67 is the new magical number



photo, originally uploaded by LanceWiggs.

Posted in NZ Business | 2 Comments

The XT network debable – Winners and Losers

I was pretty angry at Telecom yesterday when I wrote Pay the $900,000 Telecom you cheap sods, but a day later it seems that they will do so. Good.

Now that the debacle is over, let’s check the winners and losers tally.

Winners – in order
Vodafone, for a well-timed legal action which created a major PR win and delay of a rival network

NBR – and Chris Keall for two excellent articles – one head and shoulders over the rest in summarising the court proceedings, and the other tipping that a settlement was likely today. Even their reporting of the final result is excellent.

Telecom – for capitulating in the end and continuing the journey on the long road back from purgatory

The Lawyers – they always win

Losers – in order

Telecom

  1. For not doing the right thing from the start, and installing the filters to prevent interference with Vodafone’s network
  2. For not understanding how this was going to play out early enough and letting it get to court
  3. For the resulting major PR loss, the delay of the new network and the wasted marketing spend
  4. and bonus for all this happening so soon after releasing a video that says how wonderful they are

All of us customers – To have to watch two giants playing silly buggers with each other while we cope with inadequate mobile and broadband infrastructure

Vodafone – for having released into the public domain information that makes us thing you are stretching your network’s capabilities, making us realise why our call and 3G connections are so lousy.

<update: Reynolds is unrepentant, and says that Vodafone will share the costs of Filters. He also says that there are already 1000 filters in place. Courtesy of the NBR – yet again.

Money quote:

Although Dr Reynolds sees his company in the right, Telecom settled the case, seeing a two-week delay in XT’s launch as a price worth paying to rid it of Vodafone’s High Court action, and to answer a request from the Justice, in Dr Reynolds’ words, for both sides “to sort it out”.

and

“there will be some circumstances in which we share costs”.

which has the ring of  Telecom paying almost all of the time.

Also

“Give me a break. The first I heard of it was late last week,” says Dr Reynolds, of Vodafone’s threat to go legal. “They finally came to the table two days ago”.

I would be looking searchingly at the strategy and engineering folk in Telecom if I were Dr. Reynolds. How the heck could this threat have been missed?>

And for your enjoyment after the fold are some tweets from this morning: Continue reading

Posted in media, telecom | Tagged , , | 3 Comments

Spend the $900,000 Telecom – you cheap sods

Sigh.

And there I was praising Telecom the other day – praise it seems that was all too soon. I am concerned that recent behavior is indicating that Telecom is back to its old monopolist ways.

I write of course of the XT network interference with the Vodafone network. The facts laid out in Vodafone’s submission and the court case – ably reported by the NBR – are on the surface pretty simple:

  • Telecom’s new XT network interferes with the Vodafone network
  • Telecom has known about this for a while
  • Telecom could have removed this interference by spending $900,000 to install filters

There is a bit more nuance in the court case, but as a customer I am mad enough as it stands.

Yes Vodafone could spend some money to maintain their own service quality, yes Vodafone coverage is not close to perfect anyway, and yes Vodafone could have formally engaged with Telecom earlier.

But one the thing that has changed is Telecom’s new network.

The absolutely crazy thing is that the $900,000 to update all Telecom cells is chump-change in this context, and by not spending it Telecom is not only risking a lot, they making us all suffer:

  • Telecom suffers as they suffer PR damage, just as they launch a new network
  • Telecom suffers if their launch date is delayed
  • Telecom and Vodafone suffer financial costs of the court cases
  • Vodafone suffers as their network quality drops precipitously
  • We all suffer as we all have even more lousy phone services
  • The lawyers win – they always do

It’s positively juvenile, and the sort of behavior I would have expected from the old Telecom administration.

So please wake up Telecom – and behave in a way that shows you care about all New Zealanders. Demonstrate some of the values that you are trying to show in the video you produced.

  1. Fess up, say you will install the filters as quickly as possible
  2. Install those filters within a week. Nothing is impossible
  3. Settle with Vodafone so that their lawyers don’t run your business.

In the meantime those in the executive suites please ask yourselves How did this happen? Was this a decision made at the top or were you as blindsided as much as we were? If you were blindsided then how could your culture let that happen?

Until you fess up and move on we are back to the old promote one way and behave in an entirely differnt way – it doesn’t work for children and it certainly doesn’t work on us adults.

We’ll find out tomorrow at midday whether Vodafone is vindicated, but in the meantime I just want my phone to work properly.

Posted in Broadband, Internet Business, NZ Business, telecom | Tagged | 11 Comments

The media is no longer the message

An interesting survey by eMarketer, via WebProNews:

Stop. Don’t look too hard at the table. This survey is fundamentally flawed.

The flaw is simple, and it reflects an old mode of thinking: These days the media is not the message.

For example there are over 200 million blogs (they have stopped counting), and to rate them all together is patently unfair. You cannot compare, say, Bernard Hickey’s Interest.co.nz/blog with The Bad Blog (which is what I found when I googled “bad blog”, and which is actually not that bad).

To put it another way, on interest rate matters the interest.co.nz blog is more trusted than, say, TV1 Business News. However on general business or current events news, TV1 would be better.

Meanwhile Bernard and the rest of the team’s blog is less trusted, by me, than the Wall Street Journal – a publication that is a newspaper, has a online news site, offers video, does product comparisons and has blogging.

How do we measure all of this that? How do we compare the WSJ video with their print edition? How do we compare Fox TV news with their internet site with their internet delivered video?

The answer is that we don’t, as we know that increasingly the media type irrelevant and the publisher’s brand is everything. We seek our trusted providers, and we are getting pretty agnostic about where we find them:

  • If we are watching TV then we know that the BBC has a better global perspective than Fox News – unless we are right wing and living in the USA.
  • If we are online then the NYTimes is better than the Waikato Times – unless we live in Waikato and want the latest Hamilton news.
  • If we are reading about something esoteric then we know to search the internet, and that Wikiedia or a blog is probably going to have the best answer.

We assess credibility very quickly. We look for the publisher (e.g. Bloggers that write for newspapers have more credibility), we assess the credibility of the writer by looking at the production or site design, checking the publisher or writer background (about 2.2% of the traffic here checks my bio), see who refers to the that source, then look for well-crafted writing and video solid references and so on. We are often not really aware of how we do it, but we can do all of this in less than, say, 5 seconds.

It used to be that we looked for beautiful people to deliver news that we trust, but Fox news in particular has made this increasingly irrelevant – as we have come to realise that beauty is not correlated with intelligence or trustworthiness.*

We have already made decisions for older media – The Dominion Post and TVNZ news have a rich heritage, and so we tend to trust them, while a new magazine like Idealog will need to earn our trust through excellent writing, distribution and product design. However the older media can lose our trust, and when it goes, as it has for me and most TV news, it is very hard to earn back.

So how should the survey have been written? Here is one possibility. It’s not ideal but I feel it is a better way to ask the question. The audience is of course biased – and it will be interesting to see how biased.


Posted in Business, Internet Business, media | Tagged | 6 Comments

Lingopal is big in Japan

Lingopal translates between 42 languages – and can be operated in any of those languages as well. That means it is of use to people shopping on all of the Apple iTunes stores.

So it was always going to be interesting which countries picked us up first. Would backpackers from Australia and UK find us more useful, or would we be big in the USA?

Turns out we are biggest in Japan. We have done no marketing there – it is all organic growth as our google ad writing and PR ability is not so good in Japanese.

To see how different this is versus the normal distribution of sales by country, here are out sales compared to Flight Control sales figures:

I guess it isn’t surprising that we are not big in the USA, as the average person travels there a bit less, and it really is early days for every country. I’d expect us to be bigger in the UK and Germany though – but this is just a matter of when.

At least the Japan numbers are telling us that Lingopal is useful and that when it gets popular it stays popular.

You can skew these numbers if you like – go ahead and buy Lingopal on iTunes!

Posted in NZ Business | Tagged ,

Importing MYOB data into Xero – opportunity?

I’m trying to convince my mother to switch to Xero from MYOB. The unfortunate problem is that all of her history is stored in MYOB, and so switching requires re-keying of invoices and the like.

The solution to this is to commence using Xero at the start of a financial year, which leads to a spike in Xero sales at the end of each year, but means a discontinuity in systems. Moreover the end/start of the year is a particularly busy time for bean counting, and is therefore the worst time to try to change your modus operendi.

To me this is a pretty simple “just do it” for Xero, and there are three powerful reasons for doing so:

  1. Encourage switching throughout the year, increasing speed of adoption and word of mouth sales through the year
  2. Increases sales by letting customers have test drives using live data – customers can upload their MYOB data to Xero and just start playing. It’s pretty hard not to notice the difference in usability when your own numbers are displayed.
  3. Provide a better product to customers by importing history and thus being able to report comparative results versus previous financial periods

How about it Xero? Sure this is a non-trivial task, but surely it is possible?

If not, then let us know, as there is a market gap here and a new company (let’s call it NewXco) could help.

NewXco would simply provide a (semi-)automatic MYOB upload to Xero service, charging a fee or taking a commission on Xero sales. The repetitious work could be done out of a cheaper location, such as India or rural New Zealand, and the cunning code provided by some smart locals. Anyone in?

Posted in Australia Business, Internet Business, NZ Business | Tagged | 9 Comments

How Baupost’s goresight let them weather the storm

Notes from Seth Klarman’s speech at Columbia Business School is, interestingly, the most popular clicked-on link from here, coming from The Baupost Story post. So let’s do a round up of coverage, find some more reading on the Baupost story and see what we can learn about how Baupost’s approach pays off for investors during tough times.

First here’s an excerpt from Seth Klarman’s wildly expensive “Margin of Safety” book – talking about liquidation value. I’m not so sure that it is entirely obeying copyright rules, so read it while you can.

Next have a read of some early Baupost Group letters (recently uploaded by Noise Free Investing and found through  Valueplays) to great insight to how Baupost operates. The letters refer to a smaller fund that is run alongside the main fund for friends and family of the main fund investors. It is remarkable to see the foresight in the commentary leading up to and through the dot com boom and bust and to see the letter series end in mid 2001 with the fund holding 48.6% cash. That no doubt set them up well for the post September 11 crash, and so I guess they continued to do well. I would dearly like to see the rest of the series of letters – in particular the returns over the last two years would be fascinating.

As it happens another letter has leaked out from the main fund from September last year. The comments are pretty telling, again showing Baupost’s foresight* and providing vindication for their cautious approach to investing. (I first miss-typed that as “goresight” which I thought was appropriate)

Market Folly has a good summary of Baupost’s recent behaviour – mentioning that Baupost has $14 billion in assets, which was mostly 50% cash in recent years and that over 25 years the compound annual return was 20%. It seems that Baupost is starting to spend that cash now as they see bargains that meet their rigourous requirements. It takes real discipline to sit on a hoard of cash and not invest it, and while you may miss out on the next dot com or housing boom by doing so, you’ll also miss out on the potential to lose everything when those bubbles burst.

A more recent interview with HBS on Market Folly and via Valueplays again lets us know that Klarman started with just $27m in the fund in 1982, and was paid a salary of a princely $35,000. The new news is that the writer also mentions that Baupost had cut their cash hoard in half – to about 25% – by December last year.

Compare that 25% cash figure to April 20  last year when  Baupost had 45% cash, 20% equities, 17% distressed debt, 11% real estate and an amazing 6% in South Korean equities.

45% cash in April 2008 was an astonishingly smart move – and Seth Klarman even mentioned that they would have gone to 100% cash if it made sense. That let them go on the gradually accelerating shopping spree.

The Korean move was interesting, as the market there hasn’t fared too well since then in USD terms – down 44%. However the Korean Won is also down 25%, so overall the market was down only 18% in Korean Won terms, and I imagine there was a currency hedge. That’s much better than the S&P500’s 35% loss in the same period, but still tough given Baupost’s “Rule 1: don’t lose money” philosophy. Baupost would have picked decent securities in the Korean market and probably had some interesting hedges against the high volatility events that happened.

The Korean market in US Dollar terms
Google
The Korean Won versus the USD
Google
The Korean Market in Korean Won terms
Trading Economics

On the other hand Baupost may have simply closed out their Korean positions early.

Posted in Investing