A sea change from across the Atlantic?

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North America is leading the way once again, with the exceptional communicator and statesman Barack Obama safely installed in the hot seat for a second term.

Having led (i.e. caused!) the credit crunch, the US is making the most of its relative safe haven advantage and utilising the depth and diversity of its funding markets to great effect. This in turn has provided good real estate investors with more funding options through corporate bond issuances, plus loans from insurance companies as well as banks. DTZ boldly stated last autumn that, as a result, there was no funding gap in the US. In consequence, acquisitive US Private Equity funds such as Blackstone have begun mopping up bargains all over the world. Over the last year, domestic unemployment has decreased from 8.3% in January to 7.7%, homebuilder sentiment has risen to its highest level since 2006, and prices are up by about 17%.

Just as significantly, DTZ also said they expected the UK’s real estate funding gap to be all but eliminated by 2014, with equivalent funding lines to those active in the US recently tested and expected to expand significantly in the months ahead.

In the Eurozone, meanwhile, DTZ expect the funding gap to remain outstanding for some years. Even so, it looks promising that the crisis is taking a course “less bad” than most had expected  -much to the credit of (ex-Goldman Sachs) Mario Draghi, President of the European Central Bank and FT Person of the Year 2012. Draghi’s promise to “do whatever it takes” seems to be working.

As a result, the recovery of Greek Bonds has proven to be the hedge fund play of 2012. And if the Spanish government finally requested a Euro bailout, the country’s banks only required half the expected £100bn. The great exception of course is France, where policy makers seem to be doing their utmost to dismantle the economy (to the benefit of London). Economic disaster looks increasingly likely as wealth creators jump ship before they are pushed or even have their ships confiscated (as with Arcelor Mittal)!

Returning to the outlook for the UK, Mike Carney (notably also ex-Goldman Sachs) has been recruited as the new Governor of the Bank of England. He is widely considered to be one of the top two central bankers in the world, which is quite a coup for George Osbourne. Carney is generally expected to promote higher growth and employment, with interest rates staying lower for longer at the price of higher inflation.

This should be good news for investors like Inspired who concentrate on “real assets”, as values and incomes increase while debt as a proportion of value diminishes.

It is likely to encourage greater risk taking by investors who need to find higher returns in order to protect their capital, which will be at greater risk of erosion from inflation – currently standing at 2.7% and remaining stubbornly above the 2% target. Again, this represents good news for opportunistic investors like us: competition for assets may make it harder to buy cheaply, but there should still be plenty to go around as the US funds that bought loans in 2012 take action and make their margin by offloading in 2013. Additionally, our existing assets are all located in Inner London and should benefit from an increase in value, while capital should become easier and cheaper to raise.

I firmly believe that more risk taking (within reason) is a good thing generally: fear has a corrosive rippling effect through morale and into trust, investment and employment and has in itself become the greatest threat to our future wellbeing and prosperity. A more confident approach, as we’re beginning to see in the US, may just offer the perfect antidote.


What makes Twitter worth a billion dollars?

The Silicon Valley start-up has a huge following but its huge valuation prompts parallels with the dotcom bubble

TWITTER can be a tough crowd. When news broke last week that the profit-free internet phenomenon had attracted a $100m (£62m) investment and was now “worth” $1 billion, the reaction was almost as swift and harsh as that handed out to Kanye West after his unsolicited intervention at the MTV Music Awards.

“Twitter valued at $100 billion? (SIC) I heard $1 trillion and gets their own representatives at the UN,” Twittered milepetrone. “If twitter is worth a $ billion I must be worth twice that. I have a job and incoming revenues,” wrote gopevangelist. “Nutty,” was among the kinder comments.

In these straitened times the reaction was perhaps no surprise. Even Silicon Valley hasn’t seen anything like this since Google bought YouTube in 2006, and certainly not since the credit crunch knocked the froth off the world’s economy.

In just three-and-a-half years, San Francisco-based Twitter has achieved the Silicon Valley dream, going from an obscure start-up to global sensation. Everyone from Barack Obama to MC Hammer is Twittering, sending out messages of 140 characters or fewer to friends and followers.

The site has made history as a forum for protesters in Iran and is increasingly attracting the interest of big business. Facebook, Google, Microsoft and others have all reportedly been on the phone to Twitter’s founders hoping to buy the business. Now they have a price.

On Friday, Twitter confirmed it had received “significant” financing from firms including T Rowe Price, Insight Venture Partners, Institutional Venture Partners, Spark Capital and Benchmark Capital. The investment is believed to be about $100m. It follows previous investments totalling about $50m and leaves Twitter with a nominal $1 billion value — not bad for a firm that has yet to make a penny and has shown little appetite to do so.

At $1 billion, Twitter is worth as much as General Motors before it went bust, or twice the value of Domino’s Pizza — a company with 10,500 employees and actual sales of $1.4 billion last year.

For some analysts, the idea of a $1 billion company with no revenues is spookily familiar. Jeffrey Lindsay, analyst at Sanford C Bernstein in New York, said the fuss was “a throwback to the 1990s fantasy era of internet start-ups”. He said the investment represented smart money waiting for dumb money to come in and bail it out.

For others, though, Twitter is something far more exciting. The valuation is not out of line with its peers. Facebook, the online social-networking service that claims 300m active users, announced in May it had received another $100m investment from Russia’s Digital Sky Technologies, valuing it at $6.5 billion. Twitter attracts 54m visitors a month, said comScore, the web tracking firm.

For their fans, Twitter and Facebook are redefining the way people communicate. Charlene Li, founder of Altimeter, a tech consultancy, said it was important to focus not just on the technology Twitter had developed but its relationship with the customer.

Li noted that people all around the world are now addicted to sharing their thoughts on Twitter, even their negative thoughts about Twitter itself — that’s a relationship that could be worth a billion, she said. “It took Google four years to make any money,” said Li. “Look at it now.”

Beyond a brief statement, Twitter’s founders have yet to talk about the investment, but their ambitions are nothing if not grand. The firm’s aim is to reach a billion users and become “the pulse of the planet”, according to internal documents published on the blog TechCrunch earlier this year. Another $100m might get them closer to that goal. How much is the planet’s pulse worth?

TWITTER’s offices are everything you would expect from a dotcom start-up. A cavernous warehouse space in a still industrial stretch of San Francisco, the reception has the inevitable bike rack and a trestle table stacked with the tech world’s two main food groups — cereal and fizzy drinks. A huge flatscreen TV, plus video games, dominates one end of the room, and wacky sculpture in the form of two lime green plastic deer are parked in the corner.

Most dotcom companies never get beyond this stage. Nobody makes any money, the space proves too expensive, the company folds. Someone gets to keep the deer, the TV goes on eBay. Twitter has the opposite problem — its offices were too small almost as soon as it moved in and it has been searching for new digs.

Twitter founder, Jack Dorsey, started out with the simple idea of developing something that would let him know what his friends were doing.

It wasn’t a new idea — status updates were already part of instant messaging services like Yahoo’s. Anyone used to texting was used to keeping messages short. Perhaps because of its familiarity, Twitter took off at a sensational pace.

Last year, Twitter usage grew 422%. In February this year, it hit the frankly ridiculous growth rate of 1,382%, according to Nielsen Online. There is some suggestion that growth has peaked recently, but no matter which way you cut it, Twitter is huge.

However, all this buzz will be of little use if Twitter never makes a cent. The bet its new investors are making is that Twitter can turn all this chatter into a must-have marketing tool and an invaluable source of intelligence for businesses, while engaging potential consumers in a way that seems to have become increasingly tricky for traditional media.

Set against that potential is the risk that Twitter is just another fad. Not a new Google, but a new Second Life, whose 3D virtual empire rose and fell on a similar wave of buzz-fuelled hype a short cab ride from Twitter’s offices.

“If you think about what is there in terms of technology, it’s not much,” said Li. “In and of themselves each little Tweet doesn’t mean a lot.” But in aggregate, Twitter allows people — and, importantly, companies — to create and follow a dialogue in an entirely new way.

“It’s very quick, very easy, you opt in, I’m not bothering anybody with e-mails or text messages, you choose when you do it. That could be very, very valuable — especially when it comes to brands who want to develop a deeper relationship with customers.”

FOR many people, advertising has increasingly come to be seen as an irritating interruption. Consumers, once a captive audience, now fast-forward ads on their digital TVs, complain about pop-ups on the internet and treat e-mails from firms they are otherwise happy to do business with as spam.

“On Twitter you choose to hear from me and more importantly interact with me in a two-way dialogue,” said Li.

Companies, including Starbucks, already use Twitter to pump out their latest offers to those customers who sign up. Much of the mainstream media is using it to promote their content, offering links to articles in newspapers, magazines or promoting films and TV shows.

“Twitter is a great platform to push out those messages. I don’t mind Starbucks making announcements on my Twitter page but I don’t want them in my inbox,” said Li.

Twitter’s service has been the cause of much complaint. A graphic called the “fail whale” appears when the site crashes, which it often has during global news events such as the death of Michael Jackson.

Analysts expect that some of Twitter’s new cash will be used to harpoon the whale but the rest will go to Twitter’s all-important next phase. Last year, Twitter bought internet search firm Surmize, to build up its own real-time search engine. More add-on purchases are likely from marketing services and advertising software to photo sharing software and desktop applications.

The cash-rich company needs to build a more solid service as it moves toward a sale — which the founders have so far fought against — or float. Critics such as Lindsay compares the situation with YouTube, bought for $1.65 billion in 2006 and a money loser ever since, or Skype, the online telecoms firm bought by eBay for $2.6 billion in 2005. The auction giant struggled to find any use for Skype and is now being sued by its founders as it tries to spin off the business at a loss.

It’s still too early to say who is right. The Tweet looks set to stay even if Twitter fails — just as Second Life’s woes do not mean we will never have a 3D internet. Facebook, which is still growing fast, may well become the new Twitter. Or some other start-up may steal Twitter’s place as the hottest new internet firm. Alternatively, Google, Microsoft or some other group will make Twitter an offer it can’t refuse. One thing seems certain: whatever happens, Twitter’s users will have some very strong opinions about it.

Success in 140 characters

TWITTER is a free online service that enables its users to send and read messages known as Tweets. Each Tweet can be no more than 140 characters long.

Twitter attracts about 54m visitors a month. In February, Nielsen, the media consultancy, ranked it the fastest-growing of its “member communities” category, with a monthly growth of 1,382%.

The microblogging and networking site was dreamed up in 2006 by Jack Dorsey, 32, a computer programmer from St Louis, Missouri. Evan Williams, a former Google employee credited with inventing the term “blogger”, was an early investor and now runs the company with Biz Stone, a long-time colleague, and Dorsey. There are about 70 staff at the headquarters in San Francisco.

Barack Obama, Ashton Kutcher, Britney Spears and Stephen Fry are among the high-profile followers of Twitter.

Pear Analytics, the data researcher, surveyed 2,000 Tweets and described the top topics as: news, spam, self-promotion, pointless babble and conversational.

Perhaps not surprisingly, critics have condemned the site for its triviality. However, during the Iranian election Twitter became a sounding board for angry voters. It was also credited with helping to save lives during the recent Californian bushfires by spreading information about the path of the flames.

The average Twitter user is 31, according to the Pew Internet & American Life Project. Just 11% are aged 12 to 17, according to comScore, a research company.

Neilsen says Twitter has a user retention rate of 40%. Many followers drop the service after a month or so.

The privately held company received a new round of investment last week, believed to be $100m (£62.4m), valuing it at $1 billion.

Hitwise, an online research firm, believes Twitter’s growth may have hit a wall early this year. The site is often accessed via third-party applications, making it difficult to track. (Dominic Rushe, The Sunday Times) http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article6850779.ece

Contribution Currency

Success is the by-product

By Penny Power, Know me, like me, follow me – awesome book, buy it! [MS]

The most critical aspect of being a citizen in the world of social networks will be your ability to contribute to others.  Success is the by-product – the result of being a team player.  If you target success and have that as your only reason for spending time on a site then you will never achieve it.  Success comes because of your willingness to share, listen, help and contribute to the success of others.

In many ways the online world is no different to the offline world.  If you moved home into a new town or village, you would not broadcast a message from a bar stool and dish out your business card.  You would find a bar or club you liked, quietly sit down, listen, observe and, when ready, you would begin to have conversations.  I would guess that you would ask many questions of the existing residents.  You would ask them who are the good people to know in the neighbourhood.  When you needed a supplier, such as a decorator, electrician or plumber, you would ask for recommendations.  The supplier who has a good reputation would be offered to you, due to trust and respect for how he/she has contributed to helping others when they were in need.  It all seems so obvious, yet why do people act so differently online?  Impatience to gain a result can be the death of your reputation inside a social network.

The Next Big Thing…Tribe

The Next Thing: Leadership
by Seth Godin
(from his blog)

A great article going back almost a year now.  Provided courtesy of Chris Gale (we worked together for nearly 10 years through different businesses) – his main business is now http://www.blossomyears.co.uk/

Social medias growth in the last three years, though, gives marketers an inkling that there may be something else going on. Sure, they can run   ads on Facebook, but they dont work. Social media, it turns out, isnt about aggregating audiences so you can yell at them about the junk you want to sell. Social media, in fact, is a basic human need, revealed digitally online. We want to be connected, to make a difference, to matter, to be missed. We want to belong, and yes, we want to be led.

My new book is called Tribes and it comes out today. I started to write a leadership book but discovered that I was actually writing a marketing book. (Either that, or I started to write a marketing book and ended up writing about leadership, I cant remember). Either way, what I discovered in writing it is this: The next frontier of marketing is in leading groups of people who are working together to get somewhere.

As someone who was buying millions of dollars of magazine ads just 24 years ago, this is a lot of change to swallow. And its also the biggest opportunity for good/meaning/success that I can imagine. More details are here.

Things have changed, far more dramatically than most people realize. Not just what marketers buy, but what the media does all day, and what marketers build, and what we get paid to do and what and where we pay attention…

Heres the wager: A year from now, 10/16/09, will you be leading a tribe of people? Will you be creating stories, connecting people, giving them a platform and making things better for people who care about each other? Im betting you will.
Leadesrhip is now the strongest marketing strategy.
Yelling with gusto used to be the best way to advertise your wares. There was plenty of media and if you had plenty of money, you were set.
Today, of course, yelling doesnt work so well.

What works is leading. Leading a (relatively) small group of people. Taking them somewhere theyd like to go. Connecting them to one another.

I say relatively because there are few products that need everyone in order to succeed. A tiny sliver of the market is enough. Bill Niman used to run Niman Ranch, a cooperative raising meat for fancy restaurants and markets. That was already a sliver of the huge huge market for meat. He moved on to start BN, a 1000 acre farm raising goats for a subset of that subset. Its enough.

Its enough if the tribe you lead knows about you and cares about you and wants to follow you. Its enough if your leadership changes things, galvanizes the audience and puts the status quo under stress. And its enough if the leadership you provide makes a difference.

Go down the list of online success stories. The big winners are organizations that give tribes of people a platform to connect.

Go down the list of fashion businesses or business to business organizations. Same thing. Charities, too. Churches, certainly.

Its so tempting to believe that we are merely broadcasters, putting together a play list and hurtling it out to the rest of the world. Louder is better. But were not. Now were leaders.

People want to connect. They want you to do the connecting.

Is it time to join the Twitterati?

By David Lawson

Businesses are tapping into the benefits of social networking websites

Is it vital to know that someone you met at a conference has just had a good lunch? It seems that way for millions of Twitter ‘followers’.

Many will also rush to upload the restaurant recommendation to a blog or start a debate about relative merits of the food on a networking site.

Are they wasting their time, or simply taking the next step in an online revolution? According to a 15-year-old who grabbed headlines as a summer intern at a City bank, trendsetting youngsters have already lost interest in social networking sites such as Twitter. Further criticism came from a US study, which said 40% of Twitter messages – or ‘tweets’ – were ‘pointless babble’.

Yet more than half the users in a Europe-wide survey by the Association for Information and Image Management (AIIM) said Twitter gave them insight into other professionals’ lives and businesses. And two-thirds felt that professional networking on the web was vital to their career progression (see box).

Swifter responses

The RICS is so convinced about the importance of online networking that it has commissioned an investigation by Remit Consulting, which will be published this month.

Remit partner Andrew Waller says a new form of communication is evolving, which offers swifter responses through online conversations rather than the delays associated with sending letters.

Chris Lees was initially a sceptic, which may seem strange when he has played a part in helping pioneer computer technology in the property industry as executive director of software consultant Calvis.

‘Why would I want to spend more time online instead of picking up the telephone or going for a beer when my day job means I am in front of a computer for much of the time?’ asks Lees.

But a conversion to fully-fledged evangelist of Twitter and networking sites such as LinkedIn and Facebook came after realising how many of his friends and business contacts overlapped between such sites. That overlap is increasing as he invites more contacts to cross over between the different services.

Lees admits the benefits of investing time and money in social networking cannot be quantified. ‘But the same could be said of marketing, advertising, research, networking events and conferences,’ he says. ‘These things deepen relationships, and relationships are at the heart of doing business.’

Connecting with clients can be another key function of online networking. As marketing executive with property software supplier Qube, Carey Metelerkamp is responsible for contacting existing and potential customers, and she draws on the full panoply of online tools.

She uses Twitter, for example, to publicise events, news and product launches to about 100 ‘followers’ – the name used to describe users who sign up to read particular Tweeters. After making announcements on LinkedIn, she received 200 enquiries for Qube white papers. Generating this kind of response would usually involve hefty publicity.

Google rankings

Participation in Twitter or LinkedIn also raises Qube’s Google rankings, which might otherwise mean paying specialists. ‘This could be a huge benefit to small property firms, which don’t have the time and resources to raise their profile,’ explains Metelerkamp.

‘The UK property market has not yet realised the potential,’ she adds. For instance, CREOPoint, a discussion site for US property executives, has no equivalent vehicle over here.

Some of the more well-known networking sites are less appealing, however. Facebook, Bebo and MySpace, for instance, are widely dismissed as being too consumer-focused, with little business-to-business potential.

But AIIM says they are still part of a new world of social interaction known as Enterprise 2.0, which is growing exponentially. Even where there is no business involvement, social networks have bred a demand for easy and immediate access to people and data.

Companies are coming under increasing pressure to replicate online networking as business tools. More than 70% of professionals told AIIM they found it easier to find information on the web than on internal systems. And a third of users said they wanted to use the same social networking techniques for communicating with colleagues as they do with friends and family.

Online crowd puller

Networking and job hunting go hand in glove, and online sites are often still considered as somewhere to display a CV in the hope of landing a plum post.

But employers also demand references, so agencies have developed a technique called ‘crowdsourcing’, which reverses the process by asking professionals in an online network to recommend candidates.

This requires enough members to generate worthwhile responses, but few enough to have the intimate connections for valid recommendations. Background noise is also an issue. How do you filter out the mass of jabberers?

Tim Latham saw rich potential by concentrating on the relatively small number of professionals involved in the property industry. But when he set up recruitment
site Prefio he still had to overcome other barriers, such as getting people to give honest opinions in public and protecting the sensitive information required by employers.

He relies on ‘referrers’, who can prove they know the business and commit to confidentiality. They are paid £2,500 for each successful appointment, while employers are charged £5,000. (David Lawson, Property Week) http://www.propertyweek.com/story.asp?sectioncode=359&storycode=3149111