Update on the New #Conglomerates

My blog on the New Conglomerates has proven to be one of the most popular I have written. I’d been contemplating an update for a while, even before I heard this week’s announcement that Verizon is buying the bulk of Yahoo!. Talk about being prescient…. So, just over two years later, it feels very timely to return to the topic.

Image sourced from dc.wikia.com

Image sourced from dc.wikia.com

Of the so-called FANG tech stocks, when I was writing back in May 2014, Facebook had recently acquired WhatsApp and Oculus VR. However, apart from merging Beats Music into its own music service, Apple has not made any big name deals, but has made a number of strategic tech acquisitions. Meanwhile, Amazon has attempted to consolidate its investment in delivery company, Colis Privé, but got knocked back by the French competition regulators. Netflix finally launched in Australia in March 2015, and within 9 months had 2.7 million customers, a growth rate of 30% per month. Finally, Google has since renamed itself Alphabet, and purchased AI business Deep Mind.

Over the same period, Microsoft appears to have reinvigorated its strategy: back in May 2014, Microsoft had just completed its acquisition of Nokia. Since then, Microsoft has announced it is buying LinkedIn (following the latter’s purchase of Lynda.com in 2015), but has also shut down Yammer, which it had only bought in 2012. The acquisition of LinkedIn has been framed as a way to embed corporate, business and professional customers for its desktop and cloud-based productivity tools (and maybe give a boost to its hybrid tablet/laptop PCs). On the other hand, Microsoft has a terrible track record with content-based products and services, as evidenced by the Encarta fiasco, and the fact that Bing is an also-ran search engine. I think the jury is still out on what this transaction will really mean for LinkedIn’s paying customers.

So, what are the big tech themes, and where are the New Conglomerates competing with each other?

First, despite being the “next big thing”, VR/AR is still some way off being fully mainstream (although Pokémon GO may change that….). Apple and Google will continue to go head-to-head in this space.

Second, content streaming is not yet the new “rivers of gold” for publishing (and the sale of Yahoo! might confirm that there’s still gold in those advertising hills….). But music streaming (Apple, Spotify, Amazon and Google – plus niche services such as Bandcamp and Mixcloud) is gaining traction, and Amazon is building more content for SVOD (to compete with Netflix, Apple and Google). But quality public broadcasters such as BBC, ABC and NPR are making great strides into audio streaming (via native apps and platforms like TuneIn) and podcasting. One issue that remains is the fact that digital downloads and streaming still suffer from geo-blocking, and erratic pricing models.

Third, Amazon continues to build out its on-line retail empire, even launching private label groceries. Amazon will also put more of a squeeze on eBay, which does not offer fulfillment, distribution or logistics and is a less attractive platform for local used-goods sellers compared to say, Gumtree.

Fourth, Amazon is making a play for the Internet of Things (which, for this discussion, includes drones), but both Apple and Google, via their hardware devices, OS capabilities and cloud services, will doubtless give Amazon a run for its money. Also, watch for how Blockchain will impact this sector.

Finally, payments, AI, robotics, analytics and location-based services all continue to bubble along – driven by, for example, crypto-currencies, medtech, fintech, big data and sentiment-based predictive tools.

Next week: Another #pitch night in Melbourne…

 

 

 

 

C-Suite in a quandry: To Blog or Not To Blog…

Should CEO’s be on social media? That is the question many boards, PR advisers, marketeers and C-Suite occupants are faced with these days. Partly driven by existentialist angst (“I Tweet therefore I am”), partly a desperate act of “me too”, many CEOs are in a dilemma about how to engage with the new media.

While it might sound like a good idea to have a CEO blog, in the wrong hands or used inappropriately, it can come across as inauthentic, too corporate, or just crass.

The use of CEOs as “personal brands” is nothing new – think of Richard Branson, Anita Roddick, Steve Jobs, Jack Welch etc. And while social media has the potential to extend the CEO’s reach to customers, shareholders and employees, it also abhors a vacuum. If companies do not take control of their public persona, their customers and employees (supporters and detractors alike) will fill the void for them.

I am seeing this debate play out in different ways:

First, there is a difference between a personal brand and a business brand, so it is important to establish boundaries while recognising how the CEO’s personal standing can be used effectively to complement the corporate presence.

Second, having the CEO recognised as an expert can enhance personal influence but may not directly benefit the company if it is not relevant to the business – does Warren Buffet’s prowess on the ukulele boost instrument sales, or help the share price of Berkshire-Hathaway?

Third, if CEOs do choose to outsource their blog content, make sure it is genuine and aligns not only with the CEO’s personal values but also with those of the company, customers, shareholders and employees.

Finally, CEOs or Boards struggling with this topic, or those worried about whether to take the plunge into social media would be advised to consult Dionne Kasian Lew‘s new book, “The Social Executive”, which is sure to become an essential guide on the subject.

 

 

 

Stripe’s John Collison: “Better to be #disruptive than incumbent”

In a Melbourne fireside chat with Paul Bassat (hosted by NAB and Startup Victoria) Stripe‘s co-founder and President, John Collison offered the insight that “it’s better to be disruptive than incumbent”.

Incumbency comes with all the baggage of legacy data, semi-redundant systems, siloed business operations, and customers with long memories.

Whereas, a nimble and agile startup like Stripe can cut out inefficient and lazy business processes – especially in areas like online and mobile payment systems. And in doing so, a disruptive service can make us think, “how did we ever manage before this was invented?”

Collison was careful, though, to point out that Stripe is working with the banks, not against them, in case anyone thought his company has designs on becoming a fully fledged financial institution. “We simply want to make the payments business more efficient.”

Stripe’s approach is to leverage engineering skills and solutions “to fix first world and middle class problems”. Precisely so – why would you want to undermine the system (payments and transfers between banks and their customers) that gives rise to your very existence?

Collison also reflected that never before has it been possible for such a small number of people to create such enormous value, very quickly – citing the fact that WhatsApp had a mere 55 employees when it was acquired by Facebook earlier this year for $19bn. (Stripe itself, founded in 2010, had about 100 employees when it was valued at $1.75bn around the same time.)

While WhatsApp does not yet generate revenue, its valuation as a disruptive IM platform is largely based on a notional value per user, and what that may represent in terms of data from customer analytics or premium pricing for add-on services.

But you don’t even need to be a startup business to disrupt an existing market, as the music industry continues to discover to its cost – you simply need to be part of the demographic that is used to “free” stuff, has no real concept or appreciation for IP, refuses to pay for anything on the internet, and develops brand loyalty based on likes, shares and number of views. Even Stripe would be out of business if everyone switched to peer-to-peer money transfers without wanting to pay commissions or transaction fees.

 

 

 

 

#SoundCloud app update fails Product Management 101

The Golden Rule of Product Management is ‘under-promise and over-deliver’ (otherwise known as ‘managing expectations’). If anyone needs a case study on how NOT to release a new app upgrade, SoundCloud is proving to be a rich source of material…..

Background image via SoundCloud - post-production editing by the author

Background image via SoundCloud – post-production editing by the author

Last week, SoundCloud broke the Golden Rule by releasing a new version of its iOS phone app before it was finished. It did so without telling its customers in advance – not even the paying subscribers. Only after a considerable backlash on Twitter and Facebook (and a growing number of 1-star ratings in the iTunes Store) did the company start addressing customer complaints, via a rather anodyne blog. Based upon user comments, this response has failed to placate subscribers. While SoundCloud admitted that the shiny new release was not the final product, it was unable to give any indication when the rollout will be completed.

For the uninitiated*, SoundCloud is to audio what YouTube is to video. It allows customers to upload audio files that can then be shared with and downloaded by the community of users. It is entirely powered by user defined content:

  • content created and uploaded by content creators, and
  • content curated by users (via re-posts, playlists and social media interaction).

Audio content takes the form of:

  • music, mixtapes, podcasts, radio programmes and spoken word contributions.

Social media content takes the form of:

  • likes, feedback comments, and data on the number of plays, likes, downloads, followers and re-posts.

Many content creators are Pro Users, who pay upwards of $70 a year for the privilege. In return, they get a platform for hosting and distributing their content, and access to a global community of listeners. However, unlike other music streaming services such as Spotify and Pandora, SoundCloud does not charge listeners (yet), nor does it carry 3rd party advertising or sponsored content (yet).

Although SoundCloud has been highly successful (thereby contributing to the decline of MySpace?), it faces a range of competitors – from Twitter Music and Bandcamp to Mixcloud and 8tracks (as well as the aforementioned subscription streaming services).

In recent months, there has been some industry speculation about SoundCloud’s next business move, mostly in relation to increased monetization. There has also been some commentary about copyright infringement, a new cookie policy, and access to SoundCloud’s back-end data by major record labels. Leaving aside the usual conspiracy theories (Big Brother is listening in on you), future commercial relationships with major labels could mean that record companies with more marketing budget than talent may be given preferred access to listeners’ accounts and activity, in order to promote the next generation of Lady Gaga wannabes. And this prospect has no doubt contributed to some concerns among the user community, especially content creators that fuel SoundCloud’s platform.

From the start, SoundCloud has done a couple of things really well (in addition to the widgets for embedding sound files in 3rd party websites, and a few other technical tools): first, it has made it easier to discover new music; and second, it has enabled thousands of independent and unknown musicians to get some public exposure. The mobile app has now seriously compromised both of these features, because a lot of the existing functionality has been removed or suppressed pending the ‘full’ release (admittedly, these functions are still supported on the desktop version).

In short, the new app release has created the impression that SoundCloud is focussing on listeners (rather than content creators) and plans to make it much easier for major labels to connect with consumers, thereby squeezing out the independent musicians, producers and labels who have helped to make SoundCloud successful in the first place.

*FOOTNOTE: Declaration of interest – I maintain a Pro User subscription to SoundCloud under my nom de musique.

ACKNOWLEDGMENT: Credit is due to ‘Do Androids Dance?’ (itself a beneficiary of the SoundCloud user community) for continuing to cover this developing story