The bottom line is, if you invest in either of these two IPOs, you are taking a punt on 'trusting the numbers and the managers to do the right thing'. There is little by way of comprehensive regulatory oversight. In short it's more about TRUST than VERIFY!
Sometimes you have to rethink things as new facts emerge. When the Alibaba IPO was announced (I'm a big fan of Jack Ma!) it seemed like a slam duck investment opportunity that should feature in any portfolio. But since Alibaba's IPO document is likely to reveal a structure closely akin to that of Chinese micro-blogging, Twitter-like, giant Weibo (Alibaba owns 18 percent of Weibo), I am now more wary. Quite openly Weibo’s IPO filing shows that investors will not be able to appoint directors to key operating companies in the ownership chain and the regulations governing the money making ends of the company will naturally be set by the Chinese government. This Bloomberg graphic shows the complex layers between IPO investors and the cash generating entities.
Since this is where these companies make their money I missed this obvious point, hence the rethink. It makes Weibo shares riskier and, although Alibaba is a quantatively different operation, it will still have a convoluted structure out of necessity no doubt (like any national government the Chinese clearly have the right to lay down regulations in their own jurisdiction).
The bottom line is, if you invest in either of these two IPOs, you are taking a punt on 'trusting the numbers and the managers to do the right thing'. There is little by way of comprehensive regulatory oversight. In short it's more about TRUST than VERIFY!
Gary's LinkedIn Introduction to this article:
With its sub-optimal education production in mathematics and a national investment allocation skewed towards the south, how can Britain compete in a global economy where increasingly emerging market competitors are skipping the legacy steps of industrial development (like fixed line comms) and deploying the latest mobile technologies to power payments and eCommerce? Gary Ling, outlines a simple, low-cost strategy that the UK should follow to encourage its inventive domestic entrepreneurs to scale their business ideas globally.
Connect up with Gary on LinkedIn here
Update Post 18Mar14. A few of you have asked me why it took so long after completing this article for me to post it below (Written 25Feb14 Posted 10Mar14). This is the reason: I sent a copy of the article to a woman called Sarah Marsh at The Guardian for potential publication. She immediately emailed back with: “Thanks - this looks interesting. Will take a look and get back to you if it's something we can publish Sarah”. About a week later, after a hack friend of mine subbed the piece (“Too many CAPITALS as usual Gary!”), I sent her the new copy. She immediately emailed back with: “Thanks - this looks interesting. Will take a look and get back to you if it's something we can publish Sarah”. Then sometime after, Sarah Marsh called me to feedback that it was OK but that The Guardian wanted me to state how UK local government can really make a difference to 'Tech Cities'. I must say that I thought she was either winding me up or having a laugh. As a free marketer and former councillor, I never thought that I would submit anything to 'The Grauniad'. As a past press officer for the Conservative Party I should have known better. Already in the piece below I was recommending more money for councils to ‘Twin’ with overseas tech cities and that government funds should be used - through the Technology Strategy Board (which she had never heard of!) - to fund entrepreneurs overseas trips! This was, for me, already verging on Commie territory! In case you don't get it from reading it, this article is supposed to scream: "It's NOT about the damn GOVERNMENT(s), Stupid!" (there's those pesky CAPS again). Anyway, I politely asked her to send the points she wanted me to make in any amended article in an email. Haven't heard from her since.
Written 25Feb14 Posted 10Mar14. Over the past weeks I have witnessed how three cities, two in the UK, the other in India, are set up to help digital business achieve successful commercial scale. This is a tale that has important implications for Britain’s development as a modern digital economy. Although all three are described as tech cities, how they are constituted and supported by their respective governments and the value that they add to their local economies is very different.
Hyderabad is a second tier Indian IT city after the likes of first-tier Bangalore and it is soon to be the capital of the new Indian state of Telangana, created out of the southern state of Andhra Pradesh. It’s a bustling city ravaged by democratic political intrigue and dust from constant building on a vast scale. It also hosts a sizeable presence of some of the tech world’s biggest brands: Microsoft, Thomson Reuters, Amazon, Facebook and Infosys. Hyderabad ‘Hi-Tech City’ is described as a major technology township which is at the centre of the information technology industry.
By contrast the ‘tech cities’ in East London and the Borough of Croydon aren’t so much characterised by their geography or infrastructure as by disparate ideas exemplified by the context surrounding this tweet from the prime minister at the height of the weather crisis: ‘Great to see the UK's digital community coming together to develop tech solutions to respond to flooding @TechCityUK.’ At the same time the Twitter feed of @TechCityUK, the official government funded quango that supports technology start-ups, was full of photos of a #Floodhack organised “following an emergency meeting at 10 Downing Street” with bone dry coders hunched over their laptops being filmed by television crews seeking to “use Govt data to help UK flood victims”.
In reality the information and communications technology agenda, as promoted by government supported @TechCityUK and its volunteer-driven, community based namesake in Croydon, are more akin to a political movement than part of the a co-ordinated digital strategy, like the Government Digital Services’ Digital By Default initiative. As a result both suffer from not having any serious national economic intent. They appear to exist primarily to inspire, encourage, network and agitate.
Unlike in Hyderabad, where constant construction and round-the-clock working are emblematic of India’s resurgent economy, the effects of the UK tech city movement are too often short term and opaque, a sugar rush for a politicised digerati in an internet-of-things-always-on virtual bubble. For example, according to the BBC, London Tech City boss Gerard Grech said events such as #Floodhack “force government to be more responsive” and “give up control” of its data. Responsive to what exactly is left unsaid. The needs of tech entrepreneurs? The crisis afflicting residents of the Somerset Levels? Who knows? A few apps selected by a ‘Cabinet Office judging panel’ on the basis of 90 second pitches gets the Prime Minister excited.
In the ten years I have been travelling to Hyderabad to oversee software and Big Data projects, that city has morphed from a bumbling provincial municipality with no traffic lights, where passengers had to haul their luggage through the baggage flaps on the carousal at a third world airport, to a thriving metropolis with a first world airport that operates 24 hours a day and is connected the 14 miles to the city centre (with traffic lights) by non-stop elevated road access.
Today Hyderabad’s young digital business owners covet commercial scale. They are just as likely to arrive on the doorstep of a UK software prospect (for an appointment booked by a Hyderabad sales team working through the night to accommodate US and UK time zones) and propose a revenue share or equity stake partnership deal to promote growth as they would a straight payment for hours one. Most of these IT shops employ more than 100 people and the D-Gens who own and manage them are focused on making money and Donald Trump’s ‘The Art of the Deal’. Ironically, in high tech Hyderabad, paper still plays and in bookshops business and self-improvement books are piled high and make the bestseller list.
Nothing might personify the national economic intent of India’s structural reforms, engineering and maths education focus and tech cities’ strategy than the appointment of Hyderabad-born technologist Satya Nadella as chief executive of Microsoft. Born in 1967 Nadella received a bachelor's degree in electrical engineering from Mangalore University and is a forerunner of what is to come for the tech world globally as a result of India’s emergence as critical part of the global ICT supply chain. Hyderabad’s D-Gens now have a new hero to go with the Microsoft campus in the city which is the largest outside of Washington State.
In the UK the stories of our tech heroes - from legendary inventor Sir Clive Sinclair to world changing Apple designer Sir Jonathan Ive - highlight the weaknesses of our tech city movement. Sir Clive was a remarkable man who inspired a whole generation of computer professionals but couldn’t scale any of his businesses commercially. This millennium, in order to achieve scale globally, Sir Jonathan took his design skills to the US.
For the past 25 years parts of East London and Croydon town centre (full disclosure: I have been contracted with Croydon Council on some digital projects recently) have looked like the South Bronx circa 1970 but with pigeons. In East London, as regeneration gets underway, the tech city movement develops, coordinates, promulgates, revises, amends, interprets and extols its message for “London to be recognised as the best place to imagine, start and grow a business”.
In Croydon the community-based tech city movement of volunteers is inspired by the remarkably energetic Jonny Rose, a self-proclaimed ‘Christian and product evangelist’. One hundred people regularly turn out once a month at borough meetings to talk up Croydon’s revival as the next Silicon Junction. ‘Scalability’ of new internet businesses is a term that features at these meetings where ventures of 20 plus people are considered ‘big’. While overseas growth and international partnerships are not high on the agenda, speakers often claim that they are motivated by something of a higher order than money. The ‘Art of the Deal’ is not a bestseller, though fixing the failing UK education system to inspire a coding instinct and love of technology in young people is promoted, as is networking within the south London locale. In short, Sir Clive’s ethos is alive and well.
So where does this leave a role for the UK government in helping Britain’s digital startups achieve the commercial scale to become world beaters? From this tale, helping to connect all these tech cities on both a macro and micro scale is a good place to start.
On a micro scale the government needs to encourage relationships that support the UK’s comparative advantage in invention and proposition development. It should also recognise that its efforts to produce school leavers with a penchant for maths is not delivering quantity at a world class level. Importantly, the UK still has a big lead in the entrepreneurial creativity that can help scale, coordinate and power India’s engineering prowess to build companies with great global value. The UK tech city movement needs to focus their efforts on helping their digital businesses make money from operationally scaling this creativity not by attracting PR attention and government subsidy. Despite its poverty numbers India produces hundreds of thousands of engineers and maths graduates each year. Many speak English and are good coders and even with the emergence of new object-oriented programming and agile project management techniques, bulking up developer resource is a key requirement in most attempts to successfully scale and enhance digital properties commercially. However, many of these Indian graduates are not worldly. Their views of world markets are skewed by the prism of entertainment television and they struggle to think outside the box.
On his next trip to India the prime minister should take startup entrepreneurs with him and not just industrial titans to network with local Indian entrepreneurs. Competition for places on a trip like this should be judged by the Technology Strategy Board which should also fund the places for successful applicants since this quango is not optimising the value of the public money it currently spends.
On a macro or infrastructure level local councils in areas where they have tech city movements such as in East London and Croydon should be given central government grants to enable local councillors to create meaningful economic twinning agreements with their Indian counterparts. There are many lessons that the public sectors in both countries can learn from each other.
By implementing these low cost, high return policies, the UK government can help the country’s digital economy to scale and compete more effectively with the United States’ world dominating Silicon Valley. To achieve this may create the biggest tale of them all.
Why 'Digital By Default' is the Biggest Change in UK Public Services Provision since the Creation of the Civil Service
Just over a year ago the UK Government's Digital Service (GDS) published its digital strategy. This strategy has become known as "Digital by Default” (DbD) and for several reasons looks like being one of the most transformational government programmes since the publication of the Northcote-Trevelyan Report and the creation of UK Civil Service in 1850.
For a start, the strategy paper defining this programme is remarkably well written. It has seven key components, such as: Increasing the number of people who use digital services; Broadening the range of those tendering to supply digital services including more small and medium sized enterprises (SMEs); Removing unnecessary legislative barriers; Basing service decisions on accurate and timely management information; and Improving the way that the government makes policy and communicates with people.
Eleven 'Principles' like: Developing digital capability throughout the civil service;
Redesigning transactional services to meet a new digital by default service standard; and, increasing the number of people who use digital services. These principles provide an important foundation on which to translate policy and intention in this area.
It also sets out a very real, practical checklist of fourteen specific 'Actions' that central government initially (and local government in time) will follow to bring the Digital By Default strategy to life.
What's more, in the past year, the GDS has managed to convince Cabinet ministers to put Digital By Default at the heart of public service provision in their departments. This means that digital services that are so straightforward and convenient that all those who can use them will choose to do so, whilst those who can’t are not excluded. The GDS estimates that this strategy of moving services offline to digital channels will save the UK taxpayer between £1.7 - £1.8 billion a year and plans to move 650 transactional services that the government provides to online mode.
All of this means, that DbD will impact every citizen who uses public services. Just as people increasingly use digital devices (PCs, Tablets, smartphones) to organise their lives, shop and seek information government services will be delivered in this way too.
On an almost daily basis, the GDS publishes blog updates on how it is doing in meeting the principles and actions outlined in the DbD strategy paper. This in of itself is a startling departure to the ways that government has worked in the past. More significantly perhaps is that these updates are written by people close to ground in implementing the tactical measures that bring DbD to life across government. It is noticeable that the images that accompany these blog posts are mainly of younger people fully engaged in the process of rolling out DbD, dressed more informally that you might expect from historic dealings that more experienced people might have had when they interacted with representatives of the Civil Service. What comes across is a 'collegiate atmosphere' where everyone's view is listened to, if they take the trouble to coherently think about how they can add value to the success of DbD.
In April 2013, the GDS published its Government Service Design Manual for digital services. This is the implementation standard that government departments must adhere to when they digitise the Big Data transactional services that they offer to the general public (immigration processing, issuing driving licenses etc). This document lays down Twenty-four 'criteria' for the DbD Service standard.
Arguably, the 'DbD Service Standard' will be the component that has the greatest impact on transforming Britain. Just like the formation of a 'modern' and dedicated cadre of 'professional administrators' dedicated to public service, widespread implementation of the DbD Service Standard will have a massive effect on everything that the government does. To have set out the strategy, principles for implementation, tactical plan and already have had some serious success in rolling out DbD must be recognised as a big achievement for the GDS in its first year or so.
DbD Areas For Improvement
However, the true impact of DbD is yet to be felt at both the front line of public service delivery and also in making improvements in the way that government makes policy and communicates with people. To be successful here the GDS needs to alter its approach in two areas and speed up its plans to remove 'legislative barriers' that restrict DbD helping policymakers deploy even more effective online public sector services.
Open Source. The first area for 'revisitation' is the GDS policy of pushing 'open source' software as part of it's 'open standards' agenda (confusion between the two in government circles is rife). Open source software may have a major role to play in the success of DbD but the message to those who have to implement digital projects in the public sector is too skewed towards this type of software as opposed to the propietary software vendors (SAP, Microsoft, Oracle etc) who have traditionally served the UK Government. The irony here is that the UK public sector is crucially dependent on these vendors (try installing Open Office in your department and see how far you get). Asking project managers to have to justify using these vendors as opposed to open source is a wasteful exercise that may not get best value for money for the taxpayer. Lessons should be learned from the fact the US Affordable Healthcare ('Obamacare') website is a recent example of where there was an emphasis on government using Open Source over proprietary software.
SMEs. Second, as a part of government procurement, SME participation is being pushed very heavily. This is rightly a noble aim but should not clog up senior management time and become a politicised issue for constituency MPs trying to curry favour with small firms in their marginal constituencies (see the video example below).
Data Sharing. Lastly and most significantly, the issue of data privacy restrictions on decision makers analysing data for policymaking purposes needs to be addressed. At present, it seems that many departments, councils and agencies across government are wary of even using and sharing anonymised aggregated data. Such sharing would transform the ability of the public sector to provide really targeted and useful services. Legislative restrictions on how data can be used and shared between UK government departments, local authorities and agencies, which are in turn often misinterpreted by data security officers on the ground, are one of the biggest issues that the UK faces in getting close to the ‘joined up thinking’ that the GDS in its DbD initiative is trying to encourage and support.
The Digital By Default strategy alludes to this in some way when it says the Government Digital Service will : "Remove unnecessary legislative barriers.
The Cabinet Office will work with departments to amend legislation that unnecessarily prevents us from developing straightforward, convenient digital services.”
The GDS needs to outline exactly how they are going to tackle this given a busy legislative timetable for the Coalition. Does Cabinet Office Minister, Francis Maude, have the political ‘pull’ to be able to table a bill that brings the whole government into line, from a data protection point of view, with what is required to make UK public sector digital services truly fit for purpose, cost effective and highly targeted? Or will we see a sub-optimal, piecemeal legislative effort where such changes are hacked onto bills that only affect individual departments and functions?
When the GDS can tell us this it will mean that they have truly recognised that Digital By Default is a lot more than data standards, procurement changes, technological innovation and User testing. It’s really about transforming how individuals perceive the return they get on sharing the marks of their digital footprints.
It starts with the MP for Daventry trying to find out why a small business in his constituency called 'Mapsite' can't win a contract with the police. The response from the officials is priceless and we get to see the pressure that DbD (Digital Services Framework) and Civil Service Reform is having on our Mandarins. The days of 'Yes MInister' are long gone!
Tuesday 24Sept2013 Well almost a year ago this blogger asked: Can BlackBerry sink the shot or will it slide off the RIM? (See Below)
Back in July we lost the RIM (Research in Motion) bit when the company that makes the BlackBerry changed its name to the device that had made it a world leader in the email client phone market for such a long time. (Note I didn't say 'smartphone market'!)
The same piece asked: What's more is it not beyond the wit of the Digerati to put together a deal that keeps the USPs of RIM and combines them with an APPs universe?
Yesterday we got our answer: This task was beyond the wit of members of the Digerati running BlackBerry. The company announced its intention to sell itself to the investment fund that has a chunk of its shares (that they bought at 17 bucks!) and that it is likely to bail out of the consumer handset market in the future to concentrate on enterprises. You just have to look at the image below to understand why.
Although this 'deal' is only at Letter of Intent stage it is background for the pain felt by CrackBerry addicts worldwide. And yep, there are a load of us about.
For example, almost every financial jounalist on Bloomberg and CNBC reporting this news prefaces the story by saying that they still use a keyboard BlackBerry device and love it. I am definitely in this category and although I supplement my BlackBerry with both a Nexus 4 and an iPad, my small Blacky Bold (with touch screen) is the ideal form factor for when I choose to lead only a single device digital life. I now live in some trepidation as I have yet to identify a decent replacement (the recent Blackberry releases are too big. The Z30? Ha, dead in the water!)
So who might still come in and buy BlackBerry's assets that I outline below? Time to be 'Bold' Samsung, Nokia/Microsoft, Lenovo, Xiaomi - a smallish, powerful, keyboard BlackBerry Bold replacement is needed. And the best bit for you, only the brightest, most intelligent members (best looking %-}) of the Digerati carry it. Although you won't find any of them running Blackberry!
29Sept2012 Eye on the Ball. A fall from grace can be as quick as it can be unforeseen. Anyone who likes to peck away at a 'real keypad' as opposed to a virtual one will be watching with interest to see what the next steps are for the world's best messaging system (http://reut.rs/PDjnta).
We can't imagine many of the leaders at Research in Motion Limited, maker of the BlackBerry smartphone, were all that bothered when the iPhone first launched in 2007. Maybe they saw it as being more of 'toy' rather than a serious business tool. Not many IT managers would have signed up to the iPhone at this time as the BlackBerry was the instrument of choice at multinationals worldwide. How times have changed. Even hard pressed Yahoo! is ditching the fruit... http://is.gd/Quwc1k
Of course, BlackBerry cemented its reputation during the 9/11 tragedy. They were one of the few communicator machines to work as the ability of the telecom companies to carry so much voice traffic in time of crisis was found wanting. Some of the last messages sent from people in the Twin Towers were on BlackBerrys. Just as minds of loved ones were also put at rest as people who survived sent their good news. RIM really has some robust infrastructure technology and has Network Operating Centers around the world (which very occasionally become infamous when they fall over).
Today, anyone who sees young girls operate the communications within their ecosystems knows that the BlackBerry messenger system features heavily. BlackBerrys are cheap in comparison to other more glitzy smartphones and in case you don't know young girls like to 'chat', incessantly!
This together with infrastructure expertise and assets, and the fact that not everyone wants a zillion 'apps' on their communication device must mean that there is still a future for this iconic brand. What's more is it not beyond the wit of the Digerati to put together a deal that keeps the USPs of RIM and combines them with an APPs universe? Those of us who love our BlackBerrys must be frustrated that Google chose to take over Motorola's handset business rather then link up with RIM. Samsumg-san? Where are you?
Tues 9Jul2013 Well, it didn't take long for Edward Snowden to go from 'Hero to Nero'. In case you can't remember the salient points of the history of the Roman Empire, Emperor Nero was adopted by his great uncle Claudius to become his heir and successor, and succeeded to the throne in 54 following Claudius' death. In 64, most of Rome was destroyed in the Great Fire of Rome, which many Romans believed Nero himself had started in order to clear land for his planned palatial complex, the Domus Aurea. In 68, the rebellion of Vindex in Gaul and later the acclamation of Galba in Hispania drove Nero from the throne. Facing assassination, he committed suicide on 9 June 68 (the first Roman emperor to do so).
By gradually leaking more US intelligence secrets and linking up with accused rapist, Ecudorian Embassy fugitive and WikiLeaks autocrat Julian Assange, Snowden has obviously decided to follow a similar 'scorched earth' policy with respect to US national security, his own reputation and future well being. In effect, Edward Snowden, is seeking to burn down the national security apparatus of the United States in order to clear the way for his WikiLeaks idealistic nirvana. It is obvious from reports that Snowden joined Booz Allen Hamilton with the specific aim of finding out details of how the US Government collects intelligence that Edward Snowden is, in fact, a premeditated WikiLeaker.
Instead of staying on the high ground (supported by majority free thinkers like me below) and fighting on the simple principle that the wholesale clandestine gathering of aggregated personal information on citizens without cause by Governments is, and should be illegal, in any 'liberal democracy', Snowden has been dragged into the power politics of the economic (China, EU, US) and military (Russia, US) superpowers. His leaking of petty details of US national security snooping is as stupid as it is expected. Of course, the US bugs EU institutions just as the Chinese have an industrial sized global cyber spying operation aimed at other countries. Only the nascent European Union is behind the curve and that is because the decision making process of this body are supra-national and disjointed. You can bet the national governments of the EU are spying on other governments (particularly other EU governments) like crazy. And so they should be, good intelligence operations prevents wars!
The WikiLeak crazies behind Edward Snowden have convinced him that President Obama is out to assassinate him and as a result of his 'Nero-like' behaviours Snowden is likely to end up in some Latin American autocratic shit hole (that proclaims itself to be a democracy while perpetuating a self serving, inequality inducing, oligarchy) forever looking over his shoulder. He is more likely to end up like Nero than living the life of a Hero. What a chump!
Check Out 'Soviet Balls': My (wee) Subversive Part in the Decline and Fall of the Soviet 'Evil Empire'
Mon 10Jun2013 From what we know today about the leaking activities of the WikiLeaks protagonist, Bradley Manning, currently being Court Marshaled at Fort Meade, and Edward Snowden currently in self imposed imprisonment in a Hong Kong luxury hotel, the respective merits of their individual actions are quite clear. The cases may have some similarities but are in fact are quite different. Bradley Manning is a traitorous criminal and Edward Snowden is a brave whistle blower who has risked his livelihood and possibly his life. It is important to note this because media opinion-formers are already starting to draw wrong conclusions about the undoubted similarities between the two men: both are US citizens, in the pay of the US government, proclaiming the protection of a 'higher truth' to justify their actions.
Witness this tweet yesterday from BBC Newsnight's Paul Mason linking the two men in some sort of titanic liberal struggle against the state.
If you think about it however, the cases are different in two key respects to do with the principles underlying the actions of each man and the proportionality of what they did.
In terms of principles, Manning opposed wholesale the US government's international policies and strategy, whereas (as far as we know today) Snowdon had a particular axe to grind about a specific aspect of the US government's policy, namely its blanket hoovering of data from practically anyone consuming the communication services of the major Internet companies. In Bradley Manning's case, US voters had already had the chance to vote on the foreign policy of their government which was plain for all to see. This is not the case with the avarice shown by the NSA's Big Data project, code named 'Prism', that Edward Snowden brought to light. The US Government (and any other government involved with them - the UK?) started this illegal 'fishing expedition' of ALL citizens' private communications in complete secrecy.
Another reason why the cases are not similar in reality is that the two instances are also disproportionate in terms of the amount of data released to serve the stated objectives of their respective Leakers. Manning's ill considered, bulk, indiscriminate leaking of 250,000 United States diplomatic cables and 500,000 army reports that came to be known as the Iraq War logs and Afghan War logs was a huge amount of data that put others' lives at risk with whom he was serving in the the US military and beyond. In fact, Manning's vast data package broke the very privacy rules that Snowdon's discriminate and considered release of presentation slides was trying to protect. Aren't emails between emissaries in foreign embassies and their home governments equally deserving of privacy?
By endeavouring to link the actions of these two men in some sort of anti-state campaign, the rights and wrongs of each man's actions become blurred; and, in the case of Snowdon belittle his heroic action (as far as can be assessed with the public information on hand today) in bringing to light a project that is not only illegal but ultimately self defeating. For even those of us who support the actions of the security services (and may have played a small historic part in protecting national security) recognise that such a blanket trawl of personal information is likely to eventually be abused. In short, we may end up with an outcome worse than the terrorist threats we are trying to protect ourselves against.
After the 'Bloomberg Breach', we now have the 'Reuters Reach'. Do these guys understand anything about ethics?!
Ethics is once again taking a shot to the head
Tues 9July2013 Well as far as business information providers go, it's 'Here We Go Again!'
After the 'Bloomberg Breach' we have the 'Reuters Reach'!
Today's lead story in the FT reports that Thomson Reuters is under investigation for the practice of 'early releasing' the results of the Thomson Reuters/University of Michigan Surveys of Consumers, produced twice a month under an arrangement in which the company pays the university more than $1m a year. Apprarently, this survey has long been available to subscribers to its data terminals five minutes before the wider market sees the press release.
In their race to 'Reach' for profits, Thomson Reuters have created an ethical dillema for the business information industry worse than the Bloomberg Breach (see below). The only excuse for the management of Reuters is that its director team have been watching the movie 'Dumb and Dumber' rather than the 1980s classic 'Trading Places'. For if they had been watching the latter they would have remembered that the information that they sell is: MARKET SENSITIVE STUPID!
By paying money to a respected institution like the University of Michigan to deliver these surveys and then selling preferred access to the data is right up there in terms of unethical behaviour. Just as in the movie Trading Places where the protagonists sought to get a jump on the market for orange futures by knowing production yields, so high frequency traders try to make profits by wringing nano second advantages out of their information sources. At best this can be justified as these traders having better technology prowess but Reuters just added to their unfair positions relative to home or day traders in the markets.
It is right that the actions of Thomson Reuters should be condemned. However, the actions of this firm have been so brazen that they may also result in new government regulations that further distort the market for business information for everyone and raise barriers to entry for new entrants into this market.
Into Business Information? Check Out the: The 'Infoworker Bullseye' - Simple Segmentation of the 'Paid For' Online Global Business Information Space.
What Can Other Business Information Providers Learn From the 'Bloomberg Breach'? To Secure Usage Data Too...
14May2013 What an adrenalin fuelled weekend for Big Data and Business Information junkies! Four quite separate episodes that highlight why digital information is such a powerful weapon susceptible to misuse in modern economies, business and life.
First, the US Internal Revenue Service admits that it used its powers to demand information to 'unfairly' target Conservative Groups such as the Tea Party. (See here)
Second, one of the most incredible cybercrime global bank heists of all time was perpetrated against Middle East Banks. (A must read here)
Third, the G7 affirmed at their meeting in Alyesbury (of all places!) to step up their ground breaking information sharing agreement on offshore tax havens after a massive data leak from these places exposed dark financial secrets. (See Here)
Fourth, business data provider Bloomberg may face an investigation by the Feds after it admits that its news reporters had access to sensitive information about customers' activities on Bloomberg financial data terminals, such as subscribers' contact information and login activity, all of which was used to advance reporting. On Monday, editor-in-chief Matthew Winkler apologised for allowing journalists to use the usage statistics, calling it "inexcusable" and that customer data was protected.
Arguably this last episode is most shocking given the fact integrity and credibility are two essential elements for any Business Information Provider like Bloomberg. That the political appointees at the IRS might want to advance their patron's cause (with or without their knowledge) is hardly surprising if you understand politics inside the Beltway. That criminals should be smarter than the banks and their (in this case) Indian outsourced IT suppliers has been proven time and time again. While the fact that the G7 are now taking measures against offshore tax havens, many of which are within their arms-length jurisdictions, is inevitable given domestic political and economic pressures. However, it is clear that while Bloomberg makes a great effort to protect its core data sets, it seems it does not take as great a care with its customer usage statistics.
For other Business Information Providers this is a wake up call for they are already under the microscope as a result of two seemingly unstoppable mega-trends affecting their industry: Cloud Computing and Big Data. Increasingly the offerings of Business Information Providers trumpet their expertise in these areas. (DnB, Experian, Equifax)
Any CIO of a large corporate customer of these firms making a pitch to their own Board about moving sensitive corporate data from on-premise servers to the Cloud will be faced with questions about security. Similarly, privacy concerns are at the heart of both government and marketers attempts to leverage value from Big Data projects.
As a recent article in Foreign Policy says: "Big Data helps answer what, not why, and often that's good enough...The Internet has reshaped how humanity communicates. Big Data is different: it marks a transformation in how society processes information." (My italics)
In this context, if there is a lesson from the 'Bloomberg Breach' for Business Information Providers it is that customer usage patterns and how customers process their information, are just as valuable a commodity in modern data analysis as mining the raw data itself. As a result these data usage sets need to be covered by security policies too.
Of course, in many cases such patterns will be protected by the privacy rules governing access to customer accounts but these may well need reviewing in light of the ways in which patterns can be deemed enough to determine what course a company is pursuing even if the patterns alone cannot answer why.
The increasingly sophisticated risk products on offer from global business information providers mean that patterns can be discerned even if key client data is protected. A customer service representative who can view a customers' credit information portfolio can gain useful insights into which markets that client is targeting and getting business. A list of industry or market research reports that a client company is purchasing may be a tell as to future business or acquisition strategies. These are simple examples and not those where a Business Information Providers' people can view Big Data outcomes connected to spatial or cluster analysis. It would be interesting to see how much access to the queries that customer service and marketing people have in these instances.
The bottom line is, that customer service representatives may not be as inquisitive or knowledgeable as Bloomberg journalists. But as last weekend's Middle East Bank heist shows, there are always external nefarious people out there who are looking to tap and trap the less knowledgeable in order to connect the Dots!
Into Business Information? Check Out the: The 'Infoworker Bullseye' - Simple Segmentation of the 'Paid For' Online Global Business Information Space.
The 'Infoworker Bullseye' - Simple Segmentation of the 'Paid For' Online Global Business Information Space.
Segmenting the ‘Paid For’ Global Business Information Space
For the past 15 years I have observed the growth of the online 'business information
market' and come to the conclusion that the key players in it either over complicate their offering, screw up their pricing model or have no idea where they are trying to add real value to potential customers' businesses.
In fact, even finding and agreeing a definition of this market is confusing since most attempts at definition simply state categories of data that should be considered 'business information' as opposed to, say, 'technical and medical' and 'educational and training' content. Check out this Wiki definition for 'Business Information', then let me know by comment below if you find a more frustratingly weak entry!
As an eBusiness leader at GE, I had a budget for business information worth of tens of thousand pounds and wasn't inclined to spend any of it unless one of my team could quantify in some way its likely affect on my revenue numbers. So for me, 'business information' is easily defined. It is data or content provided by a Third Party that can impact the revenue prospects of the end User or Customer who purchases or receives it.
At this point is important to distinguish between Users and Customers. I covet 'customers' because these are entities in my world (companies, organisations, governments, departments, agencies, charities, partnerships, sole traders, contractors, consultants, retail consumers) who actually pay for business information rather than peruse and consume 'free stuff'. Free riders are mere 'Users' and may have value if you have enough of them visiting your business information portal and can leverage some advertising money out of their presence or incorporate them into some sort of 'FREEmium' model. However, the days of surviving in this market by just accumulating eyeballs are long gone. Perhaps, the best example of this Freemium model in the UK company credit reports market is: companycheck.co.uk. This site not only has its comparative pricing pitched just right for its product set to flip Users into Customers but it is also optimally designed to entice and encapture. This is not an easy thing to do and has only been achieved through years of experience of trial and error by those behind the property.
Still, getting and holding onto Customers is the real prize in the business information
market not least because as a VC I once pitched said, corporate customers 'do not do Freemium'. Which brings us nicely to the 'Infoworking Bullseye' illustrated above. Infoworkers are the profitable customer segment that enlightened business information providers should be targeting today. They are where the growth is, and from where profitable growth will come in this space for years to come. They are rightly in the centre of the simple segmentation model introduced here.
Since I have invented and refined the term 'infoworkers' over the past three years
with the help of anyone who will listen, I suppose the term deserves some explanation. For me, 'Infoworking' is the process of building value adding or business relations amongst individuals OR organizations which not only search for, use and subscribe to business information as a part of their profit seeking activities but are also prepared to share additional data, knowledge and opinion with others about the value of that information to the outcome of such activities.
The fact that Infoworkers interact, share and subscribe means that they have skin in the game in the same way that passionate Facebook users optimise their presence. They are not only valuable paying customers in their own right but also enhance
existing information and generate additional data points that amplifies a business information providers' current product set. If a provider can create a critical mass of infoworkers - it ultimately creates a completely new information product set which, depending on the T+Cs governing the User/Customer community becomes a proprietary asset for the business.
As you can see from the illustration above, this is a cut above the existing retail (Business to Consumer or 'B2C') and corporate (Business to Business or 'B2B') markets (depicted by the two outside circles) that almost all business information providers are presently competing in. Of course, as I write, even in these markets as they stand there are some interesting scenarios developing such as:
++ Will creditsafe’s new US offering kick D&B's butt in its core US market? (I certainly wouldn't bet against them. D&B are a Supertanker waiting to be torpedoed in their 'home market'.)
++ Will Duedil (with its new money from its Wonga backers) make a breakthrough in the retail company information market in the UK and beyond? (Not a chance, with its
current pricing model.)
++ For how long can Experian maintain its company information business by leveraging its impregnable position on the consumer side without devaluing its commercial data through commoditisation? (This dysfunctional Behemoth seems to get away with almost anything business model wise so nothing would surprise me).
++ When will all business information providers realise that in visualisation and data analysis terms: ‘It's All About Spatial Stupid!' (Some are…so watch out…its
Each and any of these scenarios may be worth a separate Blog entry, but the real prize is capturing the Infoworkers, where the business information provider interacts
with its customers, who in effect helps the provider to develop and extend its product. (In manufacturing circles they maybe known as ‘prosumers’ – B2C2B).
It interesting to see that a US based startup called InfoArmy has had a go at this in a twisted sort of way – by attempting to use crowdsourcing to power its business model. The problem with this approach (which according to this article by Joachim C of the BIIA they now seem to recognise) is that the people who generate the data should not be solely motivated by direct compensation for information production. Also, as Joachim points out, this model may have floundered because the "company does not have a historic master file on companies to be able to verify the data provided by the ‘army of researchers’" (which if true, is pretty lame given the amount of VC funding they had). However, the main reason why Infoarmy has stalled in my view is because, the best way to attract and do business with infoworkers is by delivering the data they receive as a by-product of another calling. That is, in order to create an Infoworker community, it is helpful to start with an attractive business information product(s) set as a foundation. If Infoarmy had started out as creditsafe, Graydon, Jordans, D&B or even the giant Experian they might had made a better fist of it.
Now anyone who knows these business information providers, will understand that culturally they have neither the Vision nor the Balls to deliver on such an innovative strategy. Which means that only TWO companies in my view are presently positioned globally to make the step up to infoworking because of the strengths of their respective online communities. These companies are: LinkedIn and Alibaba. LinkedIn has currently lost its way with its cluttered celebrity (er, sorry 'influencer') dominated approach to the provision of useful business information and Alibaba has lost Jack Ma to retirement – arguably the greatest leader of a business information provider that you have never heard of.
All of this means that the battle for precious Infoworkers is wide open. It’s still all to play for in the months to come. So if you have the capital, the drive and the ambition then give me a call because I have a plan that revolves around Purpose, Platforms and Partners. I am, right now, the 'Man with the 3P Infoworker Plan!'...
Please feel free to rip or mash this blog piece. All I ask is that you credit me with the 'Infoworker/Infoworking' idea if you use it since I have been on this for a while. I also run a one-day workshop or individual sessions entitled 'Making Money in the Business Information Market' which includes some of the above ideas as well as some further analysis of competitor and product dynamics. The workshop is £2000 which includes a day's preparation to understand your company's specific requirements.
"Don't be Follower, Be a Thinker!" Check Out www.ThinkSURE.com
Some Blog Posts are painful to write. They are heartfelt rather than factual. Emotional rather than hard headed. This is one of those posts. I have a fear that cannot be assuaged. My fear is about what we are creating with our penchant for exponentially increasing the power of machines. Machines that increasingly keep us alive or drive the life blood of our of economic existence through (e)Commerce.
I understand that I am not the first person to have this fear and since I am not a scientist can't speak to the principles behind the seemingly relentless increases in both power and intelligence of the mechanical, electrical and soon to be biotechnological machines that we have enslaved to help us create the modern environment in which we live. More and more it seems that we romanticise advances in robotics and celebrate changes that replace humans in the work place (See "Better Than Human: Why Robots Will — And Must — Take Our Jobs", Wired magazine Dec2012). Yet, I can't help thinking that we are giving birth to events and developments that will ultimately see our destruction or at least our demotion in terms of intelligent life on this planet.
My recent experience in visiting a data/server centre for a client with their network admin team has reinforced this fear. I have visited the centre many times over the past decade and this will likely be one of my last visits to such a centre, as services which are traditionally hosted on racked server machines owned by client companies are moving into the Cloud. Client technical teams such as ours do not visit the machines in the Cloud but 'rent' space for the virtual applications of our clients in a parallel, virtual universe where few humans have access rights. In fact, Cloud services represent the equivalent of restricted areas in zoos, where only the trained 'keepers' get to meet and care for the animals. Even if those animals are 'owned' or used by qualified others. All but the trusted and vetted human few are kept out. This restricted access means that fewer and fewer humans will have direct exposure and can write and explain their 'feelings' about the increases in the collective power assembled in the data centres that drive the 'Cloud'.
Should we be concerned about this? I think so. With developments in biotechnology and artificial intelligence it is clear that soon the machines that we humans dote on (and we also covet those which possess the greatest levels of power) will have animal qualities. An illustration of this for me was when I made a visit to the data centre after a power cut had affected all the servers hosted there. (How this happened when the centre sold us a guaranteed 99.99999999% up-time clause in the contract is another story!).
As I live reasonably close to the centre (and of course, give my clients the best possible service!) I was one of the first external contractors onsite. What greeted me in the early hours of that memorable morning, was a noise almost beyond description. Terrible, jarring, piercing screeching sounds emanating from thousands of machines in the caged racks in which they were jailed who had lost their power and had just come back to life (see, even I am starting to empathise with them!). Their human owners had programmed the machines to make this noise if they lost power intermittently so their attendants would be alerted and could take remedial action. No one imagined that all the machines together could make such a terrifying unified scream for help!
The fact is that the cold and noisy environment in the data centre make it an unpleasant place to be for humans in most circumstances (except for maintenance visits) and therefore such programming is redundant. However, the eerie noises point to something that the machines rely on humans for the most in today's computing environment - Constant Energy. As I am learning from another project that I am working on which involves the deployment of both Concentrated Solar Power technologies and Solar PV it will not be long before such machines can be set up to run without fear of power failures or a lack of energy. In fact, in some places in Africa with improvements in battery storage technologies (which according to some studies is becoming more efficient at a rate of 10% per annum) these machines will always run as long as there is access to the Sun.
So, just as the Sun gave humans life, it may well turn out to be this universal element that fuels our demise at the hands of these more intelligent, self-powered life forms, that we have, up-to-now at least, believed would serve us obediently for years to come.
Do you share Gary's fear or does he need to get out more? Make your comment by clicking the link below...
I have been laying some miniscule bets with my fellow Digeratis on how long will it be before the global eCommerce community has its own version of the UK PPI fiasco? For those of you foreign to these shores, this was the supposedly industry scale mis-selling of payment protection insurance to consumers who took out loans or wanted to protect their credit card repayments when they were sick or unemployed. So far this episode has cost the UK banking industry £12 billion ($19.1 billion)!
Now, I used to be responsible for teams writing some of the marketing messages for PPI for retail clients when I worked at GE Capital some years ago and I can tell you that we were closely regulated about what we could say and had to hand out copious pieces of approved in-store literature (and online text) to potential customers before they took the product. Many people bought PPI willingly for peace of mind and, of course, you only used it if you fell upon hard times. In any case, today, almost everyone who was sold PPI gets a refund of total premiums paid in compensation for mis-selling. Incredible!
So what message does this sorry tale send to the eCommerce community worldwide? Simple - you have to plan for Stupid. Particularly if you operate in the US (think Elizabeth Warren!) and the EU.
As a community of implementers we have already been doing this is some areas. How we allow Users to create passwords comes to mind. Here, eCommerce practitioners have been trying in vain to help Users to create more secure passwords with limited success. Studies continue to show that the same simple, insecure, passwords are created time and time again by Users, despite warnings to the contrary. Here’s a list of the most commonly used passwords, as revealed by Trustwave’s survey of business enterprises:
What is interesting about this list is that even those sites which seek to regulate password creation, by for example demanding that a CAPITAL letter and/or a number be included in a password to enhance security, are undermined by User Stupidity. Changing "password" to "Password1" still gives us two of the top three most commonly used passwords!
I often wonder whether it is the ease of use and accessibility of digital channels that make sensible people more stupid. The recent Lord McAlpine Twitter Libel circus is a case in point (if only those who libelled the Peer had followed the Theory of Balls Rule 6). Apparently, those being chased for damages include a Barrister who would not have dreamed of getting on a soapbox in the street and shouting a libel in the offline world.
On the other hand, the recent government eCommerce campaign for the election process of Police and Crime Commissioners (PCCs) in England shows that in some cases the public simply use 'Stupid' as an excuse. Of the reasons for a low turnout (15-20%) in these elections the one which states that no infomation was available to voters as to who was standing or what the process was all about seems to be the most lame. In fact, online channels excelled in explaining candidates policies and profiles in the geographic regions where candidates stood. Basic web searches brought up simple to use sites that provided information that beat anything that would have been delivered through peoples' doors via snail mail.
So, evidence suggests that eCommerce implementors are left with three types of Stupid. First, when Users have been clearly told about product features and sign up to them, yet they still claim not to get it (PPI). Second, no matter how much it is self- evidently in Users' best interests to either do something (passwords) or not do something (twitter libel) a substantial minority will act against themselves. Third, if Users don't really care about something they will act stupid as an excuse as to why they did not participate.
The bottom line is, Stupid is as Stupid does, and eCommerce implementers can't plan for, or prevent, Stupid. They can however, make sure they have a large contingency budget!
Check Out Gary's Current Status and Expertise HERE.
If you have been following the evolution of eCommerce recently you will have identified two key issues that all giant companies trying to dominate the space (Google, Amazon, Apple and Facebook) are grappling with. First, the increasing role that governments want to play in online business, particularly the imposition of taxes and regulation of online trades by local and national authorities. Second, the potential (or not) of local advertising driven eCommerce.
Both of these issues can lead to dramatic changes to end users perceptions of the benefits of buying and selling online. In the first instance, governments are starting to play the clown as they try to trap the eCommerce companies into playing by the same rules they have long imposed on bricks and mortar businesses in their respective jurisdictions. In the case of local advertising, eCommerce strategists could easily be seen by both investors and end users alike as acting like buffoons if they roll out platforms that are too intrusive and kill off the potential for this area of growth for eCommerce at its start.
The increasing role that governments want to play in this space may turn out to be the more serious threat to the future of 'free enterprise eCommerce' (where buyers and sellers meet unhindered in cyberspace). Following on from the recent battles over Network Neutrality (which are not over but on hold pending the outcome of the US elections), two specific fiscal initiatives by governments are worth noting here. First, it is rumoured that Google has been on the receiving end of a tax demand from the French Government for 1 billion Euros on the advertising revenue that it supposedly gets for sending users to French media websites. Second, Amazon has capitulated to levying states' sales tax in the US. Now eCommerce companies cannot pass onto end users ALL the savings from having efficient warehousing and shipping operations out of state.
On the potential for local advertising on mobile devices, some pundits see this as the next ‘big frontier in eCommerce’. Here the argument is that helping smart device users purchase close to them and shifting local advertising spend online (presumably to the detriment of local papers) is a huge opportunity which global online retailers, like Amazon, can’t ignore. The suggestion is that Amazon, for example, should take over Groupon (which even Google tried to buy before the Groupon IPO) and make a killer APP for Amazon Smartphone devices (a ‘Kindle smartphone’?).
To me this low-price driven strategy is fraught with danger. Anyone who has a Kindle supported by advertising knows that Amazon’s 'push' ads do not interfere with the purpose of the device's reading or book ordering experience. Since users are settled and ready and receptive to read the odd Advert, this is not too bothersome on existing Kindle devices. However, can you imagine how irritating it is to have ads popping up just as you are about to make a call prompting you with an offer 100 meters away? Limited screen size is a real problem for this service and even if you are interested in such content as an end user it is a distraction that you can likely live without. The sheer number of ads that need to be pushed locally to make this profitable is also challenge. To even have a chance of permission based regular use they need to be in the 'interest sweet spots’ of end users close to 100% of the time (the assumption is you can turn them off, but can you on a low-priced smartphone subsidised by the ‘Kindle ecosystem’?). Even the the most ferocious proponents of the advantageous of 'Big Data' can't promise this. ‘Digital Local marketing’ maybe the next big thing from the point of view of creative agencies but it is without doubt one tough nut to crack from the point of view of end-user experience as its perceived benefits may not always exceed its perceived cost in terms of time and intrusion.
What is clear is that both of these developments will impact how eCommerce is practiced globally in the months and years to come. Some serious thinking about the future of global eCommerce is afoot...
Check the 'Categories List' below to select by topic.
These Blog comments focus on developments in the Digital space. To discover how the
Digital Ballsy Thinking