I’m Tired Of You Amex


At a quarter past 5 this morning, my phone started vibrating on my bedside cabinet. My wife stirred next to me, asking “What’s that?” At that time in the morning, in the middle of a REM state, your mind starts racing, your heart starts pumping and you’re thinking someone in your family is hurt, sick, in crisis.

Several times over the last year I have had battles with American Express charging me whopping late payment fees for my account. It transpires that we did automatic payments the day prior to the due date through the National Bank (now ANZ) but it typically took 3 or more days for the money to trickle through to Amex, even though our bank statements showed that we had made the payments on time.

We asked for explanations from the bank and from American Express and no one could explain. It just seemed to go into a black hole and of course no one really understands black holes yet, so they couldn’t explain where the money went, why it took so long, nor how a few days later it would appear, LATE, into our Amex account. Maybe it has something to do with cosmic string overnight cash rates, but if so, the interest certainly didn’t come to us to help pay with the late fee.

AmexSo we agreed with Amex that we would pay several days earlier than the due date (funny how they ping consumers when the average company takes 72 days to pay their 20th of the month accounts) and they put us on a text service where they would let us know when the account was due and when they received the payment.

Up until now those TXT messages came through at a reasonable hour, but this morning (maybe reduced fees for out of business hours SMS?) they decided to TXT me at 5:16 AM.

Well thanks Amex, I know you aren’t going to charge me a late fee. but I haven’t slept since you woke me up and have a long day ahead with important business meetings. I just want you to know that this is not cool or helpful, and I’m kinda annoyed. I’d ring you and try to wake you up, but I’m sure I’d end up talking to a nice person somewhere in the world where it is business hours.

Perhaps someone can look into your systems and think about putting in a few rules?

Will Bitcoin Become the new Cash?


I’ve written a number of times about mCommerce and digital wallets. Now we have loads of companies offering services for electronic payment. These include the Apple Passbook, and many apps using NFC or other means to exchange money. The key thing that joins the hundreds of apps available is that they are legitimately tied to credit cards and banks. As such they provide audit trails and of course tie the world economy together as much as that is possible.

In the future I have postulated that actual paper money will decline and potentially phase out. I could see that happening in New Zealand faster than many other countries. We only have a small number of banks and clearing houses and as such were able to be the first country to mass adopt EFTPOS in the retail environment. Many people no longer carry cash.

However there is of course the grey market and one of the challenges there, is that people who do not want their money transactions audited. There is a global economy like this. People who are paid under the table for their work, people who deal in illegal activities such as drug sales, stolen goods and others. There are also people who just want to opt out of the system or at least flip it the bird. Cash of course can work around the system easily, there is money laundering and people will accept cash for most things as I experienced a few years ago when I watched a guy buying a used Ferrari with folding money he pulled out of his denim jacket pocket.

Much of this money circulates around the system but not through it and this is a challenge if hard cash currency ceased to exist. Or is it.

Yesterday I was on my way to a Microsoft Cloud presentation (which I will blog about on one of my blogs) either SoLoMo Consulting, or Imersia). I was a little early, so I sat in my car and read the latest awesome TNW Magazine on my iPad. Its a great magazine which I recommend you read if this blog is of interest to you, because it is the Money issue. There I learned about Bitcoin.

Bitcoin is “Bitcoin is an experimental new digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. Bitcoin is also the name of the open source software which enables the use of this currency.”

Effectively here is no bank, no fees, no audit trail. There are all sorts of businesses, even retailers, who will accept payment in Bitcoins just as businesses accept payment in other forms of money, such as Bartercard Dollars. The difference again of course is that Bartercard still connects to the banks, has an audit trail and the Governments continue to collect their taxes.

Ultimately my question is, will Governments allow this sort of  “experimental currency” to continue? Can they stop it? It appears to already have a massive following. You can buy a coffee with it, you can play poker with it. There are sites where you can buy and sell Bitcoins such as Mt. Gox and there ar others too, although I noted that one of those has dissapeared and I noted a story there that Barclays had stopped allowing people to trade with them.

So what happens if the authorities stop Bitcoin? (assuming Google or someone else don’t buy them, but Bitcoin does seem to have an anti-establishment feel to it, but it could be all about the money).  Well there is also Dwolla,  LibertyReserve, and a host of other systems. I suspect that as cheap smartphones gain mass adoption in the blue collar world, there will be more interest and demand for ways to continue to do ‘cash deals’ without cash.

Futurists are talking about the Local-Global Duality with shifting borders and changing geopolitical landscapes. The one thing keeping us together as countries, or pulling us apart is money. Financial institutions and Governments  are struggling to maintain a status quo that will keep countries running. As countries grow deeper in debt after the GFC people rush to take their money out of the banks for fear of losing it altogether, which in turn intensifies the crisis.

Farmville Tractor

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I’m not saying I agree with currencies like Bitcoin. I still want my roads and infrastructure, order and safety in my community. I believe that one way or another money from illegal activity still works its way back in, like the guy I watched buying a car for over $30,000 in folding. I do suspect however that we will see a proliferation in ‘currencies’ like this in the future. I also suspect that the criminal elements in our societies could be the ones with the most to gain from them, but also that there will be many scams which will be developed to trick people in giving up real money for virtual currency which they will never be able to repatriate. Silly really, when they can legally create computer games and sell virtual stuff and pay tax on legally earned activity with much less risk.

Smart Wallet Coming from Google


The Smart Wallet is coming says the Herald this morning.

I’m sorry but I have to laugh. A number of us have been trying to convince Vodafone and Telecom in New Zealand to do this for years. All I used to hear was ARPU and its not core business, while I was saying imagine having half a percent of the revenue. It’s a ubiquitous device people, your mobile is the only thing you always have on you, perhaps besides your wedding or engagement ring.

Ericsson had a proof of concept drinks vending machine in Auckland where you could  text for a drink at least 15 years ago. New Zealand used to be a centre of excellence for Voda back then. NZ was the first to mass adopt EFTPOS in the world, many other firsts, but then we fell asleep. ARPU doesn’t just have to be about data and voice revenue people. Ask eBay what business they are in, its not selling products, its financial services and transaction facilitation, I’m sure they say it better.

Sometimes its hard getting people to listen at the bleeding edge, but imagine if you had listened way back then, which was before Google sets up workspace in Susan Wojcicki‘s garage!

I remember loads of coversations with people like Adam Clark at M-Com, going back even to our days at Advantage back in the late 90’s, along with other members of the Wireless Data Forum where we worked hard to try to drag people into the future such as in this Herald story from the turn of the millenium.

Sorry folks its soap box time. We have so many clever people in this country and yet our leaders don’t recognise the opportunities to cash in on their expertise and knowledge. Years ago we lead the world in many ways including banking  and financial systems, EFTPOS, retail barcode scanning and much more. We still have the expertise, but we seem to have dropped into a spiral of this is the way we do business, its prudent, reliable and safe. Or perhaps they are saying that ots too late because Google is already doing it. But guys, we told you to do it before Google existed. Google isn;t forever and it doesn;t mean that noone can get great ideas of the ground.

If you follow publications like Harvard Business Review, Futurist Magazine and other forward looking publications, they will tell you that your greatest assets are your people, your staff. When was the last time you sat down and asked them what they thought, right down to the intern who’s pushing the mail cart? Why do so many people leave their companies because they feel they can do it better? Recent surveys say half of Kiwi workers want to leave their jobs. It wasn’t all about pay as the following quote shows:

“Asked what they most wanted to improve about their workplace, employees’ top gripes were “systems and processes” (41 per cent), communication (39 per cent), and rewards and recognition (38 per cent).”

There are those who make things happen, those who watch things happen and those who wondered what happened. There are also those who said it would happen but couldn’t get people to pay attention until after it happened. Of course being first doesn’t mean being best or being dominant.

Now as to testing with NFC. I watched a demo with NFC in the Netherlands in 2009 and it was cool. There were 2 phones in Europe at the time that had NFC, both from Nokia. Now that Vodafone is going to have a look at NFC in NZ, how many models of phone do we have that support the technology today? How long would it take before an early majority of people had a capable device? Just because Google is looking at NFC, does that make it the best technology? Are there alternatives? If we were best placed to implement mass adoption of EFTPOS and bar code scanning, could we be well placed for m-Commerce on mobiles? Ask Rod Drury or Adam Clark.

I’m just saying……………

The end of Whitcoulls and Borders in New Zealand


If you have a Borders or Whitcoulls voucher, even if you hate the idea of spending double to be allowed to spend your voucher, I recommend you do it quickly, because within a couple of weeks it will be worthless. It was interesting to see that there is no mention of the current situation on the Borders website which talks about eBooks coming soon, although Whitcoulls have been a bit more responsible with a home page announcement.

The demise of these companies isn’t about eBooks, it is largely around debt as pointed out by Liam Dann in this morning’s Business Section of the NZ Herald.  and the business models. I’m not going to discuss the debt because that doesn’t reflect on the industry itself, it reflects on higher level financial decisions and the economy, not on the book trade.

Book stores and music stores are in industries that are steeped in history of “this is how we’ve done it for the last 50 years and why change it if it aint broke”.

As was mentioned in today’s NZ Herald story by Isaac Davison, “In 2010, 9.67 million books were sold, an increase of 1.2 per cent in volume but 0.1 per cent down in value against 2009. This was despite the mark-up on books in New Zealand, which saw paperbacks sold for as much as $20 more than online, even after shipping costs.”

So much for Amazon (of course there were a huge number of Kiwis including myself who purchased from Amazon as well) being the cause of the demise of our local stores.

I also appreciated the comment in the same story from Jo McColl of Unity Books that many people bought hard copy books as a consequence of having purchased eBooks. I’ve done that too. I read eBooks, listen to Audio Books and still have a personal library of around 2,000 print books. The same with music, I listen to lots of music online but have still purchased at least 10 CD’s so far this year.

I might have to go to a separate blog about how Whitcoulls and Borders business model needed to change in order to stay viable and vibrant (ignoring REDGroup‘s debt which doesn’t reflect on the book trade business model itself) because for these guys its too late unless they get a savvy new owner (who will not purchase the chains’ debt) who is ready to adopt a new business model.

REDGroup have called in Administrators. I don’t care who the administrators are. Their role is a short term one and it isn’t about changing the business model or trading back into profit. It is about the creditors.

They will try to negotiate with the book publishers and wholesalers and other suppliers who are desperate to get paid for their product and worried about their future viability in NZ. Inland Revenue want their taxes and will be first in the queue.

They will need to negotiate with the 1,000 staff who will have to have new short term contracts and will be justifiably worried about whether they will get paid at all, let alone have a future with the chain, but at the same time, will be essential should they find a new buyer for the chains.

Based on the outcome of their negotiations a decision will need to be made on whether to go into receivership which is next most likely step. If that happens, enjoy the book sale, because there will be many bargains up for grabs.

The shame of it is that (outside of the decisions that got REDGroup into this financial position) the problem in the trade is that the business model needed to change and like the music industry and other industries, the people running them don’t get it. They should have learned from the music industry, which still doesn’t get it. Other industries who don’t get it include banking, telecommunications and consumer electronics to name a few.

What should they have done and what can other retail businesses do in order to not follow Borders and Whitcoulls into the mire? Subscribe to my blog and I’ll give you a few pointers for free. It isn’t rocket science, but it is a fundamental shift in thinking, whilst also remembering the fundamental simple principles of retail and distributon.

We live in a new world, its exciting and there is a lot of money to be made, but the fatal flaw is thinking that if you do the same thing you have always done, that you will get a different result.

There is an RSS feed to this blog. Come back and read some of my ideas on how companies like Whitcoulls and Borders can thrive and prosper.

Here are a few things I would look at:

  • Understanding your business
  • Communication with customers
  • Communication with staff
  • Distribution methods
  • Stock turn and inventory management
  • Engagement
  • In Store Events
  • Proximity based marketing
  • Shelf Management
  • Relationships with community
  • Relationships with education
  • Location Based Business Analytics
  • The Internet
  • Gift Registry

I could and probably will go on. The answers are a mixture of the old and the new, neither of which these chains have effectively managed. Borders started in the right direction in the US, but didn’t continue the evolution. International chains like Borders and WH Smith focussed more on the  era of globalization than evolution of the business model. Something that would have made short term heroes who have probably made their money and moved on, but was only ever going to be short term.

Barter, the New Old Economy


I’ve just got back from a break in Rarotonga, which was a wonderful place to visit for peace and rest. It was thought provoking even though thought was not high on my agenda.

I finished a piece of music I had been working on and called it Rarotonga, which you can find on Youtube and my About Songwriting blog. While there I attended a wonderful gospel church service where I had some great singing. This was followed by a bountiful morning tea put on by the open generosity of the locals.

Most of the church service was in Rarotongan Maori, however 2 words that I did understand were Climate Change. In a country where most of the land is very close to sea level this is a real challenge. You need to spend a little time on a South Pacific Island to understand what is at risk.

The one thing you must do when visiting a new country is visit with the people. 3 things stood out:

1. Everyone expressed their gratitude that we visited and explained that their country was entirely dependent on tourism.

2. Every person had at least 2 or 3 jobs and good pay was considered to be about US5 an hour. Other than Sunday’s, most people would be working 12+ hour days.

3. There was a sub economy operating below the cash economy. People trade goods or services. It might be people swapping fish for Taro or playing music in return for food and the ability to promote and sell merchandise such as CD’s.

As you do, when you deliberately disconnect from the grid, you catch up with reading and I got to reading up on Life Inc by Douglas Rushkoff. One of his arguments is that the world’s economies are driven by corporations, banks and other large entities who perhaps care more about themselves and keeping communities reliant on them than helping the people they serve gain any level of independence.

I was blown away by some of the examples of alternative trading systems he came up with, although I don’t know why. Barter as a concept is probably as old as mankind, but a new economy seems to   be reemerging in innovative ways. I’ve known doctors who accepted fish or other produce from patients who couldn’t afford to pay fees in New Zealand. I’ve known plenty of people who share their specialties, a plumber who does work on an electricians home and the electrician is owed a favor by a motor mechanic who then does a job for the plumber for free. The traditional economy still gets revenue from the parts that are used, which includes all the traders and of course tax in all its forms.

From a business point of view, I use Bartercard and they are a great organisation who I recommend. They have Bartercard Maps which uses GeoSmart Maps technology to help you find what you need based on location. However, fundamentally it is still a form of currency and our accounts department and Inland Revenue treat it no different than cash. In some cases, such as accommodation I also sometimes feel that the product you get is a little less quality than you would get if you were paying cash.

One good thing about Bartercard I like is that it is local, at least it encourages companies to use local suppliers. Despite our position, I feel many organisations in NZ from Government Departments through to consumers do not consider supporting their local economy as a major factor in making purchasing decisions.

I don’t want to go into any real detail about the examples in Rushkoff’s book, because that’s what the book is for and you might want to read it. There are some great deals on Amazon. I don’t think you’ll find it in your local bookstore.

Here’s a couple of cool examples.

  • CSA or Community Shared Agriculture. The concept is that people not only commit to buying their produce from a particular local farm, but they even commit to doing a small amount of work on it to help support it. This gives some security to the local farmer, but also helps build local community spirit and has people involved and doing something they would not normally do in their daily lives.
  • In Japan, the Sawayaka Welfare Foundation came up with a ‘complementary currency’ where young people could earn credits for taking care of elderly people. Those credits, called Fureai Kippu can then be applied to the care of their own elderly relatives who may live in a different part of the country. Because it is by the people and for the people, many say that the standard of support they get is far better than if it was provided by commercial caregivers.

The book also has lots of ideas about local loyalty programs that serve to build greater loyalty to local traders and creates stronger community feeling, which can and should apply to any town or village. The people who work, have restaurants or businesses near your home, are your neighbors. We are  often too quick to go and give profit to multinationals, when we could be supporting our local businesses and then complain when our potential customers don’t use our services.

To a degree this blog was motivated by my trip to Rarotonga and the music I wrote which you can listen to below. But it is also out of concern for our future. New Zealand, like Rarotonga runs the risk of becoming isolated. If a war were to strike overseas and our imports (including oil products, food, clothing and technology) how well prepared are we to continue living to the standard we are accustomed to? People in Rarotonga told us about the island running out of fuel for a few days and the chaos that ensued. How long would we continue our lifestyle without petrol and diesel?

NZ Herald Landlords taking money we need


It’s soapbox time folks. Over the last week, there have been several stories in the NZ media about businesses complaining that people are investing in rental properties instead of buying shares and options in companies on the share market. The latest was in yesterday’s NZ Herald.

I take exception to their bleating and here’s why. Many years ago I worked for a company called RC Dimock as a divisional sales manager. A number of us got together under the guidance of the Financial Controller and formed a share club. We all put money in each week and collaborated on which companies we would invest in.

I really enjoyed it. I read every copy of NBR, charted the daily value of stocks, learned about all aspects of stocks and bonds and invested more in our own company, my employer when we were purchased by Anzon Investments. As time went on, I started investing independently, continued staying up to date with large reliable companies and punted on more risky investments in various industries.

I had my own broker and whilst my investments were not massive, I was young and suspecting that superannuation was not going to give me any sort of lifestyle, I was looking for ways to improve that situation when it came.

As well as Anzon, I joined many people who invested their life savings in NZ stalwarts including Brierley Investments, Carter Holt, Robert Jones and many other companies. Then came Black Tuesday and many Kiwis lost their entire retirement savings.

Friends and colleagues lost almost everything they had, whilst the senior managers of the public companies moved on and in many cases their old boys club helped them pick themselves up again.

When I got married and started a family, we bought our first modest home and gave up any form of lifestyle for a few years paying at times over 21% interest, but we were building some security. Other people’s poor business decisions and the economic climate were not going to take this from us, providing we were able to maintain the payments.

Subsequently I worked for a company which was embezzled by it’s CEO and lost 10’s of thousands of dollars in salary, commissions and a large company credit card bill that my boss had run up without my knowledge. I then learned what it means to get a company credit card and you sign a form in good faith saying that you are jointly and severally liable for a company credit card. The credit card company who were coincidentally owned by my bank told me that I could either pay for the company credit card, or they would sell my house and give me the change after the 9 month bill was paid.

Further in my career, when I was making a lot of money for my new employer of almost 7 years, I was made redundant when the company was sold, along with several of my colleagues and my MD. The decision was made on the basis of a spreadsheet looking only at what they were paying us, not the great success we were achieving, over budget in ebit and sales.

So forgive me for having a lack of faith in business as a way of protecting my future lifestyle if and when I reach retirement age.

I started learning about rental properties, LAQC company structures, negative gearing and tax benefits, in as much as being able to claim depreciation and costs against my personal income and invested in a rental property.

Some people thought I was rich because I had a rental property, but my own home remained modest and I was having to subsidise the rental to cover the cost of the 100% mortgage, i.e. I had zero equity. My first tenants were a young family with 4 kids. Sometimes they would call me and say they couldn’t make the rent and could they pay the following week. I was paying around $170 a week to top up the mortgage, because the rent didn’t cover it. Then there was property insurance, fixing appliances, calling in drainlayers when they tried to flush nappies and other unmentionables down the toilet. These are just a few of the issues I had, and if it wasn’t for the ability to recover some of these losses against my income tax I would have gone broke.

The family were never going to be able to buy their own home and didn’t take great care of mine. They couldn’t pay a rent that would cover my costs, market rents did not reflect the cost of owning property. My hope was that over time the property value would increase and I would recoup my losses.

The key to my rationale, which I still subscribe to, is that I was making my own decisions and having control in the level of risk I was prepared to take. I wasn’t going to have my safety net taken away by some entrepreneur who was travelling first class around the world, who was able to walk away and start again when he had spent all my investment savings.

Owning a rental property is a business. There is a need for rental properties. The Government has quit most of their State Housing stock and people who can’t afford to buy their own homes, around 35% of the NZ population, over 1.5 million people do not own their own homes. So who is going to take responsibility for them?

When people set up a public company and use our funds to run them and take risks with, we have no control over how they use our money. If things turn sour as they have for many Kiwis trying to invest their hard earned money, they walk away and set up their next business. Investing in public or private companies is high risk. For people who can afford that risk, great, enjoy. But most owners (think big mortgage) of rental properties are not wealthy people, they are just people trying to make sure they can afford a little lifestyle when they retire without being a burden on their family. It is not easy owning rental property and the odd example of someone who has built up a rental empire is the exception, not the rule. The majority are Mum’s and Dad’s who don’t want to live on a combined income of $478 a week.

Could you live on $478 a week including rent, power and phone? What would that give you for food? Forget entertainment. On the other side, there is the potential for people to live much longer than in previous years and with Baby Boomers, less tax payers to heklp support them.

If the Government wants us to invest in business instead of rental property, they should give us some security against the risk of public companies. Of course they will also have to invest in providing rental accomodation for the 35% of us who can’t afford to own their own homes. What are the odds of that? About the same as that of people who invested their life savings in Brierley Investment shares. Telecom shares anyone?

The Internet as a battlefield


I’ve been trying to work on this post for ages, but never seem to get it finished. The more I think about it, the more tangents I head in, so here’s a start anyway. Maybe you can add a comment to the thread.

When we, Joe Citizen think of warfare, the common picture is either soldiers, tanks and planes, or more recently terrorist attacks. Information warfare is not a topic that we think of very often.

Of course using media such as radio, print and TV have been used for decades to provide disinformation, but now that we have the Internet, there is potential for a new front that could cripple economies and cause massive disruption to life as we know it.

Last month 14 Virgin Blue flights were cancelled in Melbourne when a broken cable disrupted their computer systems, stranding thousands of passengers. A total of 48 domestic flights were cancelled as a follow on of this problem.

Periodically there are major EFTPOS failures, which can happen at the worst possible times. For example in 2005 the EFTPOS network in New Zealand broke down for 2 hours on 23rd December. The estimate was that around half a million transactions were lost on one of the busiest days for retailers in the year. Millions of dollars in transactions were lost because people don’t really carry cash any more.

In November last year Brazil and some of Venezuela lost their power. Nine of Brazil’s states were out of power, representing millions of people. Whilst many complained they couldn’t watch their favorite soap opera, traffic lights were not working, trains weren’t running and parts of the country pretty much ground to a halt.

If a country or a terrorist organisation wanted to cause chaos or in some way to a country or city in the modern world, it would be incredibly easy. In Holland a guy called Max Cornelisse has created chaos and recorded it on YouTube to show how easy it is to disrupt services we take for granted. Amongst other things he has meddled with electronic signs on freeways, opened and closed bridges over canals from his PDA, sent people running from one platform to another by controlling automated PA messages at railway stations and in this YouTube Video he controlled the autoprompter at a Dutch TV station causing confusion to the newsreaders on live TV. Unfortunately it is in Dutch, but you’ll get the idea.

This is just a guy having a little fun, but what could you do if you seriously wanted to disrupt a country or city. What chaos would you create simply by shutting down the Internet. How would your business function without the Internet? How would your community function without the Internet? Imagine no email, no Voice over IP, no web browsing, no IM, no Facebook or Twitter? No online share trading. No banking, no EFTPOS, no ATM’s and who carries cash?

That’s just for starters. I wonder how long it would take for a major city, like New York, London or Amsterdam to fall into chaos? What would happen after a day, a week, even longer?

Last week there was a story on NPR about cyber terrorism. It quoted USA Director of National Intelligence, Dennis Blaire saying that “Every single day, Blair said, sensitive information is “stolen from both government and private sector networks” as criminals become increasingly more sophisticated.”

Interestingly on 16 February 2010 an event will take place in a simulated Whitehouse Situation Room which is scripted to emulate a cyber terrorist attack. Those taking part will include former Director of National Intelligence John Negroponter and former Homeland Security Advisor Fran Townsend, who will have to work out how to deal with it as it plays out.

This has happened shortly “after the House overwhelmingly passed The Cybersecurity Enhancement Act. Something that gives the Obama administration the power to switch off the Internet,” according to Techeye. For more on the Act, check here.

Just as a final thought for now. If you know how to defend against an attack, you also know how to initiate one. I’m not for a moment suggesting any Western power would do that, but given the right circumstances…….

I am very happy to be living in New Zealand in that respect. Although we have allowed ourselves to become very dependant on our friends and allies, not even able to fully feed ourselves if we bacame isolated.