Facebook – A Singular Bubble

Let’s go back in time.  Back in time to the 1990’s.  It’s late in the decade and the stock markets are going nuts about something called “Dotcoms”.  Everyone wants in, they see it as the thing to buy and make money on.  Some did, and some just lost it all.  Now it is just known as the Dotcom Bubble. 

In the 1990’s I was working for a large Wall Street firm and many of my clients came in asking for the latest greatest Dotcom story and wanted to invest in it.  We did not.  Again, we did not.  Why?  I believed that anything of value that could be put on the web would not be free.  Most dotcom stories were really about little technology designs, widgets, and software tweeks that couldn’t turn into a real product line.  There was very little that had the “going concern” aptitude of a Xerox copier, Intel chip, or a new oil field.  So we just stayed out of it and yes, we were right to do so. 

Roll forward to today and take a look at Facebook.  They have been able to absorb a lot of the web’s personal communication.  It uniquely allowed a platform to instantly update a site with photos and other chit-chat to go with.  Facebook had a great opportunity to advance web communication to a more personal platform so everyone can see what’s going on with everyone else.  Yes, it has some interest and the ability to attach some ads.  So far though, if you ask the question, “What value does it bring to the table for business?” the answer is, “Nearly nothing”. 

Yes, I can write something about my business, but if nobody connects to my other page or they don’t go to my website and then click on it, how will they see it?  If my only option is to then buy ad space on Facebook, then who will click on it if they don’t know me?  Isn’t it redundant for someone on my web site to then click and see my business Facebook so they can then click again to go back to my web site?  It really makes no sense when, as a web designer, I see that it can’t increase “clicks” that are meaningful.  I wish it could.  Maybe they will roll out a new platform and fix this, somehow.  I can’t help but believe that Google or even WordPress is ahead of them on this.  Also, eventually everything will be “liked” by someone and then nobody will “like” anything anymore.

Facebook built a huge momentum of audience, customers if you will, who have subscribed, added their photos, and connected to their high school buddies.  What’s next with this?  The momentum says and feels like there should be more.  I doubt that gaming will last, and I don’t think Facebook has any business muscle currently in place to help business owners develop their online platforms.  I want to see more.  Will it be video?  Will it be customization (ala WordPress and others)?  Will Google or some other storm in with a new platform and blow Facebook out of history?

Sometimes an idea is a good business idea, and other times it’s just a one-off item that makes some money for a bit and then becomes stamped out as a feature on a different device.  A great example is TiVo which many people wanted to own because they could see that it would be great to record shows and watch them when they have time.  It made lots of sense to users.  In reality TiVo is like a light switch in your house, just another feature of convenience.  The stock fell and has been flat-lined for a decade.

Will Facebook become all we hear it hyped up to be, or will it become just another light switch, just a bubble, one of many, in the effervescence of the ether?

Planning Business for 2011? Upgrade Your Tech!

Really, upgrade your technology.  It’s important.  If you are still running XP or anything older, you need to get off your wagon and make the change.  Windows 7, the latest Apple operating system, and Linux (Ubuntu version is best) run circles around the old platforms.

The reason it makes a big difference, even if you can’t upgrade your hardware right away, is new platforms include many portals to online communications which were not previously as easily utilized.  Now don’t sit there reading this and think to yourself that you don’t need online communication!  That is crazy thinking!  Of course you do!  Realize that newspapers, magazines, and other print materials are slowly going away.  This forces advertising to change to the online platform, no matter what! In fact, we are now halfway there, and the second half of a major change is usually quicker than the first half. 

Now you are thinking that you don’t know how to use this new online stuff.  If you are thinking that, then you don’t know how to hire expertise.  As a business owner you should be hiring people who know how to use the internet, social networking, and online advertising.  They can be employees or they can be retained through service companies or hired free-lance.  Whatever it takes, get it done.  And then learn from them. 

The big upgrade is this: These new platforms run the latest software on either an XP rated hardware platform or on the latest and greatest multi-processor system.  The new software includes, sometimes for free, Cloud Computing, Social Networking, advanced Ad design software, and many more features which the older versions of Office and other suites did not include.  If you like spreadsheets, databases, and word processing, then why not have them in an environment where they are easily loaded up to your web site and transmitted more safely than before?  (If you don’t have a web site then call me, we need to have a personal chat; something about the century you live in.)  Did you know that new scanners and most software can now convert or print directly into Adobe Acrobat .pdf format?  The time savings in this one simple thing is dramatic to any business trying to communicate their products and services.  Most new office suites, like OpenOffice can convert almost any document, photo, or graphic to almost any other document.  The computing world finally has software standards which are easily shared.

Don’t waste time, upgrade.  The learning curve is shorter with the new platforms and your employees will get more work done, and so will you. 

While you are at it, expand your business by doing much more online.  You should be able to just about double your business by doing the right things on the internet.

Is Facebook Bottle-Necked?

Facebook was growing fast, looking like the next big thing, able to leap past Google and other large internet information and social exchanges, but now it seems nearly dead in its tracks!  What’s going on with this and why may it not work out after all?

Yes, Facebook has found a niche with social networking but it leaves some important things on the table which other platforms still outperform.  There has been a lot of speculation about where our internet experience is headed in the future, and yes, Facebook looked great, about a year ago.  Maybe it will go the way of Super 8 film, Betamax and other failed fads or technologies which are still with us, like the yo-yo, but not quite getting the long-term burn or taking over the world.  So what’s really missing?

Business!  Facebook does have social network pages but they have not grown into the real opportunity that it showed previously.  It lacks a real effort in advertising and is currently too difficult to build out into a meaningful business page which could lead people to the overall objective of placing an order.  Yes, you can get people to “like” the page and say they “like” the product but there is no real opportunity for visitors to learn, be enticed, or make any decision at all.  It seems that really “liking” a product or service is still contingent upon word of mouth.  The lack of expansive capability to truly link up a business page on Facebook and show product or service in a meaningful way causes it to completely lack the feel and effect of a verbally communicated “hey, look what I bought” or “check this out”. 

I really believe something much better than Facebook must be on the horizon and it won’t be long until looking at faces is about all people really do with the current platform, along with some chit-chat.  We may have reached our capacity on Facebook already.  If not, they better roll out a new platform very quickly!  The last 2 updates have added little.

The Lost Art of Investing

Call it Investing, call it Risk Taking, call it Speculation, call it Stock Picking, or even call it Gambling if you must, but realize there is an art to the process and avoiding such truth is the opposite of opportunity.  Investors used to make money because someone worked at it, not simply because they made a deposit with whimsical money.

Case in point: as of this writing, a well-defined portfolio invested in well picked stocks and managed according to a system of maintenance, from 5/5/03 to 12/12/10, has produced a 194.8% return while the S&P has produced only 35.9%.  Is that dramatic?  Yes!  These numbers are from an investment service.

Here’s the point.  They used to call them Company’s Men (when it was still okay to call men Men), then the title changed to Stockbroker, and after that came Financial Consultant.  Legalistic challenges as well as opportunity to help clients forget “Stockbroker” as a derogatory title, have caused them to become today’s Financial Advisors.  Is there a difference between a Stockbroker and a Financial Advisor?  I believe so and I also believe the big firms want a major difference to exist.

Stockbrokers kept their jobs by performing well.  They had to perform in up and down markets by constantly looking out for risk and actively seeking opportunity.  Not all of them did a good job of this, but just like any profession some failed and some did well.  If you worked with a good stockbroker you likely made a good return as performance overshadowed losses.  That’s how it is done by the way.  There will be losses at times or there would be no risk, and if there is no risk, there is no longer investment opportunity.

In the two decades from 1980 until the end of the century, stockbrokers had a vast opportunity to expand on the notion that such effort had value!  By the end of that time many millions had been made on behalf of clients, both through methodical investment as well as the tossing of good after bad in the tech bubble of the time.  Do not believe it if someone implies a bubble never happened before.  The “Nifty-Fifty” of the early 1970s, the run-up of the markets before the great crash and depression, the multiple bubbles from 1900 to 1929 are examples of human nature in action with investment ideas, schemes, and opportunity.  Some won and some lost.  The problem of today arose when those same methodical stockbrokers began to warn clients of a market top.

First, to understand the contrast, let’s compare two things.  Imagine you are an investor and your account just jumped over a 7 year period from $50,000 invested to a market value of well over $1 million.  Your broker calls and starts telling you that it could be a good time to exit the market to a degree and protect your new-found net worth; your broker is protecting you as a client.  In comparison, now imagine you are the national sales manager of a large firm and the stockbrokers under you are signaling to clients that it may be prudent to exit positions they own; from this view the broker is reducing opportunity for trading fees.  In the first case you are grateful of the opportunity to reduce risk.  In the second case you blindly see that clients will potentially be pulling money from their accounts and reducing the pool of assets at the firm.  This is how the opportunity arose for the industry to begin focusing on investing everyone’s money into everything, through the use of allocation in managed portfolios.  This is the reason why stockbrokers who make money for and protect their clients are becoming extinct, because they increase the risk to the firm they represent since deposits will decrease in a down market and the firm would like to increase or maintain deposits during a downturn and maintain their fees on client assets.  The firm’s attitude often is one of belief that all assets on deposit belong to the firm, not to client, and so they protect the fee’s instead of focusing on performance.  Funny thing, if performance is good, then fees increase anyway, and would probably be much higher than they currently are. 

The days of the fighter pilot style, intelligent, hard-working, and ever opportunistic stockbroker have gone, for now, because the firms would rather hold your money in a more stagnant form in which their fees are not damaged or don’t cycle up and down in a wide pattern.  This does less good for the client and better for the firm. 

Don’t believe it?  Two things help make the point, one is that a market rate of return minus fees nearly guarantees lower performance, and the second is a high majority of managed accounts under-perform the markets.  Many financial advisors are effectively reduced to being no more than a teller at the bank.  You deposit the money and the advisor has little idea of where it goes and how it works even after expensive and broad training to allow them to be labeled with CFP, CFA or the like.  A lack of real practice tends to void the value of the education.

Now you may wonder if there is a solution to this.  Yes, you can do several things.  One is to pay for what you get.  If an advisor and the firm’s portfolios aren’t producing higher results than the markets, you need to realize you are paying for nothing.  Look for an advisor who can perform well.  You can learn to manage your own account.  I have seen many people try this and I have yet to see anyone, who has a career different from being a stockbroker/financial advisor, do well with this.  You can follow a good investment service which has true performance like the Investor’s Business Daily.  There are other things you can do like join a good investment group, and you can even change your career if you want to try the 5 year learning curve it takes to truly be good at it.  It is beyond the scope of this writing to provide a real answer since there is so much involved in assessing a person’s capacity to participate, including their own business ventures. 

In all, just realize there is no reason to fear investing directly in stocks, and there should only be fear in the inability to adjust to the reality of being wrong or missing opportunity.

How to Contact a Corporation

You can just about forget that.  Many companies not only don’t answer the phone with humans these days, but now they are becoming harder and harder to contact through the internet.

AT&T as an example, used to have their toll free customer service number plastered all over the web site.  It was easy to call them and get help with your account or sign up for new service.  Now, they have buried their contact info deep in the site.  Basically you are either paid up with them or you are out of luck!  They even cut off the web site to customers who are late on their bill.  That’s an interesting concept since a lot of people pay online, where they likely ordered or changed their service at AT&T to begin with.  It’s pretty funny that they sell the latest technology and then expect old fashion walk-in payments or credit cards by calling them from another phone.

Today I tried to find a way to contact Fox Sports regarding coverage of the KU vs Cal basketball game.  They have an affiliate in Kansas City but still do not broadcast the game right here in the geographic heart of Kansas fans (and the game was in California!).  You’d think somebody could say something but the contact page on the web is a dead end with a message stating they made changes to the site.

There are many companies which now forego good service.  The volume of business they do, and really many people refuse to complain or give their opinion, determines that they just “don’t” have the time.  Email works okay for many companies, but try to figure out the service pages for Norton, Microsoft, and many others who have quietly closed the communication channels. 

Okay, so, many companies just want to sell you a service and never speak to you again.  Is it because they don’t speak “American”?  Are they out of the country and don’t understand our sports and communication expectations?  Or do they just not care?  Too big to fail, too big to be bothered by those of us who pay them fees for service.  How far will our society let this failure to serve go?