Wednesday, October 29, 2014

EU's poorest country

It’s believed that Bulgaria is EU’s poorest country because it has the lowest GDP/capita of all 28 member states. The formula for calculating GDP/capita is the country’s GDP divided by its population. But is this really an accurate depiction?

Let’s take two families equal in all dimensions (monthly earnings, number of working parents) and different in only one – number of kids. If both families have a monthly income of EUR 6000 but one of them has one kid while the other two kids then GDP per capita of the first family will be EUR 2000 while of the second EUR 1500.

If we say that Bulgaria is EU’s poorest country because it has the lowest GDP/capita we will be wrong. GDP per worker is a better indicator as some EU countries such as Bulgaria, Latvia and Lithuania have extremely unfavorable ratio between labor force and total population. Demographic problems make the comparison between countries on this criterion distorted. Below is an example featuring two EU countries (Bulgaria, Poland) and one European non-EU country (Belarus).

Tuesday, June 5, 2012

Verizon LTE - man with a plan

Verizon has used a US market specific problem to drive the adoption of 4G data plans. In the US there are multiple video services Comcast’s Xfinity TV, CBS, Netflix, Hulu, mSpot. Many people subscribe for several of them and many find it difficult to search and discover content.

Noticing this Verizon decides to solve the problem and offer a solution only to people with 4G smartphones and data plans. You want to get rid of your problem – buy a 4G phone and subscribe to more expensive data plans. Verizon’s product Viewdini is a platform aggregating video from the most popular video services and making video consumption and discovery easy. It is expected that Verizon will ask the content providers to pay for the data consumption of the mobile users and thus remove other obstacle to adoption of its data plans (as AT&T announced few days ago)

Many good products become good products because they build on the weaknesses of the existing ones. If someone is a visionary he would have thought long before the LTE launch that one day it would have to drive its adoption. And because of this, long before LTE he would have been pushing the emergence of many video providers and fragmented content so that when it comes time for LTE he can address a problem he created and knew that this problem will drive the adoption of its expensive new product (that no one will buy just for its name).

Tuesday, May 15, 2012

Facebook's next business

Tagtile (loyalty hardware and app that replaces traditional loyalty cards) has been acquired by facebook 3 days ago.

Analysts are saying that the reason Facebook acquired Tagtile was to extend its online deals & offers program into the physical world. However I think that this is not a reason but an outcome of an effort to take an advantage of the weaknesses of the existing loyalty programs and also build on two of its core assets – large mobile footprint and customer data.
  1. Existing loyalty programs are old and fail to deliver. Many of them just discount products and lead to lost revenues instead of growing revenues through change in customer behavior. New business model is required. For me as a retailer is not only interesting to know what you buy from me but also what you buy from others. For example – in London I was always buying cappuccino from Starbucks but croissant always from Pret-a-Manger because they were always freshly baked and hot. Offering a solution for retail that allows you to mind data will offer much higher value to businesses.
  2. Customers don’t value the loyalty programs because they don’t give them what they want. Why discounting cappuccino if in fact I want hot croissants? Starbucks can debit my loyalty account so that I can go to Pret-a-Manger and buy a croissant.
In the time loyalty programs were created smartphones and apps were somewhere in the future. Loyalty meant just a plastic or paper card with stamps. Since couple of years the technology (smartphones) and the ecosystem (many mobile internet users) is in place and now loyalty is the next business that the smartphone revolution will change.

Retail in the US is $3 trillion market (27% of GDP). Loyalty programs are accounting for 1% of retail i.e. loyalty is $30bn business. I would like to go into such a business if I can and if I see that it is being hold by its old fashioned business model.

Friday, April 20, 2012

What is a natural startup

I am used to see a lot of startups trying to solve (and solved) a non-existent problem. However just because a bunch of people knows how to use programming does not mean that someone wants to use what comes out as an output of the simple application of their skills.

It is not often that I see a start-up offering a natural solution which is so simple, so natural and useful that people never ask "why I should use it" or "what is this doing?". People that have been to school remember the way they used to write an essay, a literature assignment or a research of a scientific topic. You go to the library, get a couple of books, start reading them and looking for the information you would need to accomplish the task. Once you find it you put it on a paper. Later based on your notes you compose your assignment. The startup Citelighter lets you do exactly this but on Internet of course.

The idea behind Citelighter from a business perspective is bright for two reasons - Citelighter doesn't require any behavioral change from the side of people using it and at the same time it delivers a great utility to them. Both factors are extremely important for the adoption of a new product and this one ranks high on both of them. I wish I see more startups that let you do things, solve tasks and find answers with less efforts and bigger success. This is an emerging trend that offers a white space to technology startups. Apple was one of the first to move to this space with a big success - Siri is doing nothing else but (1) letting you do things (2) you usually do (3) in simpler and more enjoyable for you way.

Wednesday, April 11, 2012

Telefonica did not need to do it

I stumbled upon a press release from Telefonica announcing a deal with VMware - "2 phones in 1". VMware's virtualization technologies should enable the use of personal devices in the corporate life. Congratulation to VMware for managing to trick a giant as Telefonica into adopting its solution and advancing its own agenda. However shame on Telefonica for not understanding why is this solution being pushed to the market. VMware is in a mature market and they want to open up new businesses for them. They try with smartphone virtualization although not being able to offer a product delivering an exceptional utility. Ultimately their core business (PC virtualization) is doing very well. Even if they lose - not a big deal, they are just experimenting (on the back of the rich operators).

Look at the iPhone to see a contrasting example. It was pushed in times where operators were struggling with monetization of 3G networks. iPhone solved a problem for operators and brought money to both Apple and them.  VMware's solution solves an imaginary problem that don't really exist (read the press release). Moreover it solves it in a very non-seductive way. 

Wednesday, March 14, 2012

You have a kid. You want him to play piano

Telecoms are bureaucratic, slow to make decisions, risk averse (rather loss averse) and old in the direct and indirect sense of this word. Knowing this it would have been a surprise if telecoms were as innovative/imaginative/attractive as the top technology/internet companies. However, although not always capable to be on the forefront of innovation telecoms do want not to miss the digital opportunity. They do want to make money from a field where they were too scared to go into.

What do they do?
Until now we saw Telefonica setting up a digital arm to harvest the opportunity.
Deutsche Telekom founded a venture company in 1997 – T-Ventures.
Many other operators such as NTT Docomo invest in digital projects on an ad-hoc basis.

The best strategy is the one of France Telecom that together with Publicis Groupe announced the upcoming acquisition of 49% stake in the investment fund Iris Capital. Until now the fund has invested €870m in more than 200 companies.This is may be the easiest and the most suitable for operators way to enter the digital market – buy a stake in a fund investing in digital companies. Don’t build a fund. Don’t build a specialized unit.

Telefonica's case: You have a kid. You want him to play piano. He can’t. You buy him an expensive piano. You waste your money.
Deutsche Telekom's case: You have a kid. You want him to play piano. He can’t. You make him a pianist producer. You may be make money.
France Telecom's case: You have a kid. You want him to play piano. He can’t. You find a successful pianist producer to make out of your kid a successful pianist producer. You make money.

Wednesday, February 22, 2012

A competitive response in disguise

Amazon, Apple, Google, Microsoft, RIM, and HP signed an agreement to disclose how they use private data before an app is downloaded.

Whatever the explanation of these 6 technology companies is, the truth is that what they do is simply a move to prevent future competition from the side of the thousands of developers of mobile apps. Gathering, controlling and using customer data is their business – the business of technology incumbents. For Google, Apple &company mobile apps developers are in some aspects exactly what OTT players are for us – the telecoms. We don’t want to give up a business to OTT players. Google, Apple &company don’t want to give up a business to mobile app developers. The only one difference is that when telecoms realized the threat of OTT it was too late and they could do too little. Google &company are very proactive – they prevent, so that there is no need to cure later.