Bob Browning's blog

Over the years we have worked on a number of joint ventures and this morning I got to thinking about our experience and maybe sharing with others who do the same sort of thing.

We are a technology company and normally we work with designers on a fixed-price basis. But sometimes when an entrepreneur has a good idea but not much money we are prepared to share the risk with them for long-term revenues.

1. Our first and still going strong (we are on our third rewrite) sells management reports and subscriptions B to B. We take a percentage of revenue and although we are very google-dependant so the money goes up and down, over the year they basically pay our rent.
2. We then set up a site to sell foreign currency on-line to the US market. It limped along for a couple of years and then got hit by a major fraud. Goodby to that one. The arrangement was that we had a higher take until the site met a threshold cumulative income and then it dropped. The threshold was never reached.
3. We started a toy store with an entrepreneur. It took a couple of years to take off (this bas back in the late 90’s) but when it did the guy figured he could get it re-wriitten by a small freelancer for not much money and not have give us our cut.
4. This slightly put us off, but more recently a designer we work with a lot decided to go into business for himself selling architectural hardware on-line. We did the site, he went the adwords route and instantly the site started making money. We get a nice income and we are working continuously on it. In this case we take a percentage of the net profit. This was higher in the early stages, and then dropped to a lower percentage when we reached a threshold.
5. Finally. A site I stated myself in 1996 or thereabouts and which we reformed as a separate company. (www.bobsguide.com). This is very successful and we make a regular income from it.

Lessons:

1. Because we have an ongoing interest in such a web site, we are moritvated to continuously improve it. Because we do this in time that would otherwise not be billed the opportunity cost is low and we can just get on with it.
2. We sacrifice instant cash flow for long-term income. We tend to go for this sort of project when orders are thin, so the opportunity cost is much less than you might think. Of course if we did nothing else our cash flow would kill us.
3. We need to satisfy oursleves that the project is going to be successful. I think we have a pretty good nose for this having worked on the internet for 10 years. Believe me I have had some pretty hairy propositions.
4. These work if the enterprise is genuinely a partnership. None of the successful projects has been run as a traditional client/supplier relationship. We talk, we agree, we do some work.
5. Most important of all is the trust between the partners.

For the right case this can be a good way for someone with a good idea but not much money to get a project off the ground cheaply. The entrepreneur is mortaging a certain amount of the value of the business of course, but this effect can be minimised if the partner takes a higher percentage of the take in the early stages and then it drops to more of a maintenance level once a cumulative threshold has been reached.

I heard this story on the radio from an old-time comic.

Guy goes into a clothing store, he says ‘how much is this suit”.
Assistant: you will have to speak up sonny I am hard of hearing
Guy: HOW MUCH
Assistant: I will have to ask Lou. LOU HOW MUCH IS THIS SUIT
Lou (from the back): $35
Assistant: Its $25 – you want it.
Guy: Sure – hands over $25 and rushes out the door before he is found out.

This way they sold hundreds of $15 suits for $25.

We have been trying to set up the electronic equivalent. Our approach is to use offer codes which give a discount, but which look as if they are supposed to be hidden. Our theory is that secret offer codes are more likely to be spread virally than ones we advertise. For example:

• Offer codes available in Javascript in the HTML – If you look for it
• Offer codes distributed anonymously via blogs

and so on.

Wacky idea – don’t know, we shall see.

I walked down Charlotte St yesterday. It used to be have the best greek restaurants in London. Now not one. The big brands like Zizzi’s and Pizza express plus Japanese noodle bars and so on have replaced them.

The Venus Kebab House is a Cafe Nero.

Dreadful.

Personal Marketing is lookng like the technique-du-jour for web marketers. It is a way of segmeting anf describing your target market. The idea is this. You create a fictional person (a persona) to represent each of your market segments. The persona includes name, age, even a picture as well as a bio. Then the marketing campaign is considered from that person’s point of view – “what would Vera think about that?”

I have written a very brief overview of the topic plus some useful links in my last newsletter.

Question of the day. What to these guys do.

“Moreover provides current awareness solutions to enterprise application developers, leading Web Portals and Internet search engines. The ability to display and analyze real-time news and business information adds significant value and competitive differentiation for your product.“

Answers on an e-card.

A key finding of Whats Valued Online a recent survey by CMO Council was that the main peeve with web sites was “hype and puffery of offerings”.

For a company that makes its money out of distributing the written word (OK OK they have a news feed that you can use to put news on your web site) they could do better.

I am reading Hells Angels by Hunter S Thompson.

I wish I could write like that.

The stories about the Outlaws themselves are hilarious in a black sort of way, but there is at least a certain internal logic to their behaviour. The real lesson of the book for me is that the Idea of the Hells Angels (or if you will, the Brand) ended up more powerful than the Hells Angels themselves. Police over-reacted to events that had nothing to do with the Hells Angels on the other side of the continent simply because of rumours of their involvement.

Hunter S Thompson is a genius with deep insights into human psychology.

Fear and Lothing in Las Vegas next.

Believing:

1. That whenever radio and wires compete radio always wins in the end
2. We should not swell BTs profits any more than we have to but encourage any sort of competition.

I have wireless broadband from NOW at home. Note this is broadband delivered by radio – not a wireless home network. In the home I just connect to the modem by a regulat network cable.

I have a couple of reasons other than the above:

1. I hope to use the modem as a backup for the office broadband if we get into problems.
2. I can think of all sorts of uses for a broadband connection which I can stuff in my rucksack with my laptop.

Both rely on the coverage area increasing of course, it is still pretty limited.

First experience is good. The box arrived, plugged it in and started up the dialer software. Lo we have lift-off. The station servicing my cell was down Saturday night and Sunday morning which is not so good. The wait on the support line was long and the music on hold terrible – thank goodness I have a hands free phone. The operator was very helpful however. They have just set up in our area to I can forgive some teething problems.

Price is OK – £14 for 512k. Easy to install and works fine.

It is argued that where radio comes up agains wires, radio always wins in the end. So when Now extended their wireless broadband to our street I signed up. 256/512k for £14 per month (I hope this includes VAT) sounds a reasonable deal.

I also have an ulterior motive – in an emergency if our office broadband breaks I can take a taxi home and pick up the wireless box and use it as a backup. That is the theory anyway – we shall see.

So far I have only one complaint – well two actually.

1. the box hasn’t arrived they are late delivering
2. their music on hold is truly dreadful.

More later…

In 2008 people are going to start losing their analog TV and will have to switch to digital. Yes that is 2 years time!

I have Freeview – no big deal other than having to juggle with two remotes instead of one. However if you use a VCR to time-shift programs digital TV is close to unusable. So not only am I down for an extra set-top box for every other TV in the house I also have to replace my VCR – but with what? The answer is a PVR (Hard disk-based freeview decoder and recorder = sky+ for freeview) but try buying one. Last Saturday I checked John Lewis in Kingston – nothing. Even if they had one it would be obsolete – Freeview PVRs are in the rapid development stage where models are obsolete within months.

If we were serious about switching, every TV you buy would have an integrated decoder – but they don’t.

In short the country does not look as if it is ready for digital. It will come that is obvious but before it happens people need time to switch technology and two years is just not enough. Here in London it won’t be till 2012 – thank goodness.

I have been using Vonage for a few months now. Quality is not up to business standard but this is not their fault I believe.

Talking to a few experts it looks like the problem is that with ADSL the upload bandwidth (256k) is not enough. I can hear people on the phone OK but they don’t hear me well all the time. To make this work you need:

• A good upload bandwidth (i.e. SDSL which is not cheap)
• A router that prioritises voice
• Low contention.

We have business ADSL from BT where the contention is 20:1 which is OK although being business users I guess the other 19 are heavy users.