The Communication Wall
Sometimes you think of ideas, sometimes they just grow on you. This is probably not my idea, as someone has probably already thought of it, but who cares, I’ll post my thoughts on it.
Where is Technology Going?
In fact I’ll concentrate on three pieces of technology.
The first is screens. As I watch this I’m watching the television on a 50 cm. screen. Not very big, but I know, although I don’t know where it will come from, but that in a few years time, I will be able to have a screen perhaps four metres to two or even bigger.
It will also have all the following features :-
- Low power, as a screen that size mustn’t act like a space heater.
- High pixel density, so that small details will be shown well. I would suspect a density about the same on the average laptop.
- Touch screen.
- It might also have other features like being curved and flexible.
How will it be driven? This leads to the second point.
It would probably be driven by Windows, although it might be bigger than 10,000 x 5,000 pixels. But the way computing power is going, that will not be a problem. Remember too, that Windows has the ability to run media displays, do e-mail, show web pages etc. already.
The third piece of technology is apps, such as you see with things like iPhones.
If it is Windows, then these would be easy to write.
I know that I’m biased against Macs, but once the screen is developed it could work with either system. Or Linux too! But it needs to be a generally available computer operating system, that people are happy working with.
You also have to take into account that in a few years or even possibly months, all video and audio content will be instantly downloadable. So if you want to watch Two for the Road, then you just select it and play it over the Internet.
A Few Basic Apps
The screen and its computer driver would support the following :-
- TV and video. Obviously multiple video screens would be created in different areas of the screen.
- It would have an e-mail or SMS address or several, so that you could send messages to the screen, or in fact an area of the screen. How many wives have telephoned their husbands to not forget to put the casserole in the oven? The message would be flashing in his area of the screen.
- It would have the ability to just touch the screen and write a message there, just like you can on a whiteboard. But the computer would remember everything that is written.
- Obviously, you could also use a remote pointer and keyboard to control everything, but when you touch the screen, you would also have the option of a keyboard.
I hope you get the idea.
The Domestic Wall
This is where I started.
All of the clutter of TV’s, video-players, umpteen remote controls would be reduced to a large screen, decent speakers for sound and a pointing device with a keyboard. As I said earlier, all video/audio content would usually be over the Internet or from the hard disc of the computer. Sad to think that albums with all their glorious artwork would be gone, but wouldn’t every audio download have a video feed to go with the sound.
As you could have multiple TV screens, you could monitor several channels at once. I do this sometimes with say cricket on one channel and football on another, whilst listening to the radio. You could click and change at will. Also, if like me you have CCTV cameras here watching horses, then these would be small screens at the edge of the wall.
Or you could show a film or sport on the whole screen.
Then there is the communication aspects.
- E-mails or SMS messages could be sent to the wall.
- Replies could also be sent quickly, just using your fingers.
- Notes could be written for all and sundry.
- All messages would get remembered.
And why not use it as a giant and funky photo-frame when it is not being used? Or to introduce subtle and beautiful lighting effects into the room.
Once you get the basic system going then you can add apps, that do specific tasks.
Imagine a shopping app for Waitrose!
You might have a simple scanner, that is wirelessly connected to the screen. You need two cans of tomatoes, so you just scan one tin, the appropriate number of times. This would build the basis list on the wall, which can be added to so that your on-line shopping never misses what you need.
The Business Wall
This would be basically be similar, but with more emphasis on messages than TV and video.
But who knows?
After all, because apps would be developed, that would handle various business applications, the world is the system’s oyster.
One thing I bang on about to clients is the need to communicate. I’ve found that if the company’s performance database is easily available, then the productivity often improves, as managers spend more time managing, than repeating the same messages again and again. Junior staff too have better information and make better decisions.
The trouble is there are too many managers who believe in mushroom management.
What Next?
Someone develop the screen and the rest as they say will happen!
John Lewis/Waitrose: Shops of Choice for Champagne Socialists?
I heard an actor on the radio a couple of weeks ago, going on about the evils of capitalism. It might be alright for him to pontificate about large salaries, but he showed little knowledge about how market forces work. In other words if we had a hundred percent tax on all salaries over say £50,000, we’d lose anybody of talent. Well not all, as surely black-marketeers and tax fraudsters would have a field day.
But he did put in a good word for John Lewis and its Waitrose subsidiary, as they are partnerships in which all employees have stakes.
So does this explain why in this recession, they have done so well? Perhaps, those of the left feel that they must spend their money where it doesn’t go to shareholders.
Keep it Small on Zopa
Over the last few months, I’ve been trying to reduce the size of the individual loans I make on Zopa. I now have a limit of forty pounds and the average loan is just above that figure for the over a thousand contracts I have. When I started I had a limit of two hundred pounds and a couple of those loans went into default, which meant I had some bad debts. There was also the problem then of liquidity in that there wasn’t the same number of Zopa borrowers and it was sometimes difficult to lend the money out. Now, if I put say a thousand pounds into the market, it gets lent out within a couple of days. Note that my low limits on each individual loan, do not give Zopa any extra costs, as they only check the borrower once and the other is just data processing.
There also appears to be a big difference in how Zopa checks borrowers. They have said that their checks are more stringent, but they also appear to be much faster. Perhaps, this is because they are now bigger and have more staff, but they must have better systems too!
This leads to an interesting theory. As Zopa and others like them get bigger, then the markets will get much more fluid and responsive. Money will get lent out quickly in loans split into hundreds of small ones. This will mean that larger lenders like me, will have thousands of loans which will spread their risk and thus, they will get a good return.
Do I have any evidence to back this up?
Possibly!
My rate of return over the last year is 5.39% before tax and taking it since October 2008, it is 5.55%. These are not bad returns in these troubled times.
But if I look at my returns over the last six months, the figure is 5.85%. It would appear that my policy of restricting the amount I lend to individual borrowers is having an effect, as I started this policy in the summer of last year.
When looking at loans in arrears, I have less outstanding now than I did a year ago. Partly, this is due to the smaller amounts lend, but mainly this is due to Zopa‘s better systems.
But I am not a hundred percent optimistic. We have an election coming up and who knows what that will bring.
But I certainly feel that if you want a better return on your money, that Zopa and their ilk are a better proposition than something like an Icelandic bank.
Do I have any regrets about Zopa?
Not really! But one of my borrowers died. It just goes to show how that in this world there are much more important things than money. My heart goes out to their family and friends.
How to Attract Business
I really don’t care what language people use in private, but are new powers for the Welsh Assembly to force companies and organisations to provide services in Welsh a good idea?
If I was thinking about relocating a company to Wales, I would think again, as if at some future date, I’d have to go to the expense of providing everything in Welsh as well as English. I would go to part of the UK, where things were less strict. In these days, where business efficiency is the key, then imposing rules like this doesn’t make sense for the vast majority of companies and organisations.
Cutting Unemployment
I run a couple of small businesses; one is a computer software firm and the other is a thoroughbred stud.
I have a problem on the stud in that work is distinctly seasonal and so some of the essential maintenance jobs that no-one really likes to do, get put to the bottom of the queue, when other more important things come up. For instance, if it means having an injured horse for rest after a racing injury, which requires extra care time, then this will take precedence over say painting fences or renewing a badly worn gateway, because the former is better for your cash flow.
In the past twenty years or so, whilst my late wife and I have run the stud, we’ve often needed someone for say a month or two for these maintenance and other tasks. Usually, we’ve subcontracted to a building firm, who don’t like these sort of small jobs and charge much more than say employing someone for a couple of months.
What is needed is a computer system based on the technology used on many web sites, to match the unemployed to the small jobs available. The site might be something like a cross between a dating-site for something like The Times and eBay.
Suppose you chose someone from this web site for a job that would last anything upwards of a week.
You would pay the site, which would then pay the employee directly and automatically adjust their benefit, so that they avoided the problem of going on and off benefit. After they’d finished, you would then assess their work and post it with ratings on the web site.
I think that this would have benefits for both employers and claimants.
Employers and especially small ones, would have a simple means of bridging that temporary labour problem without any great hassle. They could also read the references of those available for employment in their area and may well choose an employee whose skills and experience matched their needs. In the case of the stud, I’d probably do jobs where I can easily find people to do them. For instance, I have several painting jobs that need doing, so if I found someone, who had experience of industrial painting, then that job would be done.
Claimants would benefit from the work and the extra money, and because they were rated, this would increase their chances of getting full employment. The system would also benefit, those who perhaps because of circumstances like age, children and disability, did not need or want to work all of the year.
It is an idea, that I feel needs to be examined. As a computer scientist, I don’t believe that setting it up would be the biggest of technological problems, although asking the government to do it would probably be a disaster.
A Year of Zopa
I have now had a Zopa account since October 2008.
But it is now over a year since I started taking proper statistics of the lending, so that I can now put together proper results for the first time.
Overall Figures
As of the eighth of January 2010, I how have £39,473.90 invested in just nine hundred and fifteen separate contracts. This means that the average contract size is just over £43.
It should be noted that I generally lend in the two top Zopa markets, A and A*. This is because these markets have the lesser risks as people have a better credit rating. There are also two lower markets, B and C, that I ignore. I also lend a small amount in the youth or Y markets. All money is lent over three years.
Bad Debt
Bad debts are just two contracts, which total £278.13 or about 0.7% of the total. In terms of numbers is about 0.2% of the loans. Note that one contract is a Y and the other is an A.
So is that a figure that is in line with Zopa‘s predictions?
They predicted that debt for the type of lending I do, defaults would be of the order of two percent. There are two provisos to this.
- Loans between one and two years old are showing about a four to five percent level of default. Most of this was probably down to the credit crunch.
- Those issued recently are now checked to much tighter criteria and are showing lower predicted and actual levels of bad debt.
But both these levels are higher than I have encountered.
Let’s put it down to good luck.
Or did I just join Zopa at the right time with the worst of the bad lending bulge being just about in the past?
Arrears
Arrears are different to bad debt, in that they tend to be accounts that limp on. Sometimes they consistently pay a few days late and one or two I think will probably end up in bad debt.
The numbers of accounts in arrears vary between about two and seven. Interestingly the number grow at the beginning of the month and then decline until about the twenty-fifth. Some even if they do go bad will not be a problem, as I’ve only lent these people ten or twenty pounds or so. But others are more serious.
I have five in arrears at the moment.
- Y – £10 with just the last payment missing – 4 out of 5
- Y – £20 that just limps on a bit that has missed four payments, but they’ve all come in late – 3 out of 5
- Y – £100 that is a real limper but always manages the payment about ten days late – 3 out of 5
- A* – £120 with just the last payment missing – 4 out of 5
- A* – £30 that has limped and now appears to be going terminal – 1 out of 5
In total there is £211.34 in total outstanding on these loans, with total arrears of £12.06. So it would be unlikely that all this money will eventually be lost.
I suspect that the numbers will reduce as the month goes on. But I also expect others to be in arrears.
Returns
Working out a Zopa return is not easy, as money is going round and round, up and down and I have been adding about a thousand pounds a month to my lending.
According to my accountant the only fair measure is to take the amount of money earned a year ago and subtract it from today’s figure to get the yearly earnings. Dividing this by the average amount of money in the account over the year, should give a sensible answer.
This method also takes into account any monies in the holding account, bad debts and charges from Zopa.
As of today this yearly percentage is 5.44%. If I assume that all of the current arrears go bad, then this figure drops to 4.77%.
Is that a good rate of return in the current circumstances, where banks offer a lot less?
Strategy
When I started using Zopa, I didn’t have a strategy.
This was very wrong.
On the other hand, I had enough money to be able to afford any losses.
It is interesting that the two bad debts I have are one in A lending for £200 and another in Y lending for £100. Now, my limits are much lower.
As I said in this post, Zopa as a Lender, I started with the money from the sale of my late wife’s Porsche. But after testing Zopa for a few weeks, I started to be too aggressive in my lending, by allowing people to borrow too much. In some cases because two lending offers overlapped, I lent as much as £400 to some people.
Now, I have just two offers, one for A and A* borrowers and one for Y, with limits of £50 and £20 respectively. My average loan size is just over £40 now. I am not sure of the statistics but I believe that this makes it less likely I will suffer a major hit. Although, there are still some individuals with impeccable payment records, who owe me more than in an ideal world I would like.
So the strategy I now use is lend little and often and don’t be too aggressive in getting your money into the marketplace.
It also is essential that you check Zopa as often as possible, to make sure that your interest rates are up to date. I keep these at the highest level, that still gives a High rate of lending.
Farewell Saab
I’ve never owned a Saab, possibly because I have tended to buy British cars, but feel rather sad that General Motors have decided to pull the plug on a quintessential Swedish and European brand.
But it is only a gradual process, where cars splitting into mainstream and niches. Saab unfortunately couldn’t find a niche big enough to live in. Just like MG-Rover!
And just like MG-Rover, I doubt that they will be able to survive if someone else buys them. After all, their product line seems rather stale and it is in desperate need of new models.
The RBS Dilemma
The Royal Bank of Scotland is now 70% owned by the taxpayer. Note the word taxpayer and that means you and me. Well, I suppose it might not mean you, as you might be in New York, New South Wales, New Zealand or New Caledonia.
But the dilemma will hit us all in the next few years as we struggle to get the economy under control.
In the red corner you have the public and the government, who for all sorts of reasons find million pound bonuses obscene. And in the blue corner you have the Banks, who say that they need to pay these bonuses to attract the best talent, so that they make higher profits in complex and difficult to understand markets.
This excellent article in The Times sums it all up well. The government wants to veto the bonuses and if they do, then the board of RBS will resign.
The Treasury signalled last night that it was prepared to veto a £1.5 billion bonus pool at Royal Bank of Scotland in a move that could trigger the resignation of the bank’s board.
RBS directors have been advised by the bank’s lawyers to resign if a Treasury bonus veto means they are unable to run the bank commercially and in the best interests of all shareholders.
People close to the Treasury signalled last night that Alistair Darling would throw out any bonus plan at RBS that was much higher than last year’s £1 billion. “We would not expect to see any significant increases in bonus payments. I think most people would see 50 per cent as a major increase,” one Treasury insider said.
RBS is expected to make £6 billion in profits this year from investment banking, implying a bonus pool 50 per cent higher than last year.
Is this blackmail? Yes! But is it sound business? Yes!
It’s actually more complex than you think.
Take total tax. Corporation tax on companies is lower than that for individuals. So am I right in thinking that high bonuses might actually return more money to the government? But that is a practical not an emotional response.
How true is RBS’s assertion that they need to pay the bonuses to get the right people to manage their investments? In my business life, I have often found that you have a lot more talent in a company than you think you have, but those in charge like to keep the minions down, as they see them as a threat. So perhaps, a little bit of intelligent management might improve matters. I don’t know! But I have worked with people at the highest level in a clearing bank and know that there is a lot of nonsense there. I suspect there still is!
Now let’s suppose that to get round the bonuses, RBS got some other company to manage their investments. I don’t know whether this is possible, but I suspect that it would probably cost them an arm and a leg to make the same six billion pounds. Probably one and a half billions of arms and legs. And most of that would probably never see a British tax authority again, so we, the tax payers, would lose.
So it’s difficult!
What we actually need is a change of culture.
Banks, no matter what we think, are a short-term business. For instance, a main board director of a major clearing bank, once told me that a third of their profits came from overnight money and the interest on money that had not been cleared. That’s why banks don’t transfer money instantly!
So how can we make things better?
Economists have talked of a transaction tax on banks, to move them away from short-term thinking, but that would only move the business to somewhere that doesn’t charge. So as with anything we need global standards and a level playing field.
So it will be a difficult and long uphill struggle to make the banks appear ethical in everybody’s eyes.
For my personal banking, I don’t use a bank, but a building society through the Internet and Zopa, the peer-to-peer lender. The former transfers my money efficiently and manages my credit cards. And the latter pays me around five percent on savings, with the ability to withdraw the money gradually if I need it. To get the same rate with a bank, I’d have to lock the money in for ever.
This is a model that many others will follow, leaving the global fruit machine to the so-called professionals. Unfortunately, banks will probably do their utmost to strangle innovative competitors like Zopa.
So we must educate everybody in the Internet and personal finance, so that they can make reasonable decisions for themselves. Many web sites do this very successfully.
But to return to the original dilemma.
Should the government limit bonuses for banks in which we have the major shareholding?
In my view they should not!
Why?
It will heap more bad publicity on the banks and hopefully push most of us to look for better and more ethical ways of handling our money.
A New Bank
Years ago, I worked as a consultant for a major bank writing a software system to calculate the cost of the various operations of the bank. What was interesting, is that a significant part of the cost of transactions such as clearing cheques, standing orders, direct debits etc., was the cost of the buildings and premises. In fact, when a new branch opened, because of the premises cost, it was a long time before that branch’s costs were down to the average level.
So the suggestion of one of the callers on Radio 5, that banks open branches in areas that are poorly served, although admirable will never happen. Or only after intense pressure and inducements.
But!
We live in a technological age, with nearly everyone having a mobile phone. Also about 50% of the population bank on-line and about 70% or more of the population have access to the Internet.
So any new bank must maximise this technology to provide a service to everyone.
Banks too, need to introduce more personal service and if customers can’t get to see the bank manager, then the managers should go to the customer. How many people have ever had a visit from a bank manager? I rarely have and I’ve dealt in seven figures sums with banks for many years.
Returning to my costings of a major bank. Small sub branches were an interesting way of providing service in areas away from the main branch. They have now been replaced by cash machines, but why do we not see such branches in places like supermarkets, hospitals and garages?
Whatever happens, a new bank must innovate and draw on the experience of the past; good and bad.
Best of Salineville Awards
I received this from the US. As with most things like this, I recognise they are spam and completely worthless.
In recognition of your achievement, a 2009 Best of Salineville Award has been designed for display at your place of business. You may arrange to have your award sent directly to James Miller by following the simple steps on the 2009 Best of Salineville Award order form.
Each year, the US Commerce Association (USCA) identifies companies that we believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and community.
Also, a copy of the press release publicizing the selection of James Miller has been posted on our website. The USCA hereby grants James Miller a non-exclusive, royalty-free license to use, reproduce, distribute, and display this press release in any media formats and through any media channels.
An Award Code has been assigned to your company that can be used on our website for quick access to your award information and press release.
Your Award Code is: 8A3F-WX2B
Sincerely,
Ashley Carter
Selection Committee Chair
US Commerce Association
So I searched for Ashley Carter and the US Commerce Association. It is just a rather dubious vanity award and as I thought completely worthless.
Communicate with these people at your peril.
The Anonymous Widower 