Revolutionary Measures

Google, tax and PR – do no evil?

On the PR side it has been a busy couple of weeks for Google. Firstly, it casually announced at Davos that it had agreed to pay £130m for ten years of UK corporate taxes, although obviously without any admission of guilt. Cue a storm of protest that this was nowhere near enough for a business that reputedly made £7.2 billion of profits over that period, essentially meaning it paid 3% corporation tax. Much of the vitriol came from other media companies, particularly newspapers, that have seen their own advertising revenues decimated by the search advertising giant.

Google Quick Search Box

Then earlier this week Alphabet, Google’s holding company, became the world’s most valuable company by market capitalisation, helped by strong financial results and worries about previous number one Apple’s future growth prospects.

Given the closeness of these two events, it would be easy to draw the conclusion that ethically debatable behaviour leads directly to outstanding corporate success. But has it actually made any difference to Google’s reputation in the UK? I’d argue that overall it hasn’t affected its business in any way, for three main reasons:

1.The public doesn’t buy from Google
For the majority of people Google is a utility – providing them with the ability to browse or search the internet, watch videos, manage emails and documents or run their mobile phones, without charging them a penny directly. What people don’t understand is that the price of this free stuff is that they become the product – Google has built its very lucrative business on selling this data on our activities and preferences to advertisers. In contrast Starbucks, another perceived tax avoider, sells physical products direct to the public, giving consumers a vested interest in seeing the right levels of tax paid out.

2.Google does no evil
It will probably surprise a lot of people that Google is as enormous as it actually is. From its beginnings it has cultivated a laid-back, anti-establishment brand, epitomised by its corporate slogan “Do no evil” and heavy investment in moonshot projects such as self-driving cars and research into cures for cancer. Despite its growth, it is still seen as a Silicon Valley upstart successfully battling the likes of Microsoft (search, browsers, productivity applications, operating systems) and Apple (with Android).

3.Is there an alternative?
Obviously you can use different search/email/operating system providers, including those that make it clear that they won’t either track your online behaviour or use it to target adverts based on your browsing. But how many people actually make the effort to go out and switch, particularly when Google makes it so easy to just carry on using its services. The figures speak for themselves – it has nearly 86% of the UK search market, which hasn’t changed much since the first mention of its tax affairs.

So, while as a PR person I agree that it has handled the whole tax situation badly by trying to claim that it is doing the right thing when its activities are ethically dubious at best, I don’t think it will have a major impact on the corporate brand. This is echoed by an (admittedly small) poll in PR Week, where 51% of PR professionals said it would leave its reputation unchanged – and 11% thought the tax settlement would improve the brand.

However, where it may cause issues, is by attracting further attention from regulators at the European Union, which have previously shown that they have more teeth when dealing with tech giants than national governments. Time will tell, but with the media already setting its sights on Facebook for potential even larger tax avoidance, I think Google will feel that the £130 million it spent is worth every penny.

February 3, 2016 Posted by | Creative, Marketing, PR | , , , , , , , , , , , , , , | Leave a comment

What follows Twitter?

The press and Twittersphere have been in tumult this week concerning the unexpected departure of five key senior managers from the microblogging site. Shares fell by nearly 5% as investors worried about the company’s strategy for growth, while CEO Jack Dorsey was forced to take to the social network to reassure the world that the departures wouldn’t overly impact Twitter.

English: Biz Stone and Jack Dorsey, co-founder...

Given that user figures stubbornly fail to increase beyond 300 million, and that the share price has dropped by 67% since last April, the executive exodus is seen as symptomatic of wider issues – particularly an inability to make money on the scale of rival Facebook. Bold ideas trumpeted to revive the network include extending the lengths of tweets from 140 to 10,000 characters, but it doesn’t seem clear how this will increase revenues. In a month that saw social media pioneer Friends Reunited finally close, is it possible that Twitter will eventually go the same way?

Twitter does have a number of problems – many of which revolve around the original structure of 140 character messages, all displayed in real-time. It is easy to meet messages of interest given the sheer volume of content on the site and the user experience is not as immediately friendly as the likes of Facebook (which has also done a much better job of collecting and monetising data on its users and their habits.) When I was in Singapore last year I was told that no-one really used Twitter as they didn’t see the point, and it is true that in the UK and US much of network’s high profile comes from its use by commentators, journalists, experts, and Donald Trump.

So, is Twitter doomed, and if so what will take its place? First off, it does seem strange suggesting that a business with 300 million users is on its last legs, but we live in a world governed by network effect and the likes of Facebook have much larger user bases. And of course, none of the 300m is paying to use the service. Twitter seems like a network that doesn’t have a clear purpose – people tend to use Facebook for personal social contact, and LinkedIn for business. Both of these have bulked up their offerings, with Facebook pitching itself as a channel for customer service, with Facebook Business on Messenger, and LinkedIn’s ability to write and share blog style content providing a channel for business insight. Essentially Twitter is being squeezed, and for many people has become just a signposting tool, pointing to content hosted elsewhere. I tweet all my blogs, and it provides a steady stream of traffic to my posts – although not as many as LinkedIn.

However, I do think Twitter has a role to play – but it needs to be simplified, made more user friendly and above all clearly monetized. Which brings me to a potential suitor/solution for the service – Google. There are three reasons for suggesting it would be a good fit:

  • Google is a master at collecting user data and turning it into a saleable commodity. You may hate the fact that it knows so much about you, but it has built an enormous business on its stated aim of collecting all the world’s information
  • Despite its relatively friendly and sensible design Google +, its own social network, has failed to gain any traction, and merging the two will bring the best of both worlds together. There are allegedly 500m Google + users, mainly because registering for other services automatically adds you to the network, providing a ready market for Twitter – and that’s before you start looking at the hundreds of millions that use Google search or YouTube.
  • Other tech companies, such as Facebook, Amazon and Chinese rivals Baidu and Tencent are offering more and more services. Google therefore risks being left behind in the long term as consumers choose to spend more of their online time with fewer providers.

So there is logic behind a deal – though I’m not sure what the new entity would be called. Gitter or Twittle anyone?

 

January 27, 2016 Posted by | Marketing, Social Media | , , , , , , , , , , | Leave a comment

CES goes mobile – the lessons for marketers

Amid all the excitement and hype of last week’s Consumer Electronics Show (CES) – products demonstrated included a games console for dogs and a smart belt (unfortunately called the Welt) that monitors your waistline – there are some big trends that will potentially affect us all.

English: Jari-Matti Latvala, winner of the Nes...

While last year was all about wearables, CES 2016 was focused on travel and transport. In fact, there was more noise about cars than at the once dominant Detroit Motor show held a week later. GM announced a $500m investment in Lyft, as well as launching its latest Bolt electric car. BMW showed off a concept car controlled by gestures (taking giving the finger to another motorist to a whole new level), while Ford talked about its progress in self-driving cars. There was even a hoverboard or two – though not something that Marty McFly would recognise from Back to the Future.

What’s interesting is that it shows that the traditional car makers are waking up and fighting back hard against tech companies in the battle for future motoring. As cars essentially transform into computers on wheels, manufacturers risk becoming relegated to providers of hardware (the car chassis), with all the value and ongoing profit going to the tech firms providing the software that makes them intelligent, self-driving, more efficient or more comfortable spaces. Allied to this, there is a lot of talk about the Uber effect, with younger consumers turning away from car ownership and instead just hailing one when they need it or renting on an ad-hoc basis.

So car manufacturers are worried – fewer people buying their products and margins squeezed as the profits go elsewhere. Personally, I don’t think it will be as bad as some naysayers predict – younger people have been hard hit by the recession, so don’t necessarily have the money to buy and run a car. And owning your own vehicle isn’t absolutely necessarily if you are one of the 54% of the world’s population that lives in a city. For those living in the countryside without Uber or buses, the picture is very different.

But what is interesting is how the car giants are changing their behaviour. They have realised that they are up against a smaller, more agile foe – but one that has access to new ideas, brands well known for innovation, and no preconceptions about the business. They have to market themselves better, embrace technology and work together to convince consumers that traditional car makers have what it takes to meet their future needs. Hence investments in start-ups such as Lyft, car clubs and the joint purchase of mapping firm Here by a consortium of VW/Audi, BMW and Daimler.

But both sides face significant marketing obstacles. Aside from a few supercar manufacturers, the majority of car companies are not sexy – and VW’s issues with faked emissions tests back up the view that they can’t be trusted. Cars are expensive to buy, depreciate quickly and require ongoing maintenance and fuel. I’m not saying that tech companies are angels, but the majority of people pay nothing to use Google’s services, even if that means that they themselves become the product. So tech companies need to convince consumers that they combine style and innovation with security and safety, and that they won’t have to reboot their self-driving car before driving away in the morning. Essentially the incumbent needs to show a bit of excitement, while the new player needs to demonstrate a bit of gravitas – a classic marketing dilemma.

As the battle moves from the phony war to full on combat, and new companies (such as Apple) join the market, then expect a much greater focus on marketing from both sides – as each one aims to convince us of their benefits in the brave new motoring world. My money is on whoever develops a proper hoverboard first…………….

January 13, 2016 Posted by | Creative, Marketing, PR | , , , , , , , , , , , , , | Leave a comment

The death of the pub quiz?

A Trivial Pursuit playing piece, with all six ...

500 years ago, during the Renaissance, it was possible for one person to know pretty much everything across a wide range of subjects. Leonardo da Vinci, for example, was a painter, anatomist, sculptor and inventor, designing objects as diverse as an early helicopter and an adding machine. A little later polymaths such as Isaac Newton were leaders in fields as different as mathematics, physics and optics, while still believing in alchemy and experimenting to try and turn lead into gold.

In the late 20th century the place of the Renaissance man shifted again, moving from laboratory and academia to the hallowed pub quiz. This was the foremost place for polymaths to show off their knowledge, particularly if their family and friends refused to play Trivial Pursuit with them anymore.

But, in the same way that the days of a da Vinci or Newton are gone, I fear that time has been called on the pub quiz. And it is all down to technology and the way it is shaping how we learn and retain facts/useless information. Nowadays we can access all the knowledge in the world instantly with a smartphone and Google (except in my village, which only has 2G coverage). I remember as a ten year old memorising the capital cities of Europe (including mastering the trick question of what the capital of the Netherlands was), but am now sorrowfully realising that I may have been wasting my time.

Shared experiences and the herd mind
This means that rather than priding themselves on learning and retaining information, my children are much more focused on how to find it in a hurry. While this is good in a way – there’s no way you can know everything, so why try? – it is also disheartening in others. We relate to other people through shared experiences – whether that is knowledge of the same events, watching the same TV programmes or attending sports matches. And if you erode that – such as through the explosion in viewing choice, the plethora of pay-TV options and rising ticket prices at sports events, you take away much of how we relate to others.

Why is that important? Essentially because mankind is a herd animal, and a lot of our choices are not based on being rational, but fitting in with those around us. So take away our shared offline experiences and we won’t know how to behave, meaning we will start trying to find new herds to potentially join online. At its most extreme this can lead to the bandwagon jumping you see on Twitter, when everyone tweets/retweets on a particular topic or trend, without thinking, or at its worst joining radical organisations that provide a sense of belonging, however misplaced.

It also provides opportunities for marketers – good and bad. Marketers can position their brands as essential to the lifestyle and experiences we want to share, but this opens them up to charges of psychological manipulation if they are simply using PR and are not genuinely delivering what they promise. It is a balancing act – consumers are both more susceptible and more cynical at the same time – and are also apt to forget your brand in the wider noise if you don’t keep communicating with them.

So, while pub quizzes will never be the same, the need for shared experiences remains: as humans we should remember this and ensure that we find them in the physical as well as the online world. And that means making sure we still retain enough useless trivia to interact with those around us – and of course to dominate at Trivial Pursuit.

January 6, 2016 Posted by | Creative, Marketing, PR | , , , , , , , , | 2 Comments

Being a fox, not a hedgehog

In a famous essay based on a fragment of Greek poetry, the philosopher Isaiah Berlin divided writers into two groups – hedgehogs (who essentially know one thing in depth) and foxes (who know many things and see the world through a variety of experiences). This classification can be equally applied to all of us.

A Red Fox on an Evergreen, Colorado's porch.

As human knowledge has grown, and professions have become more specialised, people have been encouraged to be more hedgehog, and less fox. After all, the time, dedication and skills needed to become a brain surgeon, mean it is unlikely that the same person could train as a rocket scientist. So, since the Renaissance, where the likes of Leonardo da Vinci were equally adept with science and the arts, we have been pushed down the path of specialising and knowing one thing in depth.

This has obvious advantages – no-one wants to be operated on by a brain surgeon who only did half their training, but it also very limiting. As hedgehogs, people tend to view the world through the prism of their own experiences. Hence you might find that someone in the police force is by nature suspicious and on their guard, or a primary school teacher talks down to adults, treating them like children. These are obviously extreme cases, but we’ve all met someone and been able to correctly guess their profession due to what they say and how they say it.

More importantly, at a time when pretty much all the knowledge in the world is on the internet, and digital technology is changing how we work, live and play, being a hedgehog is also out of step with today’s reality. Sticking to what you know, rather than looking to acquire new skills limits everyone’s potential – it is no accident that the most enthusiastic and fearless users of new technology are children, who are naturally foxes as they learn.

However, becoming more fox-like is not easy. Like anything new, it involves giving up long-held, cherished beliefs and taking a risk. It can also be more difficult than it looks. The internet overloads our hedgehog brains with too much information, making it hard to see the wood for the trees. For example, when Spotify has tens of thousands of tracks how do we choose what to listen to? The safest bet is just to stream what we know about already, confirming our hedgehog tastes. Artificial intelligence that learns what we like automatically suggests more of the same, rather than throwing in a curve ball – “you like Puccini, have you tried Taylor Swift?”

So, how do we encourage our foxiness, but without losing the focus that a hedgehog brings? I think it comes down to three things:

1. Communication
It is easy to sit in our hedgehog silos, blaming other groups when things go wrong. Companies are full of inter-departmental feuds, with sales complaining about marketing who criticise engineering who grumble about accounts, until no-one is happy. Much better to actually sit down and listen to what everyone does, why they do it, and then try and fit it all together for the good of the wider organisation. The same principle applies in relationships outside work – understand the mindsets of those around you if you want to be able to talk their language.

2. Turn the internet on its head
In the same way that the internet encourages silos, it also provides almost limitless scope for new experiences. Rather than just extending what we do offline onto the web, use it to find new things to do, new skills to learn and new people to talk to. Type a random idea into Google and see what comes back (though be careful what you wish for), take up a new hobby or subscribe to the magazine used in the Missing Words round of Have I Got News For You?, for example. Obviously make sure it is legal, and while you may hate it, at least you’ll have had a new experience.

3. Don’t smother fox learning
As I’ve said, children are naturally foxes in how they pick up experiences from all around them. But at a certain age this stops, and they are focused solely on what they should be learning, at the expense of letting their imaginations wander. I’m not advocating dismantling the education system completely, but schools and universities should make sure they are teaching a balanced curriculum, and ensuring that students remain curious about the wider world. Why not get astrophysics students to read French literature at the same time?

When the Hedgehog and the Fox was written in 1953 there was no internet, smartphones or tablets and in many cases the solid, reliable, trustworthy hedgehog was the ideal to aspire to. Times have changed, and we all need to encourage our inner fox if we are to thrive in the constantly-evolving digital world.

December 9, 2015 Posted by | Creative, Social Media, Uncategorized | , , , , , , , , , , , | Leave a comment

How my consultancy is bigger than Facebook UK – and that’s a bad thing

 

I’ve been in business for five years now, and things are going well. I’ve seen revenues for my PR agency grow every year, thanks to loyal clients and (if I say so myself) some wonderful work. Yet it was only when I saw how much corporation tax Facebook paid last year in the UK, that I realised exactly how well I was doing. Comparing our two tax bills, I’ve paid considerably more than the £4,327 Facebook shelled out in 2014. Therefore it stands to reason I must have made much more money than the social network, even if globally its profits were $2.9 billion. Its UK business must just be lagging behind the rest of operations – after all very few people use Facebook in this country.

Facebook logo Español: Logotipo de Facebook Fr...

Obviously this isn’t the case, and like companies from Starbucks to Google, Facebook has engineered its operations to minimise its tax bill. As a businessman myself I can understand this – but what I can’t understand is that it doesn’t take into account the reputational damage that results. After all, company filings are public documents that anyone can access, and there are enough people out there who know how to read a balance sheet and can therefore spot holes in a company’s story without needing to spend too much time investigating.

I even felt sorry for the poor PR spokesperson delegated to read out the anodyne statement that Facebook was compliant with UK law, and all staff paid income tax (how gracious!). Then I realised that the spokesperson was one of the 362 people that shared the £35.4m in bonuses that pushed Facebook’s corporation tax bill down so close to zero, and any sympathy evaporated.

On one hand companies talk about how important their brand, and brand values, are to their success, yet cheerfully spend their time undermining these very same values from within. Why? I think much of this comes from a fundamental disconnect between senior management and those responsible for public relations or brand reputation. They aren’t involved in senior-level decision making, meaning that no-one is pointing out the potential pitfalls of being seen as a poor corporate citizen. In an age of consumer power, the lack of a check on potential corporate skulduggery can prove fatal to a brand.

Ever since I’ve been in public relations, which is over 20 years, there have been calls for PR to have a seat on the board and to be more involved in setting strategy, rather than just delivering it. So why hasn’t it happened yet? Partly it comes down to PR’s own reputation, with the discipline seen as more Ab Fab than strategic, and limited in what it can achieve. The rise of digital and the increase in the importance of corporate reputation should have changed that, but my impression is that the overwhelming number of FTSE 100 companies still don’t have or seek senior level PR counsel until too late in the process.

It is therefore time for PR people to take a step up and build the business understanding that they need to communicate with other senior management. Talk their language, link campaigns and messages to business goals and objectives, and if necessary, scare the bejesus out of people by explaining the financial (and even judicial) consequences of not thinking through decisions or ignoring dubious practices. While Facebook’s tax policies haven’t hit its share price, just look at Volkswagen’s financial woes for an illustration of what happens when you cover up bad behaviour. Despite its US head admitting he was briefed on how the car maker could fool emissions tests in spring 2014, nothing was done to remedy the problem or to come clean.

Looking at the PR implications of business decisions shouldn’t just be limited to big companies with expensive communications departments. Every company has the potential to be caught out if it transgresses the brand values that it trumpets to the world. So whether you are an international social network or a local plumber, think through the PR consequences of your strategy, before you implement it, if you want to avoid potential long-lasting reputational damage.

October 14, 2015 Posted by | Creative, PR, Social Media | , , , , , , , , , , | 1 Comment

Has Twitter spawned Jeremy Corbyn?

Amidst all the column inches written about the election of Jeremy Corbyn as Labour leader, there are a couple of factors that people seem to be forgetting. True, he is probably now the most famous Jeremy in the country (according to an unscientific Google search I just carried out, links to stories about him outrank Clarkson and Kyle), but he is actually part of a wider protest movement across the Western world. Far left Greek party Syriza has just been re-elected, despite backtracking on its promises to free Greece from onerous bail-out terms. Spanish left wingers Podemos have also shown well in opinion polls while Catalan nationalists won a majority, albeit a slim one, in this week’s regional elections. Going back to the UK, look at the success of the Scottish Nationalists at the election and the continued high profile of Nigel Farage.

Jeremy Corbyn

Across the pond, non-politicians such as Donald Trump and Carly Fiorina have been leading polls amongst Republicans, while Bernie Sanders, who describes himself as “the only elected socialist in Congress”, is keeping Hillary Clinton honest in the Democratic contest.

So why are voters across Europe and the United States supporting mavericks on the right and left, even if in many cases there is little chance that they will be able to carry out their policies?

No dead pig bounce
The easy answer is that they are sick of career politicians who seem keener on hanging onto power than actually connecting with voters. Many people think politics itself is broken. Even David Cameron’s alleged assignation with a dead pig just makes us shrug and doesn’t really impact his ratings either way. At the same time many people still don’t see the good times coming back after the recession – real wages in the UK are still below those of before the crash for many people, hurting confidence. Globalisation and the rise of ever-more intelligent computers is eating into traditional middle class occupations, causing uncertainty for those with skills that can be potentially automated or offshored.

Obviously, any alternative to this combination of depression and drabness has a chance to stand out from the crowd. And challenger politicians can get away with half-baked policies or even, as in the case of Donald Trump, a promise that he’ll come up with some “really good ideas” when he is elected.

But I think there is a more fundamental force at work – the internet and social media has completely changed how we consume our news and form our opinions. We live in Andy Warhol’s era of everyone being famous for 15 minutes, from a man captured on camera abusing a motorcyclist to celebrities reciting music lyrics with a Shakespearean twist.

What the likes of Corbyn and Trump share, despite their radically different views, share is a combination of solidity, outsider status and an ability to come up with inspiring (or eyecatching) soundbites that suit social media. They don’t appear stage managed but at the same time are reassuring while not being part of the establishment.

Politics 2.0
In many ways they are the start-ups of the political world, promising radical change to shake up a traditional market, in the same way that the likes of Google, Amazon and Uber have changed the industries they operate in. Perhaps voters believe that politics can be re-invented, just like retail and telecoms.

What will be interesting to see is how traditional politicians respond – will they continue to operate as before, like many of the companies that digital start-ups displaced, or can they re-invent themselves successfully and build a brand that fits with the internet electorate? Or will we see a new generation of less radical, but more social media savvy, politicians come through to replace the likes of Corbyn and Trump? One thing is for certain, in politics as in every other sector, those that cope best with today’s social, mobile world will be those that engage with voters and ultimately win their loyalty and power.

September 30, 2015 Posted by | Creative, Marketing, PR, Social Media | , , , , , , , , , , , , , , , , | 1 Comment

Death of a (car) salesman

Like anything, buying a new car has positive and negative parts to the journey. The excitement of choosing and test driving a shiny new vehicle has to be balanced with haggling with a salesman in a dealership and painfully avoiding the add-ons and extra warranties that they want to burden you with (and co-incidentally give them a bigger commission than on the car itself).

Automobile dealership - service and repair are...

Yet, the internet was meant to remove middlemen and enable us to deal direct with the producer. It has worked in industries such as travel, where package holiday companies have had to reinvent themselves in an era of cheap flights, AirBnB and TripAdvisor. But for bigger ticket purchases we still rely on car dealers and estate agents rather than dealing directly with manufacturers or those selling their house.

The end of middlemen?
So why are these middlemen still here and will they survive for much longer? After all, most buyers now read car reviews online, check manufacturer videos on YouTube, get information on options from websites, and can arrange finance quickly at the click of a mouse. No wonder that the average number of dealers that buyers visit when purchasing a new car has dropped from 5 to 1.6 in the US over the last ten years. As in a lot of fields, more and more research is carried out online without needing to interact with anyone, let alone a sweaty dealer in an ill-fitting suit.

Illustrating this trend, upstart electric car company Tesla is looking to go direct to customers in the US, cutting out dealers altogether. Other manufacturers are trying more limited experiments with special editions sold online only or dealerships remodelled to be more like the Apple Store, with advisors providing information and help, but no hard sell.

The pace of technology change within the car also threatens to make the dealer obsolete. Modern cars are computers on wheels, streaming data back to the manufacturer and able to refresh their operating system remotely without human (or mechanic) intervention. Tesla regularly updates the software on its car over the air– with an upgrade in January 2015 improving the performance of its Model S, meaning it can match the acceleration of a McLaren MP4-12C.

However as a recent piece in The Economist points out, changing the system will be difficult. Dealers are a powerful lobby, and while they don’t make much money on each new car they sell, the ancillary products and ongoing servicing relationship can be extremely lucrative. It also provides buyers with the opportunity to get a better deal by haggling between rival garages – if you have the inclination to do so.

I think that there are more basic reasons for any middleman, whether a car dealer or travel agent, to survive – adding value, trust and ease. These are important concepts for any company in the digital age to embrace and it is worth looking at your business with these in mind.

1. Adding value
With the vast majority of information now a Google search away on the internet, and prices displayed for everyone to see, do you really add value or are you a hindrance to the process? Again, the Apple Store is a good example to follow. You can buy your iPad from one of a hundred shops or websites, but the help you receive and the ability to get your questions answered in a positive, unpatronising way naturally leads people to the Apple Store.

2. Trust
Do consumers trust you? Or more to the point, do they trust you more than the manufacturer you represent? One of the factors I think will hold back the demise of dealerships is that consumers trust car makers less. You only have to look at botched recalls and unreported faults to see why. Car makers are also much more distant than your local dealership, making it difficult to build a relationship of trust. That’s not to say dealers are safe – they regularly top polls of least trustworthy occupations, but in the kingdom of the blind, the one eyed man is king.

3. Ease
People have to do more and more with less and less time. In many ways the internet has made us more time-poor. Whereas before a holiday could be booked by marching into the travel agency and asking what they had available, it now takes hours of internet research, comparing the relative locations of villas on Google Maps and poring over TripAdvisor reviews. Those middlemen that still have a place recognise that they need to make things easy, providing a helpful service that cuts down the time you need to spend and removes roadblocks from the customer journey, without charging the earth.

Looking at your own business, do you meet these three criteria? If not, it is time to change, before pressure from consumers and manufacturers squeezes you out of the market.

August 26, 2015 Posted by | Marketing, Social Media, Startup | , , , , , , , , , , | Leave a comment

Are startups solving the right problems?

 

I don’t think there’s ever been a better time to launch a startup in the UK. The public profile of the tech industry is incredibly high, and those that create businesses are more likely to be seen as visionary entrepreneurs than cranks who couldn’t get a job in a proper company. Indeed, for those leaving university, setting up your own startup is a valid (if not as initially lucrative) alternative to becoming an accountant, banker or lawyer. I’m sure startups would complain that it is still difficult to raise money, or scale up their businesses, but it feels that there is now wide public and political acceptance of the importance of creating a culture that encourages startups.

Relief map of Europe and surrounding regions

Read the press and politicians’ speeches and there seems to be a relentless search to find the ‘European Google’ or ‘British Facebook’, multibillion dollar global companies that can become standard bearers for the industry. Alternatively, other European companies essentially mimic what is being done in the US, taking their business models, localising them and then hoping that first mover advantage will let them create viable businesses before the original enters the market.

The people that run startups are smart, as are the venture capital funds that back them. But are they looking in the right areas when it comes to creating new businesses – as an article by Liam Boogar in Rude Baguette recently asked “Where are the European startups to solve Europe’s biggest problems?” Leaving aside the question of whether Europe is cohesive enough that the same problems apply to life in Edinburgh, Athens and Bucharest, it is a valid point. What issues can be solved, first in Europe, and then expanded globally, to create thriving companies that benefit us all?

The article focuses on the need to shake-up the savings market, and with interest rates in many countries close to (or even below) 0% I can see the opportunity to transform the sector, such as through peer-to-peer lending.

However, what other areas would enable European startups to build global businesses? Thinking about the particular problems Europe faces, here are four that come to mind:

1. Healthcare
Across Europe, people are living longer and birth rates are falling. Longer lifespans increase pressure on health and social care services, as the elderly battle chronic diseases and poor health. While this isn’t just a European problem, it is one that startups can focus on, particularly given the public money currently being spent on healthcare research. Areas such as wearable monitors and the Internet of Things can potentially help improve the quality of care, even allowing people to remain in their own homes, rather than be treated in hospital.

2. Transport
From driverless cars to drones, technology is revolutionising transport. With its combination of major car and aeroplane makers, Europe is well-positioned to lead the way, but it needs an injection of startup energy and fresh thinking to succeed. Whether it is new ways of charging electric vehicles as they wait at traffic lights or smarter cities where you are automatically guided to the nearest parking space, there is plenty of scope for innovation, along with the chance to scale up to export the technology across the globe.

3. Employment
More than 6 million jobs were lost in the recession between 2008-13, and youth unemployment in many countries remains high. Many of the roles that were made redundant are simply not coming back as they have either been offshored to lower wage economies or replaced by technology. What are needed are ways to reskill European jobseekers so that they can compete in the global market. Much of this should be the responsibility of governments, but technology can help with new ways of training, new opportunities for collaboration and the encouragement of remote working to combat rural depopulation.

4. Cutting bureaucracy
All governments, of whatever political persuasion, seem to delight in creating red tape that tangles up citizens and businesses alike. And, despite the European Union, there is still a range of different measures that need to be met. Many countries have begun to put their services online, but more can be done, and in many cases nimble startups can get things done quicker than lumbering government departments.

I’m sure there are plenty more European problems that need solving, from the environment to education. These don’t just benefit society, but are potentially extremely lucrative as well. So the challenge for startups and entrepreneurs is to try and solve them – and at the same time we might create the European Googles that politicians are so keen on.

August 5, 2015 Posted by | Uncategorized | , , , , , , , , , , , , | 2 Comments

The battle for banking – Amazon enters the fray

In a previous post I talked about how the big four internet companies Google, Apple, Facebook and Amazon (GAFA) had quickly developed their businesses. They’ve all moved beyond the sector they started in, extending what they offer to compete with each other in areas such as ecommerce, social networks, mobile devices and mapping.amazon_logo_wb_2328

How have they done this? They’ve used the four strengths that they each possess:

1. Agility
With the exception of Apple, GAFA was born on the internet meaning they aren’t burdened with long-established corporate structures compared to their traditional rivals. So they can make decisions quickly, unhindered by the warring departments and turf wars that characterise first and second generation technology companies.

2. Data
Rather than purely physical assets, GAFA’s USP is data and what it does with it. From selling our search histories to monetising our personal pages, the four companies have built up extremely detailed pictures of their users and their lives. This allows them to accurately predict future behaviour – how many times have you bought something suggested by Amazon even though you had no idea it existed until the recommendation popped into your inbox? The advent of even cheaper machine learning and potentially limitless cloud-based resources to crunch data means that this is understanding is only going to get more precise.

3. Focus on the customer experience
Even though the majority of interactions don’t offer the personal touch of a bricks and mortar shop, these companies have gone out of their way to create a simple to use customer experience. Compare the Apple iPhone to previous ‘smartphones’ – the only difficulty for users was unlearning the convoluted way you had to access information on Microsoft or Nokia devices. I know, I had one of the first Windows phones – the user experience was terrible. Innovations such as one click ordering, reviews and simple sharing all mark out internet companies from their rival.

4. Scale
The final differentiator is scale – and the speed at which it is possible to grow on the internet. Rather than taking 20 years to become dominant in an existing market, companies can create a sector of their own and expand globally within months. Part of this is down to the network effect, but scale has also been achieved by moving into adjacent markets and just adding them onto the offering for existing users. This lowers the cost of entry for the company with the user base and creates a barrier to entry to rivals.

Taking these four factors into account, banks should be worried about Amazon’s latest move as it builds on all four of these strengths. Amazon Lending will make loans to small businesses in the UK that sell through the company’s Marketplace platform, after the service was successfully launched in the US. The beauty of the scheme is that Amazon knows exactly how the small business is performing as it can track their sales, and then use this data to offer selected companies short term working capital to improve their business. As it handles all the billing and cash collection for Marketplace sellers it can even take repayments directly from their profits, before they it pays them, minimising risk.

Adding to this data advantage, it is also offering the same simple to use customer experience that sellers are already familiar with. Compared to faceless or unhelpful banks, this is just the sort of thing that expanding small businesses are looking for.

The ironic thing is that, on the face of it, there is nothing to stop banks offering something similar. Their merchant services arms handle online and offline debit and credit card transactions, so they have access to data that could be used to work out creditworthiness. They have a network of branches to provide loans through, as well as a significant online presence. But all of these are separate departments and banks don’t have the agility to bridge the silos and provide the one stop shop that businesses are looking for.

In the same way that Apple Pay is disrupting payment services, Amazon Lending will take another bite out of the traditional business of big banks. And, as more and more of such services launch that nibble away at banking profits, then they face being outmanoeuvred by nimbler, more customer-focused and cleverer competitors. It is therefore time for retail and business banks to get joined-up or face becoming low margin commodity businesses in the future.

July 1, 2015 Posted by | Marketing, Social Media, Startup | , , , , , , , , , , , , , | Leave a comment

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