The Great Christmas Conspiracy

It’s been going on for years. Everyone is involved. Tens of thousands are conned each year, and we are all part of the grand conspiracy.

It starts with the parents, is reinforced by the schools and assisted by department stores, grandparents, uncles, aunts, the media, the post office and even  random strangers on the streets.

I refer of course to Santa Claus.

Do you remember the epiphany? The moment that you realised that Santa was a fraud? When you figured out that the physics of inter-continental travel on a sleigh, the required mass of presents and available time just didn’t make sense? Let alone the  impossibility of fitting a  rotund Santa down the chimney, assuming you even had one.

It’s more the sense that everyone was conspiring against you that was disappointing.

The Western world holds small children to a myth through lies and deceit. It’s no wonder that they get their own back by pretending to believe, for years and years, after Santa Clausian faith has deserted their formerly longer innocent minds.

Guaranteeing Safety on the roads

A timely topic as we head out on the annual Christmas travel-fest. It’s dangerous on those roads, and we all need to do something about it.

The NZ Government has come up with their list of measures to reduce fatalities on the road:

Increased demerit penalties for crossing stop lights
Increased demerit penalties for faster speeds as % of limit
Faster loss of license for reoffenders
Easier to confiscate cars
Less material fines
Longer training periods
BOC stays at 0.08%

Those are pretty good – I’m a big fan of the stop light one, but they don’t address the major reason why the USA, say, has a much lower rate of road death than we do.  It’s the quality of the roads, an segregation of the traffic.

BHP Billiton, meanwhile, is also passionate about reducing injuries, especially fatalities. BHPB worked on identifying the leading causes of fatalities, and now are spending considerable time, money and inconvenience to reduce them. (It is rather more inconvenient to die of course).

Here are some of the measures from one of what BHP Billiton calls  “Fatal Risk Control Protocols“.  FRCP 1 aims to eliminate fatalities from Light Vehicles across their sites.

If we were serious about moving from 300 to zero deaths per year, this is what you would see introduced:

15-20 kmph speed limit, depending on site
Zero tolerance for disobeying road signs
ABS and airbags mandatory in all light vehicles
Rollover protection mandatory for all 4WD vehicles
Reflective tape and a light colour
Segregation of pedestrians and traffic where possible
Segregation of light vehicles and industrial vehicles (or use flashing light & flag)
0.00% tolerance for alcohol for everyone on site
Comprehensive pre-start check for each vehicle each day by the driver
Lights on at all times
No mobile phones while driving

Penalties: Kicked off site, out of work, and difficult to get re-employed elsewhere in industry as you are clearly a safety risk.

That’s a great list, though that speed limit is never going to work on the open road . But frankly on a BHPB site I’d have no incentive or felt need to go any faster – safety is much more important to everyone than how quickly you can get from A to B.
Above all, safety on the road starts with the individual. You decide whether you will be safe – and that means making sure you are safe even when everyone else is not. Motorcyclists are very familiar with this approach – there are plenty of times when cars will kill you unless you take action, but there is no sense in being dead and right.

Looking at those BHPB requirements, which are derived from hard evidence, we see that many of them are eminently adoptable by ourselves.

e.g.
Buy a white car with ABS  & turn those lights on
Don’t drink anything before you drive.
Never go through a stop light
Drive within the limit of the road, vehicle and yourself.
If you are a motorcyclist, then make sure you wear light colours with reflective bits – if you are sliding along  the road you want the cars to see you.

And so – how am I going?

I have white, red and bright orange motorcycles, with lights always on
I almost never drink and drive, and when I do it is max two drinks and lots of time.
I have a pathological need to stop on orange lights (while looking in my mirrors)
I ride fast, but in control, and slow right down near people.
My bike clothing is light and reflective.
But sadly speed limits are relatively arbitrary for me. It’s safety first, limits second. Expect me to be under the limit in a small busy town, and don’t be surprised to find me well above the limit when overtaking.  The speed limit to me has been guidance, and while we should throw the book at people for ‘dangerous driving’, a few kms over a poorly crafted limit is no big deal to me.

So I’m not a fan of the increased demerit points for exceeding a speed (100 kmph) I can do in 3 seconds or so from a standing start.  But I do understand why it has to be this way.

But now let’s fix the roads.

Anti Free trade: BNZ and USA

Why is it so complicated to wire money from the USA to NZ? I know the US laws are convoluted, but BNZ certainly isn’t helping reduce barriers to free trade with these instructions:

Dear Mr Wiggs

Thank you for your enquiry about transferring funds from the United States
to Bank of New Zealand.

In order for funds to be sent successfully from Banks and Credit Unions in
the United States, the following instructions need to be followed. If these
instructions are not followed, there is a risk of your payment being
delayed or being returned to the United States.

The instructions the sender will need to forward to their bank in the
United States are:

“Pay via FEDWIRE type code 1000 Customer Transfer utilising product code
centre Payment through SWIFT by MT103 (Customer Transfer).”

Pay to Receiver:

ABA #021000089
Citibank N.A.
New York City, NY

For A/C with Bank:

A/C 10933728
Bank of New Zealand
Wellington

Favour Beneficiary:

xxxxx (me) Wiggs
xx-xxxx-xxxxx-xxx

Bank to Bank Info:

xxx Branch
xxxxxx
Wellington

There is an inwards processing fee of $15.00 to receive a TT. This fee is
generally debited from the amount transferred. The overseas bank may also
charge a fee to process the transfer.

If you have any questions about the above information, Mr Wiggs, or if I
can help further, please reply to this message or contact us on the numbers
listed below.

Thank you for contacting Bank of New Zealand.

Kind regards

xxx xxxxx
Customer Service Representative
Better Off – Bank of New Zealand

Phone – 0800 275 269 or +64 4 494 9098 from overseas
Fax – 0800 329 269 or +64 4 470 3071 from overseas
(Toll charges may apply for international numbers.)

Find your nearest Bank of New Zealand branch:
http://www.bnz.co.nz/About_Us/1,1184,3-52-146-465,00.htm

Was Bookabach a bargain?

AA bought into Bookabach – so what are they getting and how much is it worth?

I’m arguing they got a bargain, even though I don’t know how much they paid for what % or even how much bookabach makes. Here’s the reasoning and estimation:

The site looks great – very well laid out and simple to use.  It’s a great concept as well – matching empty baches with people looking for a place to stay. It fits with AA’s aim in life.
There are 1884 listings on bookabach right now.

Those listings attract a yearly fee of $149 each, but there is a discount structure for folk with multiple listings. There is also a free trial period. So I’m going to make the assumption that the average discount is 20% and that 10% of the listigns are freebies. That means the average listing price is probably closer to $110.

$110 x 1,884 = $207,000 odd, which is a good ballpark for annualised income from listings right now.

Given the summer season we should assume that the listing numbers are on the back of some strong recent growth, and the founders state they are seeing 100% growth per year.

There are also APN ads on the site, and they have had an advertising partnership since early September. At around 10,000 UB’s and 200,000 PI’s per week, and at a CPM rate of $35 per banner/skyscrapper that’s potential gross ad revenue to APN of  $15,000 or so per week.

Now we need to factor in a few things, like sell through rate (% of times there is a paid ad – e.g. 50%), yield (average discounted price – e.g. 80%) and net commission (what percentage Bookabach recieves of ad revenue – e.g. 80% of 80%). We also need to determine what Bookabach receives when an advertiser buys ads across the entire APN network. (e.g. bugger all)
Right now the ads are looking pretty APN-ish (e.g. for Search4jobs), so I’m going to go wild using the assumptions above and estimate Bookabach makes about $4k a week out of those ads. So that’s another $200,000 per year, but they have only been making that recently.

So overall right now Bookabach is making an annualised $400,000 a year or so, plus or minus about $100,000.

Expenses. What about expenses?  Annoyingly there is no ‘about us’ of any meaningfulness, so the site has no personalities behind its personality.

From the Scoop press release above we find there are two founders, and they are on the third iteration of the website. That means they have either been semi or full time, or they have paid folk to do it all for them. The site is slick, so either way is not cheap, and they would need at least one or two customer service staff.

They seem to have had strong word of mouth growth, and I see no Google ads from here in Australia, so ad spend seems low. That reeks of a low spend culture (similar to Trade Me) so I’m going to guess that expenses (before AA) are about $300,000 a year.

S o that’s income of about $100,000 a year. If that is growing at 30% then the company is worth about $1.5m. I’m guessing AA paid a chunk more than that as the NPV is much higher when you can cross-promote to AA members.

Actually I think the founders did themselves a real disservice if they sold for that sort of money.

The real value of Bookabach is much much higher, if they follow a tweaked version of the standard industry model and clip the ticket per sale.

TravelBug grabs 9% of sales made through the site, and Bookabach could do similarly, now they have scale. At, say, $150 rental per night on average, and an average sell through rate of, say, 25% that’s $25m worth of sales per year going on.

Now that sell through rate may be way to high, but you get the scale. If Bookabach charged a 5% fee then they stand to grab $1.2m odd. 10% and that is $2.4m. An alternative way to go is to charge a fixed fee of say $45 each time a listing is sold, or say $10 per day say.

When your site is making $1 or 2m a year then your valuations are going to be in the $15-40m range, without factoring in growth.

AA bought in as a JV partner, and the press release wording makes it sound like they got 30-40% or so. So if AA gets it, and they should, then they should have paid up to $10m or so for that 30% or so of Bookabach.

I’m guessing they paid much less than that.

One caveat – Trade Me can step into this market at any time – they just have to take over Vianet’s rather clunky interface and build their own. So temper that valuation estimate with a fair degree of risk.

iPhone – passe already in Australia?

I hear from Sydney that the iPhone is becoming a bit, well, common in the tech community.

This before a release date has even been announced in Australia.

Personally I’m a fan of only buying Apple goodies within days of launch date  – to eliminate any concerns that, say, mac fanboy Rowan gets some Apple goodness before me. (Last time it was a dead heat – he’s late to the party but partying hard)

Happily, iPhone aside, the days of getting Appleware weeks ahead of compatriots by shopping in the USA are long gone.

eBay abandoning insertion (listing) fees?

The murmurs are that eBay is going to be dramatically lowering listing fees and increasing final value (success) fees accordingly. Bear Stearns was the first to come up with this, and others have said that apparently this will differ by category.

Total rumour, but if true it is about time. The fees eBay charges are a barrier for new sellers, and prevent bigger sellers listing everything they have. This decreases the number of listings on the eBay market, but, in theory, increases the quality of listings.

Trade Me has none of those insertion/listing fees, except for Motors, Property Jobs and other classifieds such as pets.  eBay charges a sliding fee based on the listing value of the item, and as a result the barrier to list something is much higher.

I’m a fan of variable fan by category, as some categories (CD’s, Books) have products of very low value, while others may need a fee to ensure quality and discourage scammers. The latest high tech goodness, such as iPhones, or Wiis attract scammers like rotten sheep to flies, an higher fees will help shut down that traffic. In the past the rule of thumb was that listing fees would halve the number of listings and double the sell through (completion) rate. It seems this my no longer be the case with the stagnant eBay market, and so it’s time to once again emulate Trade Me.

A simple question..

Mega blogger Seth Godin asks

How long has it been since you went through an entire day without buying anything at all?

It’s a good question.  About two times a week for me, as I go turn-about for buying lunch (a sandwich) at work each day.

Another question could be: How many non-food/grocery/fuel items do you buy each week?  I buy almost none these days.