and in business news…

Fascinating and Troll-like Barry Diller buys Ask Jeeves. No visible logic to this deal but, then again, who predicted Diller’s epic upside from buying the lacklustre Home Shopping Network or the equally mind-blowing outcome of his dodgy-looking 2001 Vivendi pact? Diller is a business genius and he compounds his genius by staying out at the edge of his target category and thus buying in at a fraction of the mugs’ price: so it’s HSN, not QVC. Ask Jeeves, not Google, USA Networks, not NBC.

Yahoo! buys flickr. This one is interesting: can the unique, clever, geeky flickr culture survive the Yahoo! steam bath? My guess: yes. Yahoo! is a friendly acquirer. They didn’t buy OFoto or Smugmug or Buzznet or one of those really boring photo sharing services. They bought the best one. That says, if you ask me, that Yahoo! is alive and well. I can imagine a raft of cool enhancements to the basic Yahoo! service right now: expect flickr pics and tags to start showing up next to Yahoo! search results, in Yahoo profiles and on My Yahoo! pretty soon.

Lending goes P2P. I think this is the week’s most mind-blowing arrival. Zopa (a UK firm) wants to connect ordinary borrowers with equally ordinary lenders. Borrow £10,000 and you could be borrowing it from your neighbour. No, I have no idea how they got this past the Financial Services Authority either: “So, let me get this straight: you want to be a lender?” “No, we’re just going to set up person-to-person loans”. “So there are going to be thousands of lenders?” “Millions, even.” “And not a consumer credit licence between them?” “Not one.” “Hmm…”

Zopa could do for credit what eBay did for car boot sales and BetFair for those men in loud suits at racecourses. I love the idea – it’s an intriguing extension of disintermediation in an unexpected direction – but I can already hear the cries of distress from the mainstream lenders. I can also see the Daily Mail editorials once the first defaults come in and the questions in Parliament about the moral hazard produced by turning us into a Nation of usurers and deadbeats. I’m assuming the stellar personnel behind Zopa have their tin hats firmly pulled down around their ears…

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Still rotting

A long time ago I ran a company called Webmedia. It was a web design firm and we earned the special distinction of ‘going bust before the boom’ (as one journalist pithily put it). Anyway, I’ve been thinking about it lately since I spent the weekend talking about business ethics in Switzerland. One incident in particular has been making me laugh. One of my managers (she ran the production department) came to me one day and asked if I’d mind if she gave me a business book she’d just read. She thought I might like it. “Sure. I said. Please do”. A bit later on, and without comment, she left the book on my desk – it was called ‘The Fish Rots From The Head‘…

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Brand not dead after all

A parade of Victorinox Swiss Army Knives
On the way to the airport Friday I found a Swiss Army Knife at the bottom of my bag. Not much of a knife (and the little tooth pick was gone anyway) so I gave it up to the nice lady at the X-Ray machine.

On the flight I thought about the poor sods who make these things. I assumed they must have been wiped out by 9/11. Since about 75% (complete guess) of Swiss Army knives must be bought at airports and since you can no longer take them on aeroplanes I couldn’t think of a viable survival strategy. Of course, I was totally wrong. Geneva airport is thick with Swiss Army Knife concessions. Giant, mechanical pen-knives open and close silently at every gate and in every souvenir store. They weren’t wiped out at all. In fact, the business insight here is that even the nastiest existential shock might conceal an opportunity.

When you buy a Swiss Army Knife at an airport now, a nifty pre-paid envelope is produced and your new knife is posted back to your home. That’s pretty neat but the leap forward here is that they now (obviously) capture your name and address in the sale and, with your permission, sign you up for the quarterly catalogue, special offers, ads for related products, whatever. 9/11 had the paradoxical effect, for the Swiss Army Knife people, of converting millions of customers from an undifferentiated horde of anonymous foreigners to a rather up-to-date International customer database. I hope they make good use of it.

Google’s edgy brand

Will a Google takeover of Wikipedia be a good thing or a bad thing? Don’t ask me. I’m more interested in what Google‘s offer says about the company’s persistently geeky culture. I may be wrong but I’m about 90% sure that it hasn’t occurred to anyone at Microsoft to host Wikipedia (this would be more their style). Wikipedia – and Wikis in general – are a good analogue for the net itself, an expression of its technically distributed and socially collaborative nature.

Wikipedia’s intelligence lives, necessarily, at its edges. In fact it barely has a centre at all in the old-fashioned sense. Most businesses find that sort of thing pretty alien, which, presumably, explains why the poor, benighted (but still awesome) Encyclopaedia Britannica actually survived the net’s first big attack only, by the look of it, to be completely broadsided by bottom-up knowledge sharing. Google‘s culture, though, evidently still thrives on funky, open, edgy phenomena like Wikipedia. Absorbing Wikipedia (which would, presumably cause barely a ripple in Google’s Ocean of CPU and bandwidth) might be commercial nonsense but it shows that the brand is alive and well.

What’s the story?

Reading about Microsoft’s belated entry to grown-up web search the thing that struck me was actually how level the playing field is right now. According to Infoworld, search breaks down like this: Google: 34.7%. Yahoo: 31.9%. MSN: 16.3% and AOL (Time Warner): 9.4%. That leaves about 8% for the gaggle of ‘others’ (including the benighted Ask Jeeves). Hardly a one-horse race.

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Best spam this week

From: "Richard" (qyield@yahoo.com.cn)
Date: 28 January 2005 05:13:30 GMT
To: steve@bowbrick.com
Subject: tent
Reply-To: sales@jxtrade.cn
To Whom It May Concern,
We have learned from the Internet that you are
interested in tents...
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How to throw away a natural advantage

The UK cable TV business is a uniquely dysfunctional family, managing to marry epic individual clumsiness with the kind of domestic chaos that continually threatens to bring the whole family down. Having (nearly) overcome the decades of forced disarray produced by its origin in dozens of separate, local companies, the industry’s getting ready for another gigantic misstep – this time into Video on Demand (VoD).

I suppose, when you own a broadband pipe into every one of your customer’s homes, the logic of VoD must be pretty compelling. It must also be immensely frustrating that, so long after Sky‘s arrival in the UK, the satellite firm still owns the multichannel marketplace despite the complete absence of a return path, no way of delivering Internet access or a phone line and the unavoidable requirement to fix a nasty wart to the side of every home covered.

Cable’s response to Sky’s continued dominance, perhaps understandably, is to push ahead with the medium’s natural advantage and try to make a go of VoD (you can’t do VoD without a network infrastructure and a proper return path so Sky just can’t play). There is, presumably, a point some time in the future when owning a fast, two-way data path into every home finally pays off and cable comes into its own but, as far as I can see, you’d need to be criminally naive to think that that time has arrived. This is still very much Sky’s market and the service of the moment is not VoD (or even NVoD – Near Video on Demand – which is a big hit on both Sky and3 cable) but Sky Plus.

The complete failure of the cable firms to roll out their own Personal Video Recorder (PVR) is perhaps partially explained by the announcement of their VoD plans but VoD won’t come close to competing with Sky Plus (or even my five year-old Tivo) any time soon. By contrast, building a PVR for cable would have been a piece of cake – the technology is straightforward, the manufacturers ready and waiting and the kit cheaper than it’s ever been. Rolling out PVRs into the cable network would be no more difficult than distributing, say, a new generation of remote controls. There’d be no impact on the infrastructure and hardly any CapEx – just a marketing and admin cost plus maybe some investment in an improved EPG (although I’m sure the Tivo people would be quite happy to share theirs). Sky has even done half the marketing job already – everyone knows what a PVR is now (“you know, the thing that lets you rewind live telly”).

So, instead of taking the easy win and, not incidentally, boosting ARPU by taking an extra couple of hundred quid a year from PVR subscribers, the cable industry has, once again, chosen the rocky road of rolling out a new and expensive technology into a resistant marketplace while Sky continues to sell PVRs like ice creams in August. Oy.

eBay people

Like you (I assume), we spent a lot of money on eBay this Xmas – lots of cheap Lego and Hello Kitty and Geomag plus toys that were unobtainable in the shops. Let’s face it, you can get anything on eBay (except a gun) but the experience is very different from shopping at John Lewis or from a catalogue. Why?

1. You’ll get objectively better customer service. Everything comes the next day. If it doesn’t come the next day you’ll get a personally-addressed apologetic note and probably some kind of compensation.

2. A good eBay rating is a guarantee of good service. You can fake an eBay reputation but not a really good one. Buying something from an eBay seller with a rating of, say, 1,000+ will always be better than buying from M&S or John Lewis or [insert your customer service King here].

3. eBay sellers worry about customer service above all. You get exactly what you were expecting. Full stop. This turns out to be a phenomenally effective retail model and it means eBay sellers can stop worrying about other classical retail success factors like terms of trade and price.

4. eBay people are people people. Grumpy, impatient people needn’t apply – they can’t be bothered to lovingly package and despatch hundreds of low cost items, manage feedback and handle dozens of trivial customer queries. Only nice people do this, so buying something on eBay is almost always a pleasant experience.

Conventional retailers have to worry about a lot of factors: customer service (timeliness, courtesy, quality etc.), terms of trade (return policies etc.) and price (cheap or not) being the big three. eBay sellers worry only about customer service. Price is taken care of by the auction process and sellers’ terms of trade are typically as tough as old boots. The lesson is simple: if your customer service is impeccable you don’t need good terms of trade and price stops being the number 1 factor.

I find myself wondering whether real world retailers could benefit from adopting some of these uniquely eBay values. A clothing retailer who decided to fanatically over-deliver on customer service might, for instance, be able to toughen up on terms of trade and thus reduce the punishing cost of handling returned items. A supermarket who went customer service crazy might find a way out of the price crunch that threatens to wipe half of them out.

eBay sellers are telling retailers: if you invest more in really unflappable customer service you can toughen up those pussy-cat return policies and save a fortune. And, of course, it’s more urgent than you think: a generation of eBay-literate customers is now saying: I’m not really bothered about your remedial, disaster recovery policies. I just want what I asked for.

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Software stories

Anyone who does product design or marketing should read this entertaining and inspiring account of the history of a Mac software product called Audion. Why? Because a) more and more products will be made and marketed like software (and because more and more products will actually be software), b) because the Panic team’s passion and sense of fun should be a model for any product team, c) because story telling should be more important in product marketing and d) because this kind of honesty and modesty is rare in business and should be encouraged…

I think I’ve waited long enough…

I’m really thrilled to be able to say that I’ve been enjoying Azeem and Shen’s new venture a lot (resisting the temptation to illustrate this entry with a wedding photo). Mink Media has entered into the Thin Media business with a rush and their first two titles are excellent and part of what looks like a really well-rounded commercial package. The Honourable Fiend (Westminster politics) is my favourite but I reckon Wanda Lust (travel) will grow on me too, once it finds its tone of voice (which is harder with PR-heavy travel material to work with, I reckon).

I’m enjoying Hon Fiend enough to urge the guys to switch comments on – I keep reaching for my quill pen – although I think I’ll understand if they don’t. Even this humble blog is now ploughing through 300-400 comment-spams per day and sorting out the real comments from the crap is getting more tiresome by the day. I think everyone acknowledges that blog media is still at best an each-way bet for the big time but ventures like this one are going to really help to nudge the form into the business mainstream. Good luck guys!