death of the cashback scheme

I’m no fan of cashback schemes. Having dealt with them on behalf of customers in my old IT support business, I’ve seen too many people messed around by them.

So the news that the Officeworks chain will stop offering them is welcome and hopefully will see the industry move away from these often unethical and unfair practices.

The main reason for offering cashback schemes is to keep commisions up for salespeople. If a TV or laptop vendor simply cut prices by $200 they would find the salespeople steering customers to more expensive competitors.

So it’s no surprise to see which stores aren’t following Officework’s lead.

If you are offered a cashback, ignore it while negotiating a price as it’s none of the store’s business what you do with it and most certainly won’t help you if there’s a problem down the track. Treat any cashbacks as a bonus and don’t factor it into your purchase.

Or better still, avoid electronics stores staffed by commission driven sharks.

Category: business advice

The five stages of product recall

1. Denial and Isolation

2. Anger

3. Bargaining

4. Depression

5. Acceptance

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