Category Archives: Business

Advertisers Face Hurdles on Social Networking Sites

Link: Advertisers Face Hurdles on Social Networking Sites

And when they try to take advantage of new “social advertising,” extending their commercial message to a member’s friends, their ads will be noticed, all right, but not necessarily favorably. Members are understandably reluctant to become shills. IDC, the technology research firm, published a study last month that reported that just 3 percent of Internet users in the United States would willingly let publishers use their friends for advertising. The report described social advertising as “stillborn.”

One interesting aspect of new technology paradigms is that it’s very challenging to tell the difference between “newborn” and “stillborn” until version 3.0.

Design for Deleveraging

Inspired by the ballot-redesign initiatives done by the folks at Design for Democracy, I spent a few minutes this week applying their principles to something that’s always bugged me: sleazy consumer lending practices. Back in my younger days, I let my credit card balance get out of hand (as I suspect a lot of people do in young adulthood). After I got married and my fabulous wife and I attacked our debt together, we realized that overspending was just one aspect of the problem. The other big part was just getting a handle on what was going on with each credit card — what you’re being charged, what kind of impact a minimum payment would make on your bill, and so forth. I’m an Excel whiz so I was able to put together a spreadsheet to deal with this, but it shouldn’t take a computer and a piece of software for the average consumer to figure out what their credit card is costing them each month.

There are basically three pieces of information you get when you receive your credit card bill:

  • What is my balance?
  • What do I need to pay this month to keep them from repossessing my sofa?
  • What is all this crap I charged up on this card, anyway?

Credit card companies do an OK job of giving you this information on the monthly statement, although the way they present it is inconsistent from one company to the next (which is a problem). But there are actually two more important pieces of information that most people would find pretty vital:

  • When will I pay off this ding-a-dang debt?
  • What is this ding-a-dang debt costing me?

To incorporate all this information, I came up with a wireframe design for a standard credit card statement. The specifications of this statement would become part of federal banking law (think of it as an aspect of the truth-in-lending statutes that have been on the books for years). The intention is to increase transparency in consumer lending and, indirectly, to encourage people to pay off their debts.

The wireframe looks like this:

The idea here is that the design of a credit card statement would be exactly the same across all credit card providers. The only variance would be in the upper-left corner: the provider would be allowed to put their logo and return address in that space, but nothing else. Every other design aspect of the statement would be described in a statute. No company would be able to issue credit cards without redesigning its statement to conform with this design, and we’d ban companies from putting all the other useless crap (cross-marketing, etc.) into the envelope along with statements — there shouldn’t be a frequent flier offer keeping you from actually looking at your balance each month. The contents of the envelope would contain nothing but the billing statement, and at the very top of the billing statement, in big bold text, would contain your exact balance, the amount the debt costs you each month, the minimum amount you need to pay, and a recommended payment amount.

The “recommended payment” amount is a new concept. It’s a simple figure that tells you how much you’d need to pay to get rid of your debt in 12 months based on your current balance and interest rate. It would also be nice if the concept of the “minimum payment” were legally changed so that it would never be smaller than the amount you’d need to pay to get rid of your debt in five years (just like a car loan). Right now lots of credit cards give customers minimum payments that would, in effect, take decades to pay off, and unless you’re handy with a spreadsheet, this might not be immediately obvious.

It would still be possible to run up absurd debts using credit cards, but hopefully this design and the new rules (particularly the “minimum minimum” and “recommended” payment amounts) would go along way toward avoiding “gotcha” debt traps, particularly for less sophisticated consumers.

In a world in which too much debt is threatening to cause society as we know it to collapse (and bankruptcy laws no longer enable consumers to discharge all their debt), this seems like a pretty modest proposal.

New Platform Consulting Products: Amazon and Facebook

Just posted three new categories of consulting practices over on the consulting web site:

  • Facebook (application strategy, corporate presence and application development)
  • Amazon Web Services (focusing on their S3 storage and EC2 hosting products)

The Facebook and Amazon practices actually aren’t new, but we’ve packaged them up in the form of consulting practices and put them on the web site for the first time.

We’re launching these practices at the same time because they’re somewhat related. The Facebook/Amazon EC2 in particular is powerful mojo; we’re just about to release a Facebook application for a client that uses Facebook and EC2 together.

DownThemAll! Firefox Extension Makes IRS.gov Less Tedious

For business owners in the United States, the last day of January means it’s time for you (or your accountant) to issue 1099s and W-2s to your contractors and employees. For me, this means I get to do my annual trip to IRS.gov to download the forms.

As government web sites go, IRS.gov isn’t terrible — certainly not as bad as it used to be. But it doesn’t support certain common use cases (like downloading a whole bunch of PDF forms at once) as easily as it could.

IRS.gov provides forms to download in long lists on the page. The lists are pretty difficult to navigate, and the filenames for the PDFs you download don’t have the names of the forms in them (just their numbers, ugh).

I found that downloading a bunch of forms at once from this page was much easier with the Firefox extension DownThemAll!. You can go to the IRS.gov search results page, then tell DownThemAll! to download all the .pdf files on that page with just a few clicks. Handy.

Tips for Consultants

If you are self-employed or the owner of a business that provides services to other businesses, there are a few rituals you have to go through to get a new customer on board.

One important thing is to define the scope of work, determining what they’re actually hiring you to do. This seems to get the least amount of attention, for some reason — less than the confidentiality terms and the payment terms, in most cases.

For us, another step usually involves negotiating payment terms and obtaining a retainer, a modest advance fee that insulates us from the tyranny of net 30 payment terms. Net 30 is tricky for a small business because it often means you don’t see a dime for your work for two months (because work done on day 1 gets invoiced on day 30, then paid on net 30 terms — you get your check on day 60). We try to negotiate net 15 payment terms with our customers for this reason, with the understanding that if they’re paying their employees twice a month (as nearly everyone does) they should be able to pay us twice a month as well.

I find that our favorite clients, the ones who we cheerfully work past midnight for, are the ones with the most generous payment terms.

In addition to keeping your cash flow sensible, getting a retainer up front also ensures that the company you’re working for is actually capable of cutting a check. You’d be surprised at how often startups attempt to hire consultants before they hire accountants or open a corporate bank account.

The retainer also gives you a little leverage, insulating the little guy (you) from situations where the big guy (your client) becomes unreliable for some reason. I had one situation this year where a client could not focus internally on what they wanted to do. I tried to get them to focus on something small and tangible, but the company’s executives spent a lot of time in meetings, bickering with me and with each other about what they wanted to do. They had ambitious plans which I finally convinced them to break out into manageable chunks. But they then they bickered over which chunks to prioritize first. Finally, after receiving my bill, they decided they weren’t going to pay me because nothing had been accomplished, even though I was working on a time/materials basis and not based on their ex post facto subjective analysis of what we’d accomplished together. Fortunately, the retainer covered about 90% of what they owed me, so I didn’t have to pay much for their inability to get it together.

During my first stint as a self-employed consultant from 1991 to 2000, I didn’t always insist on getting a retainer up front, and I nearly always regretted it when I didn’t (particularly in 2000 when a bunch of our clients went out of business in the same month, leaving us holding the bag for a bunch of fees). Now I always insist on a little something up front; this year I’ve actually turned away business from companies that either weren’t comfortable with or weren’t capable of paying a retainer.

The only exception I’ll make here is when the company is very well established (think Fortune 100 or large government agency). We actually just closed a deal with such an organization recently, which was a fun negotiation. I’ll go into more detail about what we’re doing for them when things are more fully baked, but one interesting thing I found was that the "can you do this for us?" part of the negotiation went very smoothly, in part because we’re dealing with someone at the executive level who we’ve known and worked with for years. But the bureaucracy in landing a deal of this size is understandably much more involved.

One of the things that can help a lot in this situation is to have all your ducks lined up. Your corporate documents should be available to you, in PDF format, preferably, from any computer with an internet connection so you can send it quickly to whoever requests it. The same goes for your W9 — in fact, if you’re a U.S. company there’s no reason not to have an electronically signed copy of your W9 in PDF format somewhere on the web. Everybody asks for it, and the form is the same for everybody (it just contains your corporate tax ID and signature) so you should just fill it out once and post it to the web. Some sneaky or careless customers will only ask for the W9 thirty days after you’ve sent your first invoice, so we post a link to our downloadable W9 at the bottom of all the invoices we send. That way we aren’t providing yet another excuse to pay a bill more slowly.