In search of the SME

Jim Donovan is ranting about the term SME (meaning “small medium enterprise”) and objects to people calling a company with 10 staff a SME.

He suggests:

  • < 100 staff = small
  • 100- 1000 staff = medium
  • 1000+ = large (I’m filling in the gaps)

Jim, one man’s “small” is another man’s “medium” I suppose?

Here is what the numbers tell us:

Source: Ministry of Economic Development, SMEs in New Zealand, May 2006

So, using Jim’s definition, 99.46% of all enterprises in NZ are small.

But, if practically everybody is going to be classified as “small” doesn’t it make a bit of a mockery of the classifications?

My Football Club

This is great:

These guys are trying to sign up 50,000 members in order to buy their own UK football club. They already have 45,000+ confirmed.

Top of their wish list of clubs: Leeds United, which was in the Premiership when I arrived in London but has since fallen on hard times. That would be awesome.

By the looks they have picked up sponsorship from EA Games, who possibly see this as an extension of their popular FIFA Manager game.

Will be fun to watch and see what happens.

Web 2.0: fizz or substance

Marc Andreessen has recently started his own blog.

An awseome addition to the conversation I’m sure you’ll agree.

One of his first posts is about Web 2.0.

He doesn’t seem to be a fan:

“Web 2.0 has been picked up as a term by the entrepreneurial community and its corollaries in venture capital, the press, analysts, large media and Internet companies, and Wall Street to describe a theoretical new category of startup companies.

Or a ‘space’, if you will.

As in, ‘ is in the Web 2.0 space’.

At its simplest level, this is just shorthand to indicate a new Web company.

The technology industry has a long history of creating and naming such ‘spaces’ to use as shorthand.

Before the ‘Web 2.0 space’, you had the ‘dot com space’, the ‘intranet space’, the ‘B2B space’, the ‘B2C space’, the ‘security space’, the ‘mobile space’ (still going strong!)… and before that, the ‘pen computing’ space, the ‘CD-ROM multimedia space’, the ‘artificial intelligence’ space, the ‘mini-supercomputer space’, and going way back, the ‘personal computer space’. And many others.

But there is no such thing as a ‘space’.

There is such a thing as a market — that’s a group of people who will directly or indirectly pay money for something.

There is such a thing as a product — that’s an offering of a new kind of good or service that is brought to a market.

There is such a thing as a company — that’s an organized business entity that brings a product to a market.

But there is no such thing as a ‘space’.

And, as far as startups are concerned, there is no such thing as Web 2.0.”

This all doesn’t bode well for Brenda, Phil and Che, who will be the negative team in a celebrity debate that I’m going to be moderating at the next Webstock Mini on Tuesday 19th June.

If you’re going to be in Wellington make sure you book your tickets today and get along.

We’ll see you there!

The Fortune 5,000,000

I really like the idea of The Fortune 5,000,000.

This is from the 37 signals home page:

Who uses our products?
While our products are mainly built for small businesses and individuals (we call this group The Fortune 5,000,000), companies of all sizes use them every day.”

It’s a nice way to describe the opportunity of creating software for the long tail of small- and medium-sized businesses.

But, don’t fall into the trap of thinking that this much larger group is in any way similar to the handful of large companies or government departments where many technology people spend their careers working on multi-million dollar projects. lists some of the differences.

To paraphrase:

  1. They don’t have the cash to pay big up-front fees for software.
  2. So, you can’t afford to spend lots of money chasing sales (instead, focus on building a great product which people will find useful and tell their friends about).
  3. Compared to the pain and hassle of a custom built application, a simple hosted solution which they can buy and start using right away is likely to be quite attractive.
  4. As such, they will mostly be happy to take the software as-is rather than expecting to have much control or ability to customise to their specific requirements.
  5. They don’t get a lot of love from the software industry today, so there is a massive opportunity to fill that gap.

How to hire really smart developers?

The best web developers don’t ever look in the situations vacant.

Not even online.

But they do look at source code!

So, a while back I quietly added this HTML comment to the top of the Trade Me homepage:

If you're looking at our HTML source,
you're exactly the person
who should send us your resume.
View current vacancies at

It’s been surprisingly effective at targeting the type of smart ASP.NET web developers we want to hire. But, not effective enough it would seem.

Alan, who heads up the development team at Trade Me, is advertising a couple of specific roles at the moment:

We’re also currently advertising for a Web Designer.

If you’re a smart developer or designer there are lots of opportunities at the moment. There definitely seems to be more vacancies around than people to fill them.

So, as a candidate, how do you decide what’s the best place to work? I would have thought that the chance to work on NZs largest web site would be pretty attractive.

1x Yellow Pages = 3.2x Trade Me

The big business news this week is the sale of Telecom’s Yellow Pages directories business for $2.24 billion.

That’s a big number!

Some simple maths: 1x Yellow Pages = 3.2x Trade Me.

The buyers are a consortium of CCMP Capital (a private equity firm) and the investment arm of the Ontario Teachers Pension Plan.

The multiples involved are not outrageous. According to ValueCruncher their earnings last year were $250m and are expected to be $300m this year. So the sale price is just under 9x current earnings and 6.4x projected earnings. The equivalent numbers for Trade Me at the time of the sale to Fairfax were 27x current earnings and 15.5x projected earnings.

People have been critical of the sale. According to Telecom they are getting out now because they believe the future of directories is online. I think that’s right. The question is whether that’s online with Yellow Pages or with Google. In either case it doesn’t say much for Telecom’s confidence in their own ability to convert online opportunities (Ferrit? YahooXtra?)

I think Yellow Pages itself is now in a strong position. It’s their game to lose. They have a very strong brand which is very well known and well trusted. And they have an existing billing relationship with more-or-less every business in the country, all of whom expect to pay to appear in the directory (and presumably see some return which is in proportion to that cost?)

They also have a website which is rubbish. They could easily make it 10x better. Applying some of the improvements recently made to the White Pages site would be a good start.

If they get this right it will be pretty difficult for anybody (even a Google) to displace them. And it will allow the teachers of Ontario to be that much more comfortable in their retirement.

It will be interesting to watch and see what happens.

What do you think?

Ferrit bashing

Ferrit is taking a kicking at the moment, from all directions.

Lance has several recent posts:

(remember Lance, three posts in a row is a rant, four is a crusade!)

Over the weekend Sam predicted that the site would be toast within 30 days of the new Telecom CEO being appointed (Dominion Post, Sat 17 Feb).

Even the mainstream media have caught on:

If the numbers that Lance quotes are correct then it must be a pretty depressing place to be working at the moment.

It’s a bit premature to perform a post-mortum on a still-warm corpse, but …

Whenever they talk about their product they always seem to focus on the size of the opportunity and how much money they think they can make:

Ralph Brayham thinks the New Zealand on-line retail market is under developed, saying that in the US 5% of shopping is done over the Internet, with this number reaching 10% in the UK, but only $200 million is spent on-line in New Zealand.


I’d be much more optimistic about their prospects if they were instead saying something like:

We think that it’s too hard for kiwis to find somewhere to buy the things they want on-line. We believe we can solve this problem by providing a kick-ass search engine and shopping cart all in one place, and making it easy.

That would at least indicate that they were approaching things from a users perspective and trying to solve a problem.

Of course, even if they were saying this sort of thing they’d be wrong.

Here is a quick experiment using three of the products featured on the Ferrit homepage this morning:

How hard is it to find somewhere to buy these products online from a NZ supplier?

Using Google (a well known and trusted brand, no?) …

Search for “Shuttle SN25P”, and the fourth result is The Computer Lounge (based in Auckland with an online store). The third result is, a competitor to Ferrit that has been around for a while.

Search for “Bvlgari – Blv Eau De Parfum Spray 40ml/1.3oz”, and there are options on the first page of results from both Zillion and

Search for “The Memory Keepers Daughter”, and is the third result (after a couple of reviews).

Of course, you can also find all three of these products currently for sale on Trade Me:

So, it doesn’t seem like this is very broken to me.