Don’t cough on me

It used to be acceptable to go to work or travel with a cough or the flu. That’s been changing over the last 10-20 years, and people who cough and sniffle in public are increasingly treated like people who smoke in the same places. Good.

But now the stigma of being sick in public is even worse:

Let’s be clear – if we manage this well (and we will) Ebola will be tightly contained in almost all countries.  Managing well means contact-tracking, where everyone who comes into contact with an infected person is tracked, quarantined and cared for until they are deemed safe. This is the standard technique to prevent diseases taking over, and it was also used to slow the spread of HIV. Unlike HIV, which was always contagious, and even when no symptoms were evident, Ebola is only contagious for a limited time, and only when the patient is obviously sick. So Ebola is inherently easier to manage and scaremongering aside we will all move on.

How do we know? Well if Nigeria can do it, we all can.

But even under a well managed regime it’s still going to be very awkward to be visibly sick in public places in the next while.  Here’s how I see it right now. Do you agree?

  • It’s not acceptable to go to kindergarten or school when ill. The virus will spread and one family’s inconvenience becomes magnified by a classroom and their families.
  • It’s almost completely unacceptable [fixed typo] to go to work when ill. The virus will spread and one person’s brave “work at any costs” attitude can remove tens of others from work.
  • It’s becoming unacceptable to fly or be on public transport when ill. We are in very close proximity to each other and disease will spread very easily.
  • It’s not smart to not be treated if symptoms persist.

But society is not setting us up for success here.

  • Some parents find it difficult or unaffordable to take time off work, either to deal with either their own sickness or that of their children.
  • Some people are not living in environments that allow them to get and stay well, for  example very draughty homes in winter.
  • Some employers are intolerant of workers taking “excessive” amounts of time off.
  • Airlines make it expensive or impossible to move travel dates due to sickness, forcing  travellers to take flights where they should not. (Air New Zealand’s pursers even shake the hands of essentially every business class or passenger with high status at the beginning and end of long-haul flights – something I find hygienically abhorrent and difficult to opt out of. )
  • Doctors visits still cost money, and even finding a doctor is harder than it should be.

We need to continue to collectively change our behaviour. If we do so we’ll not only slow the spread of disease, and increase our happiness, but we will also increase overall productivity.

As Employers we can be smarter about sick (or child-sick) days, making sure employees understand they have an obligation to do the right thing and stay home. This is easy to apply for businesses where working from home is a genuine option, but more important to apply in customer service businesses where staff have contact with many people.

Schools seem to be a lot smarter about dealing with sickness, but let’s also investigate other options to help kids stay interacting with the class and content while they are away at home in quarantine. Preferably without affecting the parents too much.

As a Society let’s get intolerant of housing that is subpar, building on a movement that already has momentum. And let’s increasingly look askance at people who bring their illness into public.

As above all let’s take Personal Responsibility, and I see this happening a lot more. Stay at home if you are ill, and if you absolutely must be on a plane from Auckland to Wellington at 6am on the 13th of October with your coughing and spluttering, then please strongly consider wearing a surgical mask, as is common in more and more countries.

Posted in NZ Business | 1 Comment

SellShed shedding money?

This is not how you are meant to do it: Online seller SellShed starts up

The seven-person firm has invested hundreds of thousands of dollars building a website and free iPhone app and was now on the hunt for “smart money”

A very bad sign. Rasing money just to build a website and app implies they outsourced the technical stuff (and the question is what on earth is left), and every change from now will cost money. And they will need a lot of changes.

SellShed does not have a payment engine and does not charge a commission. Howell said it instead encouraged users to contact one another and trade direct, believing its service could be funded through advertising and possibly in future by paid “premium services”

Another very bad sign is that there is no revenue model, so the flow of money would continue. A payment engine is pretty basic for this sort of thing – at the very least for premium listings of the ability to buy Facebook ads.

The app had been download nearly 5000 times in its first week,

Better – but this is a vanity metric. The next metrics to track are the actual use, number of completed transactions and, the only one that matters, revenue.

It’s sad to see a lot of money wasted. Time will tell, but the early portends, at least from this article, are not good.

Posted in NZ Business | 5 Comments

A victory for great coffee

Source: Restaurant Brands NZ Ltd 2014 Annual report

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Are you innovative enough?

I’ve been reading Peter Thiel’s excellent and short book – Zero to One. It’s resonating with a lot of people at the moment, and justifiably so. It reminds me a lot of Peter Drucker’s  Innovation and Entrepreneurship, published originally in 1984 and with very similar messages.

My own take is that the art of business is easy, but the way we talk about it keeps changing, at least superficially. I do recommend reading both of these books.

Thiel differentiates between companies making incremental changes, such as those who create new products in a category or new markets for a product, and companies creating entire new markets. Drucker did as well, saying that entrepreneurs search and take advantage of changes, and “create something new, something different; they change or transmute values.

All this this is aligned with design thinking, which, as we did at Better by Design, preaches that the goal is to capture a global niche – something Thiel also pushes. While Thiel puts end-user centred design in the incremental change bucket, and we can argue either way about that, we can all agree that nobody knows they need a product in a category that does not yet exist. The Walkman used to be the classic example of this – a product created by the strong will of Sony Co-Chairman  Masaru Ibuka, while more recently Steve Jobs was famous for doing similarly at Apple.

While Thiel is not enamoured with incremental companies, that’s not to say there are not great returns possible for founders and investors in those companies. Trade Me shareholders were, no doubt, happy with their status as “the eBay (and other sites) of New Zealand”, even as they outperformed eBay on all the vital per capita metrics.

But the outsized gains for founders and investors, the billions and tens of billions, are reserved for really disruptive companies like Amazon, Microsoft, Thiel’s Paypal, Elon Musk’s Tesla, and Apple. Here in New Zealand we have Xero and Vend, each of which attracted investment from Thiel’s vehicle here – Valar. All of these companies changed or are changing the way business is done, and once they establish a foothold the relentless adoption curve takes over.

All of these companies delivered or will deliver outsized returns to investors, and they all required leaps of faith by founders and investors both. Succeeding isn’t certain, as the acquirers of Paypal (eBay) eventually found, but PayPal still delivered years of outsized growth despite not delivering on the true promise of PayPal. And sometimes investment can be in a product that just isn’t going to take – it’s fair to say the jury is firmly out on Valar’s investment in Booktrack, but nobody can accuse Booktrack of being unambitious.

Thiel tells the dirty little secret that we all know – the ultimate business aim should be to create a sustainable global monopoly, but never to call it that for fear of being regulated. Monopolies can extract economic rent (high margins and profits) while they dominate, and that’s where the huge valuations come from. Don’t expect, for example, Xero’s average revenue per customer to stay as low as it is forever, and be wary of Xero moving horizontally into related products once they do dominate.

Thiel suggests that we can pick the great companies as the ones that can  answer the series of questions below:

  1. The Engineering Question: Can you create breakthrough technology instead of incremental improvements?
  2. The Timing Question: Is now the right time to start your particular business?
  3. The Monopoly Question: Are you starting with a big share of a small market?
  4. The People Question: Do you have the right team? (real technologists wear T-Shirts not suits)
  5. The Distribution Question: Do you have a way to not just create but deliver your product?
  6. The Durability Question: Will your market position be defensible 10 and 20 years into the future?
  7. The Secret Question: Have you identified a unique opportunity that others don’t see?

Let’s put these into my preferred way of looking at companies, which I use for Better by Capital, Punakaiki Fund and consulting work:

End User: Timing, Durability, Secret. Is the target end user well defined, and is the product delivering something distinctive and delightful that changes their life? Is the product in a long-term defensible position, and is there a (generally obvious) future development path?  I’m not so sure that Thiel has covered this fully in his questions, but I wold hope it is taken a a given – the product or service has to be great for its chosen niche.

Customer: Monopoly, Distribution: How do you get money for the product or service? How do you expand sales rapidly and sustainably?  How do you capture a global niche market?

Company: Engineering, People: Do you have the founders, staff and governance to deliver? Do you have the internal knowledge and IP, and a track record of shipping?

Investor: Do you have all of the above, and does the investment get you to the next stage of sustainability? Do the numbers work?

For me there seems to be good overlap, and I generally do cover the points raised in the questions in my own work. But the exact form of the model we use to look at businesses does not really matter – just whether it works for you and the business. I’ll certainly be adding Thiels’ questions to my arsenal, but not to replace my own model. I do commend them for people starting on new businesses or developing products.

Posted in NZ Business | 1 Comment

Bonus growth for SaaS exporters

The currency fall has a wonderful effect for exporters, especially those who have most of their costs back here in New Zealand.

As I write this, the NZD versus the USD has fallen about 10% since earlier this year. As an exampled of what this means I’ve made a simple spreadsheet estimating the impact on Xero.

My take is that the fall from the end of May to today would increase their estimated monthly revenue by about 4.3%.

Obviously this is only for revenue received after the exchange rate changes, so don’t expect any surprises when Xero announces their September revenue, although their Annualised Run Rate might have a boost.

But we’ve also heard talk of a desired optimum level of a rate of $.65 US dollars per NZD. If that happened tomorrow (and I am never a fan of fast movements), and if the AUDNZD cross rate stayed the same, then the Xero table would look like this:

That’s would show almost 10% increase in revenue, a lovely bonus for Xero and Xero’s shareholders. Xero does have a lot of staff offshore, but the bulk of their costs would be in NZD, so overall they should see a net increase in profitability, which in their case means little, as they are very well funded and constrained by things other than monthly profitability.

Every other exporter will be facing a similar scenario, but SaaS providers are luckiest because their costs are often largely in NZD, and so they will maximise the benefit.

Punakaiki Fund

Punakaiki Fund invested in three SaaS companies early this year – Timely, InfluxHQ and Mindscape. I’ll use public information to discuss them.

Timely and InfluxHQ are, like Xero and Vend before them, offering their services to the world, but find or found their early growth from NZ and Australia. That’s a natural part of being based here and the relatively high-touch sales and support approach for B2B SaaS businesses. But as they grow at some stage (that’s a bit I’ll leave to the companies to reveal) the dominant parts of their revenue will be from other currencies, so while the short term effect might be relatively small, the long term revenue impact (and the associated value of the companies) is potentially significant in New Zealand dollars.

Mindscape sell developer tools and the error tracking system Raygun.io globally. CEO JD Trask reported that Mindscape exported 95% of their products, and so the exchange rate changes will have an immediate and large effect on revenue. However they also focus their  marketing efforts offshore, so the net effect will be lessened somewhat.

Overall I like businesses that match their inputs and outputs, as we should be investing in and growing businesses that are great businesses, not ones that react one way or the other to currency changes. But that said, a lower currency spells good times for many exporters.

Posted in NZ Business

Sell your house privately in New Zealand – the book.

Over at 200 Square we help people sell their house by using the latest internet tools, and avoiding expensive print and high agent overheads like fancy offices. Our licensed real estate agents  to the wheeling and dealing for clients, and are very successful and selling houses. The upside is that it costs just $4,500 to sell a house, rather than the $18,000 or so average.

But some people don’t want to pay even a $4,500 success fee. So 200 Square founder Grant Wakelin wrote an ebook to cover the basics of selling your house yourself.

Download it directly here: How to Sell Your Home Privately in New Zealand (PDF).

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Time to change: Another Fatality at Lyttelton, Port of Christchurch

On January 6th 2014 I asked When will the next fatality happen at Lyttelton, Port of Christchurch?, after a near miss gave clear evidence that the Port’s safety systems were not in control. It was a prediction that was almost certain to become true if they did not make drastic changes.

The sad answer is that today, August 28, 2014, a person was fatally wounded in a scissor lift accident. That’s a terrifying tragedy for the family and friends of the 40 year old man who died, and my heart goes out to them.

It’s yet another severe indictment on the owners, directors and management of the Port.  

It was clear then, as now, that the safety culture and systems at the site were broken. In January I stated:

Two fatalities and this incident are well beyond any normal signalling required for a site to recognise it is in crisis and for major change to occur.

Here’s what I said in an earlier post, in December 2013. Lyttelton Port of Christchurch this has to stop. 

What should happen?

The Port has faced tremendous challenges following the earthquake, and no doubt the challenges will continue as the rebuild evolves. But challenges to operations should never be a priority over safety.

LPC is a listed company, but 80% is held by Christchurch City Holdings (CCH), who are generally very smart. CCH and the board should be entering crisis management mode, and ensuring that the company responds with appropriate seriousness. At the very least I hope they all understand that this is arguably a lapse in duty of care that could elsewhere remove the site’s “license to operate.”

The board and management team should not rest until they can state unequivocally that the safety systems and culture have changed, and changed for good, and that people on their site can go home unharmed each day.

What would I do?

If this were under my control the port (and any other facility) would be shut down immediately after any fatality, and not reopened until control of fatal risks was regained. I would conduct an all-hands meeting (as suggested by the union) and ask everyone to commit to a tougher set of site safety rules – and enforce them. The rules would include the obligation to stop any observed unsafe work, and I’d hire in external experts to stick around for months to coach everyone through the process. Not everyone will get the new Zero Harm approach, and a small percentage may need to be prohibited from accessing the site.

As an uninformed outsider in any case like this I would stand the CEO down. I would replace him with a new leader with a mandate to place Zero Harm back at the top of the site priorities. I am sure the CEO in this instance is going through hell, and I appreciate that me saying this will not make that better. He may well be superb at his job, but the priorities the board and he agreed to were not correct and an epiphany is required.  So while the CEO may be able to change his approach, he is also somewhat caught in the crossfire here, and in my experience removing the CEO (and at times the management team and/or board as well) is the strongest signal that owners can send to a site that things simply have to change. 

Finding a new CEO who will drive change will not be an easy job, and neither will that person have an easy time of it. He or she will need to work top down and bottom up, and get the support of the Union, employers and all the other players on site to make sure that safety outcomes improve. It’s a challenging job, but one that has been successfully done across a wide range of industries – I’d start by calling recruiters for senior staff in the Australian mining sector.  

The standard is quite simple really – we should all fight to ensure that everyone gets to go home safely at the end of each day. 

 

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