NZ Internet, Media and Business
Take a look at the car (below) in this article.
“You are looking at a nano-cosm of a foreshadow of the future of the world’s
geopolitical risk.
That’s how a friend of mine characterizes the global situation right now. And I though I was bearish.
Oh - he works for the World Bank. (His opinions are his own however)
If you are going to spend $20 billion on bailing out a bank that has a market capitalization of about $20 billion, then surely you should end up owning the bank?
Not so with Citibank.
Indeed, if you owned equity in a company that had debts far great than assets, then wouldn’t you expect to see your equity wiped out, and that the debt holders would be the new owners?
Not so with Citibank.
Alternatively if a white knight or government came in and rescued the company you would expect again that your shares would lose value wouldn’t you?
Not so with Citibank.
In fact Citibank’s shares are up 50% so far this US trading day after the US Government announced it will guarantee an obscene amount of debt and inject $20 billion of new capital.
Last week at this time I shorted Citibank stock - both through selling the shares and by buying some $2.50 puts. The shares were a bit over $9 at the time, and I suspected that Citi’s time had finally come.
I covered the the shorts and sold the puts at prices between $5 and $3, closing out everything on Friday US time. While I made stellar percentage profits, they were not high dollar value due to the small size of the investments. I sold before the economic values because I suspected that this bailout could happen, and it did.
It needed to happen, but it didn’t have to happen in a way that rewarded the incumbent management team and the owners of the stock. The equity holders and the management team should both be squeezed out in favor of debt holders, in this case the depositers.
Jeff Garten, the Dean of Yale School of Management when I was there, and now a Professor of International Finance there, was quoted via a recent NYTimes Thomas Friedman oped:
“A great judgment has to be made now as to just how big and bad the situation is.. This is a crucial judgment. Do we think that a couple of hundred billion more and couple of bad quarters will take care of this problem, or do we think that despite everything that we have done so far — despite the $700 billion fund to rescue banks, the lowering of interest rates and the way the Fed has stepped in directly to shore up certain markets — the bottom is nowhere in sight and we are staring at a deep hole that the entire world could fall into?”
If it’s the latter, then we need a huge catalyst of confidence and capital to turn this thing around. Only the new president and his team, synchronizing with the world’s other big economies, can provide it.
“The biggest mistake Obama could make is thinking this problem is smaller than it is. On the other hand, there is far less danger in overestimating what will be necessary to solve it.”
Freidman is calling for Obama’s proposed Treasury Secretary Tim Geithner to be appointed immediately, to reduce uncertainty in the markets. Hew’s the second serious writer I’ve seen recently, after David Brooks, to wistfully call for Obama to start now and for Bush to step aside. (It cannot happen).
I can’t help think that New Zealand’s election happned after the USA’s, and we now have a functioning new Government. I also cannot help remember how disastrous the transiton from Muldoon to Lange was back in 1984, and how we in NZ learned from that lesson. A 2 1/2 month transition for the US is simply ludicrous, especially given that the old and new Presidents meet for an hour only. The transition between Clinton and Bush II was particularly galling, with years of good works tossed away. To Bush’s credit the news from the Bush II to Obama transition has been good to date.
The evidence mounts against eBay, as they continue to cast away their franchise. It’s really sad to see this happen as they naturally own their space and should be unassailable if they were playing it right.
They are not.
Over the years the site has increased in complexity and decreased in humanity, until the community feels obliterated and the only sellers are the larger professional ones.
In New Zealand Trade Me’s strategy is to keep things simple and focus on the person to person transactions. That is working.
Auction and classified sites make money by attracting visitors, turning those visitors into members, turning thse members into sellers that list items, selling those items and collecting a percentage of the value of thise items listed and sold. eBay is losing visitors and is lagging in items for sale.
Let’s look at two data points to back up the deline of eBay.
1: Pageviews: This disturbing chart came via Auctionbytes, and shows a 30% drop in US page impressions from last October to this October. That’s a massive sign of an unhealthy marketplace.
2: Listings Today eBay Australia has 1,113,647 listings located in Australia, eBay.com has 25.2m listings located in the USA while Trade Me has 1,255,082 listings in NZ. (That’s right, there are more actual listings on Trade Me than on eBay Australia.)
That’s 55 listings per 1000 Australians, 84 per 1000 US citizens and 305 listings per 1000 New Zealanders. That’s astonishing - 5.6 times difference between Nz and Australia, and 3.6 times between NZ and USA.
Now we do need to adjust for the critical difference - eBay charges listing fees while Trade Me does not. We used to say (and observe) that free listings sites attract 2 time the listings of non-free ones. That would still leave Trade Me at 152 listings per person - 2.8 times more than eBay Australia and 1.7 times more than eBay.com USA.
Go Trade Me.
What’s going on?
To me the differences are the business versus personal focus, the advertising mentality and usability.
Business versus Personal
eBay’s listings skew strongly to the biggest sellers, who essentially run giant shops on eBay’s site. Over the years eBay has increasingly pandered to these sellers and the result is a giant shopping mall rather than a person to person market.
That has meant they are vulnerable to increasingly competent competition from Amazon & Yahoo stores, and from sellers’ own online stores. Traffic to those stores is increasingly via Google, and so the need for a single marketplace is slowly fading away.
The focus on businesses has also left eBay vulnerable to the economic downturn. This is a travesty as the auction model should weather storms better than almost any other retail. (e.g. beer and flour will do well). In tough times people should increasingly turn to auction sites to sell their unwanted goods and to buy second hand goods rather than new.
As eBay has increasingly disenfranchised the individual sellers in favour of the giant sellers they are being perceived as a store rather than a marketplace. Thus they are treated like all the other stores when ties are tough, and sales suffer.
Meanwhile the giant sellers are finding that other stores, including their own, offer far cheaper alternatives to eBay for selling. eBay has steadily increased fees over the years for both the site and PayPal, creeping up their take rate to unsustainable levels. The big sellers are not that upset to see eBay die as they have other alternatives away from the former dominant marketplace.
Advertising mentality
eBay is desperately trying to capture some of that disappearing traffic with a vast array of Google ads, and traditional media ads. Actually they spend about a third of their gross profit on marketing, while Trade Me spends nothing - relying on organic growth.
As a result people go to eBay via advertisements to buy things from the big sellers, and go to Trade Me because it is the marketplace where they buy and sell things. eBay’s formula is doubly vulnerable as other shops can simply place their own advertisements and steal the customers.
Usability
eBay’s sites are enormous, and they are complicated and difficult to navigate and use. Meanwhile Trade Me has managed to maintain the essential simpleness and usability, with a the cartoon-like nature.
eBay.com’s increasing push for “fraud protection” to the critically flawed Paypal payment system has made it harder to buy, and harder for sellers to guarantee they will get their money. With Trade Me payments are via bank to bank deposit, or, increasingly, direct credit card transaction.
Meanwhile eBay has, it seems, wildly over optimised the site for Google, and lost something along the way. e.g. Look at the page title of the eBay.com.au page displaying the results of a search for all items based in Australia:
I have no idea what this mens, but I didn’t come to eBay to buy women or men.
Warren Buffet’s recently released authorised biography Snowball is excellent.
It is a larger book, but is extremely well written, and easy to read and a great book for these troubling economic times.
You just know he is out in the market right now looking for bargains, which is why my latest strategy with my US stocks (when not shorting Citibank) has been to build my Berkshire Hathaway portfolio. Someday I’d like to own a real share or 20, but for now I am sticking with the ones that cost $3000.
For Kiwis here’s the Fishpond page for Snowball, priced to sell at a breezy $87.
From Boston.com - the world’s tallest building - the Burj Dubai. More stunning Dubai pictures if you follow the link. It will be interesting to see how they weather the low oil prices and economic crisis.
Boston.com: Burj Dubai
It’s simple - they spend time “hanging out, messing around and geeking out.”
danah boyd, who came over for a Webstock mini a little while back, was one of a team led by Mimi Ito and funded by “Genius Grant” providers MacArthur Foundation. They conducted a 3 year study, spent $3.3 million, did 22 case studies, interviewed over 800 people and spent over 5000 hours “observing” online behaviour.
Hanging out (facebook, myspace, gaming and the like) is not seen by parents as “good”, but it turns out that it is. Kids learn socialisation skills and develop interests and tastes. It’s akin to the phone calls and whispered conversations of old, and is all part of growing up.
Messing around is when you start wondering how things work and tinkering. It’s about creating your own videos, playing with hardware, tweaking games and so forth.
Geeking out is really getting into the tech, the media creation and so on. It’s cool, and age is irrelevant when you are deep diving into a topic. You get your information from peers - us old folk are not the source of knowledge any more (if we ever were) but we are useful for setting learning goals and functioning as ”role models and more experienced peers.”
Oh the power of the internet - the 35 to 40 million or so people using it, the 386 computer, 8Mb RAM and don’t forget the 14.4 kbps modem so that you can capture the true multi-media internet experience. This video has it all….
Via Andreas Von Gunten from an original post from waxy.org.
There are some great shots of sites, including search engines towards the end. But the beginning is enough.
I have to agree with Greg Saunders, posting at Tom Tomorrow on this:
“When it comes to bailing out the auto industry, count me in the “let them starve” camp. The auto industry has been outsourcing American jobs for 25 years now with little regard for the devastated communities they’ve left in their wake (seriously, re-watch Roger & Me sometime). The big three have also used their lobbying might to oppose every environmental regulation in their sights. And on top of all of that, their cars suck. Bailing out the auto companies whose single-minded devotion to SUV’s made them blind to the hybrid revolution is like bailing out a record company that hasn’t had a hit since “The Macarena”. Screw them.
The US economy is brutal in its supposed simplicity. The market is the decider - good companies prosper and bad ones fail.
That means if you make shitty products then you can generally expect to eventually go out of business.
Unless you are a US bank, airline or a car manufacturer it seems.
Unfortunately and blatantly (Ford and) GM ignored the portends, and continued to make gigantic gas guzzling, poorly constructed unsafe vehicles. They have spent years reaping the benefit of lax tax rules on those massive vehicles and now pretend to be blinded by the high oil prices and the disappearing demand from the post-bubbly economy. GM wants $25 billion, and 100,000 GM jobs and countless other jobs that are dependent on GM are at stake.
Shut the doors I say, shut the doors.
It’s time these companies (and those crappy US Airlines) were pushed into the incinerator. Out of the ashes we can expect to see one, five or even ten or twenty new, innovative and cool companies that form to fill the vacuum. We will all be richer for it.
Put them into Chapter 7 (that’s receivership where you shut the doors), chop them into pieces and sell the assets off division by division. Canny buyers will grab factories, brands and even those car loans and will operate them far more efficiently. The debt holders are in charge in a receivership situation, and this is one situation where some tough decisions should be made.
Wouldn’t it be great to see those GM brands independent again? Not just the crappy ones like Buick, Saturn and GM, but businesses like Cadillac, Chevrolet and Holden that have some following and legacy. Then there are relatively unspoiled brands like Saab, Opel and Daewoo. Imagine them all under independent ownership, scaled back and concentrating on selling quality vehicles. Imagine their suppliers in the same way.
Wouldn’t it be better for employees in the medium term to work for smaller, more dynamic, local and much more fun companies? There needs to be some pain now though, as it is just not sustainable to keep making Ladas when the economy doesn’t demand it.
Some of that $25 billion (or whatever) could go towards covering the disappearance of the pensions for former US based workers, while adding yet another nail in the coffin of private health care.
The rest could go to creating smart incentives for the new companies to invest in clean technology would help guide them, while other startups would also emerge to provide the required parts.
The motorcycle industry a few years back figured out that it was really easy to design, manufacture and sell a much vaster range of faster and safer bikes. The technology seemed to just be there and so now a young company (like Triumph or KTM) can create a compelling yet eclectic range of vehicles. Even staid BMW got into the game and is now producing everything from race bikes to 400 enduros and of course beefy adventure and touring bikes.
US based Harley Davidson is also producing great bikes these days, which begs a final thought - what if Harley Davidson and KTM each took over one of GM’s brands? Wouldn’t they make great vehicles?
<update. Ford is selling down their stake in Mazda from 33 to 13% - and lose control, while, and GM sold down their final 3% stake in Suzuki. Actually they sold 17% of Suzuki just 2 years ago to pay for “restructuring costs” and GM has now had Hummer on the block for a month or three>
<upate 2: Chapter 11 can provide some teeth - Ch11 is the “do a big reorg and trade out” version of bankruptcy. Here’s Micheal Levine in the WSJ.
After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of “change,” GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.
GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000
Federal law provides a way out of the web: reorganization under Chapter 11 of the bankruptcy code. If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM’s viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn’t be easy but, unlike trying to bail out GM as it is, it wouldn’t be impossible.
For the last two posts I referred to articles published on Venturebeat. I’d never heard of them, but have now added Venturebeat to my tech reads.
Not only were they a decent source of news (well written, well researched, timely), but they also had a simple feature that made me a fan: Rate this story.
At the bottom of each article is a simple 0-5 star rating widget. You rate the article and move on. No page reload, no logins, no email address, and the result is immediate.
It makes me feel like more than a reader - increasing my loyalty without any of the negative barriers that commenting (logging in, editing process) brings. Excellent.
If only NZHerald and Stuff could do this.
Go on - rate this post:
That’s a fake from the Venture beat site. Here’s the best we can do on WordPress.com:
Kind of like Trade Me, only…. different. Very very different. Woome
Woo me has a simple concept - setting up video calls between guys and gals - an online one minute speed date. And now you can record the conversation and post it for posterity, and they could even get on to TV.
The site teaches a lot about keeping things simple.
The front page invites you to play a conversation featuring myspace giant Tila Tequila, (which is a simple way to explain how it all works):
Here’s the whole front page - it’s then dead simple to join in.
They have been around since 2006, and launched late 2007. It’s the online dating craze for the 18-24 year old set. Apparently.
Actually I think it is really clever - a nice way to kill an evening, something you can do with friends, it’s safe and you may actually meet someone interesting. Nobody gets hurt, and you can press <end> at any time and start anew with someone else.
It’s got to be a great way to improve the way you interact when you meet someone else in a social setting.
Woome also got $12.5m at a valuation of $41m (back in July) and was running about 15,000 sessions per day back then. Interestingly they claim that time online per user is increasing over time - a great addiction indicator.
It’s an online dating competitor - make no mistake - and yet online dating sites could incorporate this functionality pretty easily.
President Obama will address the nation world each week via YouTube. Apparently
Stunningly simple. The effect is to remove the filter that the networks and newspapers place on the presidency and political process. It also removes much of their power to control the conversation.
Here’s the first one.
Traditional US media should be concerned - the Whitehouse press corps has long been the primary point of access to the presidency, and now Obama can talk over their heads, and directly to “the people”. The people can then talk about it amongst themselves (on political and economic blogs and so forth), which Obama and his team can monitor, and respond to over the next weeks. He’s smart enough to respond to both left and right wing blogs as well.
Sadly news and opinion shows on Television in the USA have moved far beyond their original purpose and premise. They are wildly biased (opinions differ on which way) and follow their own beliefs rather than the trail of facts.
Perhaps this will help spur them into a return to solid fact-based reporting and a drift away from sensationalism.
Or more likely the facts will now only be found on the internet while the talking heads on TV will push for ever more sensationalism.
In a not entirely unsurprising finding, a researcher in the USA has discovered that alcohol related deaths will fall if you increase taxes on alcohol.
No kidding. We seem to have that pretty well figured out in New Zealand and Australia.
I’d like to see a much broader international scale study relating the inputs to alcohol consumption to the alcohol related deaths and costs.
You’d have to take account not just the cost of alcohol, but also the ability to access alochol (age, time restrictions, location restrictions), the relative differences in GDP per person, the alcohol of choice in each jurisdiction, media campaigns for or against alcohol and the way people drink.
I would think that each of those is a bit more subtle than we’d believe, and some of those correlations are actually going to be negative.
Let’s pick one example - access to alcohol.
Responsible drinking appears to me to be a function of the laxness of the local laws. The more you allow people to access alcohol, the more responsibly as a society they tend to treat it.
Downunder and in the UK we struggle with the way we drink - binge drinking, while mainland Europeans (French especially) on the surface at least seem to drink more responsibly. I feel that’s a legacy of forcing closing times, whether 6 O’Clock, 11 O’Clock or 1 O’Clock.
There are clearly exceptions, but witness France and mainland Europe, where children can buy and drink alcohol, and alcohol is available all hours. As a result people tend to get over the whole getting drunk and being stupid thing at a very young age, and learn self restraint. The societal norm is that being drink is stupid.
At the other end of the scale consider Perth, where everyone is turfed out onto the streets from the pubs at 1am. Thus too many people drink hard until that set finishing time, rather than deciding when they have had enough and quietly drifting home. It also causes stress on transport services, whether that is taxis (not around for the drunken yobos), public transport (closed) or drunk-driving (all too prevalant). The societal norm is that being drunk is something to brag about the next day (after the hangover has dissapated).
To me the greatest difference between they way France and Perth treat alcohol is that in France alcohol comes in a cafe - with cheap food and relatively expensive alcohol, while in Australia it alcohol comes in big drinking barns, where non alcoholic drinks are as expensive as alcoholic ones, where food is impossible to get after 8pm and the focus is on the booze. Incredibly although state licensing laws now allow smaller establishments (cafes) to obtain a liquor license, the local governments seem to be hellbent on rejecting them application by application.
I feel that Wellington has moved a long way from the days of yore, towards the French approach. Belive me it’s easy to tell by comparing a stroll around Wellington at midnight Friday/Saturday (lots of fun) versus Fremantle at the same time. In Fremantle (which is relatively small) there are almost always several police cars and those police will see a very active time mopping up after fights.Walking around can be a frightening experience - unless you are spoiling for a fight and a trip in hte paddy wagon.
I can’t imagine why Rowan left out this photo from his travels in Nepal post. Worth reading.
An American friend sent me this, and granted me permission to publish it. Stunning.
To my friends around the world—
A week ago today, on November 4, 2008, I cast my vote for the next US president. That day I woke up at 3 in the morning in order to be at my local polling station hours before my fellow Americans cast their ballots. I volunteered and was selected to work as an Election Official in Arlington, Virginia, which is just a few kilometers outside of Washington, DC. Virginia was especially important this year since it was a battleground state in our election. I helped my fellow Virginians understand how to cast their ballots, paying special attention to the new Americans among us, including an older woman from Latin America who had just become a US citizen a month before election day. People patiently endured waiting in long lines outside my polling station and at polling stations across America, demonstrating true democracy in action.
That evening, my candidate–Barack Obama–made history by becoming President of the United States of America. In Washington, thousands of people poured into the streets in pure jubilation. Cars honked their horns for hours, firecrackers and fireworks were set off, people were spontaneously hugging one another, and crying, and laughing. It was as big a party scene as some of you may have witnessed when your country has won the World Cup, and yet how amazing was it that this massive, peaceful and joyful celebration—across Washington, across America, across the world—was not for sports, but for the election of one man to become president.
The next morning, nearly the whole city of Washington seemed to be smiling. I was in such a good mood that I could barely concentrate on work and to celebrate, treated some of my coworkers to lunch. In our nation’s capital, newspapers heralding the historic election were bought out within minutes. Instantly people talked about “Where were you when Barack Obama became president?” And this is the same city that I called my home just over 7 years ago, when it awoke to a very different day: September 11th. A city under attack, a people enveloped by fear, an event that brought great but fleeting unity to my country. On September 11th, I received notes containing well wishes and feelings of sympathy and solidarity from you, my international friends, all of which I have kept and still treasure. This week, I thank you for having sent me email after email of heartfelt congratulations on Obama’s victory, writing of your optimism for a new America.
I see the two events—even though thankfully 100% different in nature—as bookends. What happened from September 11th, 2001, to November 3, 2008, can only be described as a nightmare. A man for whom I did not vote and whom I have never respected took over my country. He already did much damage—for example, to the cause of the environment by refusing to sign the Kyoto Protocol—before September 11th, but after that terrible day, he and his cronies took over full power and corrupted what I loved about my country. Self-censorship of the press began in earnest. He divided the nation and the world into “us versus them.” Everything was black and white, and those who viewed the world in shades of gray and nuance were considered heretics. Any criticism of the administration—no matter how well-justified—was viewed as blasphemy. Questions were shunned; unfettered loyalty was exalted.
As I traveled abroad, I found that Iraq and Guantanamo and Abu Ghraib had become symbols of America, taking over from positive associations with American music and movies and the land of opportunity. Rather than being cool to be American overseas—which I delighted in during the 1990’s—it now had an undeniable stigma attached. Even though I knew that there were millions of Americans who, like me, continued to believe strongly in human rights, environmental protection, income equality and the like, the rest of the world appeared to see just one man and one nation. It pained me greatly.
I feel now that we have come out of the darkness and into the light. The eight-year-long nightmare is over. It is time to take back our country and show a new face of America to the world. The road will be long and steep to climb, for America and the international community are in terrible shape, not least of all financially. But if anyone can take on the task of putting America back together, it is Barack Obama. He is brilliant and hard-working. He is even-tempered and rational. He has struggled and thus has empathy for those who struggle. His background is diverse and complicated, like so many of his fellow Americans and citizens of the world. He is not the son of privilege, like so many presidents before him, but rather a self-made man—a true embodiment of the “American dream.” And he surrounds himself with people of great talent and solid judgment. I will share with you a short story to illustrate this fact.
Almost four years ago, I was shopping in a store near where I live. I heard a very clear, matter-of-fact voice talking on his mobile phone in the aisle next to me. “Why do you think you should work for me?” the voice queried quizzically. “What is your experience and skills, what can you bring to my team?” I turned the corner to see Barack Obama, all by himself running a quick errand, as was possible in those days when he first arrived in Washington as the junior Senator from Illinois. I stood behind him in line to make my purchases, aware that I stood behind a great man—for his 2004 speech just months before to the Democratic National Convention had left me in speechless admiration—but not imagining that I stood behind the next US president. That anecdote was more telling than I could have known at the time, for Obama hires people not based on blind loyalty or campaign donations, but based on competence. He is assembling a first-class team to tackle the problems that face us, a team that challenges him to ask the right questions. I have hopes that Obama will end the war in Iraq, close Guantanamo, and finally bring universal healthcare to America. Many of you have asked and no worries–my job will not be affected by this change in administration, I am a US government employee and dedicated public servant for life if I so choose. But I will serve this president and his new administration with renewed pride and enthusiasm.
Suffice to say: today is a new day for America and a new day for the world.
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