Ged Carroll

Category: business | 商業 | 상업 | ビジネス

My interest in business or commercial activity first started when a work friend of my Mum visited our family. She brought a book on commerce which is what business studies would have been called decades earlier. I read the book and that piqued my interest.

At the end of your third year in secondary school you are allowed to pick optional classes that you will take exams in. this is supposed to be something that you’re free to chose.

I was interested in business studies (partly because my friend Joe was doing it). But the school decided that they wanted me to do physics and chemistry instead and they did the same for my advanced level exams because I had done well in the normal level ones. School had a lot to answer for, but fortunately I managed to get back on track with college.

Eventually I finally managed to do pass a foundational course at night school whilst working in industry. I used that to then help me go and study for a degree in marketing.

I work in advertising now. And had previously worked in petrochemicals, plastics and optical fibre manfacture. All of which revolve around business. That’s why you find a business section here on my blog.

Business tends to cover a wide range of sectors that catch my eye over time. Business usually covers sectors that I don’t write about that much, but that have an outside impact on wider economics. So real estate would have been on my radar during the 2008 recession.

  • Barusch gets story wrong

    Last week I commented on a blog post by Ronald Barusch called Dealpolitik: Yahoo!’s survival plan. In his post Barusch critiques Yahoo! Inc.’s pursuit of different options for the company. Part of his critique reflected on Microsoft’s hostile takeover bid for the company three years ago:

    True, with hindsight the Yahoo board made a world-class blunder in turning down the Microsoft $33 per share bid over three years ago. But the board has to make the best of today’s situation.

    Whilst I agree with the Barusch central thesis that the company needs a new direction or possibly a new owner, and don’t have any particular sympathy for the board, I don’t think that the argument for new management at Yahoo! should centre around the Microsoft takeover bid.

    I explained in my comment to the Barusch article that whilst I didn’t have sympathy for the Yahoo! board, I also didn’t think that the whole picture of the Microsoft deal was reflected in the article. I think that there is a serious argument to be made for the Microsoft deal being a flawed structure, with a distinct possibility of it not a viable deal in the first place. There are two main strands to my thinking:

    • First of all the destruction of value meant that many Microsoft shareholders were opposed to the deal, but that doesn’t necessarily mean that it was a bad deal for all Yahoo! shareholders. (Only the ones that initially opposed the deal. Since the Microsoft deal at the time offered cash for the first 50 per cent of shares and Microsoft shares for the last 50 per cent shares. Given the state of Microsoft’s share price over the past decade or so and the state of the Microsoft online services line, cash would be preferable.)
    • The second and more important strand is that the deal had a number of antitrust roadblocks to cross. Whilst Microsoft is a bit player in the search engine advertising market, it is already a convicted monopolist in its server and tools business. This important because Yahoo! is not only a media company; but also a key contributor to a number of critical open source projects; having contributed to PHP, the Debian Linux distribution and Hadoop. Given this, the deal would have been exposed to antitrust risk in the EU. A second risk of antitrust would have come from the Japanese and Chinese markets were you have national internet champions in Softbank (majority owner of Yahoo! Japan) and Alibaba trying to escape the clutches of Yahoo! instead being acquired by Microsoft

    It was interesting that neither Microsoft, the media or Yahoo! broached the likely antitrust implications publicly at that time. Which I suspect is partly a credit to good execution by Microsoft’s corporate communications team.

    The Microsoft bid was a powerful lever that helped Microsoft secure the search deal it wanted with Yahoo!. Though Microsoft has failed to reap the full commercial gains partly because it’s AdCenter technology wasn’t as good as the Yahoo! Panama project it replaced – and neither were as good as Google’s own advertising technology.

    What should the Yahoo! board have done, and what should it do next probably has more options in it than football fans arguing over the performance of their team manager and I don’t have the definitive answer.

    But I suspect my comment may have been bounced from the Wall Street Journal Online site because it throws a spanner in the works of the Mr Barusch. His nice, neat storyline with the Microsoft deal opportunity as an inciting incident into a downward spiral of a digital greek tragedy. Mr Barusch and his colleagues don’t want the evidence to get in the way of a good story

    As an aside, it also shows how powerful storytelling is as a way to game media | public relations in favour of the PR over the journalist. People like stories, they think in stories and it makes it easier to efficiently and effectively file easy copy or blog posts.

    So if the Microsoft hostile takeover bid wasn’t the inciting incident what was?

    My own personal opinion is that spiral probably goes at least as far back as Yahoo! overpaying for its purchase of Broadcast.com – a business that had some 13.5 million USD in revenue per quarter, acquired for 5.9 billion USD in Yahoo! stock back in 1999. It was a bad deal, and it adversely affected Yahoo!’s approach to strategy, risk-taking, decision-making and speed of execution. This is likely to affected Yahoo!’s thinking on its attempted acquisition of a young Google.

    I believe that the damaged approach to strategy was a major factor in Brad Garlinghouse’s famous peanut butter memo from 2006 (though as Techcrunch summised it was also a political power-play and as I mentioned at the time, Garlinghouse was as much to blame in many respects as other senior executives.)

    Investor Paul Graham thought that Yahoo! was screwed by cultural traits baked into the organisation’s cultural DNA as far back as 1998:

    • Less interested in innovating in advertising, because this would expose customers to the reality that they were overpaying for their inventory.Yahoo! was build on brand advertising driven by reach not by targeted ads so they missed why search advertising (and a good search engine was so important)
    • Yahoo! thought of itself as a media company rather than a technology innovator; back then technology companies sold software rather than advertising, so by default they must be a media business
    • Fear of Microsoft – whilst Microsoft is a big ugly mean company now, it is nothing compared to the beast it was before the internet became mainstream and the Judge Jackson trial. Graham thought that Yahoo! tried to define itself out of the footprint of Microsoft. All of this meant that Yahoo! wasn’t a Google, Facebook or Twitter-style technical talent magnet

  • Mr Pizza in Korea

    Pizza in Korea is a unique experience compared to other countries. Pizzas in Hong Kong were generally more premium and had more of a focus on sea food. Pizza in Korea was remarkably different:

    • Packaging – unlike the UK or most other countries I have been to for that matter, pizza can come in a four-colour patterned box. Part of the reason for this is cultural, Korea like Japan puts a lot of emphasis on presentation of products from product packaging design to the fit and finish of clothing. A second reason for the quality of the packaging is intense domestic competition: in addition to food mega-corporations Dominos Korea and similar brands also has its own giant brand: Mr Pizza with 350 branches in South Korea
    Mr. Pizza
    • Product – whilst UK pizzas follow US influences at the low end of the market and faux foodie Italian accents for ‘posh’ pizzas, Korean pizza options incorporate local foods including kimchi and bulgogi on the menu. This is especially true for this brand, though foreign brands like Pizza Hut try to adapt to local tastes too.

    About the company

    Mr. Pizza was founded in 1990. They have one branch in the US, one in Vietnam, 15 in China and some 350 branches in South Korea.

    They created a mockumentary  video The true origins of pizza as a satirical viral campaign to promote their brand, (presumably internationally). It considers the dish to be a Korean national treasure. However it did touch a nerve amongst other Asian countries as it’s similarity to Korean nationalist fringes meant that some of the film’s satire was lost to the audience.

    The company looked to further differentiate itself to eat-in diners by developing a new store format and sub-brand called MIPIHAUS. The concept of MIPIHAUS is to mix an art gallery environment with their restaurant. MIPI is a contraction of Mr. Pizza and the HAUS is a reference to the Bauhaus art movement.

  • CIC on China’s luxury market

    CIC who provide the IWOM set of reports and flakey tools (think Sysomos, Radian6 or Adobe SocialAnalytics for the mainland Chinese internet eco-system) have come up with an interesting report on online conversations around the Chinese luxury market. CIC is increasingly being integrated with GroupM. It will be interesting to see how CIC copes as China exerts increasing control over social and marketing data access.

    Key take-outs

    • They are motivated to buy luxury goods as a way to ‘show-off’ and most of the online conversations are around this subject. Status itself is a tool designed to engender trust in things like business interactions rather than self actualisation per se
    • The distribution system is complex with overseas purchasing and purchasing agents (presumably to avoid China’s luxury goods tax and for more choice) also a popular subject. For luxury brands it means that Chinese expansion needs to be tapped by also having presence in places like Hong Kong, Japan, Korea, Paris – France and the major cities of the US
    • Real-time reporting of runway shows initiated by the brands doing webcasts has been extended by netizens to their own platforms. Much of the commentary is similar to the social television interactions you used to see on early video platform Joost; and on Twitter during shows like The Apprentice or The Only Way is Essex (TOWIE)
    • Counterfeit – there was a significant group that own both counterfeit and authentic versions of a product because it is ‘interesting to mix and match usage between real and fake’. This is a really interesting brand interaction and raises the question: what if authentic isn’t authentic enough in terms of brand experience? This is something that I could see impacting the likes of Louis Vuitton. Gucci, Chanel and Hermes as they become over-exposed in the marketplace. One of the ways to approach this is to educate consumers on what luxury means: craftsmanship, heritage or being at the forefront of something (which may mean an intersection between streetwear and luxury)

    More related content here. More from CIC here.

  • Optimising for platforms

    Optimising for platforms rather than clients and audiences. Three years ago I taught an interactive marketing module at the business school of a private university in Barcelona. It was a great experience presenting to a number of senior executives and up-and-coming talent from various parts of Spanish industry including advertising and interactive agencies. I ended up learning from them as much as they learned from me.

    One of the attendees talked about listening to what his clients wanted, but that he really focused on building sites that Google wanted him to build; when the client wishes and Google were in conflict, Google won out. At the time the phrase struck me as it illustrated the pinnacle of Google’s power on the internet.

    The internet maybe open, it may be based on standards which means that you can see broadly the same experience across different platforms and browser software; but that’s no good if no one ever sees you site, modern-day equivalent of the classic philosophical question:

    If a tree falls in a forest and no one is around to hear it, does it make a sound?

    However even if you don’t rank highly in Google, it can still be promoted in other ways. The other week I was at a conference when I heard one of the audience as a question about the wisdom of:

    Buiding a business in Mark’s house

    That is building a business on the Facebook eco-system. I was reminded of the earlier discussions I had in Barcelona around the power of Google.

    Facebook wasn’t a new idea, there have been social networks for as long as there has been the commercial internet.

    • The Well
    • AOL in some of its earliest incarnations as a BBS (bulletin board system) for Macintosh computers provided some of the functionality that Facebook pages and groups do now. AOL gave users 2MB to create their own personal presence on the web through a tool called Personal Publisher (it could be found with the keyword PP2 – it wasn’t called search back then) a kind of pre-Geocities.com page that does what your profile on Facebook does now
    • And if you enjoy Zynga’s Farmville or Cityville, these owe a huge debt to Lucasfilm’s Habitat developed by former Yahoo Randy Farmer and sat on the AOL platform some 25 years ago

    Many of the innovations that Facebook has since come out with like email and instant messaging, are features that AOL and others had since the internet first became popular. The contrast between the two is more about scale, whilst AOL was phenomenally popular with 30 million subscribers at its peak (who also paid for line access), and still reaches 112 million unique users on a monthly basis; but it was never omnipotent in the way that Facebook became.

    Facebook has an unsurpassed reach, kind of like a telephone directory for large swathes of the world – a de-facto real identity check. This powerful position is one that Clay Shirky says won’t be changed for the foreseeable future.

    You have to be on Facebook, even if you don’t engage with it (and engagement is something that Facebook seems having issues with for a good while).

    So businesses have gone to the logical step of building their web presence on a platform that they think is most consumers online homebase (as I read it described in Larry Weber’s Everywhere).

    So whilst Facebook may not control as much advertising budget as it likes; it wields a huge amount of consumer power and power over businesses that decide to use the social network as a platform – and that’s not likely to change any time soon.

    There are a number of factors to consider around Facebook:

    • Facebook abuses its position with consumers and I don’t need to discuss it here as it’s been well documented elsewhere already
    • Then there is the impermanence of web APIs, Nick Bradbury wrote a great post about this where he name-checked Facebook’s depreciated FBML, but to be fair, Google and Yahoo! have either changed the terms of APIs to make them less viable or got rid of them completely. So your platform may be here today gone tomorrow. From my experience, at the very least you are subject to browser compatibility problems and relatively high unpredictable down-times
    • It has become a crutch for marketing agencies in the way that the the answer to all consumer marketing used to be the 90-second television advertisement – I am surprised that so many brands are surrendering their reputation to Facebook given the concerns that had been voiced by marketers about Google’s power in recent times

    Marketers would be well advised to take a more pragmatic approach, think about where they are sending their traffic – who ‘owns’ the customer experience and take a portfolio or multi-channel approach to a campaign. More related content here.

    More information:

    Is it possible to replace Facebook? – interesting article by the research and development team at Norwegian state broadcaster NRK

    How Ford Blew It On Facebook | Advertising Age – why drive people via advertising to your Facebook page when you can drive them to your own property?

    The long-term failure of web APIs | Nick Bradbury

  • In The Plex by Steven Levy

    I bought In The Plex automatically because I had previously read and enjoyed Levy’s previous works: Insanely Great, Hackers and Crypto. Given his heritage covering technology companies and personalities as both an author and a journalist, I was curious what he would make of Google.

    The book is expansive and provides a lot of additional colour around Google, some of which I found of interest as I had worked at Yahoo! competing against Google and working with some of the early darlings of the web 2.0 movement – Flickr and Delicious. There were a couple of things that surprised me such as Google’s use of machine learning on areas like translation explained why grammar is still so bad in this area as it needs heuristics that lexicographers could provide similar to that offered by Crystal Semantics.

    Overall it was interesting to see that as with most large organisations Google is not only fallible but run through with realpolitik and a fair bit of serendipity. This contrasts with the external perception of Google as the technological Übermensch. A classic example of this is the series of missteps Google made whilst competing in China, which are documented in the book. From staffing practices, promotional tactics and legal to technology; Google blew it’s chances and Baidu did a better job.

    As an aside it was interesting to note that Google used queries on rival search engines to try and work out how to comply with Chinese government regulations, which is eerily like bad practices that Google accused Bing of last February in ‘hiybbprqag’-gate.

    There is a curious myopia that runs through a lot of later Google product thinking that reminded me of the reality and perceptions that I was aware of existing inside Microsoft from the contact I have had with the organisation through the various different agencies I have worked at. A classic example of this is the Google view of a file-less future, which by implication assumes that people won’t have legacy documents or use services other than the Google cloud. It is a myopia that comes part of arrogance and a patronising attitude towards the consumer that Google always knows best about every aspect of their needs.

    Contrast this with Apple and iTunes. Whilst Apple would like to sell you only content from the iTunes store, it recognises that you will have content from different sources: Amazon MP3s, ripped CDs, podcasts and self-created files that iTunes needs to play nicely with.

    The ‘no files’ approach assumes ubiquitous bandwidth which is likely to be a fiction for a while. (Part of the reason why I am able to write this post is that I was stuck for half-a-day on a train journey to Wales enjoying patchy mobile phone coverage and a wi-fi free environment, which allowed me to focus on reading this book in hardback).  This approach smacks of the old data lock-in that Microsoft used to have with proprietary file formats for its Office documents.

    Levy does a good job pulling all of this together and chronicling Google, but In The Plex fails to cast a critical eye over it all. I suspect that this is because he is too close to the company: the access that he gained enveloped him. Which is a shame as all the experience and insight Levy could bring to the book that would add value to the reader is omitted. Whilst In The Plex is an interesting historical document, it could be so much more. More book reviews can be found here.