Who is Farhan Lalji?

The bee (new name for the wife) and I were walking around Hampstead yesterday. We walked into the Body Shop – her choice obviously - and I said “has the body shop changed at all in the last couple of years?” it was obvious that it hadn’t. I started to wonder what if the Body Shop hadn’t been acquired by L’Oreal, would I be saying the same thing? Sure there have been other factors which slowed down innovation, like the death of Anita Roddick, but surely being part of the giant L’Oreal machine has slowed down growth.

This kind of thing is common in the internet industry; every cool company that I’ve liked hasn’t done anything really innovative since being acquired. But I was surprised to see that the same applied to retail.

A lot of entrepreneurs like the idea of pumping and dumping, build something cool, make it valuable, get someone big to pay a pretty penny, sit around while shares vest, and then head off to the next big thing. It’s not just small or medium sized start ups where this happens, a friend who’s in the venture business with whom I was discussing recent events at Y! made the statement

“pretty much all M&A is value destructive for the acquirer. But its great for the target”

I disagree… well sort of. While it’s great financially for the target, I think all M&A sucks for both parties, it handcuffs people, makes it difficult to do anything new and while the companies are busy ironing out the mess left after the transaction the competition pounces. Sad thing is while the entrepreneurs, founders, shareholders and other investors’ pockets get fatter the users/customers/employees suffer.

I hope at some point I’ll dip my toe in the entrepreneurial waters, and if you had asked me a year or so ago how would you feel about the company you built being acquired; I would probably have had a very different answer to today. Then it would have been “show me the money”. Today, it’s more likely to be “show me the plan and how value won’t be destroyed”. Interesting how your perspectives change in a short amount of time.

Let’s recap here, fuel prices are going up and up and up. People want to have a work-life balance. The internet has revolutionised the way people communicate. So why do we need to be in the same place to work together? We don’t.

Sure being in the same room as people you work with adds value, it means you’re able to socialise, you’re able to learn more about people and trust people. But how many people do you actually work that closely with? Is it enough to justify large rents in metropolitan locations? Not to mention a lot of times meeting with people or conversations get in the way of productivity.

I’ve worked virtually with lots of folks in past jobs and in my present job. I find getting together once a week with some, once a month with others, and once a quarter with others is enough to build rapport and through the telephone, instant messaging, email, desktop conferencing, video conferencing and other tools we don’t need to be in the same office as each other to work together effectively. I like working from home. I probably should do it more; I bet I’d be more effective.

So my prediction for the near future is that we’ll see a lot more virtual working, a lot more working from home and lot more smaller offices. This will potentially mean fewer meetings, less distractions and a drop in our collective foot prints. Not to mention a healthier bottom line as you don’t have to pay for large offices.

I’ve been reading Jeffery Sach’s book Common wealth and I’ve learnt the following; smart people are more likely then dumb people to contribute to society and Information leads to intelligence. So I believe that the internet is a source of information and so the internet should be available to anyone.

One of my favourite stories from my university days is how me and my buddy split cable internet over our apartments – him on the 12th floor me on the 11th and us being one apartment over from each other it was no small feet. That was how badly we wanted high speed internet access. It made us more connected, made us more knowledgeable and the fact that we’re both in the technology industry today probably has a lot to do with throwing the cable over the balconies in our apartment building about ten years ago. Okay, he was studying math and had courses in computer science so not a huge leap for him, but I was studying health sciences for pete’s sake!

The government funds libraries, it subsidizes higher education – in some countries footing the whole bill for it, and it funds a lot of stuff to ensure that its population are able to contribute to society so why not funding free wifi access for all taxpayers? It’s been trialled in a couple of councils here in the UK, as well as in Philadelphia and other cities. Sure the providers have an issue as their making lots of money on it. But screw ‘em, they’re complaining about data charges pipes and infrastructure so governments should squeeze them out of them out.

Personally, I think this could have huge impact in the developing world. Imagine if every villager had the ability to access the internet, perhaps through a project like the one laptop per child to ensure that every village had an access point, I truly think people could be better informed, make better decisions and thus contribute to society more.

I’ve been interested in the concept of business ethics for a long time. The idea that business can operate in a “good” way versus operating in an “evil” way has been revolving in my head for sometime. With Google’s “Don’t be evil” internal motto, MSFT’s reputation as the “evil empire” and a bunch of the work by Umair, Fred, and other bloggers fuelling my thoughts, I’ve reached the conclusion that “good and evil” isn’t necessarily the right way to frame the question – at the end of the day all businesses are run by people and people don’t just fall into good and evil camps. I think it’s more about operating with the best interests of the customer versus the best interests of the bottom line.

I’m convinced that long term sustainable success is driven by being totally focused on what’s good for the customer, staff and the community, whereas short term unsustainable success is driven by making an extra dollar / pound / euro / franc / dirham / rupee etc.

The problem, I’ve found, is in large publicly traded companies there’s a responsibility to shareholders and showing that the business is operating with the best intentions for profitability but there’s no impetus to show that the business is delivering to the needs of all their other stakeholders – i.e. customers, staff, the community.

When I was in business school I wrote my dissertation on valuing the social and ethical return of business. Personally, I believe that businesses should be valued on a triple bottom line, how profitable they are, how sustainable/ethical they run their business, and the utility they provide customers. Only then do you get a true value of the company and its ability to be successful over the long term. Unfortunately there is no standard for such a valuation right now – there are way too many ideas for me to list on this blog post. There are so many different thoughts on how to value social returns that no one does it and so we all suffer.

Umair’s been spending quite a bit of time talking about good and evil, open and closed, Microsoft and Yahoo, and Facebook and Google. A very basic synopsis would be that open is good, Microsoft, and increasingly Facebook, have bad DNA and this will prevent them from sustaining success in the long run. Whereas Google has being good in it’s DNA and this will enable them to succeed in the long run. It’s a pretty smart analysis and I think its pretty spot on.

However, one company that has kept its doors closed and managed to succeed is Apple. iTunes has to be the most closed bit of software I know. And DRM is just plain evil, very evil. But yet Apple kills in this market and is showing no signs of letting up.

So my theory is that design can trump good and evil in the short term. If you ensure that users have a great experience, and that it’s simple, efficient and effective users and the community in general will overlook the fact that it’s closed, proprietary and evil - how else would you explain DRM? The iPhone is another example of closed and well designed but yet super successful. The fact that Apple was bricking unlocked phones is another great example of evil but well designed.

Is this sustainable? I don’t believe so. I believe if someone comes up with a really useful, easy, super smooth system that has a wide variety of content and is good, open, basically DRM free, then iTunes could go down. And if someone (RIM/Nokia I’m looking at you) comes up with a phone that meets the standards Apple has set for usability for browsing and interacting online on your handheld device and is open as well, well then Apple could go down there too. It’s not easy, because Apple’s set the design bar so high, but it’s not impossible.

This morning I saw a headline and story that bothered me on my feed reader,

Obama under fire after fundraiser remarks (Reuters)
Reuters - U.S. Democratic presidential candidate Barack Obama came under fire on Friday for saying small-town Pennsylvania residents were “bitter” and “cling to guns or religion,” in comments his rivals said showed an elitist view of the middle class.

But then I went on twitter to see what Obama News had to say about it. And sure enough there’s a posting with the response from the senator in Indiana where he clarifies that:

“And for 25, 30 years Democrats and Republicans have come before them and said we’re going to make your community better. We’re going to make it right and nothing ever happens. And of course they’re bitter. Of course they’re frustrated. You would be too. In fact many of you are. Because the same thing has happened here in Indiana. The same thing happened across the border in Decatur. The same thing has happened all across the country. Nobody is looking out for you. Nobody is thinking about you. And so people end up- they don’t vote on economic issues because they don’t expect anybody’s going to help them. So people end up, you know, voting on issues like guns, and are they going to have the right to bear arms. They vote on issues like gay marriage. And they take refuge in their faith and their community and their families and things they can count on. But they don’t believe they can count on Washington. So I made this statement– so, here’s what rich. Senator Clinton says ‘No, I don’t think that people are bitter in Pennsylvania. You know, I think Barack’s being condescending.’ John McCain says, ‘Oh, how could he say that? How could he say people are bitter? You know, he’s obviously out of touch with people.’

And a YouTube clip so you can see the full context.

This is what I mean by the web facilitating democracy, it’s the transparency in stories that wasn’t there before and is there now. Before you would have seen the story in print media and had nowhere to turn. But today you see the story, and through the power of the web you hear straight from the source and make up your own mind with more information.

It’s here and it rocks. I heart Flickr a little more today.

More information on the Flickr blog and there’s a video group that has some great content already.
Personally I think this will be different to the other video sites already online (thinking YouTube and Facebook) because the community on Flickr is pretty strong and puts up solid content. People on Flickr are passionate about photos and getting the same people to put up videos will lead to great video content.

Loving Dunstan’s beach close ups for example.

Jason Fried over at SVN pointed an article on why the internet won’t be nirvana by Cliff Stoll from 1995. In it Stoll makes the point,

“Even if there were a trustworthy way to send money over the Internet–which there isn’t–the network is missing a most essential ingredient of capitalism: salespeople”.

That really got me thinking about salespeople. Could there be a more unauthentic role in capitalism then that of the traditional salesperson? I get shivers just when I hear the word.

But the internet is changing the sales perspective. No longer is it a person who goes around knocking on doors or cold-calling people. Everyone is becoming a salesperson.

I think in part it goes back to Umair’s point about interaction; everyone can interact with a product at a minimal cost. And then if you add the fact that sharing information has become super cheap and easy too, well then everyone becomes a potential salesperson.

By talking about NCAA basketball on my status on Facebook, by adding a bookshelf widget, by writing about 37signals on my blog, by adding feedback on a book on Amazon, by… you get the point. I’m a salesperson and so too is everyone else on the web. So if everyone is a salesperson 2.0 then no one needs to be a traditional salesperson and a salesperson is no longer needed. Finally, no more shivers.

Henry Blodget and Kara Swisher have two great videos on Yahoo!’s Tech Ticker.

On the first they’re discussing the mentality of Google’s founders in comparison to other founders. Their DNA and how they’ve moulded the company in their own image. Basically, how they’ve kept it authentic.

My take, well duh, authenticity and value people, authenticity and value!

Second one is looking at how a lack of innovation has ended up biting Dell in the behind. You have to invest in research and think long and convince the market to understand the value of research. HP, Apple and Google do this well, the list of companies who don’t is too long.

Enjoy the videos embedded below.

SAI had a post the other day talking about how much the US presidential candidates were raising and spending online. The bottom line was that they were spending little but raising lots.

That’s been my whole argument around interaction and brand advertising. The candidates don’t need to spend money to get their messages online, but online is a powerful channel to make money.

Did a back of the envelope type analysis of the 3 main candidates still in the running and how they were doing on one of the most powerful channels online, YouTube. A search on “Barack Obama” brings up over 50,000 results. Just looking at the first five, there have been over a 1.2 million views, and they all average 4.5 stars. For Hilary Clinton, again over 50,000 views, the kicker here was there was one video with over 4.6 million views and nearly 25,000 comments, but the video was a mash up from the community taking the apple 1984 superbowl ad and using Clinton’s message as Big Brother, ending with a mashed up Apple logo for Barack Obama. The other four messages are fairly positive for Clinton though.

That’s the Democrats, the Republican candidate (or likely candidate, I still don’t get how this works fully) John McCain has over 11,000 videos. The first five videos all paint him in a pretty negative light.

What’s my point? It’s that you don’t need to spend online to have a huge presence online. The candidates have over 20,000 videos online, many of them put together by the community. Then there are the tens of millions of views of these videos, and hundreds of thousands of comments around these messages. Putting display ads on sites for this many views would have cost the candidates hundreds of thousands of dollars at moderate costs per thousand impressions, but they don’t have to spend this amount online. Because the message their pushing, because interaction with these brands, because the user base community driven campaigns online are much, much, much more powerful then a banner ad could ever be.

Now if only companies could focus on delivering engaging user focused interaction rather then trying to spend money on improving the brand maybe they could leverage or harness the real power of the internet.