When Technology is Abusive

So I went to my friendly neighborhood Bank of America ATM this weekend to do something I've done many times before. I need to move a little bit of money from an account with another bank into a BOA account. The easiest way to do this is to just withdraw cash from the other account and deposit it into the BOA account. So the procedure is:

1. With ATM card from other bank, withdraw money from other bank via the BOA ATM.
2. Place money in deposit envelope.
3. With BOA ATM card, access BOA account and deposit cash.

Simple, huh?

But this week was different, because BOA had replaced their ATM with a shiny new model that was "envelopeless". This one counted cash. As in - you put your cash directly into the machine and it counts the money.

I can image the BOA execs thinking this one through: "We have a problem with people depositing the wrong amounts of money in their deposit envelopes. We need to do something..."

So I withdrew the money from the other bank accounts as normal, noting that the ATM fee had been raised to (sound of sucking breath) three dollars! Fine. Then I took the stack of twenties that had just come out of the ATM, switched to the BOA account, and attempted to deposit them back in.

One of the twenties was rejected. "Sorry, we cannot accept this bill."

In my mind this violates a principal of currency that's thousands of years old. If we've just agreed that this unit of currency is an acceptable part of a trade, you can't then turn around thirty seconds later and claim that its not acceptable. You can't have it both ways.

I've basically liked by experience with BOA so far, and I've found that generally they've been a fairly progressive bank. However this is a pretty good example of a technology upgrade that reduces the value of the bank to me: dealing with them has become more expensive (ATM fee price hike) and more hassle-prone (cash counter doesn't accept the bills that they're distributing).

Bank of America: At least address the latter issue - its insulting. If you're going to eschew envelope deposits and insist on having a machine validate each bill, then you had better stock the dispensing cartridges with perfect bills - preferably new issue, super crispy bills, but at least something that is guaranteed to be able to round-trip back into your machine. You can't have it both ways.

A disadvantage of OpenId, and web services in general

so now I can't log into BaseCamp. Whoops.

NYSIA Panel

So I went to the New York Software Industry Association panel on Monday. They had three very interesting panelists: David Teten of Nitron Advisors, Laurel Touby of Media Bistro and Carter Burden of Logicworks. (The panel was moderated by the NYSIA president - Bruce E. Berstein).

I didn't really go in with the intent of "covering" the event, so my notes are pretty helter skelter, but here are a couple of points that really stood out for me:

Offshore

I thought we'd get the controversial stuff out in the open first. David said you should try to offshore as many parts of your business as possible. In fact, he apparently has a huge team in India scanning ads looking for resources. The qualified leads get passed up to the North American offices.

Board of Advisors

All three panelists had a board of advisors of sorts. David had a fairly large board, he had specific time commitments that he required of each board member, and conditions under which they would be fired. Laurel defined her board as "people she needed to talk to at that moment". Carter's board was made up of his investors: his family. Eek. I was struck by how much each panelists personality shaped the nature of the way they did business: David was incredibly organized, Laurel was social and Carter was familial. (Of course that's a massive over-simplification...)

Equity

All three panelists had some sort of employee equity program. In each case the total equity devoted to the program was less than 10%, and while each panelist liked it for its ability to align the interests of the employees with the company, they cautioned that a large equity grant doesn't necessarily get you someone as emotionally invested in the business as the founder.

Partners

The meaning of "partners" seemed to shift around a bit. Initially it seemed like the panelists were taking it to mean other businesses in a peer relationship with the founder's business. In this case there was a fair amount of negative feedback from the panelists about the idea. Laurel frankly said she hated partners - she had a technology partner early on and it was a disaster. Partnership was characterized as an inherently unequal arrangement, where one side cares more about the partnership than the other. Danger, Wil Robinson.

Attracting Customers

There were some fairly conventional answers to attracting customers - Google Adwords etc. David put something well however: "Creation of valuable intellectual property for clients". By making his website a valuable resource for clients, it attracted the kind of people that were likely to bring him business.

Interns

This is something which I was sort of aware of, but hadn't really thought of the scale. New York would collapse into sand without interns - they are the donated labor that keeps everything running. At AI we have a couple of interns, but business seem to be churning through legions of them to do stuff. David and Laurel spoke of "employing" (as in, for free) lots of interns, which is the only way they managed to get stuff done.

Cross-Border Shopping

In Toronto for the long weekend (blogging in the strangely futuristic indoor patio of Richtree in BCE Place) and thinking about some of the lesser known reasons for the success or failure of e-commerce:

• Sales Tax: Often its cheaper to buy online, especially from companies that have no business presence where you live. In New York its a little over 8%, but in Canada there's usually provincial and federal sales tax, potentially adding up to 15% or so.
• Bank / ATM cards with credit card insignias: Any bank card issued in the states will almost always have a Visa or Mastercard label on it, and can be used as such. Canada bank cards have no equivalent label, and always require the entry of a PIN in order to operate. This means that if Canadians want to shop online they are obligated to use credit cards (not necessarily a financially wise move) or to use a solution like PayPal (requires a level of sophistication beyond some shoppers).
• Import / Export restrictions: You know, wine is an e-commerce tragedy. A closed bottle of wine is relatively non-perishable, has a range of pricing from discount to premium, has easy differentiation across the industry, is (with care) extremely shippable, and is primed for a great online service to offer a level of variety vastly beyond what a local provider could offer. Unfortunately its absolutely screwed by the law. Cross-border shipping restrictions, prohibition-era laws preventing the ordering of out-of-state liquor, import taxes - all combine to create a completely inviable (or at least inhospitable) environment for what would otherwise be a great e-commerce product. In Ontario its a complete non-starter: only the government can sell alcohol: its more or less illegal to run a private wine enterprise.

When I was running my little start-up in Toronto in the 90's, I always felt like a great opportunity was being missed by Canada. With its highly-educated population and its modern infrastructure (and, at the time, an exchange rate which made it extremely attractive to shop there from the States), it seemed like a short hop for it to become an e-commerce powerhouse. But the legal and financial support just never materialized, allowing other countries to pull ahead of it. I knew a couple of people from Toronto who were successful, but they became so by leaving.

I had dinner with (Torontonian) Jeff Skoll, co-founder of Ebay, a few years ago, and we puzzled over what was missing from the Canadian start-up landscape. He basically said that four things were required to form a great start-up environment:

1. Smart people with great ideas.
2. Angel investors willing to put up seed capital to fund it.
3. Venture capital funds willing to put up larger amounts of capital to allow a company to build up its business.
4. Larger underwriters willing to take the companies to IPO.

Canada is missing 2 and 3. I believe him, Jeff has always seemed to be right a lot.