Some Meowsings......

What Twitter is Doing Wrong

Why they lost their advantage to other platforms.

If the latest news by Twitter regarding their consideration to remove the 140-character limit comes to fruition, then they would have lost their only unique selling point.

Having followed this company since its inception, I have grown from being an enthusiastic supporter, to an indifferent tweeter, and now finally to a slightly disappointed user.

To me, Twitter had the unique opportunity to dominate the messaging and social advertising space but gave up their advantage because of the twin sacred cows of the 140-character limit and requiring that all tweets be public.

The initial lack of focus on monetizing what they had was also detrimental to the overall growth and penetration of Twitter worldwide with its active user base stagnating at about 310 million (http://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users), far behind platforms that Twitter could easily have extended into, at an earlier stage, and dominated, such as WhatsApp (900 million users).

What Twitter has perhaps failed to accept is that people do not always want to have their messages pushed out to all their followers or even the general public. The lack of a simple mechanism like the creation of groups and privacy caused users to slowly abandon Twitter in favour of messaging platforms.

Similarly, knowing that you cannot retweet an ad you think is interesting to some of your followers without sending to all, makes you hesitate before pushing the retweet button. This is obviously detrimental to the impact ads might have in the Twittersphere.

With greater privacy and security, Twitter could have developed its own payment system that allowed users to transfer money or pay bills amongst themselves. It had the advantage, initially, of a quick ramp up in its user base, availability on all mobile platforms and great media coverage.

While it is perhaps easy to say that in hindsight, Twitter could have done many things to make it a greater success, it is its inability to keep current on trends that should be the most worrying to investors. All the things listed above were implemented by startups such as WhatsApp and WeChat several years ago when Twitter was already an established, cash-rich, social media giant. The speed at which they have overtaken Twitter is less a testament as to how well they execute than how slowly Twitter moves.

If Twitter truly wishes to regain its lost advantage, it has to ensure it allows those that want to use it as a messaging service to do so, while still maintaining its relevance as an announcement board. It also has to get deeper into the lives of its users making itself indispensable rather than just an amusing diversion. Payments, calendaring, online applications, registrations, rich media sharing, etc…are all possible extensions.

Common terms in a VC’s Term Sheet to a Startup

I have recently gone through painful exercises with entrepreneurs who have not been coached in the ways of raising money from venture capitalists (VCs) where the presentation of the term sheet creates a negative impression which leads to an unhealthy relationship even if the terms are accepted.

While VCs have a lot of tools at their disposal to craft a term sheet, they are no fools and won’t craft terms that will lead to a poor future relationship with the entrepreneur with whom they have parked their money. At the same time, entrepreneurs can’t expect someone to give them money without putting in place terms and conditions to protect their investment in what is a very risky venture.

To that end, I thought to put down nine common terms that I have come across so that entrepreneurs have an inkling as to what to expect when thinking of raising funds in the VC market. This is far from exhaustive and I have a list of more sophisticated terms that are used in different cases, but these are those to be expected if an entrepreneur is fortunate enough to be presented with a term sheet from a VC.

1. Lock up terms: Stops an entrepreneur and other founders or key executives from selling their shares within a stipulated time frame. This is to ensure those driving the startup will remain in place to ensure the startup reaches its potential.

2. Permitted Transfer: Founder shares can only be sold with the approval of the VC.

3. Right of First Refusal: In any fundraising round, the VC is given first right of refusal to either take up their pro rata allocation or subscribe to new shares at the prevailing or preferential rate.

4. Options: Allowed to purchase more shares at a preferential rate to be specified after a time period.

5. Staging: Payment from the VC does not come in one lump sum but is paid in stages based on the startup reaching specific milestones.

6. Putable Options: Allows the VC to sell all their shares to the entrepreneur or startup at a specific price at a specific time. It is up to the VC to decide whether to activate this option.

7. Tag Along Rights: Allows the VC to sell shares at the same price as the entrepreneur in future fundraising rounds or exits.

8. Drag Along Rights: A VC can force an entrepreneur to sell their shares at the same price the VC agrees with a third party wishing to acquire the startup.

9. Exit Ratchet: Usually for late stage fundraising. To protect against an exit/sale/IPO that is below the valuation at which the VC has agreed to invest, a ratchet is imposed whereby shares are further diluted to the benefit of the VC so that their final investment per share is lower than what was originally reported.

Depending on the stage at which the investment is sought, certain terms may be included or excluded. For instance, it makes no sense for a Series A investor to seek an exit ratchet term. At the same time, a late stage investor may not ask for Tag Along Rights.

Other than these basic terms, there are also terms like Pay To Play, inclusion in ESOPs, etc….depending on the objectives of the VC.

An entrepreneur’s ability to negotiate the best terms is ultimately dependent upon his/her startup’s ability to show substantial traction and create a market amongst the VCs themselves.

Staff Recruitment and Selection Policies Need Some Serious Rethinking

I recently had the opportunity of meeting up with some former colleagues who worked with me in my startup many years ago and following its sale, went on to do other things. I was delighted to hear that they have all gone on to successful careers with most heading businesses. What was more interesting to hear were the problems they faced in today’s economic climate.

Whilst the problems in Greece and the slowdown in the Chinese economy was a common theme, the lack of qualified staff was also a key bugbear for them. They moaned the lack of experienced staff with the right qualifications to fill their ranks and this more than anything else, was what was holding them back from expanding their business further. It was amusing to hear them complain as these were the same young guns, in those startup days, who had taken on any challenge head on and disparaged the structured world of MNCs that pigeonholed employees to specific tasks….yet here they were doing exactly that.

If the company’s objective is to maintain the status quo then obviously I can see the benefit of recruiting someone from within the industry who has industry knowledge and possibly industry contacts. He or she can hit the ground running without much trouble. However, to expect that person to come up with groundbreaking ideas given that they are likely to be “coached” in the industry’s norms is highly unlikely and may not be a reasonable expectation.

If, however, the company is looking to grow, does it make sense to hire someone from within the industry? Granted its the safe choice, which is why 99.99% of HR departments in MNCs advocate this approach, but as Einstein once said “We cannot solve our problems with the same thinking we used when we created them”.

In today’s highly connected world, the need for a more diverse team is critical. The need to cross pollinate ideas and best practices from different industries through recruitment is a powerful tool that can save a company millions of dollars in failed ventures and consulting fees. Companies that continue to look for staff with long employment records in their own industries are likely to end up being overtaken by the next Uber, Airbnb or Tesla.

But how does one hire a senior executive from another industry most effectively. Here I can speak from experience. I have had some bad experiences, even some disastrous ones, but in general, most of those who crossed industries have shown an eagerness to learn and end up being top performers.

1. Is the candidate a good performer in his/her current industry?

It sounds like a no brainer, but how often have we heard candidates tell us that their current industry wasn’t a good fit for them which is why they did not perform well. Star performers thrive in any industry because they understand what is needed to succeed. They know how to manage bad bosses, tough colleagues and rough working environments. On the other hand, I have often found that poor performers end up performing poorly wherever they go because there is always some excuse or reason to account for their failure.

2. Has the candidate shown his/her ability to adapt and be flexible?

This is very important and one of the worst hiring mistakes I made was to bring on board a highly talented star performer from another industry without assessing her ability to adapt to the company culture properly. The clashes and ill will generated between the existing senior management and her due to her inflexibility almost threatened to tear the company apart till I had to make a hard decision to part ways with her. Moving to a different industry requires the new hire to adapt regardless of how good they are. You can’t change industry norms overnight. The best hires are those that learn the norms then find ways to impose new ones while getting buy-in from colleagues and staff.

3. Does the candidate understand why he/she is successful?

Skills and knowledge can roughly be classified into three categories. The first are the general skills and knowledge that are transferable to any industry. The second are those skills and knowledge that are specific to that industry. The third are skills and knowledge that are specific to that company. Candidates who are strong in the first category will carry a lower risk when switching industries as they have a strong business foundation. Those who are strong in the second will be able to add value in terms of introducing best practices and ideas from the industry that they came from. Be wary of those who are only strong in the third category. Knowing their way around a company might imply a strength in playing internal politics which while desirable to a certain extent, will not add much value unless this is paired with strengths in the other two categories.

So, ultimately, what would I look for in a resume for someone who might make a safe bet for a cross industry position?

1. Has the candidate spent at least two years in each company in his/her resume?

I use two years as a rule of thumb due to the cyclical nature of most industries. The first year to understand the business cycle of the industry and the second year to add value. I take anything shorter than one year as being insufficient to understand an industry fully and if there are too many such jobs on the resume then I would probably classify that person as a job hopper unless they were headhunted to their subsequent positions.

2. Has the candidate currently been in the same industry for more than ten years?

If a candidate has spent too long in the same industry, there has to be a question mark as to whether he/she will be able to adapt to a new industry or how long it would take them to do so. If however, there are jobs following that ten year stint in other industries then it should be fine.

3. Does he/she have a consistent increase in his/her level of responsibility and remuneration even as they crossed industries?

This shows a candidate’s ability to adapt and perform. If all moves are lateral with no upward movement then more questions should be asked of the candidate to assess his/her suitability.

4. Does he/she have the necessary skills for the job?

Inspite of what has been stated above, some jobs absolutely need specific skills. You can hire a CFO from another industry to fill a CFO position in your company, but that hire would still need to have the qualifications and skills of a CFO. This relates to item(3) above.

Ultimately, there is no sure thing as evidenced by mistakes made by even the most experienced executives, and what is listed above goes against the current thinking of traditional HR practitioners worldwide. However, I feel that HR has got to take a good hard look at itself if it is to meet the needs and remain relevant to the companies of today.

hsienhui.tong@gmail.com

Will Virtual Reality dominate mainstream gaming?

I had my first chance to the new Oculus Rift yesterday and had fun trying out the various “games” that had been created for it (not just ‘ole Henry!). Some of these games required that I still use a game controller, others just interacted with my hand and head movements. While the potential of VR to gaming is indisputable, it still needs to overcome some very fundamental problems.

For one, the scope/limitations of the gameplay is still limited in size. In the worst cases, to the dimensions of the desktop screen, in others to the limitations of the headset itself. Perhaps this is a limitation restricted to Oculus which Microsoft’s Hololens will overcome, but for VR to gain widespread acceptance and not remain restricted to a small group of nerds, the visual field offered has to be as seamless as if the player were wearing a normal pair of glasses (270 degrees angle of vision).

Another problem is the medium of interaction with these VR games. Using game controllers really defeats the purpose of VR and we might as well go back to playing games without that set on our heads which tends to get a bit heavy even after only fifteen minutes. In other games, hand movement is used to interact with the game, but due to its limited field of vision, you literally have to wave your hands in front of your face to execute an action, and even then, accuracy is limited. I know that there are some purists out there who insist that without true haptic feedback on the hands and other parts of the body, true VR cannot be achieved, but I tend to disagree. I don’t see the use of gloves and boots being necessary for gameplay. When Augmented Reality devices catch up and neurons in the brain can be stimulated so that the sensation of holding a gun can be felt in the hands, that would be far preferable to wearing more equipment.

Ultimately though, what is keeping VR on the fringes of gaming is precisely that…the games. All the “games” I tried did not have a compelling quality to them like even Candy Crush has. It tried to emphasize the technology without fully exploiting the world the technology opened up for them. Some games hope that you will be so intrigued with using your hands to row and navigate a boat through Venice’s canals that you forget how boring rowing actually is. A boxing game I played, while cool, brought out the limitations in the field of vision as well as the delay between my hand movement and its impression on my visual field. Furthermore, the “vigorous” motion kept dislodging the VR set from my head. I can see this happening for games where VR combat is required.

There are of course the ongoing discussions on ethics, morals, desensitizing players to violence, etc…but I will leave these to the philosophers and lawmakers. As of today, there is no VR game that would raise any flags with even the most conservative of mothers.

I must give credit though to the advances that have been made in VR. I still remember playing Wolfenstein in the early days and getting a headache and nausea after playing it for too long. The early VR devices also had this same problem which seems to have been corrected. The early devices were also heavy and caused a neck ache after putting them on for even fifteen minutes. The new devices are lighter and strap more securely to the head, although, as mentioned in the preceding paragraph, can’t stand up to vigorous motion.

Given all the challenges the VR community have slowly overcome, I have every confidence they will also get over the hurdle of the three (hardly insightful) challenges I have listed above. Till then though, I will put off buying any new VR gaming system that will come on the market!

hsienhui.tong@gmail.com

Three Areas of Investment for the Future

2015 is looking to be a challenging year economically if you happen to live in anywhere except the United States, yet investors continue to sit on a huge pile of cash accumulated during the years of quantitative easing. So in spite of the doom and gloom predicted for the economy, I remain convinced that the investment landscape will continue to remain active and vibrant.

With most VCs and PEs coming up with their reports on investment trends for 2015, I thought it might be fun to list three areas of investment that I personally believe will have a major impact on established industries, if not in 2015, then in the coming years. These areas will not provide quick returns for investors but have foundations built on solid science and will potentially change the way we live in the future.

1. Augmented Reality

A lot people confuse augmented reality with virtual reality. The difference is that while virtual reality is a computer generated, immersive environment, augmented reality enhances the real world experience by adding graphics, information and interactive components.

Google Glass was an attempt to build an augmented reality product and Google continues to focus its resources in this area. The possible applications for Augmented Reality are too numerous to list which makes me believe it can be a real game changer. The real challenge lies in the devices used to deliver the service.

Many believe the device will ultimately be a cooler version of Google Glass, but I beg to differ. Glasses only augment one of your senses (sight). I believe the final device needs to have sensors that can not just pick up but also influence brainwaves such that through this transcranial stimulation, you can not only see, but smell, touch, taste and hear. Imagine not only never getting lost again, but also being able to taste that hotdog at the booth you are passing before buying it. I personally can’t wait for this to happen…!

2. Cerebral Manipulation

I’m coining this term because the existing term of Mind-Control has some existing negative connotations associated with it. What it amounts to is this. The ability for devices to be controlled using only your brainwaves. If we look just at the computer era, where we started by typing commands, then using a mouse to shortcut that process, cerebral manipulation is the next logical step in evolution where the mind delivers the control statements to the unit.

This would be infinitely more practical and logical than waving your hands about, like how its depicted in movies, when using your augmented reality device. The people around you would also appreciate it more!

A lot of cutting edge research is already being done in this area, although mostly for academic purposes. At ETH Zurich, bioengineers there have developed a cerebral manipulation device that can alter the genes in a mouse through thought alone. Sadly for commercial applications, though a number of companies like Emotiv, NeuroSky and MUSE are working on such devices, their products are still someway away from appealing to the broader market.

This technology will require us all to learn to focus our thoughts better as the waves generated by the brain control the devices. However, if we were to take this just a short technological step further, and if devices can translate our brainwaves into words we mean to form rather than just to move a pointer, then it might one day be possible for us to communicate without ever having to speak.

3. Power Sources

All these cool technological devices would not be possible without a power source, something that a lot people forget. Research and innovation in this area has seriously lagged that for the devices which rely on these power sources. Technologies driving innovation in power sources that will drive our devices and enable them to stay mobile are:

– Wireless Power

– Super Capacitors

– Batteries

Of the three, super capacitors offer the most hope. Wireless Power (radiative) will require the use of high powered electromagnetic waves such as microwaves or lasers to effectively charge a battery, which poses a danger to people. Batteries take too long to charge and are highly inefficient.

Through the discovery of graphene, however, super capacitors are now becoming a viable option to charge the mobile devices of the future. I won’t go into the technical details, but graphene, by its nature of being extremely thin (and hence high surface area) as well as its relative low cost, is now being considered for use in low cost super capacitors. There are still many technical hurdles to overcome before this can become as mainstream as the rechargeable batteries in our phones, but it definitely represents the future of power for mobile devices.

So your idea is going to change the world…

I have been fortunate to meet a large number of startups in the course of my work, some of whom have truly brilliant ideas. What often frustrates me is that these visionary founders have stopped at the idea and either quickly developed a prototype/app or spent their time doing nice powerpoint slides to get VCs and angel investors to pour money into what is essentially just an idea, without any evaluation of factors that may impact its success. Being on my holiday break now, I thought to try to frame a necessary thought process for such founders that might help them.

So…if your idea is going to change the world…then:

1. Understand

Will your prospective customers understand the idea or is it such a paradigm shift in the way things are currently being done that no matter how simple the idea may be, overcoming the inertia of the status quo may be a step too far?

2. Want

Will your customers want it if they understand it. Do market research and survey independent prospective customers and not your grandmother or mother who thinks the sun rises and sets on you. Bear in mind that investors are people too and if we relate to the target customer segment yet don’t feel the need or desire to adopt your idea, I can almost guarantee it won’t get funded.

3. Frequency

How often will the customer want to use it (notice I use the word “want” and not “need”…because most founders believe their customers NEED to use their product every day). This will help identify what kind of business model you may wish to adopt. For example, if frequency of use is low then a per use model may be preferable to a subscription model.

4. Value

This appears to be an easy one but determining what customers are willing to pay for your product or service incorporates a thorough evaluation of market prices for competing and complementary products and services. I have seen many interesting price models developed by founders but none that really incorporate market prices for similar products as part of the formula. This blindness to market forces is often the undoing of what could have been a great company.

5. Produce

How will the product or app be produced or developed? The technical expertise to develop the prototype may lie with the founders but is there a manufacturing line already in place for mass production or a team of developers for apps? It may seem intuitive, but I have frequently come across founders who are so enamoured of their idea that they are already counting the money they will make and forget the idea has to be transformed into sales. Discounting the importance of production is a recipe for failure.

One of the worst things I have heard a founder tell me after I expressed an interest following a demo of the prototype is that production will be outsourced to China and that he was talking to factories. Outsourcing is not an early stage solution and if it takes off, the factory can quickly rebrand your product and sell it as their own. It happens even for established industries like the mobile handset industry.

6. Scaleability

What is the scaleability model for the idea? Is it a relatively linear relationship such as for manufactured products or is it a step relationship such as for software and applications where servers are added only when a threshold of users is met or is it totally scaleable where additional users cost nothing, which is the case where the business model is licensing.

7. Distribution

How will the product/service be distributed? What is the distribution model. Most startups start with one model then as they build their business, expand it to incorporate others. Dell is an example of a company that started by only selling customized models online and today, are pretty much selling through any channel they can. But the model chosen has to enable to company to at least get off the ground. Sometimes, an innovative and non-traditional distribution model can be more important than marketing.

8. Marketing and Support

Copious number of books and papers have been written on this subject so I won’t go into it, but what I look for is also what kind of partnership network the founders have established which is sometimes a key as to how good their people skills are. I have purposely put Support together with Marketing because it is quite common for startups to forget they need to offer support for their product, service or app, and should actually be part of their marketing plan. With social media everywhere, a simple support issue can cause a fledgling company to fall down like a house of cards or conversely, a well managed support issue can garner a lot of positive discussion on the company. A strong support plan is always something I look for.

9. Validate

If you are going to investors then please at least have your product, app, service and business model validated through sales to independent customers (again, grandma and mom don’t count). If the industry sometimes does not permit this (eg. Biotech or Pharma) then have written agreements or undertakings with key prospective clients to show that your idea is validated.

10. Growth

Investors will always want to know what you are going to do with their money. If you are looking to use the investment for development, operationalize a manufacturing line, use it for market expansion, etc…then you should have no problem. Articulate the growth plan with the investment clearly. If however, like how one founder I met, you are planning to use it to maintain your lifestyle (ie. pay yourself more money), then lets not waste each others time.

So these are the ten items I think founders should take note of when presenting to independent investors. I seldom recommend that startups approach investors at an early stage as managing investors can be a time consuming process and takes away focus from building the company. If money is needed at an early stage then there is always the 3Fs to approach….Friends, Family….and Fools….

Should Content Creators Allow Comments?

I recently removed the comments widget from my blogs not because I get an overwhelming number of comments (I wish…) or because I get excessively negative/personal attacks but because I felt it served no real purpose. Most of us leave a section to allow for readers or consumers of our content to place their comments hoping that this will lead to validation of the content or a thoughtful discussion of the topic at hand.

Upon reflection and some deep soul searching though, I realized that the primary purpose (at least for me) of allowing comments on my blogs was really for validation and support of my ideas rather than any real desire to encourage discussion. I found this to be a not so attractive aspect of my character and thus decided to remove it.

On the other hand, I asked myself, why would a content creator like a major news media company have the need to allow readers to comment on their posted articles? Is the reason genuinely because they hope that these comments will generate new insight into the subject of the article? Yet, such sites also allow contributions and feedback from readers on a more formal basis than a blurb at the end of an article.

I expect, more often than not, the comments feature is included simply because “everyone else has it on their site” with the rationale that it encourages engagement with readers. Yet, is this really true? Why is it that a great number of sensitive articles end up being dominated by trolls? Ultimately the reason is due to a dissociation between the casual reader and the content creator.

This follows a standard flow of logic.

Anonymity: As readers perceive themselves to be anonymous they therefore have no identity and therefore no reputation to protect.

Lack of Community: If all commenters (yes, there is such a word, I checked) hide behind this, then it is impossible to create a community and hence there is a feeling that they have no accountability.

Extreme Views: This tends to bring out the worst in people, the extreme opinions that would never surface in a casual face to face discussion with them, but are always lurking somewhere below the conscious level, tend to rise to the surface in vitriolic comments that lead nowhere, leading to…….

No Valuable Discussion!

I am aware that some content creators moderate the comments, however, by this action, are they not making a mockery of the original purpose of the comments section? I would rather just leave a contact form at the bottom of the blog for those who wish to discuss the content further with me!

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Kill that Phone Number Already!

I was at the airport this morning when a problem which I am sure is familiar to many people cropped up. I needed to contact someone urgently but his contact was on a namecard in my office and had not been updated into my mobile’s contact list as yet, a tedious process which I think many of us are guilty of neglecting. I had his email but there was no guarantee he would read his emails that early in the morning, and his email signature did not have his mobile or skype ID.

After solving the problem in a very circuitous manner (called my colleague in the US who happened to have his number and fortunately it wasn’t so late on the West Coast yet), it got me to wondering why we even still have phone numbers. The phone number was a unique identifier in the days when it was impractical to use characters in such an identifier. The physical limitation led to numbers being used.

Today, nearly everyone has an email account and most if not all use VOIP services like Skype, WhatsApp, WeChat, Line, etc….that are linked to these accounts. Through the 4G services I signed up for (along with my mobile number), I make calls to my colleagues, clients, stakeholders, etc…internationally and sometimes even locally through these services instead of through the mobile service. The need to have a mobile or telephone number is no longer necessary.

Telcos remain the biggest barrier to change due to the large amounts of money they make from mobile and telephone services (excluding mobile data). They haven’t figured out how to monetize a service should all of us start to use free VOIP services such as Skype hence are not willing to change the status quo. Instead small startups are forcing this change on them through services that enable consumers and businesses to bypass the exorbitant rates telco’s charge.

In my opinion, telcos in Singapore should actively encourage the use of such free VOIP services and revise their service packages accordingly. The total amount a consumer pays need not necessarily be lower as there might be additional frills added such as larger bandwidth if using certain VOIP services, but it also means that telcos no longer need to maintain archaic equipment and can focus on expanding and improving their mobile data infrastructure.

At the same time, telcos should take a leaf out of the book of airlines and form global alliances where the cost of mobile data is far lower for roaming customers than it is today. While I appreciate that the cost of providing mobile data services vary from country to country, it is quite unlikely to be as high as is currently charged to customers who wish to use their mobile services overseas. In this time of stiff competition in the telco sector, an alliance that offers almost the same mobile data rates in various key countries would be a sure winner.

On the argument that such free VOIP services may start to charge once phone numbers disappear, the truth is that the technology enabling such services has already been commoditised and anyone who begins charging will simply see their company slowly disappear. A decade or so ago, there was only Skype and a few smaller players. Today, we dont just have Skype but also behemoths like WhatsApp and WeChat which can easily take up the slack if Skype were to start charging. There are also smaller players like Line, Nanu, etc… Perhaps if a telco alliance is formed, it can develop its own services that have dedicated bandwidth for its customers?

Telcos should really start to look at the startup environment which proliferates with companies that offer solutions and services in this space. Some are even leveraging and exploring Wireless Mesh Networking which will use each connected device as a node without the need for a telco to provide the link to the internet. However, such solutions are in the future, when the hardware can catch up. However, when it does so, we may one day find that there is no need for a Singtel or M1 or Starhub to provide us with mobile/internet services.

The “Client is Always Right” Fallacy

Having spent the last few days talking to companies about the status of their business, I seem to be hearing one common refrain on why we need to lower margins to get a sale or to invest more to upgrade products to meet client requests, etc…which is “The Customer is Always Right”.

Now being as pragmatic a businessman as any other, I do know it is important to listen to your clients, but I can think of several instances where the “customer” is not always right…and by “customer”, I mean someone or some company that has already done business with you before and not a new prospect.

1. When the request is for a product or service you do not provide

This is almost intuitive. If I go to a McDonalds and order a Big Mac and insist they also provide me with a haircut, I am pretty sure McDonalds isn’t going to create a haircut service just to accomodate a few such bizarre requests. However, if this request turns into a trend, then management has to evaluate the viability of expanding its services into this non-core area, just as they would evaluate any business proposal. The outcome may still be no because….

2. It dilutes focus from core products or services

Resources in any organization are finite and have to be best allocated to focus on developing core products and services. Even if the request is a possible feature to be added to the product or service, the broader industry direction and trends have to be studied before making a commitment because any additional features or functions made to a product has to be maintained and supported beyond the immediate time frame.

3. The paradox of the dominant client

We should always do what our biggest client wants right? Well not always. I can give you the example of many factories to whom Walmart was the dominant if not only client. Due to their order volume, the survival of the factory was wholly dependent on Walmart orders. Margins were razor thin so when Walmart insisted on RFID tagging of cartons to help squeeze even more savings out of their supply chain, it actually put factories out of business as they could not support this additional cost. So when your biggest client tells you to lower your prices or they will take their business elsewhere; listen, do the math, then make a business decision. When margins become too thin and the client accounts for more than 70% of your business, be careful as you are turning into your client’s subsidiary without any of the benefits that come with it and the entire burden of risk upon your company’s shoulders.

Whilst we may not always accede to a client’s request, it is important to listen before making a decision, and that decision has to be made within a broader context than the very narrow so called “Client is Always Right” hypothesis. You can sometimes gain a lot of brownie points with clients by recommending a partner that provides the product or service they are looking for or to be upfront that the prices being requested cannot be met and so as not to compromise on quality, delivery or service, that you will be pulling out of the deal.

I’m Still Dubious About the Need for Social Media Analytics

I attended a talk on Social Media Analytics yesterday, organized by the Institute of System Studies (ISS) of NUS. As usual, it was well organized and the hosts, IBM, made us feel very welcome. Inspite of no longer being involved directly in this space, a number of companies which my employers have an interest in, do, therefore, I still try to keep current as to what is evolving in Social Media.

What disappointed me greatly about the speakers (and this is not really their fault), is that the systems they were presenting seemed primarily to be Social Media monitoring and aggregating tools. Having run a boutique Data Mining consulting firm, I take the term Analytics to mean that insights are developed from the data without being directed by a user, or at least preliminary conclusions can be drawn which can be further tuned by the user.

The fact that there is no such tool for Social Media may be less a matter of technology than it is of need. Monitoring Facebook or Twitter isn’t going to help a company understand more about their customers who buy for example, cereal. Because the final sales transaction (even if its through an ecommerce site) is concluded outside the Social Media space, it is difficult to draw a correlation between Social Media profiles and customer profiles. Many companies have found to their detriment that lots of Social Media chatter about a new product does not necessarily translate into outstanding sales.

The one area where Social Media monitoring remains a good bellwether however, is where there is negative criticism online. The reality is that people are cynical animals and reading how good something is will still give them pause to consider if that something is suitable for them. However, if they read bad reviews of that same something, the chances are far higher that they would no longer consider it. So companies do have to monitor the Social Media space for negative criticism.

If there is a Social Media campaign behind the launch of a new product then monitoring will of course help a company understand how effective it is in terms of reach, however, unless it is possible to segregate or stagger the timing of the online launch and real world launch, a true correlation about the actual success of the Social Media campaign and actual sales, will be hard to draw.

You will of course say that there are product categories that are exceptions to this broad generalization above. Handset makers, consumer electronics, car manufacturers, may be given as examples of industries where Social Media activity and actual sales can often be better correlated, however, these industries tend to spend widely across all marketing channels not just online.

So while I still advocate the use of monitoring tools, due to the anonymous nature of Social Media and its tenuous links to the final transaction that defines the business, analytics in this space is a waste of money. I am well aware it is possible to piece together detailed information about a person’s profile online, but why go to all that bother (and possibly face charges of being intrusive), when a credit card transaction not only validates that a sale has been made, but also provides all the customer profile and information in the system?