I retired from personal blogging in July 2008.
But you can find me over at http://blog.xero.com.
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Done!Like Jason Calacanis I’ve been thinking about retiring from blogging for a while.
I’ve been blogging now for over 5 years, 1626 posts, 3 companies, 3 children and 10 kilos. I’ve really enjoyed the experience and have had so many fantastic opportunities come out of it. I’ve met some great people.
There are a few reasons for retiring from regular blogging. Most of the goals I set out when I started I’ve achieved, and there are not enough hours in the day to get through what I need to get through - especially with a young family and growing business.
As Xero is going really well and we have such a strong and talented team its time to make some room for our other voices. I’ll still contribute from time to time at http://blog.xero.com.
I remain passionate about developing software companies from New Zealand and creating a step change in our broadband connectivity. I’ll continue to drive those issues forward as much as I can.
I’ve tried to share my journey and some of the things I’ve learned as much as I can. I’m proud that it has motivated other people to do big things and share experiences so that we can make the boat go faster.
My favourite aspect of blogging has been revealing that we’re all just people and that business can be a lot of fun. I think my favorite post was the one on bed time stories.
I fully encourage people to take up blogging, and I look forward to following the stories of other entrepreneurs going global and sharing their highs and lows.
Thank you and goodnight.
Been a busy week. Deep south end of the week. Excellent X|MediaLab event over the weekend and been in Auckland today doing a World Class New Zealand workshop.
One of my WCNZ colleagues is next to me in the koru lounge waiting to fly home and just whooped loudly. Alison just got her IT Governance Standard approved. ISO/IC 38500.
That’s pretty cool. Contact alison.holt@concretecampus.com for more information. Global influence.
X | Media Lab was quite a cool event. I was a mentor which meant that I got to spend an hour each with some very cool companies and talk through strategy and give them feedback. It was very rewarding and a lot of fun. I was blown away by the quality of much of the work. I especially noticed how rich media was just another data type for many companies. Coming from a business software background I get blown away by how sophisticated cross media applications can be.
Met some great people who were visiting. If you get the chance I’d recommend heading to an offshore X | Media Lab event to build in market connections. If you are in NZ this should be an event you shoot for next year.
Another exciting day in Xeroland as we start to move the goal posts with our latest release.
The last major change in the desktop accounting space was the move from DOS to Windows that happened in the late 90’s, early 00’s - compounded by Y2K where the IT industry did a great job convincing everyone that planes might fall out the Sky (he wrote nervously from Queenstown airport).
Unlike the last technology shift, moving online changes everything.
Over the past year we’ve been rapidly completing the broad functionality expected in a general accounting system. Sure it’s pretty but there was just a huge number of things we needed to do to be a substitute accounting system. We are getting close. So now we can start to change the rules and change people expectations of what small business accounting systems do.
This is important for SaaS. It’s not just about changing the delivery and pricing model, it’s about how being online changes everything. Shifting the goal posts.
In the old world, most desktop accounting software is often locked away in the back office, retrospective, period based and can require triple handling of data. It is only used by a small number of people in the business (thank goodness). The first step of moving online was about matching the features of the existing providers, that have been around for many years, while adding the initial online benefits of being collaborative and near real time.
The next logical step is breaking out of the back office. Linking the accounting system to normal business processes and bringing aspects of the accounting system to frontline staff.
So todays release was as important for us as we added an Employee role to our security model. A relatively small and logical addition to Xero but very significant to our strategy.
It’s very exciting to get to a point where rather than catching up, we can lead. Also after a year the company matures significantly and processes evolve. I’m blown away but how much stuff our team are getting through in each release.
Now the fun really begins.
We’re a Microsoft Gold partner and really appreciate our relationship with MS. Lots of friends there.
Only a few years ago the Microsoft powerhouse was unstoppable. You couldn’t even imagine Microsoft could have a competitor and there were calls to break MS up.
Then two fronts happened. The Internet, which challenged the lock in of the desktop model, and Apple came back.
It’s a fascinating tech story that thousands of people commentate on. But this article was a bit of a wake up call as to where MS is at.
Can Hotshot Ad Guy Alex Bogusky Make Microsoft Cool?
Firstly this
Over the past couple of years, Microsoft’s already problematic reputation in some circles — as the soulless, power-hungry purveyor of lackluster products — has suffered a series of self-inflicted wounds. It spent two years and $500 million on the media blitz around the long-delayed Windows Vista launch, only to see the January 2007 “Wow” campaign, which likened Microsoft’s new operating system to Woodstock and the fall of the Berlin Wall, derided as arrogant and creatively void. Vista itself sold poorly, leading to price cuts of up to 40%. Worst of all, the flop bred a new generation of Microsoft haters. “Microsoft has really lost control of its image,” says Rob Enderle, an influential advisory analyst for tech companies including Dell, HP, and Microsoft. And with its two most formidable competitors — Apple and Google — boasting their own consumer cults, that’s the last thing Microsoft can afford to do.
I’m sure Microsoft strives to do better but the fact is as companies grow it is just hard to be nimble and the technology market allows new entrants to come in unencumbered and change the rules. In that climate long term brand demise is entirely predictable. But at the same time a cheeky challenger, smaller with a lot more focus, but big enough to make an impact has been accelerating that brand erosion.
Nothing is doing more to carve away at Microsoft’s reputation — and contribute to its loss of market share — than the assault launched by Apple two years ago in the form of the “Mac vs. PC” spots featuring The Daily Show satirist John Hodgman. The ads became immediate pop-culture fixtures, spawning more than 1,000 video spoofs on YouTube and taking home last year’s Grand Effie, the ad industry’s highest honor for effectiveness. “Nobody messes with anyone in the tech industry the way Apple has messed with Microsoft,” says Enderle. “It’s the first time I’ve ever seen a major national campaign that disparages a competitor, and the competitor just sits back and takes it. If somebody tried to do that to Oracle, you wouldn’t be able to find the body.”
It is so interesting to watch this battle on such a big and public scale.
Microsoft is reinventing itself. SharePoint is growing like a wildfire in the enterprise and the cash keeps rolling in.
Far from being complacent Microsoft has lots of smart people and lots of money. They know they’ve missed the market in a number of public areas and that has removed any corporate arrogance they might have been accused of a few years ago.
They will have learned a lot of the past few years, and especially over the last few months on the so far failed Microhoo bid and the unrestrained reaction from the community.
I expect Microsoft to reinvent themselves over the next few years. Now there is real competition and that leads to innovation. That is great for the industry.
What would you do if you were Microsoft? If big Steve tapped you on the shoulder and said, your turn?
Here’s my strategy …
- A lightweight operating system. Forget backward compatibility. Just needs to run Office v.next which has to be compelling. Make it not need a hardware upgrade. Less is more. Open Source it.
- Leverage the Office platform for a powerful Software + Services model. Collaborative Office has to be the goal.
- Win the Enterprise. That means double down on SharePoint, but make it a database, not a collection of objects.
- In fact promote everyone in the SQL Server team. The Enterprise is about databases.
- March out everyone in the Exchange storage team. Exchange is your corporate anchor. There has been no innovation for years. You need to port it over SQL Server immediately. Shoot anyone that stops you. Mail is a database application. Period.
- Clean sheet redesign or your mail client. Mail is broken at all levels and is the most important application.
- Buy a big Services company. Maybe HP. Microsoft has to be the new IBM. Straight partnering won’t cut it anymore.
- SilverLight has to win, or buy Adobe. Don’t let Apple get them or you’re done.
- Resurrect Internet Explorer for OSX. You’re going to loose OS market share in the short to mid term, at least have a chance to keep them in the browser.
- Lock in Dell. As computer hardware gets cheaper the OS becomes the biggest cost. They’ll go Linux unless you fix those relationships with a great OS. You need a tighter hardware/software partnership. Surely together you can build a stunning computer. Look at OLPC2.
- Significantly up your Open Source strategy across the board. That will win back the geeks.
- Win the SMB market. No one there yet and they already have Office.
- Do lots of small acquisitions to fill in the strategy.
- Platform as a Service (PaaS) .Net and Windows Server with compelling licensing.
- Sack all the existing design guys and hire a design dictator who overseas everything. Microsoft Web properties, packaging and applications are ‘over designed’. You need someone who understands less is more. Not Chris Bangle but like a Chris Bangle at BMW who drove design.
- Do a total redesign of the Windows Mobile interface. It is not a scaled down desktop computer. It is a handheld device. Hire some RIM guys to do it properly. Or buy RIM.
- Maybe use some cash to buy or lock in a global fibre network. Vertical integrate your Enterprise Software stack with the network layer. Then you can QoS connected applications and add value to the stack with Enterprise Messaging Services, off site back ups etc.
- Xbox/Media center has to be default lounge computer. Double down but really model user scenarios so it works as people want to.
It’s a big list but MS has a big team, the brains and the resources.
Out today is an iPhone version of Xero.
I’ve been using it for a few days and it’s really cool. With the upcoming launch of the iPhone 3G we wanted to get it out there and see what scenario’s people want. Expense claims is an obvious one we’ll add soon.
Here is the press release …
Xero now available on the iPhone
Xero announced today the release of a customised Apple iPhone version of their popular online accounting system.
This allows people who have an iPhone (or iPod Touch) to use Xero to access all their bank balances and recent transactions from anywhere. It also provides the ability to call any contact with one simple tap.Xero Chief Executive Rod Drury said this gives business owners easy access to crucial information at all times - one quick glance at a small device in their pocket provides unlimited flexibility and mobility.
“We believe the iPhone is a breakthrough device and with signals that a 3G version will soon be available in our core markets of New Zealand, the United Kingdom and Australia we believe now is a good time to introduce an iPhone version of Xero and get feedback from customers.
“We believe online accounting is the core information system for small businesses. With Xero, businesses are beginning to see the power of linking their mobile front line staff to the back office.”
Xero for the iPhone is available immediately to all Xero customers at no extra charge, customers can simply login at http://m.xero.com. It’s also available for anyone to try for free by signing up at www.xero.com.
We also added blog comments today as we shifted to WordPress. Tell us what else you want here.
Apple’s iPhone to be offered in NZ
Well that happened faster that expected.
If you think the iPhone is a break through device, like I do, then this is a very significant announcement for the local mobile industry.
Previously the Vodafone Global CEO has ruled out the Apple dance. So it appeared that Telecom NZ had a great chance to scoop an exclusive iPhone deal.
The first wave of the carrier deals done by Apple favoured the challenger carrier that did not have an investment in content. Locally Vodafone is doing a roaring trade here on music downloads so getting the iPhone would mean some complex business issues.
In contrast Telecom had everything to gain.
As the mobile challenger launching a new, non differentiated, network the iPhone would have given Telecom a big leg up, made it instantly cool, and provided instant content. Having iPhone pricing in the product line up would have been useful alongside expensive world mode phones. Telecom would have had an easier job rebuilding their brand around an exclusive iPhone deal.
While a positive step for Vodafone the marginal benefit to them is much less than the marginal loss to Telecom.
So Vodafone needs to work out what iPhone/iTunes means to it’s current services. Telecom missed an awesome opportunity. It would be interesting to know how far into it they got. Would be tough being a single carrier from NZ competing against a multi-country Vodafone group.
For content developers I hope we see a Vodafone partnering program that provides an opportunity to develop here and use the Vodafone global network as a channel to market.
This is a significant event for the industry.
A few people have asked what was behind our name change announcement to the NZX yesterday.
MARKET RELEASE
1 May 2008
Xero is pleased to announce that its legal name has changed from Xero Live Limited to Xero Limited.
Background
When Xero was founded one of its early tasks was to find a .com internet address that was suitable for building a global brand. It had to be short, meaningful, memorable and be able to stand alongside existing brands in the business software space like SAP and MYOB.
Since its inception, Xero’s core brand has been based on the name Xero. This is reflected in its web address and its award-winning accounting software is also called Xero.
The directors were delighted to secure xero.com, but as Xero Limited was not available at the New Zealand Companies Office, they chose Xero Live Limited as the company’s legal name.
Recently the name Xero Limited became available, and has been secured. This tidies up an inconsistency and ticks off another small objective.
I was surprised the media picked it up but there is a back story that highlights a common startup issue.
When we started Xero (before it was called Xero) we needed a name. This was back in our rented week-to-week apartment in Willis Street. We actually registered Accounting 2.0 as a bit of a placeholder. Everyone (but me) hated it but time was ticking by and we still didn’t have a name.
As anyone who has started a web business knows, the biggest constraint in picking a name is picking a .com address. You have to have a good .com. For us with global aspirations we needed a great .com. We wanted it to be short, meaningful, memorable. SAP was taken and the likelihood of getting a good 3 letter .com was low. Ideally we wanted a 4 or 5 letter .com. We imagined where would be a few years ahead and wanted a domain that we wouldn’t be embarrassed of.
A friend of mine, Dot from KeyLogix, is a great .com finder and procurer. After looking at hundreds of .coms Dottie thought of zero.com and quickly found it was US100k to even start the conversation. Then she found xero.com and we loved it. Xero is a name that met our criteria, had a bit of x-factor (obviously) and we could build a brand around it.
Xero.com was not used by an active business but by a designer in New York. Dot built the relationship and a deal was struck over about a month. We appreciated the vendor listening to our story and making it work at a reasonable price. The actual purchase was handled over escrow.com and was very smooth.
After all that work we were gutted that Xero Limited was already taken at the New Zealand companies office. It must have been at the time when Windows Live was being talked about so the name Xero Live was chosen, but it was always a pain that our official name was Xero Live Limited.
Our eagle eyed Chairman spotted earlier this week that the company name Xero Limited had come free and within a day we’d changed our name to what we wanted at the beginning. So now we’ll ripple it through the NZX etc and see if we can get our newspaper stock page entry changed.
Since being Xero we found a MNVO in the US was called Xero Mobile and there is a comic book character called Xero as well.
Anyone got any other naming stories?
Quite interesting being close to National’s broadband announcement and seeing the responses. A good case study on the political process.
Firstly David Cunliffe. I believe DC would have loved to have done this but it got stopped by Cullen and H1 after the Digital Summit, then the health hospital pass.
So he used the old ‘make up something and argue against that’ approach.
National’s plan as presented would inevitably reinforce the position of the incumbent, Telecom, as the dominant fibre provider.National’s plan replaces a narrow-band monopoly in the nineties with a
new broadband monopoly.
Err not sure where that came from, but good politics.
Next was the EPMU. They got right in there with their cause …
“If John Key thinks there is the skilled workforce available to start rolling out a project like this within the next year he may need to think again as there is an international shortage of telecommunications workers and our members are already working huge amounts of overtime simply to keep the network maintained and roll-out Telecom’s modest cabinetisation program.
Very opportunistic, but nice.
NZ First was a classic. Good emotion with headlines of Telecom Deal Outrageous and use of rapacious
And nice suggestion of a conspiracy with …
“If Mr Key has done a deal with Telecom he should come out into the open and explain what is going on. Taxpayers need to know exactly why they should pour $1.5 billion into the most rapacious company New Zealand has ever known,” said Mr Woolerton.
Note the jumping on the ‘beat up Telecom’ bandwagon there. That should get some oldie votes.
And NZ First want to just buy Telecom back anyway.
“Mr Key has acknowledged that telecommunications has been a market failure in New Zealand so perhaps it is time for New Zealand to take back the industry, like it has with Air New Zealand and will do with the railways system.
Must be great to be able to throw out policy when you have little chance of having to actually do it.
This election is going to be fun.
Update at 4:30pm
Dunne goes for the high ground …
Dunne: NZ needs broadband, not bickering
Press Release by United Future at 4:11 pm, 23 Apr 2008
UnitedFuture leader Peter Dunne says the future of New Zealand needs a vastly improved broadband infrastructure, not the current bout of political bickering.
“John Key has proposed a $1.5 billion broadband plan with the declared intention of strengthening the New Zealand economy so that we can compete in a global market,” he said.
“Everyone agrees that’s a good idea, but all we’ve heard so far is the Minister of Communications carping that National is being opportunistic and handing too much monopoly power to Telecom; New Zealand First is similarly outraged that Telecom is getting too much money; and ACT has delivered the standard libertarian rant that hates the Government collecting or spending any money at all.
“Surely the point is that widespread, superfast broadband is a good thing for the New Zealand economy and the only question is: how do we get there?
“It’d be excellent if politicians spent more time working out the answer to that question and not simply whacking each other over the head and feeling they’ve accomplished something.
“If direct government investment like Mr Key proposes is not the answer, then I’d like to hear two things from the critics - first, what is the alternative, and second, why has it not happened to date,” said Mr Dunne.
Very sensible.
Anyone in a sales focussed company is aware of The Call.
The Call can be horrible thing that causes stress to all people in the sales team. People loose sleep over The Call.
The Call is: What do you commit you will sell this month (or quarter)?
The Call is not your target, it is the deals and revenue you commit to for the period.
The Call cascades down the organisation. The board asks the CEO. What’s your call for this quarter? The CEO asks the same of the global sales manager, who picks up the phone to each national sales manager, to each divisional sales team leads and down to each sales rep.
The Call is therefore necessary, especially in a public company. I first learnt about The Call at Quest (I got sales educated at Quest which I’m very grateful for).
In our team at Quest we had a simple deal classification model. Pipeline were deals you were working on, Stretch were deals you might make, but the important number is your Commit. What do you commit you will close? You call your Commit number.
The trick with The Call is put a number that is high enough that you won’t get fired and low enough that you are 100% going to make it. You do not want to miss your call number as you can imagine the cascading questions that come down from the top. You don’t want a question from the top.
Another phenomena in sales land is ‘the secret deal’. The secret deal comes directly out of the call. It is the deal your sales manager does not know about. You don’t want it in your call number. It’s your ‘get of jail card’, it’s your big commission cheque. Every sales person has their secret deal.
Selling is one of the big buzzes in the tech world. You can build great stuff but it means nothing until you sell it. But until you make your quarter number, you live under the pressure of: The Call.
We had a bit of coverage in the paper this morning including this story on what we’re calling the Xero Network
As Ben noticed we’ve been surfacing a bit more of some functionality we’ve been wanting to do since we started Xero but we had to get most of the core accounting platform done first.
Firstly some background.
When we looked at the small business market, an observation that came through very early was that while it was massive, most of the global technology players do not sell technology solutions to small businesses.
That is because the Enterprise Sales model does not scale down to small businesses (as NetSuite is finding). Of the global tech solution giants only Microsoft appears to sell across the SMB market - primarily desktop productivity tools.
So flipping that around I believe small business has not yet had the full benefits of technology applied to them. Most tech smarts has been applied to Enterprises.
The SaaS model allows increases the viability to sell to, and support, the enormous but fragmented SMB marketplace and provides an opportunity to deliver enterprise level features to small business.
We also observed that small businesses do not do integration projects. As an example small businesses should probably have a basic CRM system but as supplier and customer data is already in their accounting system they are forced to do an integration exercise. Which of course they don’t.
So another benefit of SaaS is that we can do that integration work for them, so they don’t need to think about it. That is what we are doing with the Xero Network.
This is exciting because working with other software providers we are making things easier for small business customers - saving them time and money.
This model allows us in the SaaS industry to work together, sharing each others customers and working together to make our solutions more compelling.
Of course there is nothing new here. This is Business to Business (B2B) computing but applied so that we have host to host connectivity between our systems to that our customers don’t have to know about integration. B2B is a big part of SMB SaaS behind the scenes.
There are numerous models. All of them start to drive community effects. In our system we can do ‘Xero to Xero’ transactions, ‘Partner to Xero’ transactions and most excitingly ‘Partner to multi Xero’ transactions where a single system generates transactions on behalf of many individual users. Like in the real estate industry.
As mentioned we believe that SaaS providers should work together, so we’re including a list of partners inside our applications and will include them in our marketing programs. It will be the case that we have multiple partners doing the same things. We also know that our partners will work with multiple accounting systems so I think the best approach is be open and up front with all partners and let customers decide what combinations of solutions suit their needs.
To implement this we have developed a portal that allows our partners to get our documentation, code samples, manage their profile and most importantly test their interfaces with us. We are all busy so we wanted to make it so that we could engage pragmatically with our partners and they could be largely self sufficient (i.e. not have to wait for us).
As we are just passing around messages (which may be files or XML fragments) we can expand the services we offer through the interface quite quickly as partners think of more things we can do.
So I’m really excited about this. It’s a big step forward. I want to especially thank the team at iPayroll who we have been working closely with. They played a big role in helping us to refine our invoice message format.
I good night tonight with 30-40 people at the Xero offices for Wireless Wednesday demo sessions.
First up was Scott from www.sharesight.co.nz. This has been under development for the past year and is looking very slick.
They have data feeds of NZ and Australian stocks, dividend history, historical share prices for the past 10 years - all working like you would expect it to.
I’ve been looking for a Web 2.0 style portfolio manager and this looks like it will hit the spot.
They are in final testing stages so accounts are currently free. Go and have a play.
Next up was Bruce with his Enterprise Life Cycle product, www.e-lm.com. This is a heavy duty and very functional Enterprise SaaS offering. Needs a bit of work to make it pretty but starting to win customers around the world.
FrondeAnywhere showed off their mobile banking two factor authentication solution. I hope that some NZ banks pick it up soon as it is so much more convenient that carrying around a bag full of key generators.
Clare from BookHabit showed her project. It was very interesting to hear about their business model and how the industry has greeted their worthy effort in reducing the barriers to publishing.
Pricing goes from $2.50 to $5.00 as the book gets more popular. It is free to upload your book for sale.
Max from ZetaPrints showed off a few things. Most interesting was a community blog initiative FlyingPickle.co.nz.
Webstruxure showed off an early version of an information management tool.
Neal from Telecom finished off with a great discussion on the Telecom GSM network rollout. It is a huge project. Few interesting things were.
- The spectrum Telecom is using is becoming more common around the world as challenger Telco’s come into the market and can’t get 900/1800 spectrum.
- The 3G iPhone should work on the spectrum they are going for.
- They already have a CDMA BlackBerry. I thought they were GSM ones.
- The new towers will have fibre to them so upstream data bottlenecks shouldn’t exist. Maybe will see non-frightening mobile data pricing finally.
No doubt the Telecom data guys get the Internet. Great to see these comments on Monday which indicate Telecom sees a more open mobile data view of the world as a differentiator from the global Vodafone model.
Telecom believed in providing mobile customers with an “open portal” so they could roam the Web at will, rather than providing them with access to a limited range of services through a “walled garden”, he says.
Really exciting that we’re starting to see some great reviews of Xero out of the UK. This is one of the fun things about early market entry. After all the hard work it’s very satisfying to see these sort of comments coming through.
Another exciting accounting software system, at last!
Internet accounting’s second coming
In our home market it is of course much easier to generate buzz. In the UK we are unknown so it takes a lot more work. Our team is passionate about growing a global company from NZ so we get a real kick out of articles like these.
We’re not alone. SilverStripe and Ponoko are great examples of Wellington companies marking a mark on the world stage right now.
It’s fascinating watching Apples strategy role out. They are doing some very clever things.
- Providing full access to the iPhone stack makes developers feel good and like they are in control.
- But Apple is tightly in control of the distribution and gets to clip 30% of each application sale as well as control what is on the device. This is an incredible market control mechanism and I’m sure will lead to anti-trust activity. But for now they appear to have pulled it off.
- iTunes with songs was clearly a Trojan Horse and now iTunes is an IP based distribution mechanism for movies and now applications. Any content. Apple have a global billing system.
- As bandwidth issues get solved iTunes becomes a superset of BluRay. They let the irrelevant HiDef format battle play it self out.
- The iPhone SDK of course only runs on a Mac. Windows runs on a Mac. So developers who are doing .Net development and want an iPhone client will develop on MacBook Pro’s. We are already seeing some of our dev people buying their own MacBookPro’s and connecting them to their company supplied Windows dev machines.
- Going with Microsoft Active Sync launches the iPhone immediately into enterprise land. Middle managers are consumers as well.
- Arch competitor Microsoft have delivered a very solid Office product for the Mac that allows Macs to work reasonably well in the Enterprise environment.
- They are positioning RIM (Blackberry) as a closed proprietary system. (Now isn’t that the pot calling the kettle black). Note also the reference to all messages going through Canada - ‘out of our country’. That’s hardball.
- Apple have also marginalized the carriers and introduced a global device that works both on carrier and pure IP networks.
- While doing all this they have still maintained a ‘cool’ brand and significant consumer good will.
Apple seems to be very coordinated right now and executing. It is impressive to watch.
So an interesting thing to think about is if you were in charge of Microsoft strategy what would you do? I’m not sure here are a lot of easy things you can do. To fight hard you would need to make some tough calls. I’m not sure I would have licensed Active Sync (but I’m pleased they did). Do they kill Mac Office? (I hope they don’t).
If you were RIM what would you do?
(sorry about the triple captcha on comments, will try to get that fixed today)
We can talk all we like about New Zealand New Thinking, being part of the global economy, blah blah - but where the rubber meets the road is what overseas influencer’s say about us. That drives investment and opportunity.
Noticed by Rowan, what the experts said when they arrived home after the excellent Webstock event last week.
Missing Wellington; enjoying good Internet
While, Tom Coates, back in San Francisco is missing Wellington:
Reliable internet access is a boon, otherwise quite missing Wellington.
Michael Lopp’s enjoying having a decent Internet connection:
Sweet sweet broadband
If we want to brand ourselves as an innovative, connected country a concrete aspect of developing this brand is our infrastructure. We can’t hide from that.
One of the early digital lifestyle books that had an effect on me was Being Digital by Nicholas Negroponte, back in 1995. One of his big points was the value of bits. Some bits are very, very valuable.
That concept has always fascinated me. The latest update of AppleTV provides a very relevent example.
With a New Zealand iTunes account, I can now see TV programs and HiDef movies available in the US.
But if I click through the screens to buy that US TV show I get this message.
The bits that stop me downloading US TV shows are very high value bits.
Somewhere, maybe at Apple in Cupertino, there is an iTunes content administration application where someone who gets paid $US40k can click on a box and deliver the latest TV shows and movies to my lounge.
It might be a single check box.
Those are high value bits.
Our entire broadcast TV industry is protected by those few bits. It’s like a piece of rice paper providing a dam that holds back a raging river. Those bits are holding back a torrent (pun intended) of content and new business models.
AppleTV provides a distribution mechanism direct to global consumers. The terrestrial and satellite networks are bypassed. Significant because they were the gatekeepers for broadcast content. That infrastructure is no longer required as content can be sent down our commodity IP networks.
Since MySky the amount of TV I watch live is minuscule. Anyone with MySky is time shifting and quickly experiences the freedom and mindset change of not being tied to your TV at a certain time.
So I wonder a few things.
1. What commercial agreements protect the status quo? I would imagine that the movie studios sell content to local TV networks with deals probably done just a few times a year. Now that a broadcast network is not required, do ISP’s start bidding for the content as well. Could some other entity in NZ bid for the content rights?
2. What if the studios stopped suppling national TV networks and just billed direct?
3. Under a broadcast based model advertising was required. When users pay per show is advertising still required? Perhaps shows with ads are free? What ‘inject local advertising’ players will appear.
4. What of the future of local TV production. Perhaps it is in even better shape if they can sell direct globally? Who do they talk to at Apple to cut a distribution deal? Are the shorty street people up at 1 Infinite Loop now?
5. Who wins as broadcast TV is disintermediated? Is it the ISPs? Media companies? Studio’s?
What do you think?
Those sure are some high value bits.
Just watched the Apple Keynote. Bitsy on quicktime but got most of it.
MacBook Air was cool but I think the most significant product was AppleTV - take 2.
The product has shifted entirely from an accessory for a PC download then sync to the lounge experience to a set top box that directly talks to the world. From your AppleTV you can now download movies (in HiDef) and access thousands of video podcasts and lots of other services.
The movie rentals goes international later this year. I hardly ever rent movies. By the time the kids are in bed the good movies are gone. That all changes with AppleTV take 2.
Unless movies are blocked - which it may be. I don’t need Sky movies. I’ll never set foot in a video store again. If we could get all the US TV programs I’d even question what I need anything but free NZ TV for. Why are we waiting for broadcaster to go HiDef? The content is arriving it’s just a delivery issue. That problem just got solved.
Should TVNZ just publish the 6:00 news to iTunes? Is that so crazy when Apple got every major movie studio signed up?
The direct internet connection from the Apple TV bypasses directly the existing terristial and sattelite broadcasters. It even by passes physical DVD’s. Why do I want to own a movie I watch once. iTunes is a direct competitor to Blu-Ray, HD-DVD and even standard DVD’s.
Today iTunes even delivered an iTouch Software upgrade. What is stopping me buying Mac Office 2008 over iTunes.
The iTunes grand plan is now clear. It is an Internet delivery platform and billing engine. Apple have inserted themselves into the middle of the global content industry by owning the consumer device. Starting with the iPod, and over several years now directly connected to your TV. Your viewing portal. AppleTV take 2 unlocks the investment in iTunes.
While I was watching the keynote I had an email from Telstra saying I had exceeded my monthly download limit. If this catches on it challenges our internal internet infrastructure. The broadband demands of an average NZ household just went up times 10. Here is a great example of a foreseeable but largely denied game changer that makes our internet capacity planning look woeful.
It’s a game changer and a direct threat to the incumbent broadcast model. Sky, TVNZ, Video rental shops and of course carriers -Â you have some thinking to do.
Hopefully some useful tidbits to help you get some runs on the board in overseas markets. We had a lot of fun and met some great people doing the UK road miles with AfterMail.
You’ve got a great product but how do you sell it overseas?
Text of the article …
All New Zealand business people should be looking at how they contribute to exporting. It is so important for us as a country that we earn foreign currency.
In the online world you can put up a website and you’re immediately global, but many businesses rely on people selling to people. So how do you go global?
The normal path is seeking distributors in overseas markets who can provide you with a low cost way of getting coverage internationally.
The United Kingdom, for example, is full of people selling things. There are thousands of people looking for new opportunities to monetise their relationships. This selling industry is added to every year by displaced executives with extensive networks looking for products to represent.
Conferences and industry events are common ways to meet people and you can often find these people online. In the UK, business networking site Ecademy (ecademy.com) is popular.
There are often two tiers - distributors, and resellers. Distributors may hold a master distribution relationship for the country and have access to a network of resellers.
Some distributors - many at it for their first time - will work on a 100 per cent commission basis and cover their own costs. If there are two tiers, expect to give 50 per cent of your sale price away as margin. Normally the distributor will get 40-60 per cent of a sale and the reseller 20-40 per cent.
In a single-tier model just think of it as the distributor.
While they will want you to be exclusive with them, often they will represent several other opportunities as well. Therefore, you will be competing for shelf space - attention - with the distributor, so you want to make sure you are paying a good margin. They will focus on whatever makes them the money, and you want to make sure that whatever else they are selling is complimentary.
Experienced distributors can point to a track record of success. In the UK, they will probably seek a few thousand pounds each month to cover expenses. New distributors will be more desperate to represent your product, but they may be unproven.
It is important to put a performance clause in any contract, which can become your way out if the distributor does not perform. Put a schedule of low sales numbers in for the first few months so it looks comfortably achievable. This should ensure that you get some mutual quick wins and if they fail to fire you have an out for later.
You must treat the distributor as another type of customer. Give them all the sales aides they need and concise information, so with minimum effort they can appear knowledgeable about your product.
You might want to plan a two-week trip with them in a month and have them fill the diary with appointments. This is a good early test and allows you to get to know them and show them how to sell your product. You’ll also learn a lot about the market.
A useful practice is deal registration. You give the distributor another 5 per cent of margin if they register each deal. This avoids channel conflicts and gives you a basis for measuring effectiveness of conversion and pipeline.
Selling overseas can be a lot of fun. Getting the right engagement of place will allow you to minimise costs and risk, while providing opportunities to be wildly successful.
Always ask around for advice - Kiwis are always willing to share overseas selling war stories.
Peter Griffin did a good segment on National Radio yesterday which included his picks to tech trends in 2008. Summary here: Preview of hot trends next year.
2008 should be the year of mobile data. As I’ve posted several times this year mobile data is dead in New Zealand because crazy data prices.
So much so that a generation of mobile users are too scared to use mobile services.
There is a glaring absence of content and application providers building global businesses in the mobile applications space. Hyperfactory and DataSquirt are operating largely outside NZ, Run The Red have hung in there locally and are now doing things in Brazil but we should have 20 names of mobile data providers we could reel off.
We should see a PR release every month showing a local carrier incubating another yet another New Zealand mobile content provider that is now going global. Their on again, off again developer programs seem to be in off again mode. Just hire someone from Microsoft and grow a long term developer program. Give the good ones some handsets and free accounts and watch them innovate.
Peter made a great point yesterday that the iPhone and Google Android coming had flipped power back from the carriers back to those people who build great equipment and applications. We saw a glimpse of this in 2008 and it’s being delivered to the mass market in 2009.
New Zealand is going to be left behindunless we see two fundemental changes in carrier behavior here in New Zealand. And this chaneg should be very good for them.
1. Vodafone and Telecom need to allow mobile data providers to have a sustainable business model. Each customer pays a monthly fee to the carrier. For value added applications 60-90% needs to go to the application provider to encourage them to invest.
2. We need to flip around the fear of mobile data, quickly. That will require unlimited data plans. Sure put some reasonable fair-play clauses to manage the edges but basically any New Zealander should be able to feel like they can hit mobile data from their phone for under $30 per month.
Rowan asked me what my cause would be for 2008. This is it.
This looks like a useful event early next year …
As part of PricewaterhouseCoopers Hi-Tech programme for 2007-2008, PwC is hosting Ken Morse, Managing Director of the MIT Entrepreneurship Centre.
Ken’s two day workshop will be held in Auckland on 08-09 January 2008 and is aimed at business leaders from hi growth, innovative NZ companies. The two day workshop is based on case studies, lectures, interactive discussions and hands on exercises and is focussed on assisting in the development of growth strategies - covering topics such as reaching global markets, building global networks, sales strategies, and capital raising.
Register here www.entrepreneurshipnewzealand.com
Looking back at the broadband debate over the last year it’s amazing how we as an industry moved broadband from a technical issue to a business issue and now to a political one.
For me it started back at Foo Camp in February where a bunch of tech, political and media people got together. Following Foo, stimulated by meeting a bunch of people with big ideas I published a document entitled Securing Our Digital Trade Routes. It raised the option of state ownership of our national communications infrastructure. I was totally surprised by how far that went.
Two weeks ago it came together at the Digital Strategy 2.0 Summit. A lot of the ideas we as an industry have been pushing this year came out in David Cunliffe’s speech and Pete Hodgson a few days later. Broadband is the number 1 initiative in Governments economic development program.
The government is now talking how important international connections are and raised the possibility of debt funding.
Looking back, my state ownership model was useful as a discussion starter but my thinking has certainly evolved since February this year.
First a couple of building blocks …
The New Zealand Institute did the important work of developing the business case for Broadband. It made it quantitatively clear that there is a compelling business case for world class links within New Zealand and connecting New Zealand to the world.
Am I a socialist or a capitalist? Left or Right. This was a struggle. I like money. I think the environment is important. I believe we should have free health care and education. I think we need to grow the pie before slicing it up. I prefer small government, low tax. I think saving should be compulsory. Exporting is good. Thinking globally is better. The ‘Buy NZ Made’ campaign is dumb. I like Cunliffe, I like Key, I like Russell Brown. Maybe the term Digital Socialist is the best for me.
Did the market fail in the Telecommunications industry? No the market is always working – but the free market will give you certain characteristics that may not balance out other objectives. So I’m reconciled that the government can regulate to set market conditions.
Operational Separation and Structural Separation I’ve never felt comfortable with. It seems to artificially fight the market.
I caught up with a very smart guy called Shaan Stevens this year and he influenced my thinking more than anyone else. We had a good debate on my state ownership ideas. Shaan got me thinking about how matching the investment models might make the market work and provide the characteristics we need as a country.
I’ve been calling this Funding Separation. It goes like this.
- There is a public benefit of having best of breed broadband connections between New Zealand and the rest of the world. No one company can monetize that. Certainly not a public company like Telecom who exist to earn a return for investors.
- The Internet provides an opportunity to nullify the tyranny of distance between ourselves and international markets - to leverage our real competitive advantage: the close networks that form in a small country.
- To exploit the power of the Internet we need to connect ourselves digitally to the rest of the world and treat the Internet as an abundant resource where we don’t even think about cost. We need to build businesses on top of networks. We need to remove the network as a barrier - physically and costwise.
- Therefore what we need is an open access network that operates on a cost recovery basis between New Zealand cities and the rest of the world. (Incidentally I think the role of central Government is to connect the cities. Local bodies should pick it up from there). People expect to pay for the Internet. Cost plus is better than free.
- The cost of that network is probably between $2-3bn dollars. On a debt funded basis it would cost less than $300m per year to fund that. I am sure that even just the Government spend much more than that per year on the Internet.
- The Government could regulate that the infrastructure layer of this network can only be funded by debt and returns a maximum rate of return of say 8%. It could also commit that all Government traffic goes over this network. This is the Funding Separation bit.
- With the recent financial meltdown there is a flight to quality and strong demand for these types of investment products that return a safe long term return. Left just here the market may work to solve the problem. Telecom could also provide this network if they desired.
- With Kiwi-saver coming on stream there is a lack of large onshore investments the government could make. They could be a foundation investor.
So lets look at who’s impacted:
- New Zealand Business. Low cost connection to global markets. Winners.
- New Zealand Citizens. Boom times, we earn more, pay more tax ($’s not %), have better schools and hospitals. Winners.
- Telecom. Can play at both layers but no longer have to invest at the base network so can inject new services into the network as fast as they can market them. Winners.
- Government. Hasn’t spent any cash, has lowered their costs, have transformed the economy. Winners.
- Southern Cross owners. You’ve held our country to ransom for years you pricks and get what you deserve. Probably just make normal money now. Less winners than before but well positioned in their retail businesses so not losers.
There you go. Problem solved. Now lets fix the environment.
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