I love New Zealand’s National Radio, but sometimes it needs to stick to it’s knitting. This morning they had a piece of Facebook, its battle for eyeballs in New Zealand with Bebo and concerns over security.
It’s an attempt to get a somewhat aware voice but in reality it shows the gap between the early/middle adopters and the late, late, late ones. The reporter even manages to give some examples of other social networking offerings including “tweeter” 
Click here for the podcast - not sure how long they keep them there for so get in quick.
One of the roles I fill is on the board of a Economic Development Agency, Enterprise North Canterbury. ENC has just launched the North Canterbury Business Awards, a new annual award to showcase the successful businesses that are to be found in North Canterbury.
I’ve been asked to judge the Exceptional Sustainability Award, co-judge the Exceptional Tourism Provider Award and sit n the panel that decides on the supreme winner of the North Canterbury Business of the Year.
It’s a great thing to highlight success in our region. More information can be found in this flier or at the website of Enterprise North Canterbury.
Warning - here follows a rant not at all related to my usual subject matter!
We’ve seen some governmental debacles in the last few days. Firstly the New Zealand taxpayer agreed (or their representatives did anyway) to buy the rail network back off Toll holdings. Bear in mind that this is the same rail network we sold years ago, it’s fallen into disrepair and is under-utilised. It appears that the selling party played a bluffing game, feigning reluctance to sell in order to ratchet up the price.
In any private sector setting this sort of game-playing would be picked up by the other side. In a situation where the negotiation is occurring headed by elected representatives with very little real world experience, and in positions of power vastly greater than their skills, experience and ability would deserve what happened? The said negotiators took the bait - hook, line and sinker - paying what analysts believe is an over-inflated price for the business.
Not only that but it now appears the deal was full of insider trading, whereby the managing director of Toll holdings personally bought a large parcel of shares only days before the deal was inked - his personal windfall is estimated at over $300k.
And then today it appears the the former head of a large government department had a fictitious PhD on her CV. Again in the real world CV’s are checked for authenticity - one can only surmise that the powers that be who hired this employee were so excited by the letter PhD that they omitted to do standard due diligence.
So what’s the answer then? Well perhaps electing representatives with a bit of nous would be a start, moving to a model where politicians and civil servants where accountable for their actions would be another.
Either way we have an ongoing saga of ineptitude.
Right - that’s off my chest now…..
Hot of the press are the Xero year end (at 31 March 2008) financial reports. Key highlights include (with my comments in italics);
- Revenue from subscriptions of $134,000 less than expected - key will be the figures to the end of May 2008 - projected revenue from the prospectus is $550000
- Operating expenses of $5,146,000 that’s a significant burn rate which is fine if revenue ramps up significantly
- A net loss for the year of $4,310,000
- Cash and bank balances of $9,517,000
An interesting read is the unaudited comparison between the results and the projections detailed in the prospectus - again with my comments in italics;
- In the 12 months since Xero’s Offer Document was issued Xero achieved 1406 customers. 1300 were forecast. but at a lower subscription rate than forecast - is this what Chris Anderson meant about the “trend towards free”?
- Generated revenue in the United Kingdom while no revenue was forecast from either the UK or Australia in the first year. awesome - it’d be interesting to know what those revenue figures actually are
- Receipts from customers of $213,000 was lower than the updated (February 1 2008) forecast of $250,000 - $350,000 for three main reasons not sure why receipts from customers figure is different from the revenue from subscriptions figure - perhaps Rod can advise?
the assumed average pricing is $75 (plus GST) per customer per month, based on Xero’s current level of functionality. There will be no significant change in pricing during the prospective period.
The customer growth curve Xero experienced was weighted towards the end of the period as sales accelerated at the commencement of the 2008/2009 financial year hmmmm - but it’s hard not to think that anyone contemplating signing up for the 2008/2009 would have done so prior to 1 Aprl and would therefore be included in these figures
Greater focus on accountants in the first year, and their request for Xero to spend more time on the core accounting engine rather than value added services. Therefore average revenue per customer was less than the assumption included in Xero’s Offer Document which can only but suggest that either the focus on accountants strategy was wrong or the prospectus projections were flawed
Less new customers than expected took advantage of the option for a one year in advance payment discount, preferring to pay monthly
arguably the primary reason for the lower revenue than projection (especially given the higher than expected customer count) is the fact that Xero had to drop it’s subscription rate from that indicated in the prospectus. The following is a direct quote from the prospectus;
Costs were less than forecast and interest income was greater than forecast resulting in a better closing cash position by $613,000. Closing cash balance at 10 May was $8,991,000 compared to $8,378,000 contained in the Offer Document
So overall an interesting result, nothing o shout from the rooftops but not completely off track either. Bottom line is that Xero needs to ramp things up - fast!
A comment on an earlier post seemed worthy of it’s own discussion. Relating to some earlier posting about Telecom’s plans re SMEs and SaaS, I’m stoked to see that Victoria Crone from Telecom has both read the original post, and fronted up and replied.
In my opinion it shows a willingness on Telecom’s part to move away from its closed non-communicative ways of old, and to enter into dialogue, be it positive or critical.
Victoria’s post is copied here for those interested in where these projects are at;
Disclosure - Diversity Limited is a consultant to Telecom New Zealand and its subsidiaries.
Freeagentcentral is a nice little accounting application out of the UK. It’s a similar offering to Xero but as Xero themselves would be quick to point out, doesn’t offer the automated bank feeds (at this time) that Xero does.
As an aside it will be very interesting to see Xero and FAC go head to head in the UK market.
Anyway, interesting to see that FAC have taken a leaf out of Xero’s book and have begun signing up accountancy firms as partners. You’ll recall that at IPO, Xero strongly pushed it’s strategy of partnering with accountants, seeing them as teh gatekeepers to SME uptake. Xero no doubt also realised just how sticky the incumbent solutions where, and needed to be able to have a neutral voice showing the value to be gained from changing platforms.
FAC have signed up five accountants thus far and in a really interesting case of Quid Pro Quo, has offered a 10% discount off the cost of FAC when businesses change to one of the partnered accounting firms. The mutual benefit of this is huge;
- The accountants get new customers and a point of differentiation from their competitors
- FAC gets more subscribers, a group of well respected evangelists and, to a certain extent, someone else to cover service and support issues
- Customers get a point to point service and a professional who understands the system they use and can add value beyond basic form-filling
The Information Technology and Innovation Foundation (ITIF) think tank from the States has compiled a report ranking 30 countries broadband offerings by a composite measure based on three indicators: household broadband penetration, average speed weighted by percentage of subscribership (Mbps), and lowest available price per Mbps.
The graph is interesting reading, it shows that New Zealand is relatively close to Australia, the UK and the USA on a composite score and ahead of what is held up as a Hi-tech success story, Ireland. Could it be that Ireland has got maximum utilisation out of the connectivity is has available to it (not to mention the EU money it has available to it), and if this is the case perhaps New Zealand’s economic growth to internet service ration is the real issue? ie we’re not using the connectivity we have for the right things?
It’s a contentious topic, even more so given that it’s an election year - but once again it begs the (mis)quote;
“faster broadband? you can’t handle faster broadband”
This morning I read that Burger Fuel are expanding their operations outside of the current Australasian spread and have sold a franchise to Dubai. In the past I’ve been somewhat sceptical of Burger Fuel, both pre, during and post IPO. After reading the news I momentarily thought that perhaps I’d been a little hard on BF.
I was relieved (for my own sake entirely) to read this post by Dan who has spent time working in the UAE. Dan says that;
If the announcement had been that the first store was at Mall of the Emirates you know it would have done well because the food court there is always pretty busy. But instead the first store is at Festival City. I visited Festival City last August and it was a ghost town.
In defence of BF, Dan did go on to say that Festival City is not yet finished and may well prove more popular once it is. I remain firmly positioned on the fence, and leaning heavily towards the paddock of scepticism!
In a few weeks I’m attending a four day live in course at a central Christchurch motel. Being hyper connected, I thought I’d contact them to find out what they have in the way of internet connectivity. I received this reply;
Dear Ben
Yes broadband in each room, the charge is 68 cents per minute and $33.75 for a period of 24 hours
Kind regards,
68cents per minute? Thats over $40/hour - that is a new record for me - I’ve experienced motels charging $5 and $10 per hour but $40 that is ludicrous.
I was going to be charitable but I won’t - charging like this needs to be exposed. The motel in question in the Holiday Inn on Avon, Christchurch. If you feel (as I do) that this charge is way over the top, I encourage you to drop them a line at Reservations@holidayinnonavon.co.nz
Outed!
I got an email this afternoon from Velocity Networks up in Hamilton. Velocity is a partnership between local government and tertiary institutes which aims to put in place fibre infrastructure for the Hamilton metro area. In their own words;
the combined fibre networks span the city, providing ultra-high speed broadband internet access to commercial buildings at speeds of up to 1Gbps (1000Mbps). Operating as an ‘open access’ community network, users are free to subscribe to services from a range of application and internet service providers on the network.
The project has a number of implementation phases and is expected to be completed by 2010. The initial rollout of the extensive fibre network has been funded by a $3.3 million grant from the Ministry of Economic Development, as part of the Government’s Digital Strategy.
Velocity say that;
A number of well known service providers such as WorldxChange, Kordia, Orcon, FX Networks and Lightwire have already signed up and are now offering their own data and voice solutions across the network…We also have several local internet cafés offering internet access through our fibre network
It’s pretty well accepted now that no one player can muster a business case to put this sort of infrastructure into place. It’s also argued that fast internet is a barrier to growth in this country (I’d add that it’s only one barrier and we need to think about removing the other ones as well). This sort of arrangement is an example of what we should be aiming for.
And by way of proof that it’s actually happening, here’s a picture of the trenching machines hard at work!
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Victoria here from Telecom. Thanks for the comments here everyone, it’s great to see the level of interest in what we’re trying to achieve. Here’s an update on where we’re at.
The new Telecom Business site has gone live, with information on all our services in a much easier to use format and can be found here http://www.telecombusinesshub.co.nz. We’ve had good feedback on this and are always keen for more. This is just the start. We’re in testing now for the next update which includes the domain and web services mentioned above and that will go live soon (sorry, can’t give exact dates and as you’ll know not everything goes smoothly in large scale technology projects!!) We have a lot more planned for this site. Concerns have been raised about our ability to understand and be relevant to business. We’ve been working with many smaller sized businesses over the past year, and have just confirmed 100 or so across the country that we’re working with directly on developing our services. So I guess what I’m saying is we want your feedback and if you’re interested in working more directly with us we’re keen as mustard.
It’s clear that bloggers are critical and sceptical of our ability to deliver this and we’re held to a high standard. So we’re working very hard to make sure what is put out is robust and won’t disappoint therefore we’ve been testing, trialling and in beta for a whole lot of stuff. A couple of examples, not enough space to go through them all (!) - we’ve trialed a new approach to the broadband help desk for business customers and we’re hearing it’s way better so we’re working through moving it from trial to launch - we’ve also been in trials for Managed Desktop services and are learning heaps about how we bring this service to the NZ businesses.
Re: SaaS, I’ve had a number of SaaS companies in NZ and internationally approach me based on March announcements. Personally, I’m conscious that this market has been tried before so taking learnings from the past, spending time internationally to see what’s driving success and working out how we support and make this market successful in NZ is critical. I continue to be blown away by the talent and entrepreneurship in this space.
On a closing note, as they say proof of the pudding is in the eating and hopefully the fact that we’re watching and taking part in the conversation in the blogososphere space indicates our openess.