For the Week of May 3, 2004
I've spent most of my 25 year professional career not being heard.
I hope you don't feel disparaged by that. But there is a difference between having an audience and really being heard. People with political or economic power are heard. Many people in my own profession of journalism are heard. This means they have power, they can help control events, if only a little bit.
Mostly I complain, and you're sympathetic but few of you are in much position to do anything about it except listen.
When the dot-bust came along, starting in 2000, I sometimes despaired of ever being heard. This newsletter has fewer than 2,000 readers, fewer nearly every week thanks to the spam problem, and the fact that my assumed beat (Internet Commerce) is no longer seen as cutting-edge.
I do try and keep my hand-in, but today Internet Commerce is just Commerce. The winners from the Internet Boom have been discovered. It will take an extraordinary effort to displace today's winners from their perches, although it will happen. Since the bust Google has displaced Yahoo, Comcast and the phone carriers have effectively displaced AOL, and we've even seen the rise of whole new classes of online product, like social networks.
The pace of change in Internet Commerce has slowed, not stopped, but it's relatively easy to keep up with. That's what lies beyond the boom and bust in any new business - an established industry.
While I've published less for public consumption in the last year, I've been heard more often. With Progressive Strategies I've gotten some Clues into how to be heard, and into what that means.
Several projects I've done, for instance, have had what you might call negative results. In some cases management saw my work product, saw that they couldn't meet the claims I was making, and either backed away from the claims or the market. This saved them a lot of embarrassment. In a corporate world filled with yes-men, and a consulting world where straightforward writing is a rare thing, I hope I've been a breath of fresh air. And even if the result of my work has been negative - even if things haven't been done as a result - I hope those were the right moves.
My goal as a consultant, however, remains unfulfilled, and it's a positive goal. I want to do what I can to nudge the World of Always-On toward reality. The idea of combining the PC, the Internet, and the wireless revolution into one grand new paradigm fascinates me.
This week I took either the first or second major step toward making that happen. (Which it is depends on what you think resulted from some work done earlier, for another Progressive Strategies client.) I actually went to someone's office and pitched the whole vision, in person. This came after our client committed to writing a sizable check, and after they retreated from some earlier commitments on our say-so. In other words, they were ready to listen, and so I was heard. Whether anything results from that is something I can't answer.
At this writing I have no idea what the results of my pitch will be, if any. But I've already learned several things:
- Salesmen are the most under-appreciated people in the consulting industry. Every great report, and every mediocre report, must be sold. And after the sale it must be shepherded. These people spend months finding out who they should talk to, they agonize for months gaining the confidence of clients, and they worry obsessively over how the clients will react to the results. It's the hardest job I've ever had to watch, and I admire anyone who can do it well.
- The bigger the client, the more vital consultants become. Anyone making a career at a company, especially a big outfit, has to "go native." They must accept the corporate culture, and fit into it. Corporate careers are like running through a series of tunnels, sometimes into dead-ends, sometimes falling out of the maze entirely. In a big company it's almost impossible to "get above" and see things clearly, and very, very few people in any company are empowered to even try.
- Visions are over-rated and under-appreciated. I'm a "big think" consultant. I tend toward strategic, long-term thinking. This means I get ahead of myself. It also means I can get ahead of the client. Delivering strategy when tactics are requested does no one any good. At the same time, you can be so focused on making the client happy that you fail to deliver what they need to hear, and most companies need a vision check regularly.
- Always-On remains One Big Commitment from reality. We have the Internet, we have the Ethernet, we have PC operating systems (I'm including Linux and the Mac), and we have early versions of wireless networking. What we still don't have, unfortunately, is a platform for wireless networking applications, something you can connect sensor networks into. We're still too obsessed with the data sets we can see, like video. And most home LANs still lack the power to be truly useful.
- Medicine will be the killer app. The next big piece of work I want to do is study medical applications. I want to find those $30-50,000 solutions, used in hospitals, to monitor patients. And then I want to help get them into the world, on wireless, networked PC platforms.
- Laptop technology is vital to Always-On. I've had enough crashes with my desktop PC in the last month to last me a lifetime. These high-power machines just aren't reliable, if for no other reason than that the power networks in many places aren't reliable. The future of computing is low power machines, plugged-into the wall, with battery back-up. The plug exists only for recharging.
- Security must be on by default. If we're to have applications that connect with the Internet and which you trust your life to, then security must be turned-on by default. That doesn't mean you have anti-virals everywhere. It means you connect to the Internet only when you have to. And you only download when security is established.
This Always-On world is going to be a long journey. I have friends who even tell me I'm too late to it. But if I can convince some big players to invest in this world, there will be plenty of money to go around.
I work as a business analyst with Progressive Strategies, a New York research firm that has the ear of the world's top technology companies.
My last book, "The Blankenhorn Effect" won the Computer/Internet category in the 2003 Independent Publisher (IPPY) awards .
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Takes on the News
Lessons From Spiegel's Fall
If any company would have been a natural to make it through to Internet commerce, it would have been Spiegel. The company has a huge catalog, back-office systems for transacting and shipping in volumes, and a brand name to get above the noise.
Yet the company has failed. It is in Chapter 11, it's laying people off, and it's looking for a buyer to stave off the final end.
There are lessons here:
Writing these stories always saddens me. The solutions to Spiegel's problems were obvious. Yet the patient died. Sometimes Cluelessness is fatal.
- Don't confuse the form your business takes with its function. Spiegel though it was a catalog retailer, but even back in the 1950s it was an electronic retailer.
- Don't confuse efficiency with threat. The Internet is a more efficient way to do electronic commerce than the mailing of catalogs. Companies that embraced the efficiency, like QVC and LandsEnd , prospered. Spiegel saw it as a threat.
- No one is too big to fail. Spiegel had likely been in cruise control for decades before the Internet arrived, certain it would survive forever. No one has that luxury.
The Referral Scam Returns
Referral payments are the secret sauce of permission marketing.
The idea is that people who've been driven part-way through the sales funnel are worth a lot of money. Instead of advertising to everyone, pay someone to bring good prospects to you. This is especially important in high-value transactions like real estate, where a single sale can be worth a commission of $20,000.
But if you've been burned, badly burned, by the referral business, you're not likely to be anxious to pay the fees. This is the story of Henry Silverman and Cendant.
The name Cendant came from an old referral operation, a late-1990s collection of "buying clubs" that Silverman's HFS bought in a huge merger. The Motley Fool had a story on this in 2001 and the word Fool is appropriate here. Cendant's books were much like Enron's, it turned out - the only thing left of the outfit today is the name.
So HFS is a franchise operation, names like Coldwell Banker, Days Inn, and Avis. And then along comes Barry Diller. Diller claims to own an Internet company and while Interactive Corp does own Expedia, Lending Tree, and RealEstate.Com, among other online assets, its primary assets are the old Home Shopping Network and the USA Network. What its books will look like after its cable and entertainment assets are unwound (as they're in the process of being unwound through NBC's acquisition of Vivendi Universal) is not known.
Diller is one of New York's great spinners. Diller has been spinning an Internet commerce story for three years now, and since such stories are easy to tell, most publications are eager to listen. He has profits, so if he claims they come from online reporters don't question it. And they never ask about all his failed online investments, like CitySearch.
The story is pretty simple. Diller is trying to use Lending Tree and RealEstate.Com to create a giant real estate referral program, and Silverman, who controls about one-fourth of the nation's real estate agents, won't pay for the referrals. He won't pay cash for a story that nearly cost him his company. I can't blame him.
China's Coming Implosion
Back in the late 1990s the "Four Tigers" of Southeast Asia (Thailand, Singapore, Malaysia, and Korea) overheated, their economies fell, and the U.S. caught barely a sniffle.
Well it's about to happen to China and this time we're going to get pneumonia, maybe worse.
Our Pakistani correspondent, Tee Emm, notes we're already catching cold. China's demands for raw materials are raising commodity prices worldwide. "Steel had been selling at Rs 30,000 per ton in Pakistan a few months ago. Today, it is 75,000 per ton. (Average salary of a non-technical laborer is Rs 3,000 per month, and that of a office worker with a college degree is Rs 12,000 per month). Steel makers in Pakistan are exporting steel to China like crazy. And just saw that the same is taking place everywhere, including the U.S. "
In the U.S. this inflation (which we don't benefit from in the form of production) means higher interest rates, a falling housing market and (probably) an end to the nascent recovery.
But that's just the first course. (You know how Chinese meals are -- good ones anyway.)
The next course is going to be the popping of the China bubble.
It will go just as it did in East Asia in the late 1990s, and in the U.S. Internet economy a few years ago. Loans will go bad, businesses will go under, people will become unemployed. For the soup course think soup lines.
One result will be a flood of western loan write-offs (which the banks will make up from you), followed by reduced supplies of manufactured goods (which means more inflation), and, when the yuan finally floats against the dollar (as many U.S. policymakers seem to want) it will fall in value, not rise.
And so we come to the entree. When Americans were laid off a few years ago, they found ways to get by. When Chinese are laid off they won't be able to go back to the farm, and whole families will go begging (literally). The social unrest from the Chinese collapse will threaten the entire system.
Here in the U.S., of course, you're talking about massive write-offs of investments, yet-cheaper Chinese imports, massive immigration (mostly illegal), and, since China is a nuclear power whose leaders will be desperate to distract the people from their growling bellies, a possible war against Taiwan that will, at a stroke, destroy our high tech sector because most U.S. semiconductors today are made in either China or Taiwan.
Now that you know the menu, think anyone here might want to talk about what we might do about it? Not so far. .
Clued-in is Markos Zuniga , who has used Scoop to turn his DailyKos site into a community and capture some of the online momentum generated by the Howard Dean campaign.
Clueless is the reporting of Motorola's "comeback" against Nokia , It's just an artifact of the dollar's fall against the Euro.
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