The Pebble and the Avalanche

But If It Really Is Happening, Is It Yelp?

The Wall Street Journal blogs that somone filed a lawsuit against Yelp alleging extortion. The lawsuit alleges that Yelp will take down negative reviews in return for money; others allege that Yelp will take down positive reviews if you do not purchase an advertising package.

Let's say that someone is collecting money for removing negative reviews from Yelp. Is it really Yelp?

I expect it's easy enough for a criminal ring to target business owners. They crooks put up several negative reviews; instead of waiting for the business to complain to Yelp, the crooks contact the business directly and offer their "package." The business owner, convinced that he's doing business with Yelp, pays up; the negative reviews disappear; maybe the crooks are smart even smart enough to pay some of the ill-gotten gains for promised advertising.

When I want to prove I own a web page, the person I'm doing business with will ask me to put a comment into the web page's source code, a token that only the web page editor can insert. That's a level of sophisticated identity authentication that I expect most business owners do not have.

Now I admit I'm curious... even if this lawsuit does not involve crooks, does a ring such as the one I describe exist on Yelp or elsewhere?

P.S. The most damage to Yelp would not be to their reputation, or even the proceeds from the lawsuit. I will guess that the most damage would be to their loss of Section 230 safe harbor protection — a smart lawyer could easily (and very profitably) argue that Yelp loses that protection if they manipulate positive and negative reviews to force businesses to subscribe to their services.

Topics:  · business · internet

Link to this story · Leave comment or trackback

I Lose the Gold

I seem to have lost the Gold — my Gold frequent-flyer privileges, that is. My airline kindly sent me a letter offering to extend my privileges for only $300 or $500 per month, I forget which. I suspect that they're not going to get many takers, and in fact I think they're foolish to revoke my privileges when I have a long history of extensive travel.

Be that as it may, according to today's Wall Street Journal, I'm in good company. Many corporate travelers now fly coach instead of business class; many others (including myself) use videoconferences instead of travel whenever possible. One of my current projects has participants literally all over the world; we never meet in person and spend most of our time on Skype.

I think airlines don't quite realize that their higher prices — and especially their deliberate nickel-and-diming passengers by charging them for checked bags on the ground and cookies in the air — will result in permanent changes in traveling habits. If I can teach a course in San Francisco and New York without travel costs for me or my students, I have not only saved a chunk of money but I've also save irreplaceable time.

As technology improves, the idea of a "meeting" will continue to separate from the idea of "in person." I think business travel, as measured in meetings or miles per person, will never recover to previous levels.

Topics:  · business

Link to this story · Leave comment or trackback

Ford and the Car Computer

Some time ago — in the pre-iPhone era, no less — I was asked on two separate occasions for an idea for an automotive product. In both cases my response was the same: an iPhone-style computer for cars, one that can accept clever applications from anywhere. Neither company took my advice.

I see that Ford has implemented this idea with an in-car computer. I can't quite determine if the computer is in production from the news articles, and certainly it does not seem to have the world on fire just yet. (In a remarkably annoying blunder that also keeps search engines away, Ford's home page is completely dependent on Flash, which means I won't bother accessing the Ford web site; I'm left to wonder how software developers will be enticed into working with Ford.) I personally don't hold out high hopes for this computer because it depends on a Microsoft operating system: to my mind this means lack of security, bloated software, bugs, and annoying applications.

Still, I admit that it's nice to be vindicated, and I look forward to the next release of this style of computer, perhaps something that runs on Linus or the Android operating system.

Topics:  · business · technology

Link to this story · Leave comment or trackback

More on Compensation

The US government's "pay czar," Kenneth Feinberg, will impose pay caps on hundreds of financial-sector employees, according to recent newspaper reports.

Mr. Feinberg made no effort to conceal the explicity political motives behind this initiative. For example, the numbers he uses are plucked out of thin air. Why a $500,000 cap? Why not a $400,000, or $600,000, or $502,409.95? Why does he want to expand the caps to more employees — was the previous round of pay caps somehow ineffective, and if so, how? Not only has Mr. Feinberg failed to answer these questions, he's failed to ask these questions, because these pay limits are a political exercise.

The strength of the US financial system stems from its independence from government interference. The Obama administration continues to chip away at the disaggregation between government policy and business activities, which argues that the Obama administration does not know or does not care about the consequential inevitable damage to business innnovation.

Topics:  · business

Link to this story · Leave comment or trackback

Pop Quiz in the Grocery Store

I've just read a nice quote from Craig Herbert, the CEO of Supervalu, a conglomeration of grocery store chains. In an interview in the Wall Street Journal, he said something I absolutely agree with:

"Look at three-for-$5 deals. Even if you're good at math, you have to stop and think for at least a few minutes and say, 'Oh, wait a minute, how much is that per?' We don't want you to have to bring a calculator to our stores."

I've said the same thing many times myself: "A phone call is no time for a pop quiz." You can see some of my comments on proper user interface design in this video of my latest talk at SpeechTek in New York.

Topics:  · business · user+interface

Link to this story · Leave comment or trackback

Will Running the Wheels Backwards Work?

According to a page-one article in the Wall Street Journal, companies have decided to re-aggregate their businesses. GM will purchase, or in some cases re-purchase, companies that make auto parts; Oracle will purchase Sun Microsystems, which will then run Oracle databases. Companies tout this as a way to increase sales, control, and squeeze cost savings out of their supply chain.

GM is, of course, a special case: GM is really the production arm of a union pension fund and has the implicit backing of the Obama administration. As such, GM's goal is not so much to produce a profit as to increase the number of union members, and by purchasing businesses they increase union representation.

Oracle's move, on the other hand, makes no sense at all. They explicitly want to re-create the old IBM, which controlled and sold every piece of equipment, from the software down to the cables that connected the computers together. The efficiencies and innovations of other companies destroyed the old IBM business model; Oracle fails to explain what has suddenly changed that makes this failed model viable again. Disaggregation continues to yield benefits in other areas.

Finally, we see companies such as Pepsi who intend to purchase their bottlers. Their stated goal is to gain more control over how Pepsi's products are distributed and marketed. Although I admit that the entire "bottler" structure for the soft-drink industry has always struck me as a relic from the days before efficient transportation — why shouldn't there be just one big Pepsi factory? — the stated goals of the Pepsi re-aggregation raise red flags. In essence, the Pepsi company intends to impose their vision of distribution and marketing on the bottlers; while Pepsi believes this is a strength, I believe it is a weakness as it interposes a single point of failure into their business model.

Topics:  · business

Link to this story · Leave comment or trackback

Secret Jargon of the Computer Folk

Earlier this week I visited the Apple web site to purchase some computer memory for my older Mac laptop. In the end, I had to give up and call Apple to find out which memory to purchase.

The problem is Apple's web site, which reflects a trend in the wider industry. With almost no effort on Apple's part, the model number or serial number of the laptop could be entered on the web page an easily call up a perfectly fine, exact description of the laptop. Instead, the "shop for computer memory" section offers me a selection of laptops to choose from. Apple is completely wrapped up in their internal jargon and present me with terms such as "generation six" to describe the laptop. Unfortunately, what they don't describe at all is my particular laptop — my 2.33 GHz laptop simply does not appear on the list of available machines.

The problem here is that Apple wants to use me as a pattern-matching machine (this picture? this date of purchase? this processor speed?) to find out which laptop I have, even though they have a definite, unequivocal method to let me know (my model number). This is a common and annoying user interface error; I discuss similar errors in my latest online talk. The fix is easy enough, of course, and I admit that I'm surprised that Apple is willing to spend money on phone calls like mine instead of fixing the problem.

Topics:  · business · marketing

Link to this story · Leave comment or trackback

The Format Wars: Shooting the Survivors

The format war over "high definition" successor to the DVD, fought between Blu-ray and HD DVD, ended in a victory for Blu-ray. Now it seems thismay have been a Pyrrhic victory.

Reports from China indicate that China's home-grown high definition format has a 30% market share advantage over Blu-ray. Blu-ray players have a built-in cost of $21 worth of licensing fees, and Blu-ray disks are about four times more expensive than a similar "CBHD" China Blue High Definition disk.

In other words, after a long hard scrabble between vendors for a share of the licensing fees, a different standard with a far lower cost structure is spreading rapidly through China. Like any other civil war, both sides in the West may very well have lost the battle over the next generation of DVDs.

Topics:  · business · technology

Link to this story · Leave comment or trackback

Read Some History, Congressman

A few days ago I wrote about the financial consumer protection agency that the Obama Administration intends to create. This agency will regulate all credit card offers, all mortgage agreements, all checking accounts, and myriad other details of how ordinary citizens manage their finances. In fact, the government intends to automatically enroll people in retirements savings plans — I'm reminded of "anything that is not prohibited is mandatory."

Congreessman Barney Frank responded to criticism about the agency:

"The fear that this will somehow be an out-of-control entity ravaging the private sector is unsupported by anything in American history."

I'm not certain what history books he's been reading, if any, but perhaps he should look back at the actions of Roosevelt's regulatory agencies; they had no trouble regulating every jot and tittle of financial transactions. Or, if that's too far in the past, perhaps Frank remembers from personal experience the wage-and-price control regulations during the Nixon administration and Carter's regulation of, among other things, thermostat settings in commercial office buildings. Once a goverment bureacracy begins to regulate, they regulate; after all, they are not being paid to not to issue regulations. Like any other animal without natural predators, they increase without limit and devastate their ecosystem.

Topics:  · business · finance

Link to this story · Leave comment or trackback

Home Mortgages and Tulip Bulbs

Alan Greespan continues to claim that the economy won't revive until housing prices stop falling.

Imagine, if you will, that the date is February, 1637; we're in Holland, and the commodities market has completely collapsed. Greenspan, Obama, and the Democratic Party step in with a massive stimulus package, new rules and regulations, increased taxes, and endless exhortations focused on one task only: to re-inflate the prices of tulip bulbs to their previous high levels. Government officials assure the public that spending, the markets, and companies will slide into deeper and deeper trouble until tulip bulbs recover.

I'm afraid I don't understand why a housing-price bubble is more important than a tulip bulb-price bubble. The housing bubble was the inevitable result of easy money — low interest rates and a deliberate government policy, on the part of Fannie Mae and Freddie Mac, to make loans available to people who did not meet standard risk criteria. To claim that the bubble must be re-inflated is simply another way to claim that prior government policies did not contribute to the crash.

Topics:  · business · finance

Link to this story · Leave comment or trackback