5 Recent posts that I like – and a new page

I’ll be on Kathryn Ryan’s Nine to Noon program on Radio NZ at about 9:20am Monday 22nd.

There are a few potential topics to cover – including why NZ is a good place to be right now, what businesses can do to manage through the recession and the Social Innovation camp next steps. We’ll see what happens on the day.

For new and newer readers I’ve just put up a page of posts that I like from the last couple of years.

Posts I like.

Here are some good recent ones

Blame directors for failure, CEOs for success

2 shots were fired Self restraint is good

Let’s stop MPs drinking and lawmaking Seriously

Two McKinsey pieces on education – do read them

Well done Green cabs – now how about that website Great comments

Brass Monkey 2009 – a photolog The annual winter bike rally

Posted in Business, Internet Business, Life, NZ Business, Politics

Bribes, jobs and wine – not a good mix

There are two  jobs sites in NZ with critical mass – Seek and Trade Me Jobs. It’s a tough road to get to the top, and when Seek and Trade Me themselves have lost thousands of listings it’s even tougher to make things pay.

During these recession days  employers are realising that they don’t need to try hard to attract quality candidates, which means an advertisement on Seek and Trade Me is all they need to do.

New entrant MyJobSpace is doing the tough yards, and is tiny compared to everyone else. Here’s the market share of visitors – as measured by Netratings and charted in Trade Me’s newsletter to job advertisers.

So they need to go hard to get anywhere, but I feel that their latest attempt to woo customers is sailing a bit close to the wind.

I’ve copied below the text from a remarkable email that myjobspace is sending to contacts. The deal is that by committing your employer to a $365 annual fee you’ll receive a case of 12 bottles of wine. The first choice retails for $11 per bottle, so let’s call it $130 of wine.

Now most employers have rules against this sort of thing, and it creates a disconnect between what is best for your employeer in these cost cutting times, and what is best for the employee.

Imagine if we upped the ante – and added two zeros to each side. I’ll give you $12,000 worth of stuff if you sign a contract worth $36,500. New Zealanders, as inhabitants of the least corrupt country in the world,  would react pretty negatively to that offer. Companies and individuals should also do so to the wine offer.

I would be looking pretty hard at any money paid to this crowd if I were in a corporation. Sole traders are a different story – it’s their own money and wine to play with, but then I’m not a tax lawyer either.

So while myJobSpace needs to be aggressive, I feel they have gone too far with this. Shame.

an unashamable bribe!

A little while ago we spoke to you about your recruitment needs, you decided it wasn’t the best time for you to be using our site.

However in these times, more than ever, it’s critical to have the best people. There’s an old saying – “It’s easier to change people than to change people.” Anyone who’s not being positive, innovative, committed, or is under-performing must go.

Talking about being innovative and committed….. we came up with this unbelievable offer (well bribe really) that is an absolute first for NZ

If you decide to make the right choice and start advertising for the right person here’s what we’ll do;

We’ll send you a case of 12 bottles of wine when you join, you can chose from the following:

1. Wyndham Estate Bin 555 Shiraz 2006

2. Redwood Pass Marlborough Sauvignon Blanc 2008 – rated by Cuisine Magazine

3. Twin Islands Marlborough Chardonnay 2007 – rated by Cuisine Magazine

Tell us where to send it, and we’ll courier it as soon as we receive your one off payment of $365.00+gst for 12 months unlimited advertising.

Here’s the best part: the best guarantee you’ll hear all year! At the end of the 12 months of unlimited advertising, if you’re not completely satisfied with our service and jobsite, we’ll refund you in full, and of course the wine will be a distant hangover, which is all yours. If you hear of a better guarantee anywhere please let me know.

So if you’re looking for real value and ways to cut costs, our site is said to be the most cost effective recruitment tool available in NZ. We were also voted one the best sites in NZ at the NetGuide Awards.

This offer is strictly available until the end of June, with payment of $365+gst not required until 20 July. This can even be split over 3 payments of $135+gst. (July, Aug and Sept)

If you have any queries please call or if you’d like to go ahead please email: contactus@myjobspace.co.nz with JUNE WINE OFFER in the title, tell us the wine you’d like, the address for delivery of the wine, and a daytime contact phone number. We’ll do the rest.

Yours faithfully

Gary Collins
Managing Director

PS. The first 15 to reply will also get a free priority listing which keeps your ad at the top of the page. Did you know that 82% of people don’t look at the second page of results. Valued at $95+gst †

Posted in Business, NZ Business | 2 Comments

Today’s news is fluffy

The front pages of both Stuff and NZHerald today are a sad indictment of both media in NZ and of what readers want to read.

Let’s look at them article by article – and to do so I’ve helpfully colour coded the homepages for each. I’ve sampled each page this morning above the fold on my big screen, and categorised the articles. Your interpretation may vary, but overall I feel the ratio is sadly skewed towards fluff.

Let’s start with the NZHerald. Real news included Aussie business confidence, churches and schools dealing with flu, Obama’s new plan for the US financial system (arguably the most important piece – certain for business/economy) and new property listings down.

However they also had “Man jumps off Yellowstone falls”, “Is Joe Karam a good pundit choice?” and “Flash cars don’t reel in the girls”.

Pink is “fluff”, green is “fluffy – but still news” and dark purple is “real news”. Click on the picture to see a zoomed up version.

Stuff’s (and I blame them for starting me on this post) real news included “Swine flu hits prison”, “bodies suggest jet broke up in air”, Jetstar’s bad first week, Dows (pathetic) offer to clean up their chemicals and the postponing of the eviction of gang members from their house.
However they also had “Poolside photos with the Allblacks”, Michael Hill’s new house and “World’s most handsome man named”. (I didn’t click through, but I am guessing it wasn’t me)

Neither had anything on Iran’s post election story – which is the biggest geo-politial thing happening in the world right now.

However if you want to read world news, then you can scroll down on each site- which I did, searching for the Iran coverage:

Stuff had a 5 word link to an article:

NZHerald had a short paragraph link to an article, and a small photo – better, but sad for what are critical moments for Iran, the region and the global economy and politics. (Iran has oil, issues with Israel and so on).

I’m not an editor – in fact the only time I ever made an editorial decision at Fairfax resulted in Stuff inadvertently breaking a budget lockup embargo. Editorial decisions are best left to journalism professionals and I stayed well clear.

But yet – can the editorial teams at Fairfax and NZHerald be happy with the content of those home pages? How do they compare to the newspapers? Are both Stuff and NZHerald worrying too much about pageviews and not about content? The end of that particular path is well trodden by Rupert Murdoch, and it’s not pretty.

Surely we can do better.

NBR is doing better – their home page has a much lower fluff quotient, and is a remarkable effort for a group that was late to the party.

However these days I’m doing what many others are doing, and getting my news via twitter alerts from WSJ, NYTimes and fellow twitters, via RSS reader for blogs and sites like interest.co.nz and the very occasional visit to a news home page.

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

Idiot taxes mean business opportunity

A while back I wrote about Dick Smith being a stupid place to buy stuff.

The cheapest HDMI cable you can buy on sale at Dick Smith, with the 15% discount, is a staggering $55.23.

Despite a Dick Smith staff member’s comment on the post

“I work there and I will admit you can get pretty much anything we sell cheaper on the internet”

…Amnon, amongst others, commented that there are in fact some things that are cheaper to get from DSE, but it still leaves the mystery of the $55 HDMI cable.

Now from an interesting source comes an answer – and it makes sense. DC based political blogger Matt Yglesias picked up on the notion that the HDMI cables are an idiot tax (or information tax). Actually Matt got that from Alex Tabarrok:

My best guess is that this is an unusually strong version of the hidden fee model of Laibson and Gabaix. In that model, firms overprice one aspect of service–such as a hotel charging exorbitant rates for telephone service–as an idiot tax. Crucially, the idiot tax is matched by an IQ-subsidy; the price of the hotel room is lower than it would be without the idiot tax–so the idiots don’t know to shop elsewhere and the high-IQ types are, in fact, drawn to stores with an idiot tax. Thus, buy your blu-ray player at places such as Best Buy which sell a lot of expensive cable as well as massively overpriced extended warranties.

I’d extend that, and see there are three reasons that people pay these prices:

  1. Convenience: Buyers know the price is unfair, but chose to pay as the difference in price is made up by the convenience of buying the item in store.
  2. Information: Buyers don’t know that the prices are unfair – as they are unaware of the either because they do not now the prices elsewhere.
  3. Coercion: Buyers know the price is unfair, but pay the price as they feel that they have no other option.

Let’s examine these in turn, but first let me state that any business that treats their customers as uninformed or coerces them into buying things should understand that the idiot is not the customer, but themselves.

1. Convenience

This is actually fair – if the extra price a store charges for an accessory is more than compensated by the convenience of obtaining that item immediately, then buyers can make a rational choice. This is a form of price discrimination – a time rich and money poor student may choose to shop around, while a harassed business person in a suit may choose to pay the premium.

It’s critical, however, that the difference in price is not excessive, as then the situation can easily move into the third category of coercion.

2. Information

This is screwing the customer. The store has deliberately chosen to take advantage of the naivety of their shoppers and is taking excess margin.

While this win-lose transaction works at the cashier, stores should realise that in the long run the information will emerge. This manifests itself in a gradual erosion in the public perception of the store. In marketing speak – this is brand erosion, in business speak this is falling sales and eventual bankruptcy.

3. Coercion

This is clearly screwing the customer, with the full knowledge of the customer. Assuming the customer has not walked away this coercive approach results in much faster brand erosion through word of mouth and publicity. The customer experience is negative and they do business with the seller under duress. This is clearly unsustainable.

Where industries contrive to collectively screw customers they open themselves up to a new competitor that breaks the rules and offers customers a straight deal. Indeed all of these approaches carry that risk. Let’s look at some example industries, and how a new player could take advantage.

Convenience Stores and service stations charge more for basic items as you will pay more to get it 24/7 and in an easy location. There are plenty more examples of the 1: convenience category.

Existing store chains can be out competed by mid-small sized supermarkets – much like the metro markets in London or downtown Wellington. There is also room for a service station chain to lower prices of key products and promote that as a competitive advantage. Finally the 24 hour supermarket with service station attached completely changed the industry – reducing the need to c-stores and taking big chunks out of petrol station margins.

Electronic retailers like Dick Smith place low margins on the flagship products, such as TVs and DVD players, and then makes up margin by selling HDMI cables with 80% markup, pointless warranties and so forth. The warranties and HDMI cables are un-buyable as it is clear that there is to much excess profit involved. This falls into the 2: or 3: categories above – as the price difference is just too high to be otherwise.

These old players are being out-competed by e-commerce players with low overheads, knowledge driven selling (i.e. great descriptions) and competitive pricing, cross checked by price search sites. There is little excuse for using something else these days.
There is space, perhaps, for a fairer high street seller, but it’s a tough game with tiny margins – and those rents and staff costs are not cheap.

Hotels advertise expensive rack rates, but offer cheaper ones on websites and through package operators. They charge extortionate rates for telephone calls, internet access, meals, drinks and for mini-bar purchases.

The result is that the smart hotel consumer avoids all of these extras, meaning that they actually have negative utility – the mini bar tempts you but you dare not indulge. These fall into the 3rd, coercive, category – but most chose not to pay.
There is room, and some are addressing it, for a fairer hotel approach. Charge reasonable fees for the phone, minibar and suchlike and people will start actually using them. In NZ we have always had motels, which (unlike the South American definition) are cheap, cheerful and generally fair with the extras.

Rental car agencies add airport fees, taxes and most importantly, insurance costs to their initial quotes. In NZ we have it a bit better, but the sales pressure to lower the insurance excess remains – avoid this as it is a ripoff. Don’t start me on the “free fuel – return it empty” scam either. Many (too many) people fall for this – make no mistake it’s in the 3rd category, and you should not pay.

A new play in Spain (and sadly I can’t find them) completely transformed the expat rentals a few years back by offering a one price, full insurance included, sign and drive away service that acquired customers for the agencies. Other approaches include the rent a car for an hour places like ziphop.co.nz or zipcar.com, or (please) a new rental player that charges one price, full insurance and provides instant service without 10 minutes of typing into an archaic green text screen.

Mobile Telephone providers ‘fight’ on their headline calling plans, but charge high prices for international calls, international roaming, excessive texts, minutes and in particular international data. With very few exceptions these rates are not reducible – and so international data roaming in particular is simply unusable.

The mobile telephone companies have a grip on the market – but resellers and new players like NZ’s 2degrees have the ability to be somewhat transformational by offering one price for all you can eat deals. 2degrees is stuffed on international roaming though, as these prices are dictated by the counter-party. However Vodafone has the ultimate opportunity to simply make international roaming data, voice and text fees disappear for their customers – and they’d have a lot more customers if they did so.
Customers have voted with their feet on telecos – and have moved across to Skype, especially for international calls. When the marginal cost of a call, text or data is so trivial, and the alternative of Skype is ever present it makes it obvious that the Telcos strategy should be to make the prices low enough for us not to care.

Apple charges good prices for their computers, but outrageously high prices for their RAM. The savvy buyer gets the minimum RAM and upgrades on their own.

Apple has locked in loyal customers, such as me, by providing great products. Competitors have much greater hurdles to crack than the price of memory, so for now just keep buying your memory from somewhere else. Memory (and Hard Disk) retailers should be targeting Apple buyers, particularly for the newer models, and making it easy to find and buy cheaper alternatives.

Many of these businesses are mired in the past, and a new player has the real ability to capture a large share before the incumbents react – and by which time it is often too late.

So what other idiot taxes are there – and more importantly what opportunities present themselves as a result? A recession is a great time to attack.

Posted in Business, Internet Business | Tagged , | 5 Comments

Congratulations to three new kiwi Yale students

Harry Simperingham, Ben Kornfield and Tessa Smith – remember these names. They are the three New Zealanders that will be part of the new class of 2012 at Yale University in Spetember. That’s a fantastic achievement – so well done to all.

I briefly met both Tessa and Ben at the Whiffenpoofs event in Auckland recently – and they were very demure about their acheivements. So let’s get googling.

Harry Simperingham went to Rotoura Boys High – in good company with sportsmen alums Liam Messem and Danny Lee. Indeed Harry is quite the sportsman himself – “competing with the NZ Junior Mens Coxed four at the Junior World Rowing Championships in Linz, Austria last year”. Being a rower at Yale is still a great thing – no doubt Harry will soon find himself on the ergs at Payne Whitney Gym.

Ben Kornfield went to Kings, and there is little there about him, aside from doing well in the National Bank Maths Competition back in 2005. In 2007 Ben and four others  claimed a silver medal in the International Young Physicists Tournament in Korea. Interestingly Ben said “htere’s not just physics involved as skills such as debating come into play as teams discuss their solutions to the problems”

That debating was clearly a strength – as Ben was a member of the NZ schools debating team that won the World Schools Debating Championships in Athens this year, and won 2nd best overall speaker at the 2008 version in Washington DC. Ben even made Stuff – in third form a teacher told him that “I guess debating isn’t your thing.”

Tessa Smith is harder to google. In fact I failed – but I did share a table with her at the Whiffenpoofs dinner, and I can say that she clearly meets the mark. The evidence is clear – she intelligently chose to go to Yale over Auckland University or the ultimate safety school – Harvard University.

They will join last year’s NZ contingent of Ilana Seager and Ben Bowles at Yale, and for all of these students this is an excellent result.

It’s the first time, we believe, that Yale has accepted three people from New Zealand. Well done to everyone – and may there be many more.

Finally – if it’s too late then you can still attend Yale – through the wonders of the interwebs.

Posted in NZ Business | Tagged , , , | 2 Comments

Tuesday Three: 3 ways to improve your business

Know what everybody does

  1. Know how many staff, contractors, temps and so forth that you have. Count everyone in and out each day, divide them into logical groups, assign an owner to each group then use appropriate strategies to reduce. Each person that walks in the door needs to be there for a business reason.
  2. Use Skype, especially video Skype, instead of phones and travel. Put your Skype addresses on business cards, get your suppliers and clients on board.
  3. Hire smart graduates and put them with rising stars – get them to work on cost savings projects and make sure they capture savings well in excess of their salaries.
Posted in NZ Business | Tagged ,

BNZ’s Netguard costs $5, but is the least bad option

I’ve blogged before about BNZ’s stupid Netguard Card – which has codes on it to allow you to login to your bank account. Perish the thought that you are travelling when the new one is issued, or that you lose it without first taking a photograph and placing it on your blog or Flickr.

BNZ updates the card every year – and that’s where we can start figuring out how much it costs.

They use cards from Entrust, a company that entertainingly does not even own entrust.co.nz. (pretty trustworthy huh) There is, however, a pricelist on their site, and they are quoting US$8.26 per user for a yearly process for 10,000 cards.

They are quick to point out the savings of the card versus the alternative of a Token:

entrust That’s based on 10,000 users, but we can change the number of users – so let’s choose 800,000 – my guess to the number of active BNZ customers.

That’s not so bad – at all. Indeed even with recent exchange rates and a healthy “Where the heck is New Zealand?” margin, these things are probably coming in at NZ$4-5 dollars each. That’s still $4-5 that I’d rather have in my account however.

The comparison for 80,000 users looks pretty bad for those tokens though – banks that use them would pay an extra US$23m.

So as I understand it BNZ is now obliged to use some sort of additional security check, and so choosing the Netguard Card is the least bad alternative. It’s cheap, fits in my wallet, and can be photographed and stored digitally.

I’d still prefer the option of nothing though.

Posted in Business | Tagged , , , | 11 Comments