Author Archives: thedoctor

Will 2014 Be the Year the SEC Kills Crowdfunding? And Innovation With It?

According to a recent article over on VentureBeat, it might cost you $39K to crowd fund $100K under the SEC’s new rules. On October 23, 2013, the SEC Issued its Proposal on Crowdfunding, available as a 585 page PDF, that, if passed, could put an end to crowd-funding, and even innovation, as we know it.

According to the VentureBeat article, the (proposed) legislation requires that the selling of crowd-funded securities take place on registered websites, which doesn’t sound too bad, until you also add in that these websites (which must be registered with the SEC and FINRA), must also provide investors access to a business plan, a detailed breakdown of the planned use of the proceeds, a company valuation, and financials. And already the problems begin.

If you look at the average Kickstarter campaign, it is to create something new, through a new endeavour, which has no financials, no company valuation, and no business plan beyond we plan to build this, in this way, and our production estimates are that it will cost this much. In the end, we will deliver X to you, or to the community. The business may or may not go on once the product is completed (and delivered). Moreover, these efforts are typically put together by the innovators themselves, who have expertise in creation and production, not writing business plans that have to include sections on marketing, sales, financial projections, etc. etc. Who’s going to write this plan? Create the (potentially ludicrous) financial projections? Provide, and take responsibility for, a valuation of a company or product that doesn’t exist?

But this is just the beginning. If the event (intends to) raise(s) 100,000 or more, in addition to providing potential investors with tax returns for the most recent tax year, the firm also has to provide investors with audited financial statements (before the offering and audited tax returns after the disposition of the funds). CPAs (Certified Public Accountants) are not cheap!

In addition, a crowd-funding campaign has to pay the registered website a success fee (calculated as a percentage of proceeds) for facilitating the transaction, compliance costs related to the preparation and filing of individual forms related to the crowd-funding offer both before and after the campaign, and additional fees to third parties whose help it will need to complete the financial (projections), business plan, and obtain a market valuation.

All told, the SEC estimates portal and compliance fees will eat up between 12.9% and 39% of the money raised, but, depending on what the fees turn out to be, and how much help the inventors and creators need to satisfy all of this bureaucratic BS, the costs could conceivably reach 50% of the proceeds, or more!

What is the SEC thinking? If a bunch of educated and reasonably well-informed people want to risk throwing $5 to $5000 of their disposable income behind someone who is willing to take a chance and try to do something new, what’s wrong with that? Innovation is what made North America, and without continued innovation, North America is going to be in big trouble. GDP growth is nominal, unemployment is high, and China owns too much of our debt. We need to be encouraging innovation, not discouraging it.

And while the SEC is spending time and effort writing 585 pages of rules to govern amounts of money that are minuscule in the grand scheme of things, hedge fund managers and investment banks that can crash the market and tank our economy literally overnight run free and get rich at our expense. (And SI agrees, the bank ain’t gonna help you.)

SI isn’t saying that there shouldn’t be some regulations around crowd-funding, as you do want some protections for the common man, but they should be reasonable and minimal. For example, maybe crowd-funding regulations should allow for unregulated crowd-funding events which could be:

  • limited to a maximum raise of 999,999,
  • limited to a maximum investment of 9,999 per investor, and
  • limited to registered platforms
    (that can register for free and decide whether or not they want a cut of the money raised with a 2% limit).

With the exception of (big studio-quality) movies *, most of the crowd-funding efforts are for initial product or idea development, and most of them are looking for (well) under 1,000,000, which is the number where you are looking to build a real company and would, presumably, be far enough along where you could bring in (super) Angel and VC funding.

In SI’s view, the individuals and small teams behind the efforts should be left alone and given a chance to innovate. Some may fail, but that’s okay. The point is that most will succeed, and anyone who is going to invest in crowd-funding understands that innovation is fraught with risk and that sometimes success only happens with grass-roots effort.

If you also agree, your chance to provide the SEC with your views expires in two weeks on January 21, 2014! SI encourages you to Submit Your Comment through this link today! Please save crowd-funding! We need every ounce of innovation we can produce!

 

* These should have their own class of exemptions. You might want some accountability due to the large amount of money that can be involved, but certainly nowhere near the levels that traditional investments of this size require.

Best Design Trends of 2013? Don’t You Mean Worst, VentureBeat?

Of course the doctor is going to to be attracted to an article that purports to chronicle the 10 best design trends of 2013, but after a quick read, the doctor wonders if the author meant to say the trends mentioned were the worst trends because, as far as the doctor is concerned, the list contains four (4) of the worst design trends of the year. (An editing snafu, maybe?)

In no particular order, these four (4) trends are among the worst that 2013 had to offer.

  1. Responsive Design
    There’s no such thing as responsive design, at least not from a programmer’s perspective. The idea behind responsive design is that a single interface is coded to adapt to the viewing environment by using fluid, proportion-based grids, flexible images, and CSS3 media queries. While this sounds great in theory, this is impossible in practice as what looks good on a 5″ mobile touchscreen won’t look good on a 27″ monitor, nor will you be able to fit the same amount of information. In other words, you will have to code the UI to minimize, replace, or drop components as the screen size decreases from whatever the normal viewing size is taken to be (which is probably still 1366 * 788, based upon January 2013 statistics) and to add more components, more options, or more images as the screen size increases from the normal viewing size. You will have to have different scaling rules for images for different screen sizes (as some images will have to not only scale proportionally, but scale in multiples to look good, and only to a pre-set minimum and/or maximum size), return different amounts of data depending on display capability (and, if you can get an idea thereof, processing power), and even adapt the color scheme to the display characteristics. For every component, you end up needing so many rules, to account for mobile screen sizes, tablet screen sizes, laptop screen sizes, desktop screen sizes, and large monitor sizes, that it would have been less code, and less confusion, to just code five different designs. The theory sounds good but the practicality is virtually non-existent.
  2. Delight in Animation
    Just because you can, doesn’t mean you should. The analogy is just because you can down 3 bottles of free vino before you pass out, this doesn’t mean you should. Animations are not only processor-intensive (which is an issue for mobile devices with limited battery life), but they are also bandwidth intensive. Just because the carriers have the capacity, this doesn’t mean the individual does, especially if she’s on the go. Cellular provider data plans are expensive and the last thing we want to do is run up tens of dollars in overage charges for your stupid animation. And yes, many places offer free wi-fi, but usually only have a single low-end 54 MB router that can’t really handle the amount of traffic all of the freeloaders are trying to route through it. Give us a nice graphic if you must, but don’t waste our dollars on frivolous animations.
  3. Creative Typography Explosion
    Some of us like to be able to read what you write and don’t want to spend 30 seconds trying to figure out if the word is ‘moot’ or ‘nook’ because your fancy-smancy psuedo-cursive type-front is so quirky and blurry we can’t differentiate u’s from v’s, a’s from o’s, t’s from k’s, and p’s from q’s. There are a large number of good, old fashioned, type-fronts that have been around for decades for a reason. They work. Use them.
  4. Dashboards
    Everyone should know better than to get the doctor started on this topic. I don’t know how many times I’ve told you that dashboards are dangerous and dysfunctional (which is a message I’ve been shouting from the rooftops since 20007)! Austin got the message. Why Can’t You? (Why do you need to find out for yourself that integrated dashboards are deadly or that dashboards will be your downfall.) Needless to say, the doctor is not pleased by the explosion thereof!

Got any of your own bad design trends of 2013 to share? Leave a comment!

Learn from FedEx and UPS and Avoid Package Fail This Year: Part II

In yesterday’s post, we noted that 2013 retail saw a massive package fail with packages being delivered two weeks or later than expected. The situation was so bad that, as reported in The Washington Post, Amazon, UPS offer refunds for Christmas delivery problems.

We also asked what really happened, and how can all carriers learn. In our attempt to answer this, we noted that Jim Tompkins penned a good piece over on in the Tompkins International Blog on “Realism and Final Delivery for Holiday 2013” where he noted that there were five really big factors that were going to impact final delivery and yet UPS and FedEx still failed to be realistic, practical, or pragmatic in communicating their failure to deliver on their promises for holiday 2013, even though both UPS and FedEx should have predicted all of the factors.

So how can carriers fix the mess they helped create? According to Jim, carriers need to do a better job at three things:

 

 

  • peak planning
  • contingency planning
  • communications

 

 

 

And he’s right, especially where communications are involved (as the big shipping companies should have known by December 21, after being storm-stayed for 2 days, that they were in crisis and should have communicated that fact), but planning alone won’t be enough as next year could again bring the situation where the number of packages in the network overloads the entire capacity of the network.

So what do UPS, FedEx, and other carriers have to take away from this to avoid major package and delivery fails this year?

  • plan for peak
    At some point, unless you’re (on the road to be) going out of business, you’re going to hit peak capacity. Plan for it. Be sure you can operate at peak efficiency during this time.
  • plan for disruption
    Be it weather, strike, or some other unplanned natural or man-made catastrophe, you’re going to experience a major disruption — and, thanks to Murphy’s Law, it is going to occur at the worst possible time. Have contingency plans in place.
  • plan for partners
    Not only will the disruption strike at the worst possible time, but it will result in your load exceeding your peak capacity. At this point, you have two options — accept that some deliveries will be late (and some customers will be really upset and possibly leave you for your competition) or offload some of the load to a partner with whom you have a bi-lateral contingency agreement. For example, if UPS and FedEx would have planned ahead, they could have offloaded a large number of packages to traditional 3PLs and local delivery services who were both under-capacity and looking for work. In order to take advantage of peak season, retailers need their goods on the shelves by black friday. So, the carriers that deliver to retailers will have likely made their last delivery by mid-December. There’s no reason that they can’t be used as the long-haul carriers from DC to DC, which was a big part of UPS and FedEx’s problem. Plus, most local delivery services, that often make their living couriering documents and local office supplies, are probably not going to be that busy by mid-December when office managers and legal departments start going on vacation. They could pick up from a local DC and act as additional delivery staff — they just need a hand-held scanner. Similarly, when traditional carriers hit peak capacity in November and have problems making delivery times due to weather or equipment failures, excess could be offloaded to FedEx and UPS which often only hit peak capacity during the big retail rush.

Murphy’s law, with a little help from Mother Nature’s black swan, will insure that any carrier that does a reasonable job of running their business will hit peak, will get disrupted, and then will not have the capacity to recover without help — especially if the retailers do not do anything to dispel the myth that waiting until the last minute to shop online is a good idea. So plan for this, and line up some help as part of your disaster-relief contingency plan. Then maybe you won’t end up with a tractor trailer of egg on your face. Just a thought.

Learn from FedEx and UPS and Avoid Package Fail This Year: Part I

As summarized in Martin Murray’s Logistics/Supply Chain blog on About.com, 2013 retail saw a massive package fail with packages being delivered two weeks or later than expected. The situation was so bad that, as reported in The Washington Post, Amazon, UPS offer refunds for Christmas delivery problems. (Specifically, customers of Amazon who failed to get their deliveries by Christmas day received $20 gift cards and refunds on shipping charges and UPS is refunding shipping costs. FedEx, on the other hand, is only going to work with people affected.) According to the Washington Post article, the delays were due to a combination of bad weather, shoppers waiting until the last minute, and the overwhelming surge in online buying. (A UPS spokeswoman said the volume of air packages in our system exceeded the capacity in our network.)

According to Mr. Murray, the situation with ordering from online retailers probably won’t improve next year, unless the major parcel carriers understand that people order late, they order a lot, and they expect it on time. SI agrees that an understanding will help, but only if they do something about it.

So what really happened, and how can all carriers learn? Jim Tompkins penned a good piece over on in the Tompkins International Blog on “Realism and Final Delivery for Holiday 2013” where he noted that there were five really big factors that were going to impact final delivery and yet UPS and FedEx still failed to be realistic, practical, or pragmatic in communicating their failure to deliver on their promises for holiday 2013. What were the factors?

  1. 26 Days Between Thanksgiving and Christmas to Shop
  2. 26 Days Between Thanksgiving and Christmas to Deliver
  3. Growth of Online Shopping
  4. Retailers’ Behaviour
  5. Weather

As Jim notes, factors 1, 2, and 3 were based on fact, well-known, predictable and non-controversial. They pose significant challenges, but ones that have been around since the WWW, created by Bernes-Lee in 1990, began to be used commercially in 1991 (and definitely since Amazon.com and eBay launched in 1995). These should not have been that much of an issue.

Factor 4 could have been predicted too. As Jim notes, there is a clear sense among consumers that delaying online shopping is a good thing because the availability of great promotions and free shipping became more and more prevalent in 2011 and 2012 and there is no reason to buy early when it is better to wait and get a better deal. Since retailers did little to dissuade this notion, many consumers held out to the last minute to shop online hoping for a better last-minute deal.

And while the breadth of factor 5 can not be predicted in advance, there are recent precedents for bad weather that covers a wide geographical area several days in a row. As an example Jim reminds us that it was only nine years ago when an ice storm crippled Memphis and Louisville, resulting in major final delivery problems for Christmas — and with the effects of global warming (which exists, regardless of what overpaid scientists employed by mega corporations tell you*) increasing by the year, massive storms should be expected.

So what should carriers take away from this fiasco? Stay tuned for Part II tomorrow!

* With only a few exceptions, the average temperature of the earth has been increasing steadily for the last 30+ years. (See this graph from the NOAA.) Anyone who says there is no global warming is therefore a liar or an idiot. What is not known is the degree to which we are causing it with respect to pollution, etc. and the degree to which global warming is a natural part of the earth’s cycle — as an analysis of the history of the earth through extracted core segments shows that just like there were ice ages, there were also times of higher temperature. But the fact that some degree of global warming could be natural is not important — what is important is that this analysis also shows that when temperatures rise, droughts and natural disasters become more common and (mass) extinctions soon follow. Therefore, even if we are only responsible for a (small) fraction of the global warming that is currently occurring, we should be doing everything we can to minimize our impact!