Sunday, April 14, 2019

Can online businesses drive economic growth? - The Express Tribune

Can online businesses drive economic growth? - The Express Tribune


Can online businesses drive economic growth? - The Express Tribune

Posted: 14 Apr 2019 09:02 PM PDT

Due to lack of awaren­ess, most ventur­es are operat­ing outsid­e of the formal sector

Due to lack of awareness, most ventures are operating outside of the formal sector. PHOTO: FILE

Due to lack of awareness, most ventures are operating outside of the formal sector. PHOTO: FILE

KARACHI: The size of Pakistan's economy is only $275 billion at present. According to a World Bank report, nearly half of the country's population is not part of the formal sector.

It is worth thinking that if this number comes under the formal net, then the economy's size can grow exponentially. Although no research or studies have been conducted into the potential of home-based businesses, the sector offers a massive potential in terms of job creation and expansion of economic growth if supported through prudent policies.

The introduction of 3G and 4G telecom services in the country has provided internet access to many. It has played a pivotal role in turning ideas of home-based businesses into profitable ventures, which mainly include freelancers.

More importantly, it has promoted a culture of entrepreneurship largely driven by women. There is a need to explore what this sector offers.

Highlighting the role of social media, ICT expert Parvez Iftikhar told The Express Tribune, "A lot of businesses have started operating on Facebook especially and are also using other social media platforms. It is probably the fastest-growing segment and is developing rapidly."

He said it is this thriving business sector, operating on social media, which when picks up pace creates a ripple effect by creating employment opportunities and same is the case with the freelancers. Hence, the potential of the segment can be easily gauged. Iftikhar was of the view that Pakistan is very advanced in freelancing and is amongst countries which have the largest number of freelancers.

Explaining as to how these ventures develop, he said they begin as a side project but mature into full-time business when they become successful. "These successful businesses then become job providers."

India's richest man to battle Amazon, Walmart in e-commerce

What online businesses say

As the revenue authority believes that small businesses mostly comply with regulations and register voluntarily, its main focus is on large enterprises. In this regard, The Express Tribune reached out to a few entrepreneurs who operate online.

Sara, who owns an event planning business by the name of Sparkle, said she has not registered her business since she believes her earnings are not enough and there is no need for it.

Amena Zoeb of Taha's Choco Mania also said she has not registered her business. This is despite the business earning profit of over Rs100,000 per month.

Xera CEO Zehra Hussain, who operates a successful walk-in boutique of plus-size clothes at her own house, said her business is not registered at the moment as she is not aware of it. "It is a new concept for me right now," she said.

While unawareness is a major factor, an overall lack of willingness is also one of the reasons why online businesses mostly do not register themselves.

Nevertheless, there is also a segment of business that not only registers their business but also submits tax returns because it is aware of the process.

Trims Herbal Products Founder and CEO Tooba Abbasi revealed that she is diligent in tax return filing. However, she said, "I have many friends who have a different approach towards tax filing and registration (that it is a tedious process, we do not earn enough)."

In certain cases, some individuals register their business to avoid unnecessary probe into inflows in their bank accounts.

Sharing her experience, a home-based makeup artist said, "My name is registered with the SECP (Securities and Exchange Commission of Pakistan) because without that we cannot transfer much to banks. We just got it done recently and a majority of home-based businesses are required to do that as now they have started questioning."

However, she continued that a major disincentive for filing returns is that a major amount of their business goes to taxes.

Why shift to formal sector?

Having formal status is beneficial for both the business and the government as the former would not have to bear additional cost of taxes and the latter will benefit from expansion of the formal economy.

FBR official Hamid Ateeq said in order to discourage the culture of not filing returns, they force people through a passive mechanism. "We have kept different tax rates for filers and non-filers. For example, the tax rate of Rs100 for a filer can reach up to Rs150-200 for a non-filer," he said.

Talking about the active mechanism, he said, "We keep on looking if we find something on social media. For that we have an organisation – the Broadening of Tax Base (BTB), which constantly keeps a close watch on social media, newspapers and anything like that."

"The registration process only takes five minutes. You can easily register online through a CNIC, mobile number and email address in your name. It is a short process, where you get an email and we send keys," he added.

"There are 100% people in Canada who file returns, whereas we have less than 1%," he said.

Moreover, there are regulations for the registration of a company, but none for home-based businesses; thus, these businesses do not enjoy any protection.

SECP official Sajid Gondal said, "Currently, the focus is on the ease of doing business only." There is no data available on home-based or such online businesses operating in the country. "We should at least maintain a database or keep record of such businesses, when census is conducted," he said.

Reforms

Informal businesses need to be incentivised to encourage them to register themselves and file returns. Simplification of regulations for registration, filing of tax returns, assistance in social security and fiscal incentives may encourage these units.

The FBR official said, "We are trying to incentivise the sector. We may provide pre-payment credits or something similar as new ideas are emerging."

The FBR is planning to launch a mobile application to make return filing easier and more convenient for such individuals.  An app aimed at assisting people in registering will be launched next year, said Ateeq, adding that after opening the app, only three to four windows will pop up with fields of personal information.

Talking about the need to create awareness, the FBR official said, "We organised an awareness campaign in October last year, but it requires a lot of money and the government can't spend too much on it."

Pakistan's changing e-commerce landscape

"But we have designed a communication policy, whereby awareness will be created through press briefings."

Furthermore, the SECP may tighten the noose around social media web channels, where, for example, if you want to open a web channel, you will have to register.

According to the recent guidelines of Pemra, the new law may include regularisation of social media-based businesses as well, said SECP official Gondal.

Bringing more transactions online

The informal economy is more common in offline businesses than the online ones as online transactions have a greater chance of being recorded. Good-quality internet and incentivising e-payments could pave the way for bringing more businesses online.

The government should incentivise electronic payments to make it more attractive or beneficial for the users, who mostly rely on cash on delivery, said the ICT expert. "A lower tax rate on electronic payments and rationalising sales tax in case of paying online could be done. Just like the government has tax filer and non-filer discrimination, it could promote cash and electronic payment discrimination."

Talking about how the current taxation regime for e-commerce is discouraging, he said, "If you pay by mobile, or electronically make a payment, the taxation rate is higher. It should be facilitated," Iftikhar remarked.

The writer is a staff correspondent

Published in The Express Tribune, April 15th, 2019.

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5 Reasons Your Business Needs a Professional Writer - The Good Men Project

Posted: 14 Apr 2019 02:21 PM PDT

Being a freelance writer is like giving yourself English homework every day for the rest of your life.

English class was kind of like math class. Some people loved it and couldn't wait, to others the art of language was a mystery, writing itself was a drudgery, and completing essays and reports a real chore. The thought of writing a novel or having to write every single day seems like a nightmare.

Then those same students grew up, started or joined a business, and discovered that one thing they needed to be able to do was to write. When it comes to blogging, developing a website, internet marketing, and link building, quality writing is essential. Most people not only don't like to write, as a result, they can't write all that well. It is a specialized skill.

Fortunately, there are a group of people who love to write about a variety of topics and who won't hesitate to sit all day in front of a computer and plagiarize the alphabet. These individuals not only like to tell their own stories, but many of them are happy to help you tell yours as well.

Your business needs these professional writers. Many of them work on a contract basis as freelancers, so you don't even have to hire them full time. The difference between the content they create and the things you try to produce is huge and can make the difference between the success and failure of your website or your marketing or link building campaign.

Here are five reasons your business needs a professional writer:

Your Message Needs Clarity

Your business has a service or product to offer, but the reason people will use that service or buy your product has little to do with price or even the product you actually produce. Why are millions of Apple users still fans of the company's products even when they complain about the keyboards and battery issues and products cost more?

The reason is simple. They are brand loyal because of Apple's commitment to security, their simplistic functionality, and their commitment to meeting customer needs and wants they didn't even know they had. Why the company does what it does, the way they put the customer first is more important than the actual products they produce.

Your message, your why needs this kind of clarity to build brand loyalty. If your message is muddled or your website is filled with grammatical errors, unnecessary words, and unedited text, your customers and prospects will perceive that as a reflection of your commitment to quality. The way your message is written and presented is just as important as the message itself. You need clear, concise language created by a professional.

You Need Another Voice

If yours is the only voice on your website, you need another voice or even set of voices to balance it out. Otherwise, your site becomes rather narcissistic and self-promoting. Your readers can tell when everything is in one tone and from a single point of view.

Another voice, another tone, is essential. This also prevents boredom on the part of your reader. You probably repeat themes and words without realizing it. Often businesses run out of ideas to write about on their blogs or even in link building campaigns. One of the jobs of a professional writer is to come up with more creative ideas, making your content stand out.

The thing you don't want for your website is for it to be dull. Hiring a professional writer will add another voice that validates and hones your message.

You Aren't That Good at It

You might be good at emails and writing the reports you need to every day, but when it comes to web content and blog posts, you probably aren't that good at it. The reason? Writing is a developed skill. There is talent involved, but there are also formulas for good web writing and blog posts. The more practice you get the better.

A professional writer does this kind of thing for a living, just like you practice your profession. You wouldn't hire someone to do your job who had little or no experience or who had an entirely different area of expertise. They might be able to perform some of the functions of your job, but probably would not be that great at it.

The same is true of writing. Hiring someone who is less than a professional to do it or trying to do it yourself is like diagnosing and treating your own medical condition using the internet. You might be right, but you might not, and if you're wrong the consequences can be costly.

The Time Factor

How much time do you have to dedicate to writing web content a week? A month? If the answer is only a few hours or less, you need a professional. Often the issue is that you need to get your mind in the right place and be without distraction to write effectively. The thing is you don't always have that chance, and it is easy to look at that writing as a low priority task and skip it if something else comes up.

The truth is that creating content is a vital part of your marketing strategy, and if you don't have time to do it or simply put it off, eventually you will lose search engine rankings and organic web traffic, things that can drastically harm your bottom line.

A professional writer has the time and resources to create content for you and paying them for their time is much less expensive than using your own time and possibly wasting more of it than you anticipated.

Leave it to the Pros

You would not have a bad experience with a doctor and go start your own medical practice thinking you could do better. No, you would search for and find a more professional physician you could trust. You would not hire a cashier to be your accountant or a beginning guitar student to play music at your event.

In the same way, you shouldn't hire an amateur to write your web content or blog. Nor should you try to do it yourself because your competition's blog looks horrible and you feel like you could do better.

Your business needs a professional writer.

Originally Published on Unbound Northwest

EU to facilitate financing for small businesses in Africa and the European Neighbourhood - Modern Diplomacy

Posted: 14 Apr 2019 06:39 PM PDT

The European Union and its Member States continued to be the world's leading provider of official development assistance in 2018 and stepped up their efforts directed at developing countries.

This was confirmed by the OECD's Development Assistance Committee (OECD-DAC) in their latest report on preliminary figures for 2018. Collective assistance from the European Union and its Member States amounted to more than €74.4 billion in 2018. European development assistance represents almost 57% of the total global development assistance by all OECD-DAC donors.

Commissioner for International Cooperation and Development, Neven Mimica, said: "EU development cooperation helps improve life opportunities for millions of people across the world. The EU and its Member States have invested over €74 billion in development in 2018 – over half the world's development efforts. In the future, the EU and its Member States should not only maintain our leading position, but also keep up efforts to further increase our development assistance."

Preliminary 2018 figures indicate a slight decrease in overall collective Official Development Assistance (ODA). Taking into account the OECD's recent change of calculation methodology, the adjusted difference between 2017 and 2018 comes to a decrease of €731 million.

This decrease is due to a significant reduction in in-donor refugee spending in 2018 compared to previous years. Excluding in-donor refugee costs, the EU and its Member States have stepped up their development cooperation efforts by 4% compared with 2017.

Compared to previous years, the number of people arriving in Europe decreased down significantly. In consequence, in-donor refugee spending – which aims at assisting refugees and asylum-seekers in Europe during the first year of their stay, covering food, shelter or training – has decreased as well, by €3.3 billion – a 32% decrease compared to 2017.

Collective EU and Member States' official development assistance represents 0.47% of the EU Gross National Income (GNI), significantly above the 0.21% average of the non-EU members of the Development Assistance Committee (DAC).

In 2018, four EU Member States provided 0.7% or more of their Gross National Income in Official Development Assistance: Denmark, Luxembourg, Sweden, and the United Kingdom. In four Member States (France, Hungary, Malta and Sweden), the Official Development Assistance to GNI ratio increased by more than 0.01 percentage points between 2017 and 2018, while it decreased by at least 0.01 percentage points in twelve Member States.

Background

The international community spelt out in the Addis Ababa Action Agenda how development financing should evolve to support the 2030 Agenda for Sustainable Development. Official Development Assistance (ODA) is one of the sources of financing to deliver on the international community's commitment to achieve the Sustainable Development Goals (SDGs), but it is clear that efforts to mobilise financial resources for sustainable development have to go much further.

In May 2015, the European Council reaffirmed its commitment to increase collective ODA to 0.7% of EU Gross National Income (GNI) before 2030. Since 2015, on a flow basis, ODA by the EU and its Member States has grown by 11.7%.

The ODA pledge is based on individual targets. Member States that joined the EU before 2002 reaffirmed their commitment to achieve the 0.7% ODA/GNI target, taking into consideration budgetary circumstances, whilst those that have achieved that target committed themselves to remain at or above that target. Member States that joined the EU after 2002 committed to strive to increase their ODA/GNI to 0.33%.

The Union and its Member States are also committed to collectively providing to least developed countries (LDCs) ODA amounting to between 0.15% and 0.20% of the EU GNI in the short term and 0.20% by 2030. In 2017, EU collective ODA to LDCs grew to 0.12% of GNI (€18.2 billion), the first increase in four years after having stood at 0.11% since 2014.

The data published today is based on preliminary information reported by the EU Member States to the OECD pending detailed final data to be published by OECD in December 2019. EU collective ODA consists of the total ODA spending of the EU Member States and the ODA of EU institutions not attributed to individual Member States (i.e. own resources of the European Investment Bank).

There are 30 members of the Development Assistance Committee (DAC), including the European Union which acts as a full member of the committee, and 20 EU Member States.

“To create a fantastic work culture, invest time and energy to make your team feel appreciated” With Mia Stallard - Thrive Global

Posted: 13 Apr 2019 07:15 PM PDT



Invest time and energy in making your team feel appreciated. This is SO important. A little appreciation really goes a long way here. Make it a point to notice the little things as well as the big stuff. If someone was on time all week or arrived 5 minutes early one day, let them know how much you appreciate their punctuality. Anytime you notice someone doing something correctly or well, you should compliment them. I also like to thank my team often, and let them know how much I appreciate their hard work.


I had the pleasure to interview Mia Stallard. Mia helps entrepreneurs build businesses they can run from anywhere in the world by increasing their reach through social media marketing. When she's not on her laptop working, she's traveling to an exotic location on whim, throwing a lavish tea party, attending a yoga class, or practicing her henna skills.


Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?

Ever since I was about 8 years old I wanted to become a digital nomad (before that was even a thing). I read every article and blog on the internet in search of online job opportunities and seldom came up with any real information. If you've ever researched this topic you know what I'm talking about. In the midst of all this research, I became an expert budget traveler; I knew how to get super cheap tickets and travel anywhere on a shoestring budget. Last year I came across a deal I couldn't turn down, to a place I had always wanted to go: it was only $350 for a round trip ticket from LA to Thailand. I knew I had to take this opportunity so I dropped everything and left. When I returned home I had abruptly lost my source of income, putting me in a financially desperate situation, which inspired me to finally take action and start the online business I had always dreamed of starting. Two weeks later I had my first client, and I've been location-independent and loving my life ever since! (P.S. If any of this resonates with you, I invite you to join my Facebook group The Digital Nomad)

Can you share the most interesting story that happened to you since you began leading your company?

I think what's most interesting to me is all the ways you can leverage your social media, which I had no knowledge of before starting my company. For example, last year I received a free luxury yoga retreat ($3,000 value) in northern California directly through Instagram. It was the most incredible experience! I took my mom, and we had a private cabin in the forest with a beautiful balcony surrounded by giant redwoods. When most people think about leveraging social media, they think about marketing their business and gaining new leads. What people don't realize is all the other ways you can use your social media to acquire things unrelated to business — like free travel, accommodation, and merchandise. Also, with micro influencing on the rise, you don't even need a lot of followers to take advantage of these kinds of opportunities like you once did. I received that yoga retreat and only had 900 followers at the time! This is also one of my favorite things to help my clients achieve because it's really fun and exciting work once you discover all the possibilities in your niche.

Are you working on any exciting projects now? How do you think that will help people?

Yes! I'm currently working on an Instagram course. My goal for 2019 is to expand my reach even further and help more entrepreneurs understand the potential of social media and all the possibilities it can bring for them and their business. So I'm putting all of my Instagram knowledge into a self-guided course where students can not only learn how to properly use the platform to market their brand but also how to use it to their full potential and receive free products and brand partnerships!

Ok, lets jump to the main part of our interview. According to this study cited in Forbes, more than half of the US workforce is unhappy. Why do you think that number is so high?

There are many different things that factor into this statistic so it's hard to give a reason that covers all circumstances. Generally, I think as corporations have expanded over the years they've attempted to eliminate as much human activity as possible and moved more into mechanical automation to cut costs. This has eliminated the need for creative input and decisions to be made by employees which, in turn, would cause them to feel less important and not as vital to the business. I also think we've lost a lot of values in this country that were once so important in business; for example, in customer service and leadership. I frequently walk into establishments and am ignored or have to deal with unfriendly and unwelcoming staff. I think this stems from a serious lack of training which just ends up perpetuating poor business practices and making work an unhappy place for everyone involved. I believe, as a business owner, it's in your best interest to prioritize the needs of your employees as well as your customers, even if it means taking a personal loss as the CEO (financial or otherwise) because you wouldn't have a business without either. I don't think people understand how important this is to the longevity and sustainability of a business.

Based on your experience or research, how do you think an unhappy workforce will impact a) company productivity b) company profitability c) and employee health and wellbeing?

When employees don't feel appreciated, they're not going to be as invested in the company's success, which means more mistakes that could have been avoided are likely to occur. This could potentially cost the company a lot by wasting productivity on fixing these mistakes. As for the health and wellbeing aspect, everything I've mentioned leads to excessive stress on the employees, which is not healthy and will lead to burnout and, eventually, cause great employees to seek work elsewhere. This is also costly because you'll have to train new people.

Can you share 5 things that managers and executives should be doing to improve their company work culture? Can you give a personal story or example for each?

1. Everyone communicates differently.

Not everyone has the same communication style, and it's worth investing the time into learning how everyone on your team communicates and likes to receive information. Some people are better with clear deadlines; for example: "I need you to do X by this date." Some people work better with a kinder approach; for example: "Hey! I hope you've had a good morning! When you get a chance, can you do X? I'm hoping we can have this done by X date. Thanks so much!" A good leader can usually pick up on different personality styles right away, but if you're unable to gauge how someone prefers to be taught/communicated with, you can always ask the person or have them complete a simple personality test upon hiring to give you some insight.

2. Create a safe space for questions.

I've worked jobs before where I've been terrified to ask questions because the boss was always yelling at people. This is a horrendous way to run a productive business. You NEVER want your employees to feel scared to come to you with a question or concern. This will only cause them to make uninformed executive decisions, which will end up costing you money down the road. Instead, make it clear to your employees that questions are highly encouraged and you are always happy to answer them or deal with an issue they're having.

3. Invest time and energy in making your team feel appreciated.

This is SO important. A little appreciation really goes a long way here. Make it a point to notice the little things as well as the big stuff. If someone was on time all week or arrived 5 minutes early one day, let them know how much you appreciate their punctuality. Anytime you notice someone doing something correctly or well, you should compliment them. I also like to thank my team often, and let them know how much I appreciate their hard work.

4. Offer performance incentives.

Don't just scold people when they make a mistake; reward them when they do something right. Even if the "reward" is just a compliment, it's important that people feel noticed when they perform well because that will encourage them to continue to strive for excellence. I worked a job once where I was by far the best and most productive employee they had, I was always on time and was the only one that took the job seriously. I was never praised for any of this and I was 10 minutes late ONE time and was reprimanded and told "time is money" instead of listening to my emergency. I felt so unappreciated and unsupported that I put in my notice and quit. Now that business has massive turnover rate and recurring issues with hiring quality employees. That business owner could have saved SO much money simply by making staff feel appreciated.

5. Work as a team.

Restructure the way you word your requests to make everyone that works for you feel like they're part of something bigger and not just a robot to wind up and pump out work for you. Instead of constantly coming at your team with a "do this, do that" attitude, try using language that implies this is a collective effort. This is also a great tactic to point out a problem or mistake without making them feel alienated. For example: "I really like what you did here with [something specific] but next time it would be really great if we can do it more like [this] because of [this reason]". When someone feels like they have a hand in creating a bigger picture, they'll likely go above and beyond in their work because they feel they're a critical piece to the success of the business. You can also ask for input from your employees, which does a lot to also make someone feel respected. And again, when someone feels valued, appreciated, and respected, they'll go above and beyond.

It's very nice to suggest ideas, but it seems like we have to "change the culture regarding work culture". What can we do as a society to make a broader change in the US workforce's work culture?

Invest more into training people in management positions to create better leaders. I also think companies should prioritize the needs of their employees and give them more flexibility and creative input.

How would you describe your leadership or management style? Can you give us a few examples?

In my business, I'm all about teamwork. I really try to approach my employees as teammates and I try to get to know each person so I know their learning style and how to effectively communicate with them. If there is a mistake made or issue I have to address, I have a process that I think works with any personality type; I don't dwell on the mistake, instead I talk about the individuals strengths, point out what they did do right, and then suggest a different way of doing something next time, and why it's a more efficient choice. This avoids any negative feelings and empowers them to take a new approach next time. I also make sure I'm frequently praising my team and making them feel appreciated.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Yes, and thank you for giving me the space to do this. There are honestly so many people who've helped me get where I am, but the ones who had the biggest impact would be my friend Melia Paulden; she was the very first person who made me feel like what I wanted was achievable. My first client, Ellen Coule, took a chance on me and hired me before I had anything to show for my business, and she's also become a friend and mentor to me throughout the years. I'm forever grateful for crossing paths with her! My business mentor, Amber Blewett, she's helped me scale my business in a way that works for me. And, of course, my parents (Susan Kohl and Nick Stallard) for teaching me the leadership skills I use every day in my business.

How have you used your success to bring goodness to the world?

The most rewarding part of my work is being able to help my clients create their dream life. The business owners I work with have an incredible product or service but just need help getting seen by more people, which is exactly what I do. The increased reach I'm able to get them results in increased income, which means I get to watch my clients go from working multiple jobs to being able to quit them all and either travel or spend more time with their kids. Knowing this is what my work can result in absolutely lights me up! I've also been able to donate time and money to my local animal shelter which definitely brings joy to this world because who doesn't love animals?! Also, on a side note, I think just by being successful and showing others what's possible, I think we all have the ability to create a positive ripple effect by the way we choose to live our lives.

Can you please give us your favorite "Life Lesson Quote"? Can you share how that was relevant to you in your life?

"There are people less qualified than you, doing the things you want to do, simply because they chose to believe in themselves," and "Hustle beats talent when talent doesn't hustle." I love those quotes! They're so true and very relevant to my life because people are always intrigued by my lifestyle and then suddenly shocked when they realize how I created it (without financial support, formal training, or a degree). I also think these quotes are really motivating and inspiring because it reminds us that anyone can create anything they want in life if they just take the action required to make it happen.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I wish we lived in a world where people felt encouraged to tackle their craziest ideas and wildest dreams. I think too many extraordinary people are kept small by the projection of others, which keeps the world an in a low vibration because the majority of people aren't living a life that lights them up. When I was younger and I described my dream life (the life I'm currently living) to people, they used to laugh in my face or actually think I was crazy. "Wait… you want to have a good paying job that allows you to travel the world full time AND you don't want to go to college?!… Yeah, keep dreaming" or something along those lines is what they would say. Those limiting words eventually became a negative inner voice that I constantly work to overcome. I'm now at a place where I have compassion for those people because I understand their negativity had nothing to do with my potential and everything to do with their own self-doubt, but people who want to live a bold life and pursue a dream on their terms shouldn't be made to feel like outcasts; this should be the norm. So, the movement I would love to inspire is to speak to everyone in a way that makes them feel like anything is possible.

Fixing the 'Other' Georgia - Valdosta Daily Times

Posted: 14 Apr 2019 06:00 AM PDT

ATLANTA – Lawmakers just wrapped up another session where rural Georgia's economic woes loomed large, with many bills being cast – some more convincingly than others – as a lift for the state's small towns.

One measure pitched horse racing as a rural jobs bill. Another proposed requiring tech companies to disclose repair information for phones and other gadgets as a way to put more people to work across the state. And another would ban local home design laws as a way to protect workforce housing.

None of those passed this year.

But several rural-focused bills are now sitting on the desk of Gov. Brian Kemp, even though the 2019 legislative session will likely be remembered more for a controversial measure that seeks to severely curtail abortion in Georgia or a sweeping voting bill that will affect how Georgians exercise their right to vote for years to come.

This was at least the third consecutive year where legislators pushed fixes aimed at spurring job growth in the state's rural corners, where economic recovery has lagged behind metro Atlanta and other urban areas.

Broadband

The measure that is widely expected to have the most impact on rural communities is one that has been in the works for at least three years.

Lawmakers passed a bill that gives Georgia's electric cooperatives – which already have a long-established presence in rural communities – the authority to sell high-speed internet. Non-profit telephone co-ops will be able to do the same.

A couple co-ops in north Georgia are already providing broadband, but others have been hesitant to wade into the internet business without legislators officially blessing it in state code.

It's too early to know yet just how many of the state's 41 co-ops will eventually sell the service, or at least partner with others to sell it. It's also unclear just how many people in the state's hard-to-reach communities they will be able to connect.

It may take time. Rep. Jay Powell, a Republican from Camilla, who carried the bill in the House, said he believes customer demand may drive reluctant cooperatives into the broadband business, as will seeing other co-ops sell the service.

"I think pressure from consumers and seeing other folks do it and do it successfully will make a big difference," said Powell, who co-chairs the influential House Rural Development Council, which legislators voted this session to continue for another two years.

But for many people, the bill at least represents the possibility of a new provider – and one that functions as a nonprofit – helping to boost connections for the estimated 1.6 million Georgia residents who live without adequate access.

"That's giving people a lot of hope," said Rep. Sam Watson, a Republican from Moultrie who is the rural House panel's vice chair.

Another bill that stalled would have raised money for rural broadband expansion by taxing digital goods and streaming services while lowering existing fees on traditional services, such as telephone and cable.

"I think the politics got in the way," said Powell, who also chairs the powerful House Rules Committee. "The news media portrayed it as a 'Netflix tax,' which I think was couched to see how much public opposition they could generate."

For two years now, Powell has pushed a communications service tax as a way to also modernize the state's tax code. As an example, he said people pay a tax on a DVD but not on a digital movie watched online.

"Whether you are going to use the proceeds to fund rural broadband or not, it is a good tax policy," he added.

Health Care

Rural state representatives stepped into the Gold Dome three months ago with a plan to overhaul the state's system for regulating health care, only to leave this month after making just a few modest but significant changes.

But they did succeed in passing what some consider the most important aspect of the sweeping health-care proposal: Stronger transparency requirements.

"The best way to cure an infection is sunshine," said Rep. Penny Houston, a Republican from Nashville who was instrumental in pushing through the health-care bills.

"The transparency is not just for rural Georgia but it's to help health care all over," she added. "Georgia has some of the most expensive health care in the nation, and the cost of health care needs to come down."

If signed into law, nonprofit hospitals will have to post vastly more financial information on their websites, including the salary and fringe benefits of their highest-paid staffers, a list of the properties owned and any stake a hospital may have in other enterprises.

"Hopefully, we're going to maybe learn some good things and we might learn some bad things," Watson said. "But at the end of the day, we're going to find out what our problems are and what things are working and what's not working.

"If you don't know what all the problems are, it's hard to fix them," he said.

Watson said lawmakers have been troubled by talk of money parked in offshore accounts and medical use rights, which some hospitals have used to control nearby property and ward off competition. A proposal sitting on Kemp's desk would ban the latter practice.

About $10,000 was added to the budget to pay an outside consultant to study what nonprofit hospitals pay their executives and lobbyists.

The hospital industry has been leery of changes to the certificate-of-need program, which dictates how many health-care facilities can exist in an area as a way of trying to control costs.

The program is often seen as a vital protection for rural hospitals, which fear losing the profitable services that help offset their losses. But critics argue the outdated program has turned some hospitals into monopolies, squashing the competition that could help keep health-care costs in check for consumers.

Many legislators were wary of changing the program.

"We cannot put these hospitals out here and demand that they treat anybody who walks in whether they can pay or not and then compete with some of these clinics that only take folks with insurance," said Sen. Ellis Black, a Republican from Valdosta, who ultimately supported scaled-back changes.

"You've got to maintain a level playing field to some degree," he said.

If the bill is signed, a hospital or another facility would be able to spend more on improvements before having to go through the often expensive and time-consuming certificate-of-need process.

For example, a hospital could spend up to $10 million on a construction project or equipment without having to go the state for approval. Today, it only takes a $2.5 million project to trigger the process.

And a rival health-care facility would have to be within 35 miles of another facility to be able to raise an objection to a competitor's proposed expanded or new service offering. Right now, any facility in the state can challenge another group's plans.

"We've had CON all these years and it has not worked for rural hospitals," Houston said. "They've closed. So we've got to try something different. This hasn't kept them open."

Lawmakers also tightened up the rules for a popular tax credit program in an effort to ensure the money goes to the hospitals that truly have the greatest need. The program gives donors a dollar-for-dollar tax credit for giving money to cash-strapped small-town hospitals.

The bill did not, however, raise the limit on how much state money can go toward the tax credits. The cap remains at $60 million.

And a separate measure allows the governor to pursue a pair of waivers from the federal government, including one that could partially expand Medicaid. It remains to be seen, though, what impact this will have across the state.

Rural Economy

There are also a slew of lower-profile bills and line items in the budget that took aim at rural Georgia's struggles.

One measure that passed with little fanfare would make it easier for employers to cash in on a tax credit program – if they set up shop in some of the poorest rural counties in Georgia.

Companies could reap the benefit for bringing as few as 10 new decent-paying jobs in the smallest, most impoverished communities. Right now, the bar is set at 50 jobs.

"That's a realization that 10 jobs in rural Georgia is the equivalent of 100, 150 in the metro region, as far as overall economic impact that it has in a small community," said Rep. Terry England, a Republican from Auburn who heads the House's budget-writing committee and who is the other council's co-chair.

Lawmakers also included $300,000 in this year's budget to target blight through small grants for communities with just 2,500 residents. The program allows local communities to do things such as rent a dumpster and let residents fill it up with the old washing machines, couches and other rubbish that may be junking up yards.

"I think it will be a good little thing to help put a better face on those small communities when somebody does come in to look at them to think about moving a company there," England said.

Another measure touted as a potential rural boon was one allowing for the cultivation of hemp in Georgia. Lawmakers hope the new-to-Georgia crop will create jobs in agricultural communities.

"No one takes back roads through rural Georgia anymore," said Rep. Rick Williams, a Republican from Milledgeville. "If you're not on the main thoroughfare, you lose people coming through. There's nothing drawing them there. You've got to do something to help the economy."

Other ideas didn't fare as well this year.

A proposal that was pitched as a rural transit bill stalled in the Senate. The bill would have created pilot programs to transport unemployed residents to work. It would have also consolidated some state functions under a new agency and allowed counties to pass a sales tax to fund their own transit projects.

A plan to give farmers a tax break on any federal disaster payments they receive for Hurricane Michael – should Congress ever approve the aid – also ran out of steam in the Senate.

And a controversial measure that sought to bolster the state's "right to farm" law in the wake of costly lawsuits against the pork industry in North Carolina ran into concerns that the changes would protect the state's prized agricultural industry at the expense of other people's private property rights.

These bills remain alive for next January, when lawmakers return for the new session.

Jill Nolin covers the Georgia Statehouse for The Valdosta Daily Times, CNHI's newspapers and websites.

15 Key Questions Venture Capitalists Will Ask Before Investing In Your Startup - Forbes

Posted: 13 Apr 2019 09:13 AM PDT

By Richard D. Harroch and Larry Kane

Venture capitalists make decisions constantly about whether or not to invest in various startups. The majority of the time, the answer is no. There can be many reasons for this decision, including that the startup is not within the firm's focus or stage of desired investment. But assuming the company is within the investment parameters of the fund, here are 15 key determining factors for whether a venture firm will or will not decide to invest in a startup that is seeking venture capital.

Ready to pursue VC funding? Be sure you understand the kinds of questions investors will ask.

© ra2 studio

1. Is There a Great Management Team?

Many investors consider the team behind a startup more important than the idea or the product. The investors will want to know that the team has the right set of skills, drive, experience, and temperament to grow the business. Anticipate these questions:

  • Who are the founders and key team members?
  • What relevant domain experience does the team have?
  • What key additions to the team are needed in the short term?
  • Why is the team uniquely capable to execute the company's business plan?
  • How many employees does the company have?
  • What motivates the founders?
  • How do you plan to scale the team in the next 12 months?

Ultimately, the investor will need to make a judgment about whether the founder and team will be enjoyable to work with. Does the investor believe in the team? Is the CEO experienced and willing to listen? Also, involving experienced advisors can be very helpful in the early stages to help bridge an early stage team that is still growing.

2. Is the Market Opportunity Big?

Most investors are looking for businesses that can scale and become meaningful, so make sure you address the issue right up front as to why your business has the potential to become really big. Don't present any small ideas. If the first product or service is small, then perhaps you need to position the company as a "platform" business allowing the creation of multiple products or apps. Investors will want to know the actual addressable market and what percentage of the market you plan to capture over time.

For most investors, a "big" market opportunity is in excess of $1 billion in sales annually.

3. What Positive Early Traction Has the Company Achieved?

One of the most important things for investors will be signs of any early traction or customers. A company that has obtained early traction will be more likely to obtain venture financing and with better terms. Examples of early traction can include the following:

  • The creation of a beta or minimally viable product
  • Initial or pilot customers, especially brand name customers
  • Strategic partnerships
  • Customer testimonials
  • Admission into competitive programs such as Y Combinator or other technology accelerators or incubators

Investors will want to know, How can the early traction be accelerated? What has been the principal reason for the traction? How can the company can scale this early traction?

Don't forget to show early buzz or press you have received, especially from prominent websites or publications. Feature the headlines in a slide on your investor pitch deck. List the number of articles and publications mentioning the company.

4. Are the Founders Passionate and Determined?

Many venture capitalists look for passionate and determined founders. Are they individuals who will be dedicated to growing the business and facing the inevitable challenges?

As Paul Martino, General Partner of Bullpen Capital, says:

"We have a saying at Bullpen that we like 'blue collar' CEOs. That means that we like to see nuts-and-bolts operators, not pie-in-the-sky dreamers. Demonstrate that you've spent time looking up our background and investment portfolio finding mutual interests. I like founders who (1) know their metrics cold; (2) have a clear idea of the business they're in; and (3) know how to grow it. What gets my attention is a hard-nosed, determined founder who, with a few operational pointers combined with a solid, already existing plan, can get to an even bigger outcome. That's the kind of ride I want to take."

Deepak Kamra, General Partner of Canaan Partners, makes a related point:

"Yes, you need to appear professional if you are going to be starting a serious business, but you need to show some passion and enthusiasm. Startups are hard, and they take a long time, and you will need to show that you have the inner drive to get through the highs and lows. This doesn't mean you have to jump up and down and wave your arms. Perhaps it's a story about what is driving you to get into your business, why it's personal, or why there is nothing else you would rather do than spend the next 5 to 10 years living and breathing this idea of yours."

5. Do the Founders Understand the Financials and Key Metrics of Their Business?

Venture capitalists look for founders who truly understand the financials and key metrics of their business. You need to show that you have a handle on all of those and are able to articulate them coherently.

Mark Patricof, founder of Patricof & Co., says:

"Know exactly what you want to spend your money on. Don't tell me how long it will last; tell me what you want to prove. The most impressive entrepreneurs communicate the value of their businesses through numbers. A conversation centered on a company's revenue growth, sales funnel, and customer churn causes an immediate connection with investors because when entrepreneurs position themselves as metrics-driven, it's as though they've entered an investor's mind."

Josh Stein, General Partner of DFJ Ventures, says:

"Know your KPIs (Key Performance Indicators). Effective entrepreneurs understand what their top priorities are and manage their companies by focusing their teams around a handful of critical metrics that reflect those priorities. I'm always interested when a founder can articulate her KPIs, talk intellectually about her team executing to improve them, and has a clear sense of where those metrics can be in a year or two."

6. Has the Entrepreneur Been Referred to Me by a Trusted Colleague?

Venture firms get inundated with unsolicited executive summaries and pitch decks. Most of the time, those solicitations are ignored. The way to capture the attention of a venture capitalist is to get a warm introduction from a trusted colleague: an entrepreneur, a lawyer, an investment banker, an angel investor, or another venture capitalist.

7. Is the Initial Investor Pitch Deck Professional and Interesting?

The first thing the venture investor will expect is to see a 15-20 page investor pitch deck before taking a meeting. From the pitch deck, the investor hopes to see an interesting business model with committed entrepreneurs and big opportunity. So make sure you have prepared and vetted a great pitch deck. Looking at other pitch decks and executive summaries can help you improve your own. See How to Create a Great Investor Pitch Deck for Startups Seeking Financing.

8. What Are the Potential Risks to the Business?

Investors want to understand what risks there might be to the business. They want to understand your thought process and the mitigating precautions you are taking to reduce those risks. There inevitably are risks in any business plan, so be prepared to answer these questions thoughtfully:

  • What do you see as the principal risks to the business?
  • What legal risks do you have? Will the business model comply with applicable laws, including expanding privacy protections?
  • What technology risks do you have?
  • Do you have any regulatory risks?
  • Are there any product liability risks?
  • What steps do you anticipate taking to mitigate such risks?

Startups that can show they have reduced or eliminated product, technology, sales, or market risks will have an advantage in fund-raising.

9. Why Is the Company's Product Great?

The entrepreneur must clearly articulate what the company's product or service consists of and why it is unique, so entrepreneurs should expect to get the following questions:

  • Why do users care about your product or service?
  • What are the major product milestones?
  • What are the key differentiated features of your product or service?
  • What have you learned from early versions of the product or service?
  • What are the two or three key features you plan to add?
  • How often do you envision enhancing or updating the product or service?

10. How Will My Investment Capital Be Used and What Progress Will Be Made With That Capital?

Investors will absolutely want to know how their capital will be invested and your proposed burn rate (so that they can understand when you may need the next round of financing). It will also allow the investors to test whether your fund-raising plans are reasonable given the capital requirements you will have. And it will allow the investors to see whether your estimate of costs (e.g., for engineering talent, for marketing costs, or office space) is reasonable given their experiences with other companies. Investors want to make sure at minimum that you have capital to meet your next milestone so you can raise more financing.

11. Is the Expected Valuation for the Company Realistic?

If you tell an investor you want a $100 million valuation even though you started the business three weeks ago, or don't have much traction yet, the conversation will likely end very quickly. Often, it's best not to discuss valuation in a first meeting other than to say you expect to be reasonable on valuation. But the venture investor also doesn't want to waste a lot of time on a deal if the valuation expectations are unreasonable or not attractive.

Valuation at an early stage of a technology company is more of an art than a science. To help bridge the valuation gap for early stage startups, you often see investors looking for a convertible instrument with customary conversion discounts and valuation caps. These instruments, such as convertible notes and "SAFEs," have become quite common. For more information about this, be sure to read A Guide to Venture Capital Financings for Startups.

12. Does the Company Have Differentiated Technology?

As most venture investors invest in software, internet, mobile, or other technology companies, an analysis of the startup's technology or proposed technology is critical. The questions the investors will pursue include:

  • How differentiated is the company's technology?
  • What competitive advantages will there be over existing technology?
  • How easy will it be to replicate the technology?
  • How costly will it be to build the technology into each product?

13. What Is the Company's Intellectual Property?

For many companies, their intellectual property will be a key to success. Investors will pay particular attention to your answers to these questions:

  • What key intellectual property does the company have (patents, patents pending, copyrights, trade secrets, trademarks, domain names)?
  • What comfort is there that the company's intellectual property does not violate the rights of a third party?
  • How was the company's intellectual property developed?
  • Would any prior employers of a team member have a potential claim to the company's intellectual property?
  • Is the intellectual property properly owned by the company, and have all employees and consultants assigned the intellectual property over to the company?
  • If the intellectual property was developed at a university or through government grants or with open source technology, how does the company have the right to use the technology?

14. Are the Company's Financial Projections Realistic and Interesting?

If you present investors with projections showing the company will achieve $5 million in revenue in five years, they will have little interest. Investors want to invest in a company that can grow significantly and become an exciting business. Alternatively, if you show projections in which the company predicts to be at $500 million in three years, the investors will just think you are unrealistic, especially if you are at zero in revenues today. Avoid assumptions in your projections that will be difficult to justify, such as how you will get to a 400% growth in revenue with only a 20% growth in operating and marketing costs.

In order to believe your financial projections, investors will want you to articulate the key assumptions you have and convince them those assumptions are reasonable. If you can't do that, then the investors won't feel you have a real handle on the business. Expect that investors will push back on the assumptions and they will want you to have a cogent, thoughtful response.

15. Is Your Legal Formation Clean and in Compliance with Applicable Laws?

Investors don't want to invest in a company that has legal issues with the founders or third parties, failed to properly issue stock or options, failed to make securities law filings, has unaccredited investors, or hasn't complied with employment laws—these are all red flags. Before pitching your business, you need to make sure the company is clean from a legal perspective. An experienced startup lawyer can help significantly. See 10 Big Legal Mistakes Made by Startups.

Related Articles:

Copyright © by Richard D. Harroch. All Rights Reserved.

About the Authors

Richard D. Harroch is a Managing Director and Global Head of M&A at VantagePoint Capital Partners, a large venture capital fund in the San Francisco area. His focus is on Internet, digital media, and software companies, and he was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on startups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. He is the co-author of the recently published 1,500-page book by Bloomberg, Mergers and Acquisitions of Privately Held Companies: Analysis, Forms and Agreements. He was also a corporate and M&A partner at the law firm of Orrick, Herrington & Sutcliffe, with experience in startups, mergers and acquisitions, and venture capital. He has been involved in over 200 M&A transactions and 250 startup financings. He can be reached through LinkedIn.

Larry Kane is a corporate partner in the San Francisco office of Orrick, Herrington & Sutcliffe LLP. He represents newly formed and high-growth technology companies and venture and private equity investors. Larry's typical representations range from formation and early stage corporate counseling, angel and venture capital financing, mergers and acquisitions, joint ventures and partnerships to venture fund formation, lending and other commercial transactions. Larry's practice focuses on a range of technology companies spanning education technology, software and SaaS business, education server, consumer products, and semiconductor business.  Larry can be reached through the Orrick.com site.

This article was originally published on AllBusiness.com. Read all of Richard Harroch's articles.

4 Money-Making Online Business Ideas That Need No Investment - Entrepreneur

Posted: 23 Nov 2018 12:00 AM PST

3 min read

Opinions expressed by Entrepreneur contributors are their own.

Everyone wants to start an online business that does not demand any investment. The beauty of Internet is such that you can live anywhere you want, set your own schedule, and work as little or as much as you want, and still become an entrepreneur—all at no cost.

Here are some ideas for businesses you can start online.

Creating Wordpress Themes

Wordpress is being used by many these days as their websites. More people want to establish an online presence, and WordPress is a user-friendly site where people can put up their blogs and other content. Consequently, the demand for WordPress themes and templates is rising. People who can design websites and know how to do HTML coding can have a good chance of building a business. Create these themes and sell them online.

SEO

Whatever websites we open, SEO is behind them. We can open, access and browse a website only when it is able to do so. If it is slow and takes too much time, visitors will abandon it. Every company has websites, and they need someone to manage it. Nowadays the competition is so tough, that if a website is not fast enough, visitors will move on to some better website in the competition. If brands and companies want their sales and traffic to go up, they have to focus on their SEO, and you can provide them with the expertise.

Sell domains

Many people are in the business of buying and selling domain names to earn money, and it takes little time and investment. You can purchase a domain online at its registration price, which is not too much, and then sell it further for a profit. But it is better if you do your homework first on domain auction websites so you can make a good idea of the popular domain names.

Build apps

Smartphones are everywhere, and the demand for creative apps is only increasing in popularity by the day. Whether it is games, learning apps, fitness apps, or some other creative apps, everyone is using them on a daily basis. App development may take time and creative genius, but once you put it out there, it will be worth it. The apps cost you almost nothing to develop, and there is no shipping or storage cost involved either. All of this only expands your overall profit margin. Apps that perform well make thousands in ad revenue every month, making them a great passive income strategy for the creators.

Editorial: How AirPods and Shortcuts shifted Apple's Siri story and blunted Amazon's Alexa Echo threat - AppleInsider

Posted: 14 Apr 2019 04:53 AM PDT

 

Editorial

Two years ago there was no shortage of media coverage imagining that Apple's entire hardware business was about to be eclipsed by a new voice-first world where Amazon's Alexa, Google's Assistant and perhaps even Microsoft Cortana would shift consumer and developer attention away from iPhone apps and toward stationary Internet-connected microphones running ambient "skills." Why didn't that actually happen?

Siri Shortcuts

Rival voice assistants were supposed to kill the App Store, but Apple's Shortcuts app suddenly made Siri ultra powerful.

The Great Expectations of Alexa

Amazon's Alexa voice assistant certainly involves some impressive technology. Alexa, along with a variety of similar voice services operating in China; Assistant; Cortana; and Samsung's me-too Bixby were all created in the model of Apple's original Siri, with additional differentiating features intended to make them superior. In some ways, Alexa and other voice services made Siri look embarrassingly antiquated.

Alexa specifically aimed to muscle into Apple's extremely valuable ecosystem of iOS and Mac users and peel away customers devoted to Amazon. Alexa originated at Amazon's Lab126 R&D center as a foundational part of Amazon's Fire Phone strategy, the Android-based smartphone project dreamt up and meticulously directed by Amazon's founder Jeff Bezos. The project was reportedly started in response to Steve Jobs' dramatic unveiling of iPhone 4 in 2010, but wasn't ready to show until the summer of 2014.

Fire Phone was designed to replace Apple's general purpose iPhone with more of a handheld shopping tool that could use its camera and microphone to recognize objects and then order them for you, from Amazon. A primary selling point was FireFly (below), a port of a camera shopping app Amazon had been offering for years on iOS without much attention.

Fire Phone

After failing to sell Fire Phone as camera-based shopping tool in 2014, Amazon's Lab126 began offering Alexa Echo as an Internet microphone

After Fire Phone flopped, Lab126 scrambled to repurpose some of its expensive technology in a new form. By the end of 2014, Amazon was ready to ship its standalone Echo Internet appliance, which lacked either a camera or a display but could respond to voice requests using the company's cloud-based analysis.

Echo and related products slowly gained traction before exploding into a supernova of media excitement in 2016 that proclaimed Alexa to be not just an interesting new technology, but the One True Way of the future and the glorious promised leader who would slay Apple and bring order to the Force. That's hardly even an exaggeration.

In April 2016, Slate published a piece that called voice services the upcoming replacement of GUIs and multitouch and claimed that mobile apps were going away to make way for "virtual assistants, bots, and software agents."

It even proclaimed "Alexa and software agents like it will be the prisms through which we interact with the online world." Metaphorically, of course; Echo is actually a cylinder and fell short of literally splitting the Internet into rainbows, despite all the colorful prose that rained down on it from pundits.

Slate Alexa puffery

Slate, for one, concocted some over the top prose to welcome voice agents like Alexa as our new overlords

Later that year Business Insider gleefully outlined the late 2016 forecast of Mizuho analyst Neil Doshi, who imagined that Alexa would be generating $11 billion in revenues for Amazon by 2020. Just $4 billion of that was expected to come from hardware sales (of 41.3 million annual units of ~$100 Amazon Alexa devices) while $7 billion would come from Amazon orders.

That math assumed that Amazon wouldn't slash the price of its Echos to $30 or less, and that half of the user base would be ordering "$25 worth of products 5 times a year on average," with the implication that these orders would be newly prompted by the presence of Alexa, not just the stuff people were already ordering.

"We believe," Doshi wrote, "that the Alexa-enabled Echo and its family of product, coupled with transactions and apps, could provide a large revenue opportunity, and make Amazon a pivotal part of peoples' everyday lives."

That giddy prediction effectively suggested that Alexa would soon be bringing in about as much every year as Apple's Services are now doing in a quarter. In other words, the boring, piddly snoozefest of non-hardware sales related to Apple's App Store, which barely matters because it isn't nearly as big as the iPhone, divided by four, was the large and exciting prospect driving unhinged excitement around the idea of Amazon's internet microphones.

RBC Capital were among the many analysts who agreed, based on a survey it conducted that appeared to indicate that over one quarter of Alexa-powered device owners "said they made purchases 'very' or 'somewhat' often through voice shopping," which was interpreted to be "an impressive number given Alexa just rose to prominence over the past 12 to 18 months."

In 2017, Juniper Research wrote that "advertising is the biggest revenue opportunity for voice assistants," imagineering a forecast that voice-assistant advertising would "reach nearly $19 billion globally by 2022." Researcher James Moar hedged his monumental bet by acknowledging that "voice-based interaction presents less options [sic] than other forms of advertising, meaning less adverts [sic] are possible."

Writing for Time in 2017, Lisa Eadicicco eagerly announced, "Amazon Is Already Winning the Next Big Arms Race in Tech!"

Alexa Puffery

"The most convincing evidence of the Seattle-based giant's advantage? Alexa, Amazon's voice assistant, is dominating this year's CES," Eadicicco wrote.

Eadicicco certainly wasn't alone in prematurely characterizing Amazon's Alexa as the winner that was "already" revolutionizing the technology industry, mostly just because various companies had announced Alexa-compatible devices at trade shows like CES. However, there wasn't much thought given to whether people were actually going to buy Alexa-powered shower heads or rush to replace their smoke detectors with Alexa-powered units that cost $250 each.

Instead of thinking up the fearsome doubts that Apple has to disprove, such as "who would pay $999 for a phone!?" or "who will keep paying $2 for apps, when there are so many available?" the journalists fawning over the premise of Alexa simply assumed Amazon's incredible competency at managing global warehouse sweatshops would translate into launching a new hardware interaction model, a vibrant new App Store-killing "skills" market, tons of exciting new advertising, and definitely billions of dollars of new Amazon orders.

Everyone knows it's child's play to compete with Apple and just run it out of business. Just look at Surface, Nexus, Pixel, Moto, Essential, Galaxy, Fitbit, Swatch, and Fire. However, something went wrong on the way to Alexa destroying mobile apps and crushing Apple's iOS platform.

Alexa and the Voice First Reality

Three years later, iOS mobile apps have grown dramatically rather than shriveling up into obscurity as Slate prognosticated—along with Recode, The Verge, TechCrunch, Quartz, and many others who wrote up their treatise on the Bot War on Apps waged by those "virtual assistants, bots, and software agents" like Alexa.

Almost all of our Internet interactions still involve keyboards, trackpads, or multitouch gestures—with voice being only occasionally useful for tasks like dictation, setting an alarm, or asking for a specific song. The unhinged excitement about Alexa in a world of "ambient computing" turned out to be just about as "revolutionary" as the CueCat.

The primary intent of Internet microphones was to help drive Amazon's online sales or further Google's surveillance advertising efforts. Their progress turned out to be wildly exaggerated. Instead of "often" driving voice shopping, Alexa was actually found to be doing virtually nothing to spark Amazon orders. The Information reported that just 2 percent of Alexa users ever tried to make a purchase from Amazon in a year, and 90 percent of those who did never tried again. And that came despite the fact that early adopters of Echo were already Amazon's Prime customers.

Rather than generating billions of additional shopping revenue as Mizuho and RBC analysts imagined a couple of years ago, Alexa has been as much of a gimmick as Amazon's earlier efforts to promote online shopping with A9 Flow and Fire Phone's FireFly service.

Additionally, consumers have bristled at the mere thought of Alexa or Assistant injecting advertising messages into their conversations. Both companies have adamantly claimed that they are not even thinking about pushing voice advertising, based on the caustic receptions they get whenever they try to sneak in some advertising. There goes another "$19 billion" opportunity that was supposed to keep voice assistants flush with cash.

On top of that, the idea that third-party developers would at some point be earning App Store-like revenues from building voice agent "Alexa Skills" totally failed to materialize. This March, Bloomberg detailed a variety of Alexa developer experiences, noting that "the advent of the smartphone triggered an app gold rush. So far that hasn't happened with Alexa."


Amazon Alexa Skills didn't exactly slay the App Store

Meanwhile, Apple's App Store sales, search advertising, and subscriptions grew 19 percent over just the last year, driving its Services business into a $10.9 billion per quarter enterprise. Apple has even harnessed the installed base of Amazon Alexa as a new way to promote its own Services revenue via Apple Music. It's as if Apple wins even when everyone says it's losing.

Alexa's Expensive Free Hardware Gambit

While the iOS app and subscription content paradigm continues to grow in influence and value, the core of Apple's business is hardware—to the tune of well over $200 billion in revenues every year.

Amazon Alexa and Google Home were lavished with oversized attention for years over rather minor sales of their Internet microphone products that weren't remotely profitable. During that time, Apple's hardware-based profits—virtually all of which featured Siri—were around $50 billion annually.

In other words, while Amazon and Google burned through tons of money across four years of just trying to establish an installed base of microphoned users with the hope of someday monetizing them, Apple earned $200 billion in hardware profits. Today, many of the same journalists who were excited about the promise of Alexa Voice monetization are now pouting that Apple is also working to sell additional new services to its vast installed base. It's almost as if they have a horse in the advertising game.

That is exactly why voice needed to be chattered about as if it were going to materially hurt Apple. Amazon and Google had already proven that they can't sell a phone, a tablet, a watch, a tv box or any other hardware at a profit, so they really needed a Big Lie. The suggestion that voice was going to topple apps—and very clearly by extension Apple—was the root of the whole fantasy erected to support the idea that suddenly there was a hardware category where Amazon and Google could win even while they were very clearly losing.

Neither Amazon nor Google have even attempted to earn any Apple-like hardware profits from their mostly loss leader Internet microphone offerings that they effectively give away. Rather than being poised to sell another $4 billion in hardware next year as Mizuho analysts predicted, Amazon is now facing an increasingly saturated US market and intense competition from Google, which is copying its cheap device strategy. Both also have little hope of entering new markets like China where local companies have already rolled out their own voice alternatives. Internet microphones are pretty obviously not the next iPhone.

Amazon's invention of dozens of new Alexa form factors—from stationary tablets to wall clocks to a microwave that orders popcorn for you—have not shifted where money is being made in tech hardware. Instead, Apple has dramatically increased the perceived value of its iOS offerings to the point where mainstream iPhone buyers now spend an average of nearly $800 on new iPhones—and rather loyally do so every two or three years. Apple's growing base of customers have also kept buying tens of millions of premium iPads and Macs, and millions plunked down new money on the hottest product of the year: Siri-capable AirPods.

HomeKit gear

Rather than giving away hardware, Apple sells over $200 billion worth of gear annually that also supports Siri features, from HomePod to AirPods

Apple reportedly sold 35 million units of AirPods alone last year, a figure which would generate about $5.6 billion of revenue. AirPods also earn money, rather than just being a loss leader racing to deploy "microphone market share" capable of summoning Siri.

Apple's HomePod sold about 3 million units across just the second half of last year, generating more than another billion in revenue at its debut. That's equivalent to the revenues of 20 million units of Echo Dots (when they're not on sale), but HomePod is profitable. Nobody predicted that Apple would be earning more money than Amazon from "smart speakers" back at the peak of Alexa hysteria.

But beyond accomplishing little for online shopping, or advertising, or for developers, or drumming up any new hardware profits, there's a larger problem for Alexa—the initiative is blowing through tons of money while doing all that nothing.

Sunk investment

The idea that Apple fell behind in the voice-based assistant race that it effectively initiated back at the 2011 introduction of Siri has made for a compelling, truthy media narrative. Siri as a service was clearly being bested by various features and abilities of Alexa and Assistant. Even Apple's most ardent fans were vocal in hoping the company would plough more money into Siri research so that it, too, could maintain more conversational requests and answer trivial questions at least as well as Alexa.

Amazon has invested spectacularly in Alexa research. In 2016, Bezos, the company's chief executive, said that about 1,000 people were working on Alexa and the Echo. Toward the end of 2017, the company's senior vice president of devices and services David Limp announced there were 5,000 working on Alexa.

The company is notoriously slippery with its numbers, but if that actually meant "5,000 employees" it would represent close to half the workforce capacity of the shiny new Apple Park. Imagine Apple devoting half of its new campus just to work on Siri features. If shareholders heard that, they'd have good reason to dump Apple's stock because Siri itself isn't a revenue generator. Alexa not only doesn't generate revenue, but it doesn't even pretend to help Amazon sell $200 billion of other hardware each year the way Siri does.

Apple Park

Imagine dedicating nearly half of Apple Park just to work on Siri

The idea that Apple reportedly once had 1,000 people working on some sort of automotive efforts in Project Titan—and laid off 200—was taken as shocking pivot of wasted effort, even in a year where Apple had earned $59.5 billion in profit on sales of $266 billion in product. Critics similarly fretted that Apple Park's supposedly $5 billion price tag was astronomical, arrogant and a portent of doom.

But for Amazon, the idea that 5,000 people were working on a loss leader novelty feature that wasn't accomplishing anything across years of monumental investment was just plain exciting. Even more so was that fact that Amazon was also trying to hire hundreds more to work on its "Alexa engine" and "Alexa machine learning." And even more exciting was the fact that Amazon was building its own urban campus in the middle of Seattle for $4 billion, featuring giant Spheres full of plants.

In 2018, Amazon reported $141.92 billion in product sales and earned all of $10 billion in profits. Dumping tons of money on Alexa was clearly part of the reason Amazon wasn't nearly as profitable as Apple, year after year over the last half-decade. But all these years later, Amazon has effectively nothing to show for it.

Last year, Apple actually paid out more just in shareholder dividends—about $13 billion—than Amazon reported earning. Amazon doesn't even pay dividends. Clearly, something would have to change for Alexa to be worth shoveling so much money at. Investors clearly must think so because Amazon is valued stratospherically, with a Price to Earnings ratio of 91.7, compared to just 16.7 for Apple. But when will Alexa start generating tens of billions of dollars, and how exactly?

Since 2014, Amazon's voice efforts have only managed to create an "Echosystem" of 100 million devices, a number that includes every device shipped by anyone, with some support for Alexa; last fall CIRP estimated the installed base of all the voice assistant Internet microphones ever sold as being just 50 million.

Apple has an active installed base of 900 million iPhones, 100 million Macs, and hundreds of millions of other devices—from iPad to AirPods—designed to work with Siri, not even counting all of the third party products that support HomeKit or other Made for iOS integration with Siri. Yet pundits kept talking about Alexa as if it has some unique "Amazon Everywhere" or "first mover" advantage.


Alexa was neither everywhere nor the first mover in voice assistants

Cloud competency vs user-driven automation

Alexa can certainly be used to do things Siri can't. There are some devices (including peripherals from Amazon's Ring subsidiary) that only work with Alexa and not Siri. Alexa can run a variety of third-party skills, even if there's not much real value in those. In various ways, Siri has become a runner up in terms of the value of its "cloud competency" compared to Alexa and Google Assistant.

But rather than devoting thousands of workers and shoveling tons of money at Siri to "catch up" to make Siri equally good at doing everything Amazon has worked to make Alexa capable of, Apple pursued an entirely different strategy focused on user-driven automation.

While Alexa aspires to understand and anticipate anything a user might ask, Apple focused on Siri performing a subset of specific, valuable tasks. This was frustrating for many users because there wasn't any obvious way to know in advance if Apple had implemented a given feature. And in many cases, Apple hadn't, such as in enabling multiple timers or other features that Alexa explicitly could. Feature comparisons of Siri against Alexa or Assistant were often unflattering.

At the same time, independent behavioral studies kept highlighting the reality that most people were only really using voice services to do a few common, memorable tasks, such as playing music or setting alarms. Certainly Apple knew this, given that it had access to massive usage data from the most frequently and broadly used voice service in the world.

A primary area where Apple focused attention was accessibility. At WWDC 2017, Apple presented Todd Stabelfeldt, a disability advocate and quadriplegic who outlined how Siri, paired with the alternative motor control features of iOS Switch Control, and the display and camera hardware that supports FaceTime and iOS 10's new Home app, empowered him to live a productive life. He implored developers in the audience to make full use of the assistive technologies in Apple's platforms.

Sarah Herrlinger, Apple's senior manager of accessibility policy and initiatives, stated at the time, "We put a lot of time and effort into making sure our products are as accessible as possible for all users. For some people, doing something like turning on your lights or opening a blind or changing your thermostat might be seen as a convenience, but for others, that represents empowerment, and independence, and dignity."

Beyond accessibility, Apple's attention to meaningful enhancements to Siri as an integral part of its various platforms has also followed a user-driven focus, rather than just showing off frivolous entertainment features like the ability to recite jokes and maintain an ongoing, fake conversation with users.

As we predicted in advance last year, Apple's approach to making Siri more useful for real-world users involved acquiring Workflow and integrating its automation features into "Shortcuts," complex task workflows that users can then invoke with their voice via Siri.


Siri Shortcuts shift voice assistance from being a genius in the cloud to a useful way to trigger common tasks on the devices you already have

You can build Siri Shortcuts to, for example, begin a workout, start a favorite music playlist, and put your phone in Do Not Disturb mode when you tell Siri "I'm at the gym," a set of actions no cloud service could reasonably anticipate for you. Sometimes the best assistant is somebody who can do exactly what you specify, rather than trying to guess at what you might want.

At last year's WWDC, Apple laid out an entire strategy for Siri automation that included third-party developers creating Shortcuts for users, an easy to use Shortcut app that lets individuals set up their own Siri-enabled workflows, and even iOS using artificial intelligence to recommend Siri Shortcut actions individuals can activate with a spoken phrase, based on their common tasks—such as ordering an almond milk latte on the way to work every weekday, or checking where their next calendar appointment will be and getting directions to it.

Apple continues to maintain the advantages Siri originally had—including the largest installed base of users and connected devices in the most places around the globe, as well as support for by far the most languages worldwide. But it now also has Alexa's ability to leverage third-party efforts to expand and customize its functionality, albeit in a much more individualized way, using sophisticated, personalized workflows.

Apple achieved this without having to hire thousands of employees and create dozens of different Echo-like variants to effectively give away at tremendous cost. So all these years later, rather than being a genius, step-ahead strategy destined to destroy Apple's position and take away all of its assets, Alexa appears to have been mostly a vast, speculative waste of resources.

When all you have is a hammer, everything looks like a nail

The voice engineers at Amazon, Google, Microsoft, Samsung, and Facebook (remember "M"?) all racing to deliver a better Siri pretty clearly overestimated the value of voice assistants, certainly in the short term. But there's nothing new about getting carried away with the perceived value of whatever technology you're currently working on.

Blackberry once thought that its BES messaging service and its physical keyboard would mount a sold defense against Apple's iPhone. Microsoft once thought Windows was so valuable that it could slowly roll out tablets and phones and the enterprise would just wait around for years for it to catch up to iOS. And back in the day, Apple once thought its Mac desktop was so great that it could just tinker on wonky futuristic new ideas like QuickDraw GX, QuickTime 3D, and PowerTalk, and its clients would adopt them.

In each case, journalists and analysts often agreed and supplied their own figures and logic to support ideas that were clearly not realistic, just as they all bandwagoned on the ridiculous idea that Internet microphone voice appliances were going to rid us of iPhones and apps so that instead of living our private lives staring at screens, we'd walk around shouting our private life into a series of speakers, one in each room and maybe one in our car. It all makes so much sense when you turn your brain off!

Apple didn't rise to prominence by giving away free stuff. It became the global economic powerhouse of today by creating good products that people wanted to pay money for. The profits from those sales continued to fund new generations of iPods, iPhones, iPads, as well as the chips to power them, the iOS upgrades to enhance them, and new generations of devices and form factors from Apple Watch to HomePod to Apple TV to AirPods.

Siri has served as a useful component to Apple's products, but certainly has never become the company's primary strategy. Apple's years of alleged neglect of Siri appear to have caused no discernible problem in the long term. Apple is now making significant profits from its own voice-based music appliance, as well as with its Siri-capable wearables, mobile devices, its HomeKit ecosystem and with CarPlay integration.

Apple has continually expanded Siri's relevance in ways that the tech media have ignored, simply because it didn't fit their nutty narrative of Alexa killing the App Store. Siri's support for more languages and its installed base on over a billion devices means that meaningful enhancements—including last year's DIY Siri Shortcuts—can be rolled out faster and cheaper than either Amazon or Google can design and shovel out tens of millions of nearly free new devices--this time with a camera and a display--at their own expense.

Apple's increasingly large installed base of Apple Watch users can now effortlessly invoke Siri with Raise to Speak. And iPhones, which already use AI to categorize your photos by people, places, moments, categories, and various objects within them, can now be invoked by Siri: "show me my pictures of motorcycles in Mexico."

Raise to Speak

watchOS 5 introduced even more fluid access to Siri

Who would entrust Amazon or Google to pull all their personal photos into the cloud for analysis and categorization, given their histories of misusing personal data or accidentally sharing it to the wrong person, or handing it to the authorities in whatever country demands it? One of Siri's primary features is that much of the metadata it can make available to users is local to their devices and never leaves.

The tightly integrated nature of Siri means that even a significantly better voice competitor wouldn't be enough to gut and replace Apple's $200 billion worth of annual hardware sales. Apple's users can make use of Alexa, or Assistant or even Cortana without changing their hardware and without removing Siri functionality.

In fact, the majority of Alexa users are already Apple customers; they haven't given up anything to play with Echos. But in the end, those customers are far more vested in Apple products than in cheap Amazon devices that can be replaced tomorrow with Google Home freebies, and then after that by the next wave of free hardware trying to promote the next fad, charging nothing and gaining nothing but a huge write-off and a temporary surge of non-commercial customer activity.

We've now witnessed just over four solid years of Alexa-based hardware sales that have added up to effectively nothing, even as Apple's installed base of interconnected devices have radically expanded to create a valuable platform that actually sells billions of dollars worth of apps and other third-party investments, including HomeKit peripherals, service subscriptions from Google and Microsoft, and replacement Lightning cables by Amazon.

The Alexa voice fantasy isn't unique in being the only media narrative that's complete nonsense, but it's a great example of how bamboozled analysts and journalists can be when some new technology is dangled in front of them with the premise that it will destroy what is currently the most valuable and productive tech company. Their credulity isn't evidence of reality.

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