Circle of Experts - Brain Food Blog

Underleveraged talent pool: the unemployed and underemployed

2008-08-14T07:55:37.9913184-07:00

Lately, I have been thinking about the unemployed and underemployed as a pool of talent. I'd argue they are one of the most undertapped economic segments. Of the global working population, 6.3% is unemployed. In the US, the long-term unemployed are better educated, older, and more likely to be professional workers than the mean unemployed population. These workers are particularly held back by age discrimination and high wage expectation.

I am reasonably familiar with this market because a key component of the Circle of Experts' strategy is to tap the knowledge of people in transition. Working with this community excites me because the unemployed are people facing significant challenges. While they are wrestling with finding a job, we are glad to pay them a competitive rate.

Particularly now as layoffs increase, there are significant entrepreneurial opportunities in creatively tapping the time and talents of the unemployed and underemployed. The expert network business, the fastest growing sector of the investment research industry, is a prime example. Other successful startups working in this market (broadly defined): Accolo, TheLadders, Notch Partners, and ProfessionaLink. Who else would you add to the list?

Leveraging the talents of the autistic/creating a new business

2008-07-13T07:54:25.676-07:00

I recently learned about an entrepreneur with a very clever business model: Thorkil Sonne, founder of Danish software testing company Specialisterne. The 55-person firm's clients include CSC, Microsoft, and Oracle.

Specialisterne claims to be the world's first company focused on leveraging the unique talents of people with autism spectrum disorders (ASD). Sonne started the company in large part to ensure that people with ASD—including his own son—would have employment opportunities. ASD, the most common form of autism, affects close to 1% of the population, but only 10% of ASD adults obtain any form of employment.

Software testing is a repetitive role which requires high attention to detail, and is an excellent fit for the typical ASD personality. 75% of Specialisterne's testers have Asperger syndrome or a form of ASD. Sonne estimates that 1% of all the tasks executed in a given large company are suitable for autistic workers.

What I particularly like about this is that Sonne identified a community of talent almost unused by the labor market, and has built a successful firm on that insight. From the point of view of both profit and of social welfare, he has built a powerful model. He is now expanding internationally.

Raising Fund “x”: Trends in Private Equity Fundraising and Fund Evaluation

2008-06-12T13:18:18.53-07:00

I enjoyed listening to a panel this morning sponsored by Broadgate Consultants on "Raising Fund “x”: Trends in Private Equity Fundraising and Fund Evaluation." My rough notes follow:

Panelists were:

Dr. Oliver Gottschalg, Assistant Professor of Strategy and Business Policy, HEC School of Management; Co-director, HEC-INSEAD Buyout Research Group
C. Scott Hamner, Director, Credit Suisse Customized Fund Investment Group
Jesse E. Reyes, Managing Director, Bear Stearns Private Funds Group; Founder, Reyes Analytics

Reyes: Buyout market bifurcated between very large firms and very small. Everyone now wants to go mid-market (defined as under $1b to under $6b).

Distributions have been coming back to LPs very slowly, so they have less capital to invest.

Hamner We represent pensions and other large investors. We act as an investor/fiduciary on behalf of those clients, and are an intermediary here.

Quality and volume of funds is much greater now than it was in the past.

We're seeing a convergence of our investor criteria.

We have a much larger universe of funds in which we can invest.

Bar for new manager relationships is higher than managers we've known in the past.

Gottschalg: "Top quartile paradox".

A lot of LPs unhappy with past performance of their investments.

Q: Subjective or objective criteria more important?

Reyes: "People eat multiples not IRR."

Gottschalg: Multiples and IRRs are both misleading. A better measure is to move to a better standard on which performance can be objectively reported.

Q: What is your advice to new managers?

Reyes: I see a lot of shotgun marketing in the LP business. You should only be focusing on funds that are a fit for what you invest in/your stage.

The attribution of your track record is important, i.e., who in your fund did what.

The devil you know is better than the devil you don't.

Differentiation/knowing your customer is paramount.

Q: What is the effect of the growth of the secondaries investing market?

Gottschalg: This industry will move to more objective reliable performance measures, a ratings-type model.

A more liquid secondary market opens up a whole new toolbox for how you invest in this sector, and changes how you think about investing in this area.

Gottschalg: What are obstacles in the way of this industry realizing the division that you outlined?

Inefficiencies in the market help top PE firms get great returns.

Reyes: Is being top quartile in Fund 1 correlated with being top quartile in Fund 2?

Q: How does GPs marking to market impact how you do business?

Reyes: 95% correlation between VC returns and Nasdaq; 60% correlation between buyout returns and S&P 500

Question from fund that brags about its capital efficiency, and asked for details on metrics that the panel recommends for evaluating fund performance.

Reyes: Capital efficiency is not a gating item, it's a differentiator.

Teten: What metrics are fairest for judging private equity vs. hedge funds and other investments?

Reyes: Some relevant research on this topic by Austin Long, of U. Texas, and Jeremy Collard.

People tend to use just multiples, not IRRs. "It's hard to compare an IRR with an index."

3 elements to consider in designing a performance measure:

- overall multiple

- duration

- risk level you are taking

(Teten: I'd also add you should measure how much capital you use immediately vs. later.)

Hamner: Two main comparables:

- a public index (S&P 500, Russell 2000)

- Cambridge Associates US Venture Capital Index/Thomson Venture Economics index

Q: How do you measure performance when PEs take a long time to put capital to work?

Reyes: "Just in time" financing is the solution for this, that is a tool to boost IRR to the highest possible level.

Visit to SF Bay Area May 5-8: Wharton & Columbia Business School Alumni Clubs

2008-04-30T08:15:07.3795-07:00

I’ll be visiting the San Francisco Bay Area May 5-8, and hope that you can attend some of my investor seminars to the Wharton and Columbia Business School Alumni Clubs:

Topic: “Squeezing Blood from a Stone: The Professional Investor’s Guide to Eliciting Information”

Host: Wharton Club of Northern California
Learn how professional investors elicit maximum information in minimum time from industry sources. How do you ask just the right questions to get a CFO to open up and tell you about his company? This training is based on best practices in the intelligence, psychiatric, law enforcement, and journalist communities.
When: Wednesday, May 7th, 6pm cocktails, 7pm program
Location: Perkins Coie, 101 Jefferson Drive, Menlo Park, CA 94025
RSVP and more details: http://www.whartonclub.com/article.html?aid=901

Topic: “Where are the Deals? Venture Capitalists, Hedge Funds, and Private Equity Firms’ Best Practices in Deal Creation and Deal Origination”

Host: Columbia Business School Alumni Club of Northern California
What are you doing to identify companies in which you can successfully invest? Learn about recent research on where institutional investors source their investments; how to identify companies with the earmarks of an attractive opportunity; and how to increase your inflow of worthwhile referrals from both intermediaries and investable companies.
When: Thursday, May 8th, 6pm cocktails, 7pm program
Where: Pagemill Partners Auditorium, 2475 Hanover Street, Palo Alto, CA 94304
RSVP and more details: http://www.acteva.com/booking.cfm?bevaid=158041

Also, I will be attending the Association for Corporate Growth Grow! Awards on Tuesday, May 6, at the Computer History Museum in Mountain View ( https://chapters.acg.org/sv/uploads/events/922FC1DF84A74255B0B429DC3FC81104.pdf ), which may interest many of you.

Integrity Research Names Evalueserve Circle of Experts 2008 Top Pick as Asia/ Emerging Market Specialist Expert Network

2008-03-26T07:47:51.3675-07:00

I'm happy to report that Integrity Research, the leading research firm that analyzes the investment research industry, has named Evalueserve Circle of Experts the 2008 Top Pick as Asia / Emerging Market Specialist Expert Network. We've only been part of Evalueserve for one year, so we're very happy to quickly see public recognition for the value that we've created. One of the rationales for the merger was the opportunity it gave Circle of Experts to quickly gain access to Evalueserve's emerging markets infrastructure, particularly in Asia.

I have attached the full press release below.

Press Release

Integrity Research Names Evalueserve Circle of Experts 2008 Top Pick as Asia/ Emerging Market Specialist Expert Network

Evalueserve Circle of Experts has been selected as 2008 Top Pick for Boutique Asia / Emerging Markets Expert Network Specialist by Integrity Research, one of the most influential firms analyzing the investment research industry. This honor comes one year after the acquisition of the Circle of Experts, formerly known as Nitron Advisors, LLC, by Evalueserve, one of the largest global providers of offshore investment research support services.

The Circle of Experts is strong in all industries in the Emerging Markets. We leverage the intellectual capital that Evalueserve has developed in executing over 10,000 projects for over 1,100 clients, including 7 of the top 12 investment banks and 10 of the top 15 strategy consulting firms.

Evalueserve has dedicated operations centers in India , China , and Chile and is well-positioned to service clients on these markets. Evalueserve is also setting up a new operations centre in Romania in early 2008, in order to provide local coverage of European markets.

Integrity Research evaluated the twenty-five leading expert networks on six different metrics: their ability to source experts, the skill with which they match the appropriate experts with client requests, additional services such as market research or conferences, the firm’s key compliance principles to prevent the misuse of proprietary non-public information, customer satisfaction, and overall network usage.

Integrity surveyed hedge funds and long only investors to better understand how they use expert networks, which networks they prefer, and why. The survey helped Integrity Research evaluate each expert network, and also understand the dynamics of the expert network industry itself. You can read a summary of the survey at http://secure.integrity-research.com/imageweb/executivesummary-expertnetworks.pdf and purchase the entire study at http://www.integrity-research.com/retailReport.

About Evalueserve

Evalueserve provides custom research and analytics services to companies worldwide including Investment Research, Market Research, Business Research, Data & Financial Analytics, Intellectual Property and Legal Process Services, plus access to a global network of domain experts through Evalueserve Circle of Experts. The firm was founded by IBM and McKinsey alumni, and has completed over 12,000 client engagements. The firm currently has over 2,200 professionals located in research centres in Chile , India , China and New York . Evalueserve’s Client Executives are located in most major business and financial centres globally – from Silicon Valley to Sydney . For more details, visit www.evalueserve.com.

About Evalueserve Circle of Experts

Evalueserve Circle of Experts (www.CircleofExperts.com) provides its clients direct access to a global network of frontline industry experts across the Americas , Asia, Europe, and the Middle East . With its focus on emerging markets and dedicated operations centers, Evalueserve Circle of Experts has an unparalleled panel in India and China . The Circle comprises executives, scientists, academics, consultants, and regulatory observers who can deliver fast and precise solutions to client issues through private telephone consultations, customized surveys, and in-person meetings. Evalueserve identifies leading experts across all major industries and presents them to our clients.

About Integrity Research

Integrity Research Associates, LLC is an information and solutions provider specializing in the investment research industry. Integrity’s primary clients are institutional investors that use Integrity’s services to find new research providers and monitor existing ones. Integrity’s analysts cover over 1,600 research firms in the U.S. , Europe and Asia —research providers that no other source can offer. Integrity Research is the only firm which tracks the entire research industry, including nontraditional research, boutiques and research-related data, software and analytics. Integrity covers primary research firms and other alternative research firms which offer unique investment insights.

mailto:

Disclaimer

Although the information contained in this article has been obtained from sources believed to be reliable, the author and Evalueserve disclaim all warranties as to the accuracy, completeness or adequacy of such information. Evalueserve shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.

EVSContact

India :

PRCC

EVS Media Relations Tel: +91 124 4154000 pr(at)evalueserve.com

New York :

David Teten

Tel: +1-212-682-5875

dteten(at)CircleofExperts.com

On Sourcing Deals for Private Equity Funds

2008-02-22T12:31:42.257625-08:00

I enjoyed presenting a few weeks ago to the Harvard Business School Club of London on "Best Practices in Deal-Sourcing by Private Equity, Venture Capital, and Hedge Funds", generously hosted by McKinsey. You can download my slides here. I look forward to learning more about this area at next week's Capital Roundtable Masterclass on "The Art of Building the Right Deal Flow", in New York. I would welcome your feedback.

The Art of Email Writing

2007-11-10T20:11:00.94875-08:00

A constant complaint we hear around the office is that emails we receive (and sometimes send) are poorly written or unclear. According to “How to Write a Perfect Email”, when writing an email that warrants a reply, there are four key components to get a quick and valid response:

1. Brevity- Keep it short.

2. Context- How do you know me/where did we meet (Give information that would make a person remember you) and put it in the subject line.

3. Something to Act On- Make the request clear and ask closed ended questions.

4. Set a Deadline- Set a date when you need the information, give one follow-up email and then pick up the phone.

My colleague Michelle Reicher observed that the guidelines set in this blog are a good standard to follow, but, "I disagree with the blanket advice to ask closed ended questions. Keep the request and question clear and concise, but allow the responder to give as much information as is necessary to move forward. When one sends an email with questions, the goal is to solicit a response, but it is important to have a complete, comprehensive, and useful response not just a yes/no answer. Yes/No responses answer the immediate question, but do not allow farther explanation that may answer future questions or give farther insight into the matter at hand."

In The Cranking Widgets Blog: “How to Construct the Perfect Email Subject Line”, the blogger observes that a good subject line is imperative for a successful email:

“There are 3 simple tips that, if implemented properly, will make your email subject (and, subsequently, your email) much easier to read.

1. Use Keywords [to identify the purpose of your email.] All email messages fall into one or more of 4 possible categories:

o Questions (or messages that elicit a response from the reader)

o Responses (messages that are in response to questions or other inquiring messages)

o Informational (or FYI - messages that are meant to inform but don’t require a response)

o Spam (jokes, pictures of your nephew’s baseball game, etc. - as well as actual spam)

2. Briefly describe the subject - This is best done before you start writing your message. Finding the right balance between vague and overly-specific can be tough. Personally, I think it’s like anything else - you get better at it with time.

3. For Pete’s sake, never leave the subject blank - This is something I’ve mentioned before, and it bears repeating.”

The body of the email will never be read if the context of the subject line does not act as an icebreaker or a contextual reminder. If the subject line merely says, “Hi” then it is synonymous to a cold call, but if the subject line identifies the business or how you know this person it becomes analogous to a warm call or a referral, which are generally more fruitful and productive than an unsolicited call.

Content is Dead, Community is King? The Promises and Risks of Social Networking in the Information Industry

2007-11-02T07:51:45.062-07:00

My colleague Jesse Mandell took detailed notes on the recent SIIA panel on Brown Bag Lunch: Content is Dead, Community is King? The Promises and Risks of Social Networking in the Information Industry". You can view the web broadcast at no charge here.

Panelists:
Leslie Forde, VP of Strategic Alliances, Communispace
Leslie is a member of Communispace’s Management Team and is responsible for developing strategic partnerships with customer-focused organizations including marketing consultancies, advertising and public relations firms. She helps Communispace’s partner companies to effectively leverage customers by bringing them into the marketing conversation. Partners such as Ogilvy & Mather, Edelman and Digitas are using communities to deliver more value to their clients: to differentiate their brands, drive greater advocacy, foster loyalty, and overall, to improve marketing effectiveness. Leslie is a frequent speaker on hot topics such as: creating online customer communities, customer engagement, Web 2.0, social networking, and word of mouth. She sits on the Word of Mouth Marketing Association’s leadership committee. Leslie is no stranger to creating effective partner alliances. Prior to Communispace, she was the Corporate Sales Director for Cook’s Illustrated and managed channel sales and marketing efforts across all products including: retail book distribution, sponsorship for the public television show ‘ America ’s Test Kitchen’, and alternate circulation programs for multiple publications. Prior to Cook’s, Leslie was a Vice President at Northern Light Technology where she managed sales, marketing, and business development efforts in the US and abroad. She moved to London to launch the company’s International Division, where she lived for over two years and grew enterprise clients and alliances by over 300% within the first six months. Previously, she held marketing and brand management positions with Xerox, Bausch & Lomb, and Allstate Insurance.

Kim Kobza, President and CEO, Neighborhood America
Kim Patrick Kobza is a co-founder of Neighborhood America and has led the company through its growth and development since 1999. Mr. Kobza developed many of the original concepts on which the company is founded, helps drive its ongoing vision, and is responsible for revenue growth.
Mr. Kobza's diverse career is characterized by involvement in leadership practices and community building. His background includes education and practice in economics, business, and law. Kim Kobza is a visionary and frequently speaks on the importance of leadership and community building in both business and public disciplines.
Mr. Kobza participates in ongoing education and leadership opportunities with many national leadership organizations and is a graduate and frequent participant in the Harvard Executive Leadership series on Cross Boundary Collaboration. He holds a J.D. from Wayne State University ; B.S. degrees from Central Michigan University in the areas of Economics, Mathematics and Earth Sciences.

Scott Parry, General Manager, Reuters AdvicePoint
Scott Parry has over 15 years of experience in the financial industry. His experience includes building and marketing financial information products and leading the development of innovative online brokerage services. Currently Scott is the General Manager of AdvicePoint, Reuters' Web 2.0 online community that connects investors, financial advisers, and investment product companies.
Previous to Reuters, Scott was the VP of Institutional Sales at Invesmart Advisors. Scott helped found Ameritrade Institutional Services and managed Ameritrade Retirement Services and Ameritrade Corporate Services. Scott was responsible for the creation of numerous online brokerage/information services.
Previous to Ameritrade, Scott was the VP Sales & Strategy for Nelson Information, a division of Thomson Financial where he drove the rapid growth of Nelson Information from a print directory publisher to an online information provider.
Scott has a BS from Charter Oak State College with a concentration in organizational management and is working toward a MS in internet technology at Pace University . He holds Series 7, 24, 63, & 65 brokerage licenses.

David Teten, Founder and Managing Director, Nitron Circle of Experts
David Teten is Founder and Managing Director of Nitron Circle of Experts, an Evalueserve company. Nitron is a research firm which provides institutional investors, corporations, and law firms with industry insights from a network of frontline industry experts. David was formerly CEO of Nitron, which he sold to Evalueserve. He was formerly CEO of Teten Recruiting, which he sold to Accolo, the 2006 fastest-growing private company in the San Francisco Bay Area. He was also formerly CEO of GoldNames, an investment bank focusing on serving the internet domain name asset class. David worked with Bear Stearns' technology/defense Investment Banking group, and was a strategy consultant with Mars & Co. He is an Advisory Board member of Accolo, Grouply, and the Word of Mouth Marketing Association. David is the lead author of The Virtual Handshake: Opening Doors and Closing Deals Online, the first book about how to sell, market, and close deals more effectively with online networks and other Web 2.0 technologies. He runs TheVirtualHandshake.com resource site and blog and co-writes a monthly column for FastCompany.com about Web 2.0 technology. David is a frequent keynote speaker to finance and technology conferences. David holds a Harvard MBA and a Yale BA and lives in New York with his family and two notebooks.

Moderator:
Karen Christensen, CEO, Berkshire Publishing Group
Karen Christensen is publisher, entrepreneur, and author specializing in global issues who began her career in London and founded Berkshire Publishing Group in 1998. She is editor/publisher of Berkshire's GuanxiOnline (http://www.guanxionline.com/), which helps professional people navigate today's China , and is a member of the National Committee on U.S.-China Relations (http://www.ncuscr.org/). Karen is co-editor of Global Perspectives on the United States and launched the community website http://www.loveushateus.com/ in 2006. Karen is an occasional journalist as well as the author of a number of popular books, including The Armchair Environmentalist, that have been translated into French, German, Japanese, Korean, Thai, and traditional and simplified Chinese. She blogs about publishing and social media at http://www.berkshirepublishing.com/blog and about China at http://www.guanxiblogs.com/karenchristensen.

NOTES ON PANEL

KC: Halloween is a good time to hold a panel. It is one of the few times where we gather with many different people we don’t really know to celebrate together. It is an interesting holiday because it is based entirely on trust---we send our kids to request candy from total strangers. A recent study found that 25% of Americans don’t have a person to turn to when they're in trouble. This is where online communities come in; they can fill the gaps for people and provide a sense of community where otherwise they would have none.

KC continues with background on the program:

Today we are going to ask tough questions asked about community building. Community is important to many people, including environmentalists, who are into buying locally sharing resources, etc. I looked at this community and decided that I didn’t want to live near them because they weren’t much fun (laughter). In short, communities are not all rosy; they have both positive and negative aspects. The exciting part of developing big community projects is the ability to build knowledge and business relationships. Today’s program came about because I wanted to learn about new social networking tool to build business and related communities. There are 57 definitions for community, and the ability to collaborate and make a community with different people is important for companies to develop.

KC then discussed the different cultural concepts of community and used the Chinese term that means community, guanxi. In each culture there are different concepts of community, and to be included in a community even for work, there are varying ways to do it.

KC then introduced the speakers and reviewed their experience. She also asked the speakers how they defined the term “community” and what communities they are members of.

DT: A community is two or more people with any relationship stronger than they would have with a stranger. For example, Americans meeting in another country are part of a community of expatriate Americans. They would not necessarily be friendly back home but because they share the same nationality they will associate when abroad. I am a member of many communities: my family, two synagogues, company (Evalueserve), our clients, school classmates (business school, college, high school).

LF: A community is any group of people who share a common interest and develop relationships with a sense of reciprocity. Now with the web, location and place falls away. I belong to many communities and at the moment I am very into Facebook.

KK: One of the main purposes in life is to use collective intelligence as a community to make better decisions. For example, communities have been formed around the future of the Statue of Liberty, and national causes such as what to do with healthcare. Community is fundamentally about having a common purpose. I am a part of communities where I will act, friends, family, church and leadership groups. However, most people aren't part of too many communities.

SP: To get a better understanding of how communities function, I looked at the interactions of financial advisors and what kind of online communities would appeal to them and if they would use them. They don’t like to interact with each other online and prefer to meet face to face. So we made our community more of a transactional place where investors could talk to advisors and fund companies, etc. I also looked at open and closed communities and the implications of each. Reuters has different initiatives going on to create communities among people using their products (e.g., Reuters Space) where they can share ideas for optimization, etc., so that Reuters could better meet the needs of not only their clients but of financial advisors as well. I personally belong to several communities including family and church. People look for communities when they need information and then become part of that community. For example, when we found out my middle daughter had special needs I became part of that community.

KC: Why does community matter today?

DT: I divide community into two categories. (DT then spoke about user generated content and how Nitron acts as a community and connects people).

DT: There is clearly a movement for people to generate content and synthesize it into something other people can use. Also people use user generated content for feedback, e.g., the NYtimes website. They integrated community content on to the site even though it doesn’t fit the editorial norm.

LF: What has been happening with consumers is that people aren’t allowing brands and publishers to have such access into their conversations as they used to have. Highly authoritative content has lost a foothold. People go to friends instead of going to the traditional places for information. New content providers now have the same cachet as traditional content providers. Secondly, consumer generated content is its own animal. We need to learn how to harness consumer sentiment to understand it and how to make, and break businesses as well as what content is important in people’s lives.

KC: So LF, you create communities instead of waiting for them to form naturally? What does it take to build a community?

LF: Invitation only communities are different from ones that people create on their own. This is interesting for publishers. Publishers have many different kinds of communities that they create for their different customers. These go across age of customer base. It is surprising that when you get people into a virtual room how much they want to be part of the future and a brand's direction.

KK: The role of content is changing---- just look at http://ratemyspace.hgtv.com/ (Editor: the internet equivalent is ratemyspace.com, a completely different site.) People can make suggestions etc., about other people’s spaces. Users took trusted content and used it to create a conversation. This enabled a conversation amongst users, which generated hundreds of thousands of users and millions of hits per month. The peers are the audience and are not experts, this makes it relevant to individual people; the learning is within the audience.

SP: I have been in the information business for a while. I have found out that there are risks associated with the rise of user generated content. Wikipedia for example has a lot of information that is now free. Brittanica used to be worth $500m—now much less. What happens when user generated content becomes more valuable than proprietary content? We have to stay ahead of that curve.

KC: Let’s talk about the implications for deciding to build a community. Can communities really be created? Are online and offline communities different?

DT. Yes, they can be created and need to be created using a seed. (DT then gave the example of the stone soup story and how everyone contributed to the soup but that it started with only a stone.) My company, Nitron Circle of Experts, hosts dinners which bring together both clients and Nitron’s experts. The dinner is an artificial community and the seed is the expert.

LF: These are great questions, since 1999, I have felt strongly that there needs to be a high level social glue for people to participate and contribute. Social glue can be many different things. I spoke with a motor oil company and asked how are we going to get people to talk about oil? The fact of the matter is that you can’t, you have to get people into community about something else like NASCAR to get them to talk about motor oil. Not every brand needs to create a community; this might not be most effective way to reach the customer. Thinking about purpose and social media strategy is the right place to start, that will lead you to what kind of communities to go to.

KC: Feel free to ask question (to audience)

KK: Really big things are happening in the world right now and it is important to build communities right now out of a want to create as opposed to something mechanical that it might have been in the past. It is behavioral not a mechanical challenge that we face. It is important in the product development process to listen to consumers. Nine out of ten products fail, what if we can bring this to 8/10 because you listen to partners and consumers.

KC: Those are groups we need to use.

KK: There is a need to recognize the value of these communities in our business. Also not simply open or closed communities but there are hybrids that need to be considered as well. They are open and give feedback to closed community (the company) to create value.

Audience: Do you have an example of a community that has done this?

KC: We may be aspirational, this might not be working as well as we would like.

SP: We don’t want to rely solely on online communities. We also do conferences with financial advisors, so that they get the face to face feel they can interact best in. We need both bricks and clicks to make online communities work

LF: It is public knowledge that Charles Schwab is a client, and they started a new initiative to attract members of Generation X. Schwab wants to build products and relationships for this community. Schwab though up a high interest checking account that would come with free Schwab advisor account so that they could start the relationship early with these people for when they have money.

DT: It seems odd that they had to make an effort to figure out that high interest accounts would attract new business (laughs from audience).

LF: It is hard to get the practicalities into the business.

KC: Where should a company start listening to map opportunities?

SP: Just start talking to people.

KC: Who did it and for how long for you to get your community up?

SP: We hired experts and talked to our constituents.

KC: Do we know where our most important communities are? Where should we trust our gut?

SP: If you trust your gut, and add research you will get success.

KK: Start with your own employees and then turn to partners.

LF: I think it depends on what the high level goals are. If you are interested in driving loyalty then talk to customers first. How they view your value proposition versus how you do is something you need to get a handle on. Then you have to figure out how this impacts loyalty. If you are interested in new customer acquisition then you should talk to the growth market and find out what they need.

DT: I would talk to corporate entities and personal network of your employees. People within companies should enlarge their personal network thus enlarging corporate network.

KC: What is the optimal size of a community?

SP: I have no idea, we work with over a million financial advisors, how many do you really need? Probably thousands?

KC: Will they (the financial advisors) pay for a community?

SP: For the online community that we built there is a basic version and an advanced version. If they want, there is a basic version online but a better one you have to pay for.

KC: Can communities be too small?

SP: Yes, one that doesn't generate enough revenue to sustain it and get ad dollars is too small.

LF: Through trial and error we tried lots of things. We found that 300-400 people is the sweet spot. So that when new members log in to the community there is new content but at the same time there is familiarity. Members tell me when they are going on vacation for example, so there is a real sense of community with smaller networks. We all kind of know the members and they know others, there is intimacy b/c they see a relationship.

KK: Size is directly related to business purpose of the community. Communities based around mass market products will have lots of people. Communities based around a governance issue that affects lots of people will have lots of members. Every community has a life cycle. Some are a week some are much longer or until the business purpose has been achieved. The needs of a community change as well.

KC: How do we keep communities relevant and sustainable? There is initial buzz and then what happens?

KK: Social networks and communities are very different. Communities need to be credible and relevant over a long period of time. Community has to create value for users. There is also a need to create institutional memory for the community, the online Flight 93 community for example. A decision was made to include lots of people from designers and architects to the families of victims to create a new idea for the monument. Every PowerPoint and piece of documentation connected to a decision is stored. New people coming on can see how and why decisions were made. This underscores the need to create memories that are the working pieces of a community.

DT: I disagree with the rest of the panel, community size can be infinite---using my earlier definition of community. Facebook for example, I can send anyone a note and they will read it because they can see my profile and see my credibility. EHarmony is a community of people interested in romantic partnering.

DT then discusses online dating and manageability issues with mailing lists, and mentions Grouply as an initiative in this space. He then asserts that with the right amount of tech you can get around the issue of size.

KC: Should have an “island” in Second Life? Should existing technologies be used (Facebook, etc.) or should they be individual for each company?

Many comments from panelists some yes some no. it is based on the individual need of the company.

KK: It takes knowledge and technology to get it right. This is a unique creature. Technology enables communities but doesn’t build them. One needs to make sure that the technology works at all times. This is the largest segment of the technology industry today. This model is used in CRM world. They use data from customers to make their software better.

Audience Question: Facebook had to fire some staff when they were found to be picking up social contacts from the database. Guidelines from management need to be established. Humanity has always had communities. What is really new about this? What are the real dollar opportunities? Where is the payoff?

DT: (Responds to a previous question about safety questions online. ) There were bad people in the world well before the internet. The telephone had the same problem; people overreact to new technology. When we hyperventilate about alleged inappropriate behavior on MySpace, we're publicizing by anecdote instead of by data, and then we're establishing policy by anecdote instead of by data. According to the study Love Online, the rate of negative events among couples who meet is the same or higher for people who met face to face then people who met online.

LF: The downside or risk of community is that you have people who can say anything, and there is a need to create boundaries. In my past life with public communities I learned that communities can be hijacked, but in communities online this can be monitored.

KC: There are trust issues where personal or financial data can be taken advantage of.

SP: There are ratings systems which are great. Like eBay, can talk about people's credibility. That aspect of community is wonderful.

KK: We have an expectation of interaction. This is a function of an economic equation as opposed to a behavioral equation. The opportunity cost for participation is almost zero now. What changed here is that the technology is disrupting the cost of participation. It is now easier to get involved and for companies to deliver and make sense of it.

Audience Question: What about civil society? To what extent does technology which brings lots of participation imply for the governing structures of our country?

KK: At one point I was President of neighborhood association and it surprised me to see lots of community members with lots of wisdom---who did not participate. However, at community meetings you always heard from the same loud people. The promise of technology is that it will create a more structured environment for participation. If technology is used to include people to draw on collective intelligence then it can be excellent and used for public hearings. There are rules for public comments.

KC: What is the one thing the audience should do to use community in their business?

LF: Take a look at your 2008 business plan and look at it to see if the planning for next year has any planning to do with community. Make sure that you are planning for how this technology will affect this business

DT: The community should look at the communities that already exist. Orkut, for example exists in India . It is heavily used by our employees, whether or not management approves of it.

KK: One should feel a sense of courage to change the conversation and create clear value propositions for communities within your organization and raise expectations.

Audience Question from a publisher: There are many communities to be discovered online. One area not connected how is to connect people with publishers. How can this be done?

DT: Look where people have affiliated themselves with the publication and leverage that.

KC: Final comments from the panel?

LF: Communities can provide a lot of business value. Insight about new response to products that can make 100 millions of dollars, just look at the 100 calorie pack at Kraft, that came from customer insight. These communities can build relationships with segment of population that could never have been reached before. There is real importance around organic word of mouth that created positive brand value.

DT: Nothing sufficiently pithy. (laughter)

KK: (pitched his company’s newsletter).

SP: We are hedging our bets and using lots of models to start an online community.

DT: Just one last comment, it is short sighted to think of this in monetary terms. The NYTimes missed opportunities by charging people for viewing the Times’ archived content. While they made money, the Times lost relevance. Charging for content can be more expensive than it appears.

Web 2.0/Enterprise 2.0 in the Financial Services Industry

2007-10-22T03:11:43.25-07:00

Matt Nelson of Tower Group was kind enough to give me permission to post his thoughtful slides on "Web 2.0/Enterprise 2.0 in the Financial Services Industry", from the recent New York Financial Markets World conference on "Web 2.0 and Enterprise 2.0 in Capital Markets." Christopher Rollyson and he briefly discussed his presentation here .

Indian Gold Market Overview

2007-10-22T02:55:19.5-07:00

A Bullish Slant from this Key Market

We recently listened to a conference call with a preeminent expert in the Indian gold market, and several of the points raised during the call merit the attention of commodity-oriented investors. Short term macro issues like the weakness of the dollar or global inflation are often cited as reasons for gold’s recent moves. We believe the Indian market is at least as important as these drivers in determining the near term future of this key commodity.

Hosted by Nitron Circle of Experts and BNY Jaywalk, the talk with the senior gold expert raised several critical points:

India is the largest national market for gold in the world, in terms of tonnage. Recent demand growth for gold in India has been nothing short of staggering, with Q207 demand at 370 tons, up over 90% from last year. In fact, incremental demand from India represents virtually 100% of marginal global gold demand in the second quarter of 2007. Understanding the economic and social variables for Indian gold demand is therefore critical to forecasting global gold prices.

Current market fundamentals for gold demand in India are robust. Strong economic growth and a rising currency certainly help, but it is equally important to understand the broader economic role gold plays in the country. Many deep-rooted beliefs as well as social customs serve to underpin a rise in gold demand as India’s economy continues to expand.

Two products drive gold demand in India – investment products (bullion/coin) and jewelry. The intersection of demand for these products is the wedding season in India as well as a series of important religious festivals. Both of these start in the back half of October and run through late January. Gold plays an important role in intergenerational wealth transfer in India, and weddings and religious festivals are key points when families often hand wealth down to the next generation.

Gold also plays an important role in India as a store of value, especially in rural farming communities. Its good price performance through recent global capital markets turmoil has served to further burnish this reputation. Banks even offer “mortgages” to buy gold, recognizing how important this investment is in Indian culture. Farmers will also use gold as a way to preserve wealth in anticipation of potentially lean times ahead.

Indian gold merchants are sitting on seasonally peak levels of inventory in anticipation of the wedding and religious festival seasons. Banks have large stocks of bullion and coins, for the same reason. Should the imminent rush of demand not materialize in the next few weeks, both the jewelry stores and banks will have to start to unload inventory. Mitigating some of this risk is the relatively weak production profile of gold mining enterprises. Existing mines supply only a small part of the country’s overall demand, face steep cost/ounce constraints, and have long start-up phases.

We therefore believe that gold investors need to watch the Indian gold market very carefully over the next few month. With gold near multi-year highs, there is little room for disappointment in this important market.

If you would like to arrange a conference call with this expert or otherwise gain insights into the commodity markets in India, please feel free to contact the Nitron Circle of Experts.

For more information on Nitron Circle of Experts please visit www.CircleofExperts.com.

Nitron Circle of Experts is a subsidiary of Evalueserve, a leading provider of Knowledge Process Outsourcing services – custom research, analytics, and intellectual property solutions . For more information on BNY, please visit: www.BNYJaywalk.com .

The Promises and Risks of Social Networking in the Information Industry, Oct. 31

2007-10-21T07:35:34.6875-07:00

I’m happy to be participating at a Software and Information Industry Association lunch /webcast on October 31 in midtown New York, on "The Promises and Risks of Social Networking in the Information Industry".

The event is on “how your enterprise can profit from social networking: in promotion and marketing, in the development of new products and content creation, and even by making communities one of the services your business offers as an ancillary to content products.”

The other panelists are:

Leslie Forde, VP of Strategic Alliances, Communispace;

Kim Kobza, President and CEO, Neighborhood America;

Scott Parry, General Manager, Reuters Advicepoint

Karen Christensen , CEO, Berkshire Publishing Group will moderate.

Some of the questions that will be addressed include:

• How can we make our communities persistent and sustainable?

• What increases the value of a community to its participants?

• What social media are appropriate for my business?

• Does it really make sense to use existing free social networking communities like Facebook and Second Life?

• Can we develop our own unique social networking systems with open source technologies?

The event costs $50 for non-SIIA members. Alternatively, the event will be available via webcast. Register here.