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.

  • Yahoo’s downfall

    I’ve seen a lot written about Yahoo’s downfall.

    Most of it lacks insight. And at the most basic level lacks precision. Yahoo is an employee who works at Yahoo! or Y! (the Y-bang). It was the best culture I ever worked in; and the most dysfunctional company that I ever worked for. I got to work with amazing people at a company that managed to fumble the ball on opportunity after opportunity. Most analysis you see comes from outsiders who lack insight.

    So when I came across this question on Quora and decided to post my answer. I’ve shared my answer on this blog with additional data points and information on ‘Yahoo’s downfall’.
    Yahoo! star
    This is a big question. In the answers that it will receive you are likely to see:

    • Difference of opinions about the reasons of the decline
    • Differences of opinion  about when the decline actually set in. Which begs the question was the downfall that drastic?

    Before we get into the why, lets think about the nature of businesses.

    Public listed companies generally don’t last forever

    The AEI said that 88 per cent of the companies that made up the Fortune 500 in 1954 are gone. Yahoo! is between 21 and 22 years old depending which way you count its age.

    Yahoo! has outlasted many of its peers:

    • Excite – merged with @Home Network in 1999. It went bankrupt in October 2001. It was sold in December 2001. By 2007, the business was broken up by territory.
    • Lycos – was sold three times, each time for a fraction of the purchase price
    • Hotbot – bought by Lycos
    • AltaVista – minority stake sold to CMGI in 1999. Bought by Overture in February 2003. Yahoo! acquired Overture in July 2003

    Only MSN remains of the original brands that it competed against. If MSN wasn’t a Microsoft business, its survival would be questionable. Microsoft’s online services lost money from 2006 through 2010. By comparison, Yahoo! has kept making a profit – despite its issues.

    Macro-effects

    The technology sector has become a hunting ground for active investors. Back in the 1980s, American publicly listed brands were attacked by investors:

    • RJ Nabisco – leveraged buyout by KKR
    • Gulf Oil & Unocal – T. Boone Pickens had failed bids for both oil companies but made a large profit on his holdings
    •  TWA – leveraged buyout by Carl Icahn. Icahn’s business practices were responsible for its bankruptcy in 1992 and 1995
    • Revlon – acquired in a hostile takeover by Ron Perelman, much of the business was broken up to pay for the deal

    In the 1990s, factors changed:

    • Credit lines for deals dried up as some leveraged buyouts proved to be bad for investors
    • Businesses developed more effective defences including poison pills, golden parachutes and greater debt
    • Overall value of the stock market increased. This reduced the amount of opportunities to get companies on the cheap

    Moving forward 20 years, the technology sector became in a similar place

    Historic technology businesses have moved from being high growth to value businesses. This changed the nature of investors interest in them.

    • Microsoft gave a seat on its board to an activist shareholder ValueAct Capital
    • Apple started paying dividends and raising the debt on its balance sheet to fend off Carl Icahn

    Google’s unique two-tier shareholding structure has proved to be an effective defence so far.

    A business like Yahoo! looks like a classic corporate raid target as its value is less than the sum of its parts. It has a regular cashflow that could service a lot more debt at current interest rates. It has assets that can be quickly sold.

    Capital has become much cheaper. This is partly a result of low interest rates set to keep the economy out of trouble in 2008. But there is also a lot of foreign capital and pension fund money looking for a home.

    Missed opportunities

    Given that we have the perfect vision of hindsight, Yahoo! missed key opportunities. Here are some of them.

    Yahoo! failed to buy Google

    Yes, Yahoo! did fail to buy Google. And their competitors failed to buy Google as well. Excite rejected the opportunity to buy Google for $750,000 in a deal arranged by Vinod Khosla. By comparison Terry Semel, then CEO of Yahoo! failed to buy Google for $5 billion. At the time Yahoo!’s entire market value was roughly $5 billion.

    Yahoo! failed to buy DoubleClick

    While Yahoo! was playing catch-up with Google on search. Google outbid the online industry to pay $3.1 billion for DoubleClick. DoubleClick provided advertisers with more opportunities to place banner ads than Yahoo! did.

    Yahoo! failed to buy Facebook

    Terry Semel offered $1 billion for Facebook in 2006. Semel wouldn’t go to $1.1 billion Facebook’s board wanted.

    Yahoo! failed to sell to Microsoft

    I don’t think that the Microsoft deal was a serious offer. There are  reasons to be suspicious:

    • Microsoft couldn’t make its own online business profitable at the time. The deal was unpopular with shareholders
    • Yahoo!’s contribution to the open source community would have been an antitrust issue
    • It would have to get through approval by Japanese competition authorities
    • It would likely have to get through Chinese antitrust authorities

    Yahoo! didn’t communicate these risk factors to shareholders. Which then left the door open for the Microsoft-funded Carl Icahn coup later on.

    Yahoo!’s board has failed the company

    I think that there is a stronger argument for this when you look at their selection of CEOs over the years

    • Tim Koogle – led Yahoo! on the upcycle of the dot.com boom. He resigned and replaced by Terry Semel during the bust that followed.
    • Terry Semel – was a senior media industry executive who bought the business out of the bust. He never got the product and never used email. He never managed to build a media company despite his Hollywood heritage.
    • Jerry Yang – history will look with more favour on Jerry Yang in the future. He did the Yahoo! Japan  and Alibaba deals which are the most interesting parts of Yahoo! today. As a CEO, his time was consumed by  Microsoft’s hostile bid
    • Carol Bartz – Bartz was a Microsoft approved appointee. Her deal on Facebook Connect saw the social network build its business on the back of Yahoo!’s user database. Bartz does the Microsoft search deal badly. She also launched mobile apps that were bad. The one thing she needs respect for is her approach to marketing. Bartz realised that she needed to promote the entire Yahoo! brand. Although there was a buzz marketing team in the US, most marketing was based around products. Unfortunately the execution of the brand campaign was poor. This was partly because it was led from the US with little engagement of regional and national marketing teams.
    • Scott Thompson – stayed for five months. Allegations were made about his education, better due diligence on his recruitment required.
    • Ross Levinsohn – Ross served as interim CEO after Thompson left. It is hard to know what CEO he would have made. But his successor seems to have borrowed his strategy.
    • Marissa Mayer – Despite the goodwill Mayer had going into the job she hasn’t managed to change Yahoo!’s current business. That the company’s strategy is being driven by activist shareholders says a lot.

    Problems in execution

    Yahoo! had its fortune hitched to brand display advertising. Growth has dropped in this for the past ten years. Yahoo!’s declining advertisng revenues started in Q2 of 2006. Part of the problem was that Yahoo! had been too successful to begin with. Yahoo! sold its display advertising for way more than it was worth.

    Yahoo! failed to monetise search as well as Google. And then handed its search business over to Microsoft, who failed to do as good as job as Yahoo! managed on its own.

    Yahoo! failed to execute in mobile, despite some smart early efforts. Photo community Flickr was the default photo app on Nokia’s N73 blockbuster smartphone. The N73 launched at the end of April 2006. It was was one of the last things I worked on before leaving. Given that headstart Flickr could have been Instagram. Instead its a more specialist community of ‘proper’ photography enthusiasts. Yahoo! Messenger and Mail both worked on Nokia handsets from the mid-2000s. Yahoo! Go was an app which provided access to services including:

    • Flickr
    • Address book
    • Calendar
    • Email
    • Maps
    • Search
    • Content: news, weather, finance, sports, entertainment

    It could have provided the same function that Android provides for Google, but Yahoo! considered as ‘beta software’ right up to it’s demise in January 2010. Yahoo! has been providing Apple with weather information and stock data for the iPhone. Yet it hasn’t managed to build a successful iPhone app.

    One way of illustrating the decline of Yahoo! in mobile is to look at the user numbers of Yahoo! mail, which seems to have peaked around September 2011.
    Yahoo! Mail, Hotmail and Gmail users over time
    Hotmail shows a linear increase over time, likely due to organisation changes as it has moved to the cloud and Gmail takes off, presumably on the back of Android – though iOS users also have Gmail accounts.

    Yahoo!’s acquisition process was broken. Ever since Yahoo! wasted 1 billion dollars buying Mark Cuban’s Broadcast.com the business slowed down. Broadcast.com was a scare on the collective memory. Capital decisions took longer, acqusitions took longer. The cheque book was harder to open. Under Marissa Mayer, it was finally let loose, but the purchases seem to have made little difference.

    Yahoo! failed to become a media company. Back when I was at Yahoo! we launched Kevin Sites in the Hot Zone – a sort of proto Vice News in 2005. Despite Semel’s Hollywood background, he and following CEOs never made it work. Despite the fact Yahoo! had joint ventures with TV networks in Australia and Canada. When Marissa Mayer finally managed to get talent in the door, audiences had moved to other sites:

    • Gawker Media
    • Buzzfeed
    • Daily Beast
    • Aol’s blog network
    • Huffington Post

    Yahoo’s downfall in social is spectacular. Yahoo! owned pioneer social brands, any of which could have been the Instagram, Facebook or WhatsApp:

    • Yahoo! Chat – chatrooms were the Facebook Groups of yesteryear. Yahoo! was doing social before it was a thing
    • Delicious – neglect, internal politics and corporate interference meant that Yahoo! never capitalised on Delicious. Despite its tribulations there are some people who still use it, though I am not sure why
    • Flickr – corporate interference and neglect destroyed the potential growth of photo sharing site Flickr. The site is kept going as a photographic enthusiasts community. It could have been Instagram. Thankfully, Yahoo! only spent $30 million on it
    • Yahoo! Messenger – Yahoo!’s Messenger had a poor mobile client, but could have been WhatsApp. Facebook dominates the sector along with Tencents WeChat, NHN’s LINE and Daum Kakao’s KakaoTalk
    • Tumblr – Yahoo! was forced to writedown the value of Tumblr to nothing. The company failed to monetise the popular blogging and curation platform. Tumblr is one of Yahoo!’s few products that attracts a millennial audience

    Yahoo! products had a poor experience. I launched over 14 products at Yahoo! in just over a year. I only ever used 2 of them on a regular ongoing basis – Delicious and Flickr. Other products like Yahoo! 360, Yahoo! Answers or Yahoo! MyWeb 2 – fell into three categories:

    • Dogs to use – particularly in the set-up part of the process
    • Not particularly useful – Yahoo! Answers, great idea in prinicple but poor cultural fit. That poor fit meant that it filled up with noise, Yahoo! Answers isn’t as useful as Quora
    • Strangled soon after birth – so it became frustrating to commit your time to them as a user

    Politics paid a part in this process. The Communications group (responsible for Messenger and Mail) had a lot of duplicate products. Yahoo! Photos was a bad version of Flickr. For storing your bookmarks there was:

    • Yahoo! Bookmarks
    • Yahoo! MyWeb
    • Yahoo! MyWeb 2
    • Delicious

    This all bogs management down and sucks away resources. There were also so many projects that never saw the light, due to constant changes in priority. More Yahoo!-related posts here. What do you think brought about Yahoo’s downfall?

    More information
    Fortune 500 firms in 1955 vs. 2014; 88% are gone, and we’re all better off because of that dynamic ‘creative destruction’ | AEI Ideas
    Microsoft’s Bing/MSN Results Truly Horrifying — Loss Rate Balloons To ~$3 Billion A Year | Business Insider
    Stupid Business Decisions: Excite Rejects Google’s Asking Price | Minyanville 
    A Microsoft First: Activist ValueAct Gets a Board Seat – WSJ
    How Yahoo! Blew It | Wired
    Yahoo! Could Have Bought Facebook For 2% Of Today’s Valuation | Business Insider
    Sorry Microsoft, Yahoo — Google Just Got Bigger | Ad Age

  • Thin film electronics + more things

    Coal redefined for thin film electronics | Electronics EETimes – sounds like a graphene connection. Thin film electronics is going to be key for wearables

    Web Summit 2016 | Approach to marketing – it does beg the question why should a marketer support this and go to their conference?

    The VR idea maze — Benedict Evans – worthwhile read. I think the point made on content is particularly pertinent. We may have the hardware but it could take decades for the craft of content creation to come to full fruition

    China’s government sounds out international PR agencies about how to polish nation’s image overseas, sources say | South China Morning Post – A spokesman for WPP, which owns Hill+Knowlton declined to comment. Ketchum also declined to comment. Fleishman Hillard Inc, Ogilvy Public Relations and Edelman did not respond to messages requesting comment – Weber Shandwick attracted negative attention working for China during the run up to the 2008 Olympics and Ketchum had a similar experience working for Russia

    Microsoft’s Silver Lining Is Shrinking — The Information – not surprisingly moving a cloud model disrupts Microsoft’s margins in comparison to package software (paywall)

    Off the grid – Official site of Stephen Fry – interesting essay on the perils of social media

    China Unicom bets on turnaround as net profit plunges 85pc | SCMP – 4G network capital costs and increased marketing costs

    “Overpaid and underperforming”: An anonymous investors’ letter lashes out at Nikesh Arora — Quartz – there are other shoes to drop on this. Looking that the shareholders hold ADRs rather than SoftBank shares – this is a US led charge. It is also interesting that this happening right before the Yahoo! shoe drops. SoftBank,  and its Yahoo! Japan joint venture are a key part of Yahoo! Inc’s value

    Korean TV Dramas Are the Best Export Since ‘Gangnam Style’ | Digital – AdAge

    Pirate Bay Founder: Streaming Model Could Ignite New Piracy War – TorrentFreak – really interesting essay. I had a similar experience with Apple’s iBooks. I bought James Michener’s Mexico for a long flight and trip, tried to download it a week later and it was no longer available. I now buy mostly paper books

    Brands rip up media plan in the face of disruption – it decided last September, in consultation with MediaCom, to take more radical action. Tesco slashed its media budget for newspapers to practically zero and shifted most of the money into online and social media. TV and other traditional media have also been heavily cut (reg wall)

    Can audio go viral on Facebook? Here’s what happened when NPR ran an experiment for a month » Nieman Journalism Lab – Sharing audio on social media is hard to do. Stan Alcorn documented many of the struggles two years ago in a widely cited Digg story

    Elisabeth Murdoch’s Vertical Networks creating ‘Brother’ Snapchat Discover channel – Business Insider

    IRIN | Spies Sans Frontières? – the ethical conundrums around this are particularly interesting. More security related posts here.

    Is Programmatic Expertise Moving In-House? – EContent Magazine

  • Integrated agency wins

    I started thinking about integrated agency wins when I read that Asda appointed Publicis after a short pitch process this week.
    ASDA
    What was notable about the win was that it covered both creative and media briefs. Notable enough to become a conversation topic when I met up with industry friends for coffee. Integrated wins are not that common.

    WPP has managed to win global single agency accounts:

    • Ford Motor Company
    • HSBC
    • Colgate-Palmolive
    • News International
    • Bank of America
    • Miller Coors
    • Ford Motor Company
    • Mazda
    • Huawei

    Then there was Enfatico for Dell.  Enfatico struggled with personnel changes at the client and client culture.

    The Publicis deal is is more modest in one respect, it only affects Walmart’s UK business, but is still £95m.

    On the face of it, integrated appointments have a lot to offer, so why aren’t they more common?

    Let’s first look at the pros of an arrangement:

    • Better chance of not getting silo-ed thinking from the agency. Both creative and media can be part of the ideation process. One of the big parts of WPP’s early success was a focus on media investment management. This broke the symbiotic creative relationship between media and creative. It worked well for a number of years, but with integrated agency wins, the pendulum seems to be swinging back the other way
    • New ways of audience targeting as part of the creative process. The concern is the combined profitability of the account. Rather than a focus on media profitability

    Barriers to adoption:

    • Current contractual timings don’t allow for pitching media and creative business together. It seems so obvious, but there may not be a convenient break clause in place
    • Pitches are often driven by procurement teams; who look at better value in continuity, rather than a more holistic approach

    Weakness of a combined media and creative agency arrangement:

    • The marketing group may not have strength in all areas. I worked for a large marketing group which held the global account of an FMCG company. Despite being part of a global marketing group, we couldn’t execute in two markets for the client. This affected the social media marketing work we did for them and they weren’t happy
    • Dependent on the marketing team, they may not want to work with a media agency that:
      • Operates an arbitrage model. Having bought the ad space from the media, they then sell it on to clients with targeting data
      • Operates a model that isn’t media neutral to meet wider internal goals
    • Clients often think of the arrangement only as a way of cost reduction

    There are also weaknesses with the single client agency model as WPP has done it:

    • Set-up costs are usually shared across clients, but where there is dedicated infrastructure. This cost will have to be borne by the client, upfront or salted in the fees
    • From a client perspective there is moral pressure to maintain the agency relationship. This complicates the client’s ability to ensure cost-competitive rates
    • Less opportunities to cross-pollinate ideas across categories. This is because the agency is focused on one client only

    While Asda have taken an interesting first step, hiring an integrated offering. The hard work is only now starting:

    • Putting in place the right working practices client and agency-side
    • Changing the creative process to take advantage of integration
    • Have a proven positive effect on Asda’s sales figures in the face of competition from Lidl and Aldi

    More posts on WPP here, and Publicis here.

    More information
    Asda hands £95m media and creative to Publicis Groupe in double coup | Marketing Magazine
    WPP Folds Ill-Fated Dell Agency Enfatico Into Y&R Brands | Advertising Age

  • IP with WeChat + more things

    UK companies in discussions related to IP with WeChat | 英中贸易协会与微信法律团队会晤 – WeChat wants brand advertisers and e-tail sales, the brands want a clamp down on grey market and counterfeit product sales enforcing their IP with WeChat. More on WeChat related content here

    Twitter has outsized influence, but it doesn’t drive much traffic for most news orgs, a new report says » Nieman Journalism Lab – Twitter generates 1.5 percent of traffic for a typical news organizations, according to a new report from the social analytics company Parse.ly that examined data from 200 of its client websites

    The F.B.I. Reportedly Paid Professional Hackers to Break into the iPhone | Vanity Fair – interesting that the hackers built specialised hardware to give the FBI multiple chances and the intellectual property continues to be owned by the hackers

    WordPress Version 4.5 Now Available: Here’s What’s New – Search Engine Journal – changes mostly in terms of productivity | editing content

    Yahoo! Worth $44 if a Team of Microsoft and Others Bought Patents, Opines SunTrust – Tech Trader Daily – Barrons.com – I don’t think the patents are worth what SunTrust do. The most important search related patents are already licensed to competitors Google and Microsoft

    New tax law reshapes China cross-border e-commerce! | WalkTheChat – China tightening up on grey imports and luxury good consumption

    不带钱包在中国怎么度过24小时？结果让外国人惊呆了…… – CNN on living without cash in China for 24 hours (use WeChat payments instead)

    Facebook’s 360 Degree 3D Camera Unveiled At F8 Conference | Fast Company – this will allow the Shenzhen eco-system to compete with Nokia’s Ozo and annihilate it on cost

    Didi Kuaidi ride-hailing app roams into US | Shanghai Daily – the Lyft deal now makes sense

    XHamster blows a load of justice on North Carolina over anti-LGBT bill | TheNextWeb – and they quote statistics about the popularity of gay and shamble porn in North Carolina

  • Hacks and Hackers notes

    I went to the Hacks and Hackers London presentations this evening host at the Institute of Directors and here is a summary of the notes that I made.

    Presenting at Hacks and Hackers this time was:

    • Simon Rogers
    • Kate Day

    Simon Rogers is ex-Guardian and Twitter. He talked about how Google uses Google Trends, combining it with third party data such as information from the likes of Associated Press. They build some nice visualisations around them. Most of the data that they used was basically the same data that consumers had access to through the Google Trends tool. Google seem to deliberately restrained in terms of the data that they could deploy on this, but they did work on tightening up and redefining regions from the way their internal data held it to the way it related to the real world.

    There was some nice work done that looked at associated search terms that came up by people who searched for US presidential candidate names. It reminded me of the work that Hunch did around consumer behaviour patterns and likely political beliefs – but less sophisticated. (Hunch was bought by eBay and eventually shut down).

    Kate Day talked about the launch of US site Politico in Europe. The business had a split business model with a B2B subscription offering that provided European Parliament intelligence. and a more conventional consumer advertising audience model which targeted people who were professionally interested in European parliamentary politics.

    From an editorial point of view stories which drove big peaks in traffic often brought in the wrong kind of audience who either wouldn’t be likely to return, or ‘get’ the content on offer.

    Targeting on social media was purely done through careful selection of the copywriting, which requires professional knowledge and a desire to self select as a ‘policy wonk’ rather than using Facebook or Twitter’s ad targeting mechanisms. In common with other subject areas regular coverage of a beat area matters to drive continued engagement. Politico has managed to get UK press scoops by showing up at all the press briefings in Brussels rather than following the British eurocrat events – this probably says a lot about the small size of teams that other national news outlets have operating there.

    More media related topics here.