September 2008 Archives

Never one to pass up a good PR opportunity, it’s hardly a surprise Richard Branson has something to say about the current economic climate in his new book, Business Stripped Bare. Unsurprisingly, he’s not swallowing the theory that the end of capitalism is nigh.

"However difficult it might be to accept this in our present global predicament, it is possible to turn a profit while making the world a better place. Things change and the bald fact is that change, most of the time, is a threat.

“Always, always have a disaster protocol in place. If the bankers who cooked up so many crazy credit schemes had borne that in mind, we might have avoided the present crisis. Then again, in business, as in life, you can't afford to be afraid of doing the wrong thing. Success in business never comes from inaction."

Branson’s in reflective mood in general, taking the capitalism theme back to the core of what being an entrepreneur means to him. He reckons it’s something you’re born with and, as a result, natural entrepreneurs won’t be put off by unfavourable conditions:

"To be a serious entrepreneur you have to be prepared to step off the precipice. That is the very essence of capitalism. Failure is not making mistakes but not giving things a go in the first place... I've learned more from people who have tried and faltered than from the few charmed people I've met for whom success came easy."

"Entrepreneurship is not about looking out for number one. It's not about getting one over on the customer. It's not necessarily about making a lot of money. Entrepreneurship is something that we are born with - because it's about turning what excites us in life into capital so that we can enjoy it even more."

Who are we to argue?

A bad couple of weeks for business? Depends which businesses you’re talking about.

Certainly there’s been no escaping, nor denying, what’s been of the most turbulent periods of modern economic history.

Yet, strangely, as if almost oblivious to the doom echoing around them, it’s been a fabulous two weeks for tech and web companies.

It’d be naive to pretend the current downturn, let alone full blown recession, won’t have at least partly stifled investors’ appetites for traditionally high-risk tech start-ups, but it certainly still feels like a seriously exciting time for tech companies.

Last week I wrote about Seedcamp, which has proved a phenomenal success and benefited many other UK companies than those directly involved in the programme. Web 2.0 blog Techcrunch UK held a party for the final night with the cream of web, tech entrepreneurs, peeps and investors flocking for a piece of the action.

Alongside it, digital media community Chinwag has kicked-off its Digital Mission in association with UK Trade & Investment, which has seen 25 carefully selected UK tech companies fly over to the US for a series of meetings, networking events and seminars.

And last night, London hosted Twestival, a one night celebration of social networking and micro-blogging site Twitter, pulling another impressive crowd.

Next month the Future of Web Apps conference returns to London with some superb speakers and, I’m sure, another chance to mix with not just the UK’s, but Europe’s, bourgeoning web and tech scene.

I use the words ‘scene’ and London with equal measures of pride and concern, because I know some of you will too. There’s no point pretending London, well the SE, isn’t the most important place for web businesses – and that’s coming from a fiercely proud Brummie.

However, in a broader context that’s not a bad thing. Techcrunch editor Mike Butcher talked this week about how in the US, Silicon Valley is a place and everywhere else it’s a ‘state of mind’ and he’s right. He was actually talking about the need for a European hub of activity, but I’m concerned the rest of the UK doesn’t feel isolated from London’s scene and feels happy to join in, because it's essential for everyone that they do.

They certainly shouldn't feel put off because, from my experience, it’s completely inclusive. Here’s Techcrunch’s list of similar events coming up over the next couple of months (and they're not all in London!).

It might be a bad time for ‘business’ but not necessarily ‘businesses’ – we’ve got a great thing going on here, let’s embrace it.

Image: Flickr

‘Managing expectations,’ is a buzz phrase I’m hearing a lot at the moment.

At its worst, it’s essentially an pre-empted excuse for not doing something very well: “The job won’t be completely finished by the deadline so let’s ‘manage the expectations’ of the client.” Bullshit, basically.

At its best, it’s about doing the basics well first and not shouting so loud you end up disappointing not impressing.

Someone, well something, tried to manage my expectations today and failed miserably.

Now I’ve always hated ‘press 1 for’ automated phone systems, but I’m resigned to their existence. Trying to book something today I was informed: ‘You have been placed in a queue until an operator is free to answer your call." Oh joy, I thought, but ho hum.

It was then I was kindly told: ‘Your call is No.2 in the queue and will be answered in approximately 15 seconds.' Spirits were lifted but tempered with a healthy degree of scepticism.

Obviously, 15 seconds passed. About a minute later the voice returned to reveal: ‘your call is No.2 in the queue and will be answered in approximately 1 minute."

You can probably guess what happened next. Yep, by minute nine of the call I was still No.2 in the queue with an answering estimation of six minutes. I gave up.

Now here I’d normally end the blog as the point is well and truly made. I wouldn’t usually name the company, but seeing as I called Bloomsbury Lanes Bowling and complained about the same problem back in February, I think it’s only fair to.

A challenge to make it illegal for employers to force staff into retirement at the age of 65 has been rejected by an advisor to the European Court of Justice, sparking outrage from anti-ageism campaigners and prompting even the independent BBC to report the news as “a setback”.

At face value it’s difficult to disagree with Heyday, the division of Age Concern that raised the challenge, which claims “denying people work because of their date of birth is grossly unfair”.

At the moment, two thirds of UK companies operate a mandatory retirement age, which, again at face value, seems archaic.

But like most issues, it’s not so simple. The law does dictate that businesses have a duty to consider requests from workers wishing to continue working beyond retirement age. According to research by the CBI, 30% of retirement age staff asked to postpone the move last year with 80% of those requests being accepted.

The CBI argues this enables employer and employee to sit and discuss solutions that work for both sides – but Heyday argues this often isn’t how decisions are made, with companies automatically releasing people at 65 regardless of ability to continue working. Some 260 people have cases of unfair dismissal hinging on a ruling.

So it’s a toughie. I’d like to say just change the law, most companies won’t be affected and those that do treat people unfairly will rightly face unfair dismissal tribunals. Except it’s not that straightforward is it? Changing the law swings everything too far the other way; opens the way for thousands of scurrilous claims and introduces even more hoops for lawful employers to jump through.

I expect the law will eventually change, but fear we’ll end up with a situation where employers avoid any responsibility whatsoever by handing as many people as possible fixed-term contracts they can sever or renew at regular intervals. That, of course, will undo all the good work and it’ll be the lawyers and big companies that’ll be to blame.

“Dictionary.com meets YouTube meets Wikipedia,” is how Bebo founder Michael Birch perfectly summed up Wordia.com, launched last week.

Birch should know, of course, because he’s backed founder Ed Baker to get this brilliantly simple idea off the ground.

Wordia combines traditional text definitions of words from partner Harper Collins with user-generated videos, such as the one below. Users can edit, submit and rate videos on relevance, accuracy and humour.

Launched at the former house of Dr Samuel Johnson, who invented the first dictionary some 253 years ago, Wordia.com already tackles 76,000 words and 120,000 definitions but wants its users to control how it grows.

“Over the years we’ve tried many ways to improve our grasp of the English language. We’ve listened, jotted and scribbled down words that have excited, confused and challenged us. wordia.com is our way of improving our own vocabulary and in the process, discovering what words mean to other people,” says Ed.

Wordia is supported by Open University and National Literacy Trust and you can just see it being a massive hit with kids and adults alike. As well as a great toy and tool, it’s got massive business potential too. It’s a simple idea with global appeal and has massive branding potential.

We reckon Birch is on to another winner and it's great to see him backing other web start-ups.

Worst thing about working for Smarta.com? We were too busy working on getting our own site live to get to the brilliant Seedcamp, Saul Klein's intensive week-long workshop for European technology start-ups.

Championed here in July, from afar Seedcamp looks every bit the success this year as it was when first launched 12 months ago.

Check out the highlights of day three below, but also visit the site as there's tons of valuable reporting, documentary and user generated links to learn from for anyone looking to establish a new technology business.

It's almost as good as being there... well, not quite but we share your pain!

I’ve just completed three whole months without a desk phone. Did I miss it? Well no actually, not at all. The people who needed to get hold of me still did, while less of my time was unnecessarily wasted.

Seeing that Tesco plans to switch all of its 40,000 staff to only use mobiles after striking a £100m deal with Cable & Wireless, it makes you wonder if the traditional desk phone is actually now obsolete?

After all, with all our data now stored on mobile it’s just so much easier to go the full hog and make the call, isn't it? I bet you’ve made calls on your mobile this week while sat next to a desk phone and I'd wager you've no idea of the cost implications.

OK, most companies won’t have a supplier such as C&W prepared to create a GSM network just for them, but fixed mobile convergence is getting really affordable. It’s far too techie for us to explain further, but check it out.

Taking it one step further: assuming nobody needs PCs either now laptops are so much easier, perhaps all those innovators that have been screaming for years about hotdesking/virtual working/shared workspace etc were right all along? Maybe...

Now I don’t want to go all GMTV and smother what’s a very serious issue with a ludicrously inappropriate dollop of syrup and glitter, but how much does the average small business owner or sole trader understand about the economic apocalypse that the global media is reverberating at us from every medium?

Any more than the average homeowner that understands banks going crash, bang, wallop result in mortgages going up and negative equity? Does the climate at the moment mean anything other to you than higher costs, reduced sales and less access to finance?

Is the constant analysis and hyperbole actually any use to you? More so, is it helping the situation? Especially when all the ‘experts’ put together didn’t predict Lehman Brothers going or HBOS before the collywobbles became clear to everyone.

One thing is for certain: it's certainly beyond your control.

We’d usually find ourselves naturally opposed to anti-capitalist musings, but given its polarisation from all other commentary we thought we’d share Jarvis Cocker’s views on the credit crunch, even if, for us, it’s a bit out of the left field. Over to you JC:

“It's really nice seeing capitalism getting its comeuppance. It had gone too far: I think most people can understand capitalism when it's about companies that make real products, but when it's about organisations that just make money ... that's abstract capitalism, it's beyond most ordinary people - and I include myself among them.

“I mean, you see the FTSE index, or whatever, running along the bottom of the TV screen and generally it just doesn't impinge at all on the way you live your life, and then suddenly you're told your life is going to take a nosedive. Who understands that?

“The truly sad thing is that all this is taking place with a so-called Labour government in power, a government that should have the interests of the majority at heart, but has instead played the role of a pimp.

“Maybe a bit of a recession will do us some good. A lot of people have been living beyond their means. We've all done it, I've done it: you feel a bit depressed, you go and buy something. People might now actually talk to each other a bit more, make their own entertainment, all those other great northern clichés.”

So good news for social networks, hey Jarvis?!

Who’d be Gordon Brown? A lame duck seemingly not just fighting a losing battle with the public but with rebel MPs plotting from the inside.

Ironically, the people most qualified to offer advice are those he’s failed to sufficiently listen to or consult during his reign as either chancellor or PM: entrepreneurs.

Like heads of state, sitting at the head of a company can be a lonely experience – especially if that company isn’t enjoying the best of times.

While it’s clever old you that’s built everything around you and created jobs for the people who’s wages you pay, it’s also you that’s responsible when things go wrong and, fairly or not, in their eyes you’re to blame.

One entrepreneur I spoke to last week was forced to make redundancies for the first time and had been shocked by the reaction not from the staff that left, but those that stayed.

“They’re bitching about me and it’s not very nice,” she said with genuine upset. “It’s that situation you experience as an employee and tell yourself wouldn’t happen if you were the boss, but now I realise it’s just the way it is.”

And it is just the way it is. As well as all the upsides, being the boss can be a thankless task. Empathy for Gordon? Maybe a tiny bit...

I wonder how Michael O’Leary reacted to the news of XL Leisure’s demise.

Last month he was relishing the fact high oil prices would result in a series of bankruptcies before the end of the year, boasting: “I hope prices stay high as it will get rid of a load of crappy competitors.”

O’Leary’s a tabloid wet dream when it comes to giving good quote but arguably he’s only saying out loud what many entrepreneurs think inside. By and large, a business going bust is good for its competitors, right? And if you’re looking to take a majority share in a market you’re effectively looking to force others out, aren’t you?

The fact a business going under also results in a fellow entrepreneur losing their pride and joy, redundancies and a host of disgruntled creditors is unpalatable of course, which is why most treat such news with a respectful dose of decorum.

Some entrepreneurs, such as Absolute Radio chief exec Donnach O’Driscoll, take a different view to O'Leary altogether and are pro-competition. He talked this week of his desire for a burgeoning radio industry that’s needed if Absolute (formerly Virgin) is to hit its bold brand expansion targets. Secretly, he won’t want his rivals to be doing too well though, I’m sure.

What do you think about your competition? Would you be glad to see them disappear? Outwardly sympathetic while inwardly revelling, perhaps? Or is your belief there’s enough business for everyone if the market’s strong?

Smarta’s favourite business book of the mo is Sarah Lacey’s ‘Once You’re Lucky, Twice You’re Good: The Rebirth of Silicon Valley and the Rise of Web 2.0’.

We’ll leave you to discover why, but in a snapshot it’s a great insight into how the key protagonists of the dotcom era are behind the big successes of Web 2.0.

Lacey also demystifies the myth of ‘overnight successes’ and reveals the real journeys behind the likes of Facebook and MySpace.

It’s my guess there’ll be scope for a second edition in a few years judging by two interesting start-ups that surfaced this week.

Fresh from the mega sale of Bebo, co-founder Michael Birch has backed Wordia.com, ‘the world’s first digital and demographic online video dictionary’ which launches next week.

Meanwhile, Michael’s brother Paul (who was also involved in the Bebo launch and started 50m user BirthdayAlarm.com) has ploughed a reported £150,000 into mobile social network Wubud, started by another Web 2.0 veteran Paul Walsh.

Watch this space... and get the book while you’re doing it.

If you’ve only ever got two members logged in to your social network, don’t shout about it on your homepage.

Might as well add, ‘register now and chat with like-minded individuals – they’re both waiting for you...’

I probably wasn’t the only one to think, ‘Who in their right minds would rebrand Virgin Radio to Absolute Radio?’

In reflection though and having read Media Week’s interview with Absolute chief exec Donnach O’Driscoll I have to admit I’m at least half-converted.

The Virgin license would have cost Absolute £8m, which while peanuts for one of the few global brands is a lot of money for a station that only has FM network coverage in London.

Using the Virgin name that’s what it would have remained; just a radio station with limited access. Now, freed from the shackles of license restrictions, it can exploit the web, podcasts, TV, ticketing, events, affiliates , digital music and social networking markets competitors have embraced for a while.

As Jonathan Barrowman, head of radio for media agency Initiative, says in the piece: “There are limited benefits to being part of the Virgin family – all you get is the badge. It’s a bit like owning a Ferrari, but without having a driving license.”

While any rebrand is risk intensive and I’m not convinced by Absolute as a name (does it say anything?), turning your back on a brand as illustrious as Virgin does have a stronger business case than it might first appear.

Couldn’t help but applaud our friends over at LaunchLab.co.uk for pledging not to publish another negative report about the world economy’s faltering growth.

LL is concerned the ‘doom and gloom’ created by the media’s fixation with the credit crunch is actually contributing more to a decline in business confidence than our admittedly faltering economy.

Dan Matthews, editor, said: “Politicians are putting too much emphasis on the poor state of the macro-economy and not enough on sections of it that are holding up, growing and creating wealth and jobs for Britain.

“Confidence is a big part of what makes the economy tick and all this bad news is making people feel pessimistic and scared. There’s no reason not to start a business right now, as long as you do homework and launch in the right way.”

I agree. There's quite simply never a bad time to start a good business.

It seems you lot agree as well. Otherwise I guess you wouldn’t be here reading this. A poll on LL also shows 50% of its business readers think the current climate will have no impact on their business or could actually help it.

With a number of companies prospering from the downturn I’ll go along with that too. That said, I reckon regardless of credit crunch hysteria or positive-only reporting, the vast majority will just get on with it. When will politicians and the media realise most business owners only care about their businesses, not ‘business’?

Get a blog. You’ve got to have a blog. Your customers expect you to have a blog. If you don’t blog you’re missing out. Blog blog blog...

Now don’t get me wrong, I love blogs. I advocate their use for engaging with customers and driving people to your website.

But that’s if, and this is a big IF... you have something vaguely interesting to say.

If you’re simply churning out some cringe-worthy pre-amble to pushing product, please don’t bother. Want an example? Stand up Simon Uwins, marketing manager for Tesco’s US chain Fresh & Easy.

What cooler way for a corporate exec to show he’s really ‘down with the web kids’ and ‘a man of the people’ than by blogging about attending a Radiohead gig?

“What an amazing performance! They sounded just as fresh as ever... [can you see where he’s going?] They’re impossible to categorise. In our own small way, that’s what customers say about us.

“We have the quality and interesting selection of a speciality market, but also the brands and convenience of a supermarket. And the prices of a big box retailer!”

Yuk. How not to blog...

How about this for a great bit of viral marketing by Samsung for its new Omnia (i900):

I once interviewed a guy who ‘didn’t want to talk about’ a 15-year gap in his CV. As he didn’t get the job (for other perfectly legal and less libellous reasons, obviously), I never got to find out whether the office’s dubbing of him as ‘The Murderer’ was justified or not.

I often wonder though, what if he had served time for some hideous crime but consequently turned out to be the best candidate for the job? If I'd have been OK with it, would the rest of the office? If it turned out he was a serial axe-murderer would it have been my head on the block?

Legally, unless the role requires and specifies the need for no criminal convictions, it can’t matter. We all know prejudice exists in recruitment though, and even in these litigious days it’s easy enough to get around giving someone a job if you want to.

In turn it’s fairly obvious if you’ve got a criminal record, especially for something pretty serious, it’s not easy to find work.

While it’s not business’ problem, ex-offenders’ difficulty in finding work is seen as a key factor in their likelihood of re-offending. A report out this week by Policy Exchange proposes paying businesses to employ ex-offenders who find it most difficult to find work and claims the move would save taxpayers ‘up to £300m’.

Getting paid to take on someone desperate to work and who’ll presumably be motivated to repay your faith? CSR brownie points thrown in – got to make some sense, hasn’t it?

Image: Flickr

According to most of today’s paps, broke Brits are surviving the credit crunch on a diet of baked beans.

Yep, sales of those fibre-rich favourites are up 12% with annual sales topping £300m for the first time.

However, closer analysis of the much-understudied beans business suggests the latest stats merely reflect a longer-term trend that’s seen bean sales grow a minimum 10% a year since 2004 as consumers embrace them as a staple for a health-conscious diet.

Not that I’d want to accuse the press of leaping on any opportunity to stir its ‘credit crunch’ frenzy, of course...

Anyway, back to beans: when Branston launched its range to rival Heinz in the branded BB stakes in 2005, commentators scoffed that the market was already bloated with one big hitter and a host of own label alternatives.

Well a 22% rise in sales over the last 12 months suggests Branston was right not to lose its appetite.
Aiming to be No.2 in the market is a vastly underrated strategy.

Image: Flickr

Niall and Faith MacArthur have been forced to abandon the sale of its 92-strong chain of sandwich shops EAT.

The poor summer weather and current economic climate have been blamed, after the MacArthurs failed to find suitors matching their reported £150m valuation for the company they formed in 1996.

They sold a 42% shareholding to private equity group 3i in 1997, which sold its interest to Penta Capital last year. Still holding 45% equity, the MacArthurs look set to miss out on a prospective £70m windfall.

Sources (not sauces) close to the group told The Independent: "It just doesn't make any sense to sell a business like EAT at the moment. The valuations are just too low. That's not to say it won't be sold in the future when things recover."

The Indie also speculates EAT is just one of several food and leisure companies feeling the impact of a miserable summer. It claims healthy fast-food chain Leon is “rumoured to be struggling”, while Pizza chain Prezzo has been forced to shelve MBO plans and slot machine firm HB Leisure has put fund raising plans on hold.

Not good, and you sense we’ll need more than an Indian summer before investors get hungry again.