The Outlook: Exporting nations are feeling the hit as the China-fueled commodities boom slows. Sluggish demand and falling commodity prices are reducing government tax revenue, increasing trade deficits and affecting currency values.
Rights groups denounced an Egyptian court’s decision to drop murder charges against former President Hosni Mubarak.
Germany’s president is considering awarding a posthumous medal to a young woman killed after defending two teenage girls from male harassment.
Among photos selected by Wall Street Journal editors, Moscow’s Red Square gets festive, brides don sneakers for a run in Thailand, a town celebrates its monkeys, and more.
An Egyptian judge sentenced the leader of the outlawed Muslim Brotherhood and 25 others on Sunday to three years in jail for insulting the court, a day after charges were dropped against ousted president Hosni Mubarak over the killing of protesters.
The drubbing Taiwan’s ruling party took in local elections looks set to complicate the island’s economically robust but politically fraught relations with China in the coming years.
The Afghan capital has become the focus of a violent campaign by Taliban insurgents seeking to exploit the new government’s continuing infighting and drive out the country’s foreign backers.
Authorities at John F. Kennedy International Airport said they found nothing dangerous Sunday on an American Airlines plane after a bomb threat was phoned in and the aircraft arrived from Spain.
Reports have been coming in all weekend about how Thanksgiving and Black Friday online sales are up this year, in double-digit percentages yet again, but now the first raw number estimates are finally here. comScore has announced that Thanksgiving Day this year passed the $1 billion mark for the first time, and Black Friday managed to surpass the $1.5 billion figure.
More specifically, Thanksgiving Day saw a 32 percent gain to $1.01 billion in spending. In addition to breaking the $1 billion record (which Black Friday first achieved in 2012), it’s also worth noting that this Thanksgiving (November 27) marked the first day of the 2014 season to reach such a level of spending. Naturally, the record was immediately broken the following day.
Black Friday (November 28) spending was up 26 percent over the same day in 2013. This pushed online sales for the 24-hour period to $1.51 billion.
Adding the two days together, the combined spending in the U.S. was $1.96 billion in 2013. This year, that number grew to $2.51 billion.
comScore naturally suggests this is good news for the upcoming holiday season. If Thanksgiving and Black Friday broke new online sales records, there’s no reason to believe Cyber Monday (tomorrow) and other days closer to Christmas can’t do the same.
“Thanksgiving and Black Friday both saw exceptionally strong online growth rates as each day surpassed $1 billion in desktop spending,” said comScore chairman emeritus Gian Fulgoni. “The strength we saw in the early online buying rush likely reflects a few things, including overall health in consumer spending, responsiveness to the strong deals being offered online, and perhaps some shoppers opting to stay home on Thanksgiving rather than head out to the stores that opened their doors early.”
It’s worth noting that these new records were achieved despite reports of outages and slowdowns. One firm found desktop and mobile e-commerce pages were 20 percent and 57 percent slower (respectively) this year, compared to 2013.
Google is a great company — from its record $23 billion IPO in 2004 (at a time when Nasdaq was below 2000!) to its dominant mobile OS. My associates and I have such an admiration for Google that we built our latest web conferencing platform with Google’s technologies.
But we also know that Eric Schmidt, together with other key executives at Google have contributed to this success through a stable management since the early days. As a fan of his, I’ve followed most articles, interviews, and slides about his latest book How Google Works and eventually read it. It’s an interesting book that reads like a story. I highly recommend it, but not as a management book the way the authors seem to position it, because it may take technology startups in the wrong direction. In fact, I think Schmidt and Rosenberg are totally wrong about how Google works. Here’s why:
First off, the authors are confusing causation and correlation. Schmidt points out a series of characteristics of Google as a company and presents them as the reasons for Google’s success, but in my opinion, they are all consequences of Google’s success.
For example the authors write: “Their plan for creating that great search engine, and all the other great services was equally simple: Hire as many talented software engineers as possible, and give them freedom.” Well, this worked because the search was already successful enough to fund that freedom. I would love to see one single company that isn’t dominating a market with no cash cow in-flow that can succeed without strict discipline, sharp focus, hard work, and hands-on management.
If this management style is the reason for Google’s success, then why have the majority of initiatives at Google either failed or been financially inefficient and unprofitable? If they were standalone startups, they would have most likely already been dead.
Another special characteristic of Google is its sales force. When interacting with sales people at Google, I am shocked to see how untrained and inefficient they are. If there are known companies with great sales cultures such as Oracle, or some older models such as IBM or Xerox, that could sell literally any product in their portfolio, Google is that other extreme, where sales reps have exceptional products in their baskets but are unable to sell them. The truth about Google is, their products don’t sell, they get bought!
Schmidt and Roseberg know that 90 percent of Google’s revenue comes from advertising (thanks to Google’s de facto monopoly in search) . According to the company’s 2013 financial filings, 83 percent of Google’s revenue came from ads, about 7 percent from Motorola (which is now gone), and 10 percent from everything else. In other words, when you add up all the revenue from Google Apps (Gmail, Docs, Drive, Maps, etc.) together with the Android and other mobile businesses, and then add Chromebooks, Chromecast, Chromeboxes, and everything hardware and everything Chrome, Google Developers Network, Google+, Google cars, Google robots and drones, Google Glass and other wearables, Google Cloud, and everything else in the Google world, you get $5 billion or 10 percent of Google’s revenue. Peanuts! Google does not disclose the split of cost among different business units, but it’s not hard to imagine their level of profitability if they were independent entities.
Although Google is perceived as heaven for its employees, the viewpoint from shareholders is a bit different. I am not saying Google’s shareholders are unhappy, but the company’s use of its profit and capital is not optimized.
Let’s compare the efficiency of Google with IBM. IBM may no longer be considered a hot company, but you may be surprised by the comparison of financial and management performance: IBM’s business is only 26 percent software (or revenue composed of high margin dollars, i.e. dollars that don’t require labor delivery or support or manufacturing); for the rest, the company has to deliver man/days for dollars. Google;s business is 83 percent high margin (90 percent in 2014). That’s why IBM’s business is by nature much less profitable: $38,000 of income per employee compared to Google’s $256,000k per employee. Google’s business is seven times more profitable. Yet the Price per Earning of Google is only three times IBM’s. Google’s P/E ratio is comparatively very low; it’s four times less than Facebook and half of Microsoft’s in the ’90s. Not to mention Amazon, which, despite being hardly profitable, has a market cap of over $140 billion.
Google’s financial performance is not on par with the level of innovation and the “smartness of its creatives.” Worse, Google’s stock value is not on par with its financial performance. Maybe investors are not comfortable with the long-term results. Is it because of too much waste, technology explorations, and incoherent diversifications? Maybe.
Amazon and IBM use their funds more efficiently and are more loved by investors, although, granted, they’re less popular among their employees.
So what makes the difference? How does Google work?
The key is market dominance. If you have a de facto position of a monopoly in your market, money pours in, and you can afford to give your employees even more than 20 percent of their time free.
Google is in a situation of monopoly with its search business. In the above table, the reason Facebook and Amazon have high P/E is that investors consider them to be either in or near a monopoly position, while IBM, and to a lesser extent Oracle, are competing and have to work hard to keep their leadership positions. (Amazon’s monopoly in book publishing is already achieved, but Amazon has real challenges in other markets).
Moreover, Google’s monopoly is in a very profitable, high-margin business: fully automated ads with minimal cost of sales.
Last month, during a course at Stanford, Peter Thiel, PayPal’s founder, advised entrepreneurs to seek monopolies, stating that “competition is for losers.” As long as Google has its monopoly in search, Googlers can enjoy free food, don’t need to worry about sales skills, and can take 20 percent time off or more. But when that changes, the company needs to be ready for the shock.
In conclusion, each company needs to find a culture, methods, and processes that work for its individual circumstances. There are rarely one-size-fits-all concepts, and those that do exist are the good old ones: Innovation & Quality, Customer Satisfaction, Employees Development & Education, and Financial Performance. Everything else is just context based.
[The opinions expressed in this story are solely my own and do not express the views or opinions of my company.]
Darius Lahoutifard is an Enterprise SaaS Executive and Enterpreneur, the founder of Business Hangouts, an Enterprise App for Google’s Hangouts on Air. You can follow him on LinkedIn here or follow his company on Twitter here.
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Black Friday news kicked off this weekend quite early when Best Buy was hit with a massive outage, but it turns out that was only half the story. The top 50 e-commerce websites were slower overall this year compared to last, suggesting customers were frustrated even if they could get to their favorite shopping site.
Web performance monitoring company Catchpoint Systems looked at aggregate performance this weekend and compared it to the same timeframe in 2013. The results are notable: desktop webpages were 19.85 percent slower, while mobile webpages were a whopping 57.21 percent slower.
More specifically, the firm made the following findings (it’s worth noting that using the median ensures outages don’t impact the figures):
- Median webpage response times for Desktop websites for the entire group (aggregate) was 3.991 seconds, compared to 3.330 seconds in 2013.
- Median webpage response times for Mobile websites for the entire group (aggregate) was 2.954 seconds, compared to 1.879 seconds in 2013.
The data is for all of Black Friday (November 28, 2014) until 10:00 am EST on Sunday, November 30. The comparison was made to the same time period in 2013: November 29 to the morning of December 1.
Catchpoint hints that the main reason for the slowdown was not simply because there were more users overloading the systems. Most webpages in the e-commerce group monitored by the firm were also bigger: there was more data on the page to download.
The top five fastest desktop sites, according to Catchpoint, were H&M, Costco, Apple, Barnes & Noble, and Etsy. Yet none of these five were present on the top five list for fastest mobile sites: Sears, WW Grainger, Office Depot, Ikea, and Saks Direct.
Best Buy was actually down multiples times on Friday, and also experienced issues on Thursday. Neiman Marcus was down for 2.5 hours on Saturday night with poor availability leading to the outage. Gamestop had poor availability all weekend and J. Crew had slower-than-normal load times as well.
Catchpoint Systems conducts its performance tests on a customized list of 50 web and mobile sites identified as leading e-commerce retailers. The tests were run from 30 backbone nodes located in various U.S. cities, which the company says allows for noise and connection variables that occur in real-user environments to be factored out of these results.
We’ve asked for full list of the 50 e-commerce sites and will update this article if we hear back.
Uber today announced that it has complied with the Reserve Bank of India’s requirement that every transaction made with an Indian credit card use two-factor authentication (2FA). Yet the company has done so grudgingly: while the requirement is clearly a security measure, Uber says it has a negative impact on businesses.
For context, two-factor verification requires you to use more than one form of verification to access an account. Typically, this information includes “knowing something” such as a password or pin code and “having something” such as a mobile device.
In its announcement, Uber calls the requirement in India an “antiquated solution that is cumbersome for consumers and stifling for businesses across India” as well as “unnecessary” and “burdensome.” The company unhappily notes that the rule applies to all transactions, “no matter how small the amount,” point out that even short cab ride in the country can’t be as quick and efficient as everywhere else Uber offers its services.
Uber also adds the requirement is “causing a major challenge for businesses trying to offer Indian consumers a better purchasing experience.” The company further notes that consumers prefer the old system, but “India’s one-of-a-kind 2FA requirement persists” despite the claim that it runs counter to “the face of rapidly changing business expectations.”
The good news is hidden in all these complaints. Uber does note that it has seen “a slow conversion” of riders from credit cards to a 2FA compliant wallet, and that it is engaged in constructive discussions with the RBI. The company further adds it is talking with the Indian government “to advance regulations that support innovation and job creation.”
Uber also makes a request:
In the meantime, we would welcome an additional 45-day extension from the RBI that would give the majority of our existing riders sufficient time to transition over to a new 2FA-compliant payment system. This additional grace period not only prevents consumers from being disadvantaged but it also protects partner-drivers who rely on Uber’s riders as their sole source of income.
This seems reasonable to us. We applaud India for pushing such a requirement to boost security, but if a company says its business will be less impacted if it can delay the switch by six weeks, that seems lik ea valid appeal.
Toronto police are investigating whether the deaths of three people found inside a Thorncliffe Park apartment building and a death on a nearby highway are related.
The federal government is working to confirm reports that a Canadian citizen has been captured by Islamist extremists in Syria.