Powershop saves me 32.5% at the moment

So Powershop lowers switching costs, but as you can see from the headline it also lowers actual costs.

So how much can you save? If you are like me – then a lot.

I was using Contact, who like the other companies, charge in two ways – cents per unit consumed (kWh) and a service fee. Powershop charges just c/unit and does not have a service fee.

Contact Prices
It’s hard to compare last year with this year, beacause there have been some tasty prices rises in the interim.

Between my September 2008 and January 2009 bills the daily “One Meter Managed” service charge rose from $0.9811 to $1.102 – a 12.3% increase. That’s an impressive increase in a recession, and not justifiable on what has to be an almost entirely local cost base.

Meanwhile my kWh price from Contact rose from 17.292 to 19.059 c/unit- a 10.2% increase. That 19.059 cents is before GST – so the actual price per unit is 21.44 c/unit after GST.

The average home uses 8000 units per year, or just under 22 units per day. At that rate the $1.102+GST charge is equivalent to 5.66 cents per unit, making the actual price per unit 27.0977 c/unit. This is the rate to compare to the Powershop rates, which include GST and service fees.

I save 32.5% at the moment
The cheapest Powershop charges for me right now (they vary by location, time and usage) are 18.36 cents per unit, including GST. (Our own FlowerPower and Powershop’s Standard Power are both at that rate.) That’s 32.25% less than Contact’s price per unit including daily charge of 27.0977 cents.

32.5% is a staggering difference for an industry that is meant to be low margin.

However the Powershop prices do change by season – and we are in a relatively low price season (for Wellington) right now. Winter is the peak period, and Powershop is selling me power in advance for winter at 22.49 cents. That will rise as winter approaches, but as 22.49 cents is still 17% lower than the 27.0977 cents that Contact charges I feel optimistic that the Winter rate will still be less. (I don’t know – our margins are tiny and the wholesale price dictates all).

Now I was away for most of the time during December/January, and so the impact of the daily rate was much higher in cents per unit terms. That 18.36 cents per unit was almost HALF (52%) of what I paid per unit for December January. (Your results WILL vary, but this is astonishing)

Do this using your own power invoices (we will work on handy calculator) and prepare to be shocked.

Find your cents per Unit (kWh) rates on your bill, add 8 cents per unit to them to make them comparable, then compare with Powershop’s rates. (8 cents is 5 c/unit for daily charges and 3 c/unit for GST).

So sign up to Powershop and save, and sign up with via this link and get $20 free “sign-on bonus” electricity as well.

Up next – FlowerPower and Powerkiwi.

Powershop lowers switching costs – and that is good

A while back Ari from Powershop gave me, and a few others, a demonstration of Powershop – a new way to buy electricity. It’s pretty cool – you can choose which supplier you buy your units from each time you buy.

I loved the idea. It reduces the pain and cost of switching from one supplier to another to zero, and so means the market for consumer electricity is more efficient. This means you can continuously chose the cheapest option, rather than only get offers for lower prices once you switch away.

In short – cheaper electricity.

I liked it so much ~~I bought the~~ we (a few of us Kiwi bloggers) formed a company – PowerKiwi. PowerKiwi provides (so far) two products on the Powershop site – FlowerPower and The Green Power Company. More on those and Powerkiwi later.

Anyway, despite Contact disconnecting both my gas and my electricity without reason in the past, I had stayed with them, as I figured the others were just as bad, the issues were with the industry and most of all the pain of switching was just too high.

Enter Powershop.

Switching to Powershop was really simple – a web form to fill in, with no paper involved, and no paper ever in the mail. I had an old power bill handy, which sped things up as I could enter my “ICP” number. After being disconnected when my neighbours moved, I am glad that I can give the industry their own number to identify me.

However Contact Energy is still managing to have their day.

I had a dual account – gas and electricity, with a credit balance on the account. When I transferred the electricity account to Powershop they split the account into two – gas (continued) and electricity (paid off and stopped).

Contact managed to place the remaining credit on to the dead electricity account (they now owe me $50), while I received a bill for the gas account – for about $50. Muppets.

I’m also starting to receive unsolicited mail from Contact – telling me how I could save if I signed up and how much they would like me to, err, call them (and wait on hold). Sorry – no. Please stop wasting paper. And calling them, their competitors to shop around for the best prices is just far too much pain.

My February bill was negative, as the estimated meter readings had been incorrect. That meant that Contact got to use my money before it was rightfully theirs.

All this is “switching costs”.

Most of us (Powershop market research says) are paying more than we could be for electricity – and we are doing so because switching from company to company each time the price moves is far too painful.

It is also expensive for Contact and their competitors. That marketing material costs money to create, print, customise, find addresses for and to mail. It’s also messy at the letter box, destructive of our resources and, well -it’s called junk mail for a reason.

Because I can enter in my own meter readings, I will catch any “coffee shop” readings and wildly wrong estimates – so called because the meter reading is made while the meter reader is sitting in a coffee shop. I can understand that it’s hard to trek up to the top of Roseneath in the wind and rain, but now at least I’ll know when that happens.

I can also pay for my electricity when I want to – each week, month or in arrears automatically. I’ll get discounts for paying in advance – be it next week, month or even for winter. Contact sends a monthly bill – and strangely enough my December/January bill was for 35 days – a nice end of year bonus for them.

So if you are convinced – then sign up, and get $20 of free electricity when you do from FlowerPower (use that link to get the $20).

Need to know more? Check out the next post to see how much I saved. It’s shocking.

Why this site is in #blackout

#blackout

Section 92A of Amended New Zealand Copyright Act comes into effect on the 28th of February, 2008.

The chilling effect of 92A has been reported here before – one email to an unused address, and a family’s internet connection was switched off.

It is pleasing that MP’s from all sides have indicated that this section of the act has issues, and my personal belief is that the 92A section slipped in without notice of almost all MPs.

However the required code of conduct between ISP’s and the “Creative industry” is unlikely to be negotiated before the implementation date. Much more crucially there needs to be public (internet users) and creative, people that are not associated with the RIAA and MPAA controlled NZ equivalents, representation in the drafting, agreement and implementation of any code of conduct.

We should recognise that society and our economy now demand that high speed reliable internet access is a utility, and like electricity, gas and water it should only be switched off in exceptional circumstances.

<update. After 7 days of pressure and campaigning the Cabinet has today decided to delay implementaton for a month (March 29), and for another 6 months if there is no agreed code of conduct by then. Well done to the Government, and to the global campaign.>

#blackout – is self regulation the answer?

Here is a commentary on the change to the copyright act, section 92A, and the #blackout protest. Its by my father, Glen Wiggs, who is a lawyer and ex-head of the Advertising Standards Authority, a self-regulating organisation here in NZ. Dad is currently the Adjunct Professor of Advertising Regulation at Sunshine University, and an expert on industry self-regulation.

The key issue is that it amounts to conviction without trial. In the event of an ISP terminating then if challenged in court it would need to prove that the principles of natural justice were followed. In other words a fair trial. The law is draconian but it is incumbent on the ISPs to establish procedures that are fair and include the right to be heard.

Therefore if a third person did the downloading then this would need to be taken into account by the ISP.

Yes try and change the law but this is likely to take years. The quicker route is to press the ISPs to set up a fair system where all parties have the right to be heard and the decision is made by an independent person/tribunal.

If you compare it with advertising. It is common for complainants, including politicians, to demand that an ad be withdrawn immediately. This would be conviction without trial therefore the ASA was established.

Carry on the protest but you may be perceived as defending law-breakers. However you will get public backing for a fair trial. There is no need for the law to be changed to achieve this objective as it can be done by self-regulation

Bad news for Cricket: Sponsor Standford is being investigated

Via the WSJ it appears that Stanford International is under investigation:

Stanford International Bank Ltd. of Antigua recently failed to provide some $16 million in funding to a small Florida telecommunications firm, while a small Alabama health-care firm said it was unable to complete a roughly $62 million merger after funding fell through.

….The disclosures raise new questions about the activities of Stanford International Bank, part of a sprawling financial-services network controlled by Texas businessman R. Allen Stanford. As reported, the Federal Bureau of Investigation and securities regulators are examining the bank’s marketing of high-interest certificates of deposits through affiliates in Texas and elsewhere.

It doesn’t seem totally bad, but R Allen Stanford is a huge support of cricket in the West Indies, and it would be really sad to see that go away.

How bad things get when it’s only the brand

There is very little you can say to defend this leaked (I hope) report on Pepsi’s new logo (big pdf). Go and read it if you have not already – it will affect you in some way. I felt ill.

A few snippets to show just how far removed Pepsi’s branding people are away from the quality of the product:
no idea what this is

Apparently Pepsi’s DNA was conventional is is now innovative. Or something. But the product is still high fructose corn syrup (USA) or sugar (elsewhere) and water. Indeed I feel that Pepsi and Coke lost all hope of product quality (in the sense of “good for you”) years ago.
verbiage
If you ever see this sort of prose from one of your marketers or an external consultant then show then the door, and quickly. “We think it looks good, it tests well and we can animate the smiley face” would have sufficed.
Newtonian nonsense
Apparently Pepsi cans are very heavy. Very very heavy.

The best response from the web has been this cartoon from blowatlife. I won’t be able to look at the new logo without seeing this now.

It’s the products not the brand

A timely find – a viral video about Trader Joes – a small USA chain of food stores that are lots of fun to shop in. The products at Trader Joes are high quality – and that is especially relevant in the USA where (Whole Foods aside) it’s all to easy to buy processed rubbish.

and from the Trader Joes website the right rhetoric:

If there’s one thing that sets us apart from all the other grocers out there, it’s our products. And not just the products themselves, but how we bring those products to you.

You see, our buyers are like culinary ambassadors. They travel the world – from exotic locales to local farms and dairies – looking for interesting, great-tasting foods and beverages at terrific everyday values. They do all the heavy lifting for you.

It’s not hard. Focus on the products, not the brand.

It’s the Gelato, not the brand

Giapo
Somewhat by mistake I found myself reading something that Kevin Roberts had written – he apparently has a blog in NZHerald. This post was about new Queen Street, Auckland, Gelato shop – Giapo, and here’s what he had to say about it:

The store has been created as a Lovemark and is dripping with Mystery, Sensuality, and Intimacy.

What? To me that’s missing the point. Businesses create products not brands.

I walked past Giapo the other day, and it it could fit well amongst the several gelato shops in Fremantle – bright, clean design and so forth. It’s good to see.

However the Fremantle shops hold a valuable lesson for Giapo, as even with stunningly new design and beautiful friendly staff at rival stores the crowds just keep going to the place with the best gelato – Armano.

The reason is simple – Armano’s focus and rhetoric is relentlessly on the quality of the product:

There’s no such thing as bad gelato. But have you ever had really, really great, oh my God, I’ve died and gone to Heaven, this is life-changing, exquisite, fresh gelato? That’s what we make. On the premises. Every day. Why settle for good when you could have amazing?

…Amano is Italian for hand-made. And it is the perfect name our gelato shops, where you can watch the resident chef create fresh gelato each day. Our business was started by two Italian cousins with a dream to bring the delights of fresh authentic gelato to Australia.

…We don’t make gelato the easy way. We make it the right way. We believe that true gelato must be made fresh in-store each day, with the finest ingredients, a bit of science, and a lot of love.

So lets turn to new store Giapo, and look at their rhetoric from their Facebook page:

How do we make a change?

Giapo is born on these words.
We are not an ice cream shop. We are not a gelato shop either.

(emphasis mine). That is really not a good start.

Giapo starts with a smile…and you?
Giapo is an experience to live, a moment you never forget.
Our credo: give a child a smile. Our hope: provide this smile to everyone.How do we make a change?

Giapo is built to be different.
Innovation and design are all around the place.
Design creates our universe.
Innovations make it interact with us.

How do we make a change?

Giapo is constantly in this change.
We have a conversation with our customers.
We want to listen more than to be listened.
That’s how Giapo will improve.

How do we make a change?

Giapo is trying to give its own answer.
Making an ordinary moment feel as if for the first time.
Making an usual act become a special experience.
Making everyday life sounds like a journey.

How do we make a change?

Nothing about the quality of the gelato.

Here’s a less structured credo from owner Gianpaolo Grazioli’s blog. English isn’t his first language, but he can sure write:

GIAPO’S CREDO.
“Giapo is in the business to give a child a smile. Our first responsibility consequently goes to the children, the youth, the mother and fathers, and all others who believe in our products. They are our lodestar. We believe in them more than in any marketer. In exceeding their expectations, everything we do must be of top quality. We must listen to our customers carefully and all the time. Giapo is a company based on courage and innovation. Giapo’s people do not fear of innovation and change because they are continously looking to develop the know how to manage its next attendant risk. Giapo’s strategy is based on perpetual innovation shaping its future day by day and winning with the consumers while changing the game continuosly. Giapo’s innovation come from the consumers and it is for them. Innovation and change to enhance and deploy our core strenghts that’s how Giapo wants to inspire the market and lead the next revolution starting from now. Associates will autonomously look for new training and empowering experiences according to the new goals. The focus will always be on the value creators addressing or eliminating the value destroyers, not annually but everyday. Goals will be stretched and the bar is raised continously. Giapo must engage human emotions. Sharing a passion that matters to our consumers, helping them to be what they want to be. Giapo’s brand stands for trust, affinity and looks for a loyalty beyond reason an emotional connecting point that transcends the products. Giapo will be a company based on organizational clarity. Everybody within the firm will know what is important and what is not. Transparency with the associates and the consumers is a key factor. Whatever we say we must do. Giapo is a people company. Giapo aims to build a cohesive team with a high level of trust between its associates. The focus is on achieving the goals of the firm and not just the personal success of each member. Giapo proposes itself as a University of Ideas. Giapo will reinforce its communication clarity through human system. Its people are his most important resource. And being just humble, hunger and smart will not be enough to work with Giapo, the candidate must fit within the organization principles. Candidates have to fit the value, the culture and cohesiveness of the firm. We respect the dignity of our associates and value their merit. Associates must feel certainty in their jobs and must enjoy their working place. We expect that all our associates are driven by a passion for learning no matter what roles they work on and learning means desire to know more. We will support sustainable entrepreneurship and we will plan to promote it through a coordinate license agreements system. Giapo’s associates will never stop to repeat each other the giapo’s principles and value to make sure that everyone are on the same page. Giapo’s associates will keep in good order the properties they have the privilege to use have and will strive to reduce costs in order to maintain reasonable prices without compromising the quality. Giapo is a serious supporter of an environmentally friendly world, we must encourage civic improvements and better health and education. Financial reserves will be created to provide for adverse time. Giapo’s associates final responsibility goes to its shareholders, business must make good profit. These are our principles and we believe that following them will make our objective achievable and our business a successful one.”

Again – nothing on the quality of the gelato.

Giapos has the Facebook page, Twitter account, Youtube page (with random customer interactions) and a website still coming. None of these focus on the product quality, and only the website is really necessary.

Fremantle’s Armano has a tiny website – pretty much all of the text is above – and a chain of stores that everybody recommends to their friends once they have tried the product. It’s that simple.

Gianpaolo’s dream can be realised – but only if they focus first on the quality of the product, the business fundamentals (pricing, flavours, cost control) and finally on marketing. This over-worked marketing screed is diverting from the core business proposition, which is simple – great gelato right next to the movie theaters on Queen street.

I’l now bravely take it into my hands to try the Gelato, and will report back. Here’s Gianpaolo, who has come out from Italy to give us great gelato – and we should be thankful.
dream skool

<Update. I’ve now tried the gelato. Strangely enough there were no (well one) fruit flavours when I visited – it was all whites and browns. So I tried a Bacio and it was OK. Worth having, but no Armano. I’l pop back later to see whether fruit flavours appear. If not then I will really have my doubts.>

Five ways to increase your free time

This is Indexed once again sums up a complex thought on a card.
thisisindexed

Most people are in the middle of this curve, and would really like to be at the far end.

But why not move the curve? Why not give ourselves more personal time, even if we don’t have a wad of cash stashed away?

It may be unfashionable in the teeth of a recession or maybe depression, but why not take a step back, and set out to do stuff that we want to do?

Here are five ways to start:

Reduce hours at work. For most people that read this blog and are in full time employment that probably translates to “go home at 5:00”. I for one tend to work and keep on working way past closing time each day, and that means very little free time. It’s a delight to work with companies that have a down tools at closing time policy.
The reason is simple – businesses get more productive and happy staff when the staff are working sustainable hours. One extreme example is within ex-client BHP Billiton, where there are very strict rules on fatigue management, and there are systems in place to identify those that have been on site for too long in a day or over a series of days. That’s aimed primarily at safety – tired people are like drunk people and can make bad decisions.
So we could try dropping hours back to 40 or 50 per week, and take advantage of the freed up time.
Drop a day or two from the work week. The 5 day work week is a relatively new innovation – after all it used to be 6 or 7 days. But why should we be satisfied with just 2 days off per week? Moreover those two days are the same days that everybody else has off, and that means we are probably busy anyway.
Smart employers have flexible work policies in place, and there is no harm in asking to join the program. In these tougher times a 20% saving on your salary could be very welcome for our overlords.
Take a leave of absence. Tiwai Point have apparently had a good response from a leave without pay program. This is a wonderful way to retain a career and future income while gaining some free time. Employers would be wise to offer this sort of program, whether formally or informally – so talk to the boss.
Quit the job. It’s the ultimate holiday, and something that Kiwis are very good at doing – quitting and then going off on the big trip. It means that you need to have at least some savings, but these savings could be in the form of illiquid assets that can be sold.
Business owners – take a 2 month holiday. As businesses grow they start to absorb more and more of your time, until there is nothing left. A great way to manage out of this is to plan well in advance a lengthy holiday. This will force you to put in place people and procedures to make your business independent of your own day to day involvement. The beautiful thing about this is that you can then free yourself to work on the business rather than in the business.

Do it now.

We all make plans for what we will do in the future, but many plans lie dusty on the shelf rather than open on the desk with heavy editing and coffee stains.

It may feel impossible to free up work time given the demands that work is placing on you and given their need for your personal talents and knowledge.

But imagine what would happen at work if you suddenly took ill, or had to rush off to take care of a loved one who fell ill? People will cope without you, and may even thrive in your absence. In truth nobody is essential, nobody is irreplaceable, an we always muddle through.

Finally there is the money and the time. How will you cope with less or no income and what will you do with that free time? Those are different issues, and we’ll need to deal with the first one in another post soon.

Lower the barriers to raise car ownership

New Zealand has the third highest car ownership per person in the world, the economist informs us. That’s amazing, especially as tiny Luxembourg tops the list. It’s especially amazing when you are standing at a rental car counter during summer and unable to get a car.

Luxembourg is only 80 x 30 kms, and while boasting the highest GDP per capita, the owners of those cars often live next door in Germany, France or Belgium – saving taxes. It’s essentially a statistical anomaly, so let’s leave it aside.

Number two is Iceland, completely isolated like New Zealand, and with a small population. Perhaps there is something to living in rocky countries that are under-populated and geographically isolated?

Well no – next in the list is Italy, about the same size as New Zealand and with 54 million or so more people, but a similar topography.

So why?

Commenters said that there is an alternative source of statistics, but that doesn’t explain why NZ is high on this list
Commenters also said that for the USA SUVs are classified as “trucks” and not “cars” for the USA. Adding them back raises the USA up to first place. High GDP and low vehicle prices gets them there.
New Zealand has relatively poor infrastructure and is very rural and hilly, and so we more often need cars for commuting or for shopping than higher density and more urban places. Auckland is spread out, Wellington is all hills and so it is tough to walk or cycle. Christchurch gets a pass here.
But most of all it has to be the lack of trade barriers.

New Zealand stands almost alone in that regard, and it means we avoid the equivalent of a large import tax that everyone else pays.

In NZ, once the vehicle is inspected by customs and agricultural officials you drive the vehicle to a nearby testing station, get a warrant of fitness, pay your registration and GST and go. It’s simple, I’ve done it and it took about 20-30 minutes.

If you want to import a vehicle into, say, the USA or EU, then you need to get it approved by the authorities as being safe, conforming to standards and so forth. You also need to pay a confusing array of taxes, get it tested, registered for your jurisdiction and so on. I’ve tried to do this to the USA, and utterly failed at any price.

These rules and regulations are present in every major market, and yet seem to be different in each. As a result the cost of compliance is very high, and so imported cars are at a serious disadvantage to domestically produced cars.

And that’s the point – protection of a domestic car industry. Sadly that “protection” seems to have a negative impact – if higher car ownership numbers results from freer markets, then wouldn’t it be better for your domestic producers of all products for you to free your own market? It’s a bit simplistic, but basic economics tells us that the more efficient the market is the better the result. It’s often contrary to political concerns, although those jobs in Detroit may have been kept if the US car companies had been properly exposed to the rest of the world’s cars earlier.

Iceland, Luxembourg and New Zealand have no domestic industry to protect, and Iceland and Luxembourg are both part of the EFTA – and so you can easily import or register a car from anywhere else in the European free trade area. Meanwhile it is expensive to export your car from New Zealand (no-one will take them) and from Iceland (high used car sales taxes).

So what would the impact be of global standardization of car certification? At the very least allowing people to import small volumes of cars easily would help identify gaps in the market. Better would be bilateral agreements between markets – accepting that the regulations in each jurisdiction are acceptable for the other and increasing sales of each other’s cars in each country. A Nobel prize was won by pointing this out – the EU cars are in demand in the USA and vice versa.

Those USA SUVs are a nice case study. They were wildly popular because they were and still are cheap, and they are cheap because they are regulated and taxed as light trucks and not cars. This does mean poorer safety standards, which is very bad, and yet people flocked to buy them as they perceived more car for the dollar.

And therein lies the rub. The health and safety standards in Europe differ from the safety standards in the USA and, in then there is California. Global manufacturers can adapt to each country, and create vehicles that conform to more than one standard. However a great start would be a single standard between the EU, USA, Japan and Korea. Going forward that standard could be a rating (e.g. A,B,C on safety, 1,2,3 on environment), and given jurisdictions could select which rating they require or compliance.

Finda and Yellow: they had already lost

Business listings is a winner take all game right? After all – why would you have more than one set of Yellow Pages in your house? So Yellow’s purchase of Finda is a great move. Right?

Well not exactly. When was the last time you used Wises, Finda, Yellow Pages or UBD?

My answer is – I can’t remember.

On Monday I needed a Physio, and so I turned to Google and googled “physotherapist Wellington”. That was the actual spelling, and after clicking the “did you mean..” I got a nice summary of what was around, along with the regular search results:
Google

From there I clicked through to a great map:
Google
Where I found a couple of options, clucked through to their websites, chose one (Te Aro Physio) and was delighted by their service. (Really – I recommend them)

So I tried the same search on Wises. Again I made a typo – it wasn’t deliberate. What I got wasn’t exactly compelling:
Wises
So I slowed down, typed it correctly and got this:
Wises
Well useful, but clearly the Google results are better. Firstly the zoom level was automatically correct, and secondly the number of Physios reported was just 10, versus 38 for Google. Worst of all Te Aro Physio – a fairly sizeable outfit – was not on the list.

Next I tried Finda, slowing down my poor typing so that the auto-guess system could work. I got this list, showing 26 in Wellington Central and 49 in the region. No maps, but I just noticed that there is a display in maps function. That gives an OK view, once zoomed in (same as Wises) but again there is no Te Aro Physio. No wonder I was able to get a same day appointment.
Finda

For completeness I tried to use a paper Yellow Pages to find physios as well. But there does not seem to be one in the house. It’s not even my house – I’m borrowing high speed internet at my parent’s place right now – they are over 70 and have no paper yellow pages.

So I tried the Yellow Pages site. They found 36 Physios in Wellington City, an did include Te Aro Physio. They had a link to the website, and even offered directions. So good on them.

Yellow.co.nz
They had a map:
Yellow

But that map was small, ugly, and the site covered in advertisements that moved around and it just doesn’t feel nice. It feels like a money grubbing commercial site, and that login button didn’t help.

I’ll be sticking to Google, and knowing them they will keep improving so that they stay ahead of everybody else.

Back to the deal. Yellow’s website seems to be ugly, but already better than those of Finda et al. Taking Finda and co out will reduce competition for classified advertising dollars, but unless Yellow keeps them alive I can’t see a lot of upside in Yellow Pages listing prices. It’s a recession people. Perhaps Yellow feels that they can get more advertising spend from the sites, especially by sharing listings. But we are near the end of days.

To me it’s a play that slows the inevitable doom for Yellow. The “goodness” of the deal comes down to the sale price, and sadly we are not hearing what that is. But I will give a hearty “Well Done” to APN, for exiting out of a dead market.

Well done Green Cabs. Now – about that website?

A big change when I came back to Wellington late last year was the emergence of Green Cabs.
greencab

What an overdue idea, and what a great one.

It’s a triple play – better for the environment, better for the drivers and better for customers.

Their fleet of bright green Toyota Prius cars cost about $45,000 each for the drivers to buy, which is a bit more than the traditional taxi saloons. But once they start using them then the average fuel bill (from drivers I spoken to) is about a third of the price before. A third!

Unfortunately for the drivers, but fortunately for us, Green Cabs has gone for a competitive pricing model, using the savings on fuel to allow them to become amongst the cheapest of the quality cabs.
greencabs

The cars are small – so not great if you are in a large group, but perfect if you are on your own. I would hazard that most taxi journeys are one or two passengers anyway. Still – you can chose to forgo the Green Cabs option when you are in a large group.

Another benefit is that the small Prius’s are perfect for Wellington’s narrow windy hilly streets. Broadly the hybrids use the engine going up hill, and recharge going down hill, though I’m told that up hill with a bunch of people in the car can be slow going. But I guess that Auckland’s traffic, and Christchurch’s flat roads also provide ample opportunity for electric drive.

The drivers I’ve met are polite, well dressed and safe, the Green Cabs company offsets emissions by planting trees and so on. NZTaxiblog has some more background.

So what’s not to like? – surely this is a case study of how to spot an opportunity, execute it well and save the planet at the same time?

Well – yes, and kudos to the founders Callum Brown and Dave Jordan. But there is one small problem.

The website. Here’s the booking form – though you have to hunt to find it.

Why oh why are there so many fields? You don’t really need all that do you?

And here is the about us – notice the tiny frame for text:
greencabs

and so forth. They are Wellington based, and there is no shortage of decent design and implementation companies here. Won’t someone please help them?

Drink Chai Tea if you support Obama

We hear that Obama is bringing fresh change to the White House. Perhaps least, the NYTimes reports, is the change of preferred Presidential drink: Honest Tea.
Honest Tea (Horrible Flash Website warning) was co-founded by Yale Professor Barry NaleBuff, with a former student of his, Seth Goldman. They were appalled at the sickly sweet unhealthy iced tea being sold in the USA, and so decided to do something about it. Honest Tea was launched in 1998 with very low sugar high quality organic iced tea. (Barry is the co-author of some really interesting business game theory books, including Thinking Strategically, Coopetition and Why Not? I recommend them all.)

I am also an ex-student of Barry Nalebuff’s, and was in class in late 1997 shortly after he came back from his first big tea research trip to India. Barry spent that two hour lecture dressed in a salwar kameez and presenting and pouring on the rich subject of tea. A couple of days later we applied the case study method to the tea business. Or was it the beverage business? Whatever it was the real world results have paid off – Honest Tea now has Coca-Cola distribution (Coke also has a minority equity stake) and sells millions of dollars worth of tea each month. This in spite of co=founder Seth saying that “Barry had a reputation as a cold-calling, occasionally heartless egghead who was a genius with numbers and strategy and less adept with interpersonal skills.” on the HonestTea Blog.

Another ex Student of Profesor Nalebuff’s is Gisborne raised Doug Hastie, who coincidentally was, and is still, also a tea fanatic. Doug got the same tea lecture from Prof. Nalebuff a couple of years after me, and it accelerated his own thinking – Why were Kiwis satisfied with drinking lousy tea? So after a year at Goldman Sachs in New York Doug decided to return to New Zealand, and to set about improving the quality of the tea that we drink here.

Doug saw that over the years the quality of tea that Kiwis drink had descended from high quality large tea leaves contained in sealed tea chests, to poor quality tea dust contained in cheap paper bags. It’s little wonder that coffee had made such inroads into what was once an almost exclusively tea drinking culture.

Doug made his own pilgrimages to India, Sri Lanka, China and Japan, selected the high grade teas and suppliers, and result is the Chai Tea range. The range has been on the supermarket shelves for a few years now, and you can even buy them online.

So – President Barack Obama drinks Professor Barry Nalebuff’s tea, Nalebuf inspired Doug Hastie to launch New Zealand’s Chai Tea, and you can buy Chai Tea all around New Zealand. So what are you waiting for – support Obama today!

(I am an investor in Chai, and so clearly biased – but the story is true. Chai Tea really is the best on the shelves and Doug’s own story is even more remarkable)

eBay should buy Trade Me, but they won’t

Apparently rumours are circulating about Trade Me and eBay – not that I heard about them until just now. Mod has squashed them anyway, but oh what fun.

The problem is that eBay traditionally purchases auction sites, then brings over the content to their own site and use their own model. They struggle to see the world any other way.

Trade Me outperforms eBay, and so this approach would destroy value. Moving the site over to eBay’s version would sharply reduce listings, lower income and reduce profits for Trade Me. Listings would drop as members are confronted with eBay’s Byzantine systems, income would drop as sales drop due to the same and gross profit would get eaten as the spend on advertising goes way up.

It gets worse. eBay doesn’t understand the motors and property markets, whereas Trade Me has succeeded, while Jobs is something that they are also nowhere near. Don’t even start me on selling advertising.

So Trade Me was, and is, more valuable to a financial or media purchaser than to eBay.

Fairfax, a media purchaser, kept Trade Me at arms length since purchase – allowing the business to continue to develop along some pretty impressive curves.

The results are obvious – today Trade Me has 1.19m listings in NZ and eBay Australia has just 1.16m items located in Australia. That’s right – there are more items for sale in NZ than Australia, and that’s a country with well over five times NZ’s population.

But wait. If eBay are smart then they would see Trade Me as an opportunity to improve their own businesses around the world.

While the list of things that I would do if in charge of eBay has been covered before, I have to confess that buying Trade Me was not on the list – and it absolutely should be, and I’d pay a lot for it.

But after the purchase what should eBay do?

They should leave Trade Me alone, and not tell them how to do anything. Instead, I’d help the rest of the eBay organisation learn as much as they can from Trade Me’s success.

I’d send people from eBay’s senior development team to Trade Me – to work under the direction of Trade Me staff – and to do really entry level stuff. They can learn, and spread the word to the rest of eBay.

I’d send Trade Me senior staff over to the US, to spread their message of simplicity and usability.

Then time for some fun – I’d replace eBay’s Australian site with Trade Me’s platform. This is a massive migration, but the listing numbers alone say that something is seriously sick with eBay Australia. Let’s see how that goes, and it everything goes well, then start hitting other smaller markets.

And so on.

But is eBay smart enough to pay enough for Trade Me? I think not.

Final Ferrit: The governance failure

Part four of a four part take on the end of Ferrit. We started with Market Space, then site idea and execution, and business economics. This is hopefully the last Ferrit post, but the most important in this series

The Governance Failure

There were failures at a number of levels from Telecom, including poor strategy, poor execution, but to me most of all it was a failure of governance.

Strategy
The strategy failure was at the highest level – and not only in the way Ferrit addressed the perceived space (see above). The failure was at clearly articulating and following a vision of “What does Telecom do“. The answer is that Telecom NZ delivers telecommunication (& IT) services, and until they can demonstrate that they can do that well, anything else is a distraction.

The launch of Ferrit meant that Telecom moved focus and resources away from its core broadband and mobile business lines, and so NZ slipped even further behind the rest of the world. It is heartening to see in the press release that the main reason for Ferrit closing was to move back to the core business.

Branding
The branding of Ferrit was brilliant as a case study in ineffective branding. Beyond ineffective, Ferrit’s brand equity managed to plummet from day one. From the choice of rodent name, to the sleazy and intelligence insulting advertising, to the Ferrit.com website which was a porn site domain that Telecom was forced to purchase. Perhaps they could sell it back now.

Meanwhile New Zealanders are smart, and can see through branding campaigns that seek to portray an image that is clearly inconsistent with reality. Telecom itself suffered from this approach for years, and Ferrit was another example of just what not to do.

Simply put – Ferrit may have done everything they could to create a poor brand, but the failure to gain traction was caused by the poor site and flawed strategy, not by the poor brand.

It’s easier to describe how successful web (and other) companies go about building credibility, or brands. Trade Me, Google and Apple all followed a similar path. They start small, they make a great product and they grow slowly and organically through word of mouth. Only after they have established a strong beach-head do they contemplate an advertising campaign.

Torpedo7 is a Kiwi success story that has out-performed Ferrit by using this method. The bicycle and sporting goods site usability is fantastic, their fulfillment stunningly quick and their advertising spend is very hard to see. The result is traffic to their sites that is larger than Ferrit’s, and no doubt revenue figures that dwarf Telecom’s folly.

Ferrit turned this approach upside down, launching a wildly extravagant and misguided campaign months before the site was able to do anything useful. Anybody that visited the site had a poor experience and thus moved on, often never to return. By the time the site became mildly useful it was too late – the brand was in ruins.

Execution
Telecom took a corporate approach to the development and launch of Ferrit. They did the equivalent of buying and adapting SAP rather than just using Xero. That’s not how things work in the web-world.

They could have done it well – here’s how:

The leader of the team needs to be someone that completely “gets” the internet, someone that had no legacy power internally and someone that understands the technologies.
The number of staff needs to be tiny – obeying the two pizza rule, where two pizzas can feed the development team.
The software should be open source, or developed internally using the newer tools and never outsourced.
The marketing team should not exist until well after the soft launch and early market acceptance, (they just spend money) and external advertising agencies should never be contacted in the first few years.
The budget should be small – making the team work smarter with what they have and preventing any expensive follies.
The location should be away from the corporate parent (it was), and in a lean environment (it was not)
The team should be interconnected with the local web community, be that on the latest social networking tool, conferences such s Webstock or simply through blogs.
The early scope should be small, with more features (and dollars) added only after the concept is proven

Telecom and Ferrit failed on all of these levels. Sadly I’ve seen corporates fail consistently at building their own businesses – Pfizer’s recent laying off of research staff was an admission that they are just too big to innovate, while Trade Me is the classic example of a start-up taking away the corporate incumbents’ businesses.

Governance
This is where I am truly perplexed, and concerned not just for Telecom but also for many other large corporate businesses in New Zealand. The total failure of Ferrit was obvious to any external observer right from the start. How could the leadership of Telecom let this happen? And if this was really was a pet project of the then CEO, then how did the Board of Directors let this start and keep going for so long?

Was there anybody on the board that gets the internet? Was the board able to reconcile the tens of millions money being poured into Ferrit with their fiduciary obligations to shareholder to maximise value? Was the board able to reconcile their obligations to other stake-holders with not only Ferrit’s poor performance but the resulting internal distraction from the core goals?

Who was asking the hard questions? Telecom.co.nz has pages and pages of corporate governance material on their website, but I can’ help but observe the board failed dismally in their obligations to shareholders.

All is not lost – they did exercise their biggest power and bring in Paul Reynolds as CEO. He is slowly turning around Telecom, and is doing it well. We could argue that the Ferrit closure happened about a year to late, but really it is a small amount of money to the giant corporate.

Paul has managed to change out his management team and now drop Ferrit without acquiring a nickname such as “Neutron Jack” or “Chainsaw Al”. Credit to him for that, but I hope that his current board is asking him the tough questions.

It’s a sad interlude for Telecom that needs to pass into history. The great news is that this closure is yet another sign of a resurgent Telecom that puts customer needs first and understands that shareholders benefit when you create value for all.