Free Rice: Addictive, but is it a scam?

Addictive. Very addictive – I’ve managed to donate 1830 ‘grains of rice through the UN to help end world hunger’.

free rice

However I’ve only managed to get to level 44 – and then only once. There are 50 levels.

Here’s the deal. Each time you get an answer right, 10 grains of rice are donated through the UN. The money comes from the displayed ads – and the advertisers are solid brands, as you can see.

Here’s the issue:

freerice growth

There have been 1.2 billion grains given out so far. That’s 120m correct answers – call it 130m pageviews.

At a CPM ($ per 1000 impressions) of, say, $20, that’s $2.6 million in income. At a CPM of 10 that’s $1.3m. <update – apparently these are way too high> They feel like a good range, but really I’m just guessing here. Does anyone know what sort of rates these guys would be paying? I’m confident that the revenue is at least $1m though – it could be much higher, but as you see, it will not be lower.

Rice is light: 1000 grains is about 26 grams, so 10 grains is about 0.26 grams.

Rice is cheap: 1 bagged metric tonne is $350, FOB (in the ship) at source.

So 1.2 billion rice grains is about 3,120 tonnes <update – wrong by 2 magnitudes>, or $1.09m FOB.

Therefore the site owners are making everything above a CPM of about $8.

Advertisers – if you are paying more than that, then you are enriching one John Breen [update: dead link removed], who is a very smart cookie who just happens to have also collected $1m for global poverty efforts.

I love this, and I love the moral dilemma aspect as well. Is it right to enrich John Breen when you are also enriching poor children?

My answer is yes – as the $1m worth of rice is $1m more rice than the UN had before, and you’ve had some enjoyment along the way. Your opinion may differ, and perhaps John Breen is a non profit, and the funds channeled to worthy causes or business building?

<update>

thanks for the comments picking up the rather undeliberate errors. I’ve now corrected them and put in the latest numbers

Cycling Friendly Perth

I see that Perth didn’t make the list of the top 11 cycling friendly cities in the world, although somehow I doubt that 4 of the top 11 friendliest bike cities are in the USA.

Anyway – perhaps this photo I took on a bicycle ride today will explain why Perth didn’t make the list:

perth

The blue sign on the right signals a bike trail. The Green wooden sign on the left has a no cycling logo:

Perth

and the sign in the middle.. well let’s just get a close up:

Perth

Still – with weather like this, who is complaining?

perth Weather

10 Questions to Xero’s Rod Drury

Rod kindly offered to answer some questions about Xero during this earnings release phase, so here they are. My questions are in Bold, Rod’s answers in Italics. Rod notes that

we are trying to be as open as possible so I’ll try to give you as much info as I can and explain where we can’t.

Basic Data
Rather than attempt to reconstruct your half year numbers, it would be useful to have some facts that can be used to reconstruct your P&L:

1: How many new customers are you signing up per month – i.e. in September and October?

[Rod]Too early to provide any meaningful numbers.  We will provide the customer numbers as soon as we can after the reporting period. (Hopefully the day after as we did on 1 October).  If we provided numbers each month externally at this early stage it would drive the wrong behavior and put the whole company on a short term focus.  So for now we are reporting operational metrics each half.  It’s a simple model though, customers * price paid * months.

2: What is the split between new NZ and foreign customers?

All NZ right now.  We are planning to have Australian and UK Customers next year.

3: What sort of churn has there been – what % of customers have dropped out so far? how long do they last?

Too early to be meaningful yet but so far churn has been surprisingly low.  We have observed that there is a status of ‘paid but not engaged’. That is they have paid but not really used the software.  Once we get customers actually using the software then churn drops right away.  So we measure activity and have strategies to get customers engaged after purchase.

Key Features
There are three main features I believe would boost Xero’s value – Seamless import/export to MYOB et al, Offline capability and pricing that will attract meaningful trial.

4: (When) are you planning to release MYOB import/export functionality?

We are progressively making it easier to convert from other systems with each new release.  Right now we have a fairly manual but not onerous process and that is easing the process with each release. We do however think that people should stand back and relook at their chart of accounts when they do a conversion so that their accounting system gives them the information they need to drive their business.

When you start interacting with your accounting system daily and it becomes a real management tool you want to be measuring the right things.

5: (When) are you planning to provide Xero offline functionality?

It hasn’t been a request we’ve heard loudly yet from customers but of course we are following closely the offline capabilities of the standard browsers due next year, so it may make sense do do something then.  Expense claims might be a good scenario where offline capability makes sense.

6: (When) are you going to introduce discounted/free pricing for new adopters?

Right now we have built a good product company.  Over the next year we need to build a great sales and marketing company and there will be lots of techniques that will drive new customers and revenue.  A key focus will be communicating how much time and money you save with Xero.  We save hours each week and days a month. We’re not seeing a huge push back on cost at this stage.

With each new version we are delivering more functionality which makes it even better value. We have also identified parts of the market where we may be a too high a price point and over time we may go down there.  There may also be markets that we go up too as well.

We have a lot of options and as the product broadens over the next 6 months we will look at where we are positioned but for now we’re comfortable.

Forecasting
Xero is best able to project Xero’s future earnings  – while we outside must struggle with vague assumptions. What are you seeing ahead?:

7: How many customers do you forecast Xero will have in 1, 2 and 3 years?

The nature of SaaS is that it is hard to predict future numbers.  We can manage our costs, we can build great products, and we can do clever marketing.  We have targets that we manage the business to.  With SaaS we seek to minimise the relationship between our largely fixed costs  and revenue.  We know the minimums we need to get to, to deliver a return to our shareholders – as laid out in our offer document.

8: Where will those customers be?  geographically and verticals?

Our initial focus is NZ, UK and Australia.  Service based businesses are a great early vertical that match our current feature set. This will broaden quickly over time.

9:  When are you forecasting to reach profitability?

We committed to 3 years in the offer document.  If we found that revenues accelerated faster than plan we would invest faster.  We have put ourselves in front of the small business SaaS wave and it’s all about speed right now.

Information release
By your audio release shortly after the half-year finished, it seems clear that you believe in providing more rather than less information. This is particularly important for such an early stage company, as there are few other indicators that investors can rely on:

10: While NZX requirements may not dictate frequent releases, are you planning to move to more frequent earnings/KPI releases? What will your information release approach be?

At this stage each half and we will release operational metrics as soon as possible after the end of period.  Doing it more frequently would drive the wrong behavior in the company and investors at this early stage but our philosophy is to be very open with the numbers, as we have been.

Hope this is useful and sets our approach to market communications.

AFR will not go free, BusinessSpectator launches

Fantastic news – AFR.com.au has redone it’s moronic pricing scheme,  which charged readers (whoever they are) anywhere from $25 to a staggering $150 a MONTH.

Rest assurred – they have now come back to reality and are charging just $109 for non subscribers, and $45 for subscribers.

That compares favorably with the WSJ.com site, which charges me $99 as a non subscriber.

But wait….

The new AFR.com.au figure is still PER MONTH, while that WSJ.com figure is per YEAR.

So for the dubious privilege of using AFR’s unusable flash-based service, I’d have to pay, well, basically 12 times what I pay for the Wall Street Journal.

And as the article in fellow Fairfax publication smh states:

Keeping subscriptions contrasts with a move by The New York Times, which in September decided to scrap its TimesSelect subscription service, which was two years old, in favour of increasing advertising sales. The chairman of News Corp, Rupert Murdoch, has indicated he will make access to The Wall Street Journal’s website free

Meanwhile the obvious is happening:

A former AFR editor, Alan Kohler, launched a free finance site, BusinessSpectator, last week.

Actually that Business Spectator site is pretty good. It was the first place that I saw the news about $113 billion giant BHPB (who I am consulting to a tiny part of) bidding for $70 billion rival Rio Tinto. They also already have advertisements.

Xero results – first look

First look at Xero results

Revenue

1: Xero made $24k from 204 paying customers and 404 users.

That’s $117 per customer and $59 per user, but the report states $54 per customer. Perhaps the $54 is the average monthly per customer revenue.

Cashflow

2: Xero received $16k in cashflow from customers (“receipts from customers” – i.e. an additional $8k booked but not received – a useful number)

3: Xero spent $2.36m (operating) + $486k (Dev costs) + $240 (other assets) = $3.086m in cash on operating over the period.

4: Xero made loans to 3 directors for $300k. The money from those loans ended up being passed back through the IPO procees but will not be forgiven.

5: Xero earned $493k interest (from the IPO money) and $107k GST = $900k in cash.

6: Xero received $15m from the IPO, which cost $1.1m for a net return of $13.9m.

7: Xero now has $12.6m left, spending $2.8m (plus that $1.1m IPO cost) after starting with $1.5m and receiving (net) $13.9m.

This is all over six months, and obviously Xero has moved forward in both revenue and burn rate per month over that time. The next step is to figure out their monthly burn rate and try to see what the future holds.

Stay tuned.

Monthly costs are $50 per customer (and yes – $10 for additional customers). Xero was launched in – mm when, and moved to general release in August.

So this 2 month (August/September) result represents 2.34 months of payments per customer.

BNZ: Owning customers on and offline

During my sagas with BNZ I’ve been struck at how unfailingly polite and efficient the BNZ Customer Service Representitives (CSR’s) have been. They may be dealing with obsolescence on their screens, but at least they are nice with it.

They. That’s an issue, and an issue that commenter  Keith Tan pointed out also happens with personal bankers.

Over the last 4-5 months I’ve had Peter M, (twice), Renee G, Kylie T,  Krissy W (4 times), Laura P, and Julian A – all CSR’s – reply to my emails.

That’s 6 people for 10 emails.

It’s pretty easy technology-wise to direct all of my emails to one or two people, particularly when the emails are of a similar nature or in the same thread. It’s also pretty easy to escalate ‘difficult’ customers like me to someone with a different title.

Neither has happened, and the overwhelming effect is the impression that BNZ as an institution does not listen and does not care about me as an individual. (They certainly don’t read blogs :)

Let me reiterate – the individuals concerned have been excellent. However, there is no overall account ownership. Every message stream is a transaction – nothing more.

My suggestion to BNZ is to move to consistent customer ownership – both on and offline. That’s the same person in the branch and on the other end of my email. CSR’s have to sit somewhere, so why not put them in a local branch?

The reason I started with BNZ in the first place was because I knew my personal banker.

BNZ can reinvent the personal banker experience by moving to a consistent person in all touch points, and then use this relationship to really understand my needs, give me the products and services that I desire and make me want to stay.

It’s all about the people, not the systems – but the systems are getting in the way of the people.

BNZ – it gets worse for all of us

My own personal BNZ Sucks saga continues, but there is worse news, via a response to my internal emails:

From April 2008, all Internet Banking customers will be required to use NetGuard when logging into Internet Banking.

I applied for my damnable Netguard card on the 21st of October (which I blogged about in passing), but when I was at home over the last few days there was…. ….no card.

So I applied again. and again. and again. Sure enough – there is no mechanism in the Netguard application application that recognises that you already have an application. (That sentence does actually make sense.)
But when I went to log in just now, I got this:

bnz
Once I bypassed (I get 3 weeks) the useless login ritual, I found that an internal email I sent was successful in ordering a Netguard card.

I do not envy the poor (but lovely) folk that work at BNZ and have to deal with these systems.

Along with the April 2008 information, there were a few more snippets in the previous internal email.

Continue reading “BNZ – it gets worse for all of us”

Tokelau connects everybody

Tokelau’s three atolls have no airport nor harbour and are two days sailing away from Samoa and just two years ago its 1100 Polynesians looked and sounded like they were in another time and space in the past.


Now they have free broadband

Tokelau is, of course, still part of NZ. It’s a great story.

Tokelau has no Internet cafes – in fact it has no cafes at all and its solitary bar, the Luna Liki Hotel on Nukunonu, serves warm beer – when it has any.

But a good Internet wireless service embraces the tiny islands that house the people. The three schools and three hospitals are all online and the service is being upgraded to a high-speed satellite service.

Telecom – believing marketing trumps reality

It may not actually be an iPhone, but Telecom is inviting comparison between its latest handset, the Okta Touch, and the much-hyped Apple handset.

We don’t have to see the Okta to know the answer to this one.

I watched the video. TVNZ interviews David Gray (Grey?) Telecom’s Head of Consumer Marketing, which is just the title of the person you’d expect Telecom to send. Why not send the CEO, if this is so important?

David answered the first question (Why Okta?) by saying that the brand

Resonates with consumers as a name that has technological expertise and is accessible.

I’ll refrain from commenting.

He later said that the Okta Touch is aimed at business users. This is clearly not the iPhone market.

David reiterated 3 times that the Okta has Windows Mobile 6, but I’m not sure people care.

Finally he got caught trying to nuance the distinctiveness of the phone – “does this exist anywhere else? was answered by “This product does not exist with the Okta branding”. The interviewer drilled and got a more honest answer in the next question.

Nobody talked about the path beyond obsolescence when Telecom changes their high speed network next year

We’ve never had it so good

Things are booming  in New Zealand – and we have 3.4% unemployment forecast for the September quarter by Westpac, a strong Kiwi dollar and low inflation.

I have not seen signs this good in my lifetime.

I do worry about US housing and sub prime happenings, froth in the US equity markets and froth in the NZ housing market.

But over the last four days in NZ I sensed a growing sense of optimism, dare I say even a ‘we can do anything’  feeling. That feeling is growing, but still nowhere near US East Coast, Silicon Valley or even Perth.

Let’s keep it coming.