Category Archives: Rants

Bad Apples Get Loud in the Crowd

Business Ethics, Current Affairs, Rants, Web/Tech

What a shame. The wisdom of crowds is a good idea. User reviews is another good idea. You click and then read. There’s the reassurance found in good reviews. How many times have you been influenced by reviewers’ stars for one product or another. And lately also for services (as in Google maps, linked to reviews for services like TV installation and plumbing).  It’s nice, except for the bad apples in the crowd. Sour grapes. Sweet lemons.

Sour Grapes

If you use reviews at all, you recognize them. Using the review site for revenge. “You’ll be sorry you treated me badly.” The lurking competitors are bad; the extortionists are bad. Most of them inadvertently make it too obvious, but the worst of them do it too well. They pollute the review sites.

  • One of my favorites was the local restaurant review that was all thumbs down. Then the reviewer shares that they refused to serve her because they said she was drunk and unruly. Hmmm … do we see two sides to that story?
  • The gas dryer review spews venom about the product. Read closer: it was written the day the installer failed to show up. As in, before using the product.
  • The bad auto review hates the dealer; not the car.
  • QuickBooks (bookkeeping software) reviews are a good example. A lot of hatred there, far more than the software deserves. Everybody hates the accounting software they use, regardless of the brand. And no, I don’t work for Intuit, and no, they don’t pay me to say that. It’s just a good example.
  • The worst of it: reviews by competitors. To stick with the QuickBooks example, people reviewing QuickBooks who are really plugging their own competing software. People reviewing one book to plug their own. People reviewing restaurants who own or work for competing restaurants.

Just in case it isn’t obvious, think about this one: people who threaten other people with bad reviews. If you don’t add that other service for free, I’m going to trash you on the web. It happens, believe me. The extortionists.

Sweet Lemons

You can usually spot them: reviews on review sites by employees, consultants, marketers of the product. For me, when there’s only one or two reviews on a site, I’m suspicious.

Can’t Touch That

Review sites can’t deal with these bad apples. Earlier this week the New York Times published this piece about Yelp. Vendors want due process, error checking, protection against competitors and such. I’ve seen that before, about Amazon.com. Well, to be honest, my company has been victimized by competitors and extortionists on Amazon.com.

Legally, practically, the review sites don’t dare touch even the most obviously spurious and malicious reviews. It’s one of those legal areas that are either black or white, with no in between: as soon as you change a single review, then you’re editing, and you become responsible for all of them. If you never touch a review, as a hosting site, then you’re not responsible for any review’s content. I’m not an attorney, so check me on this, but that’s the way it was explained to me by somebody who should know.

So it’s damned if you do, damned if you don’t, and in the meantime, those of us who would like to draw on the wisdom of crowds have to go with so much caution that it’s rarely worth it. These days I only look at reviews when there are a bunch of them, 25, 50 or more, so that the bad apples don’t distort the broad picture.

But Could They, Should They, In the Future?

I was about to write “there ought to  be a law.” However, on reflection, never mind. Bad idea. But is it perhaps too much to hope for a court case or ruling that eases up on the legal liability for weeding out some of the most obviously erroneous or self-serving reviews?

Maybe at least an honor code and ethics attempt, asking people to at least identify themselves confidentially to the hosting site, so they take responsibility somewhere. It’s not a big identity theft or spammer email problem to do that; most blogs do it routinely.

It’s Not Necessarily Free Speech

Free speech is about politics, not printer drivers or restaurants. And we’re not talking about government entities limiting speech, we’re talking about review sites taking out the trash. I wish that the whole free speech thing weren’t such a slippery slope.

However, the courts do say that free speech doesn’t include shouting fire in a crowded theater (dangerous) or distributing commercial leaflets in a crowded theater (commerce). So maybe there’s hope for review sites getting a little tiny bit of slack on this, some time in the future.

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This ‘No Business Plans Post’ is Wrong on So Many Levels

Business Planning, Current Affairs, Entrepreneurship, Rants, Venture Capital

I read Paul Kedrosky regularly and like most of what I read, but this Twitter business plan post is just so wrong, on so many different levels:

"Seeing that Twitter closed
a funding round, and spotting the associated incredulity about Evan’s
company not having a business plan, reminded me of something: Whatever
your feelings about Twitter, business plans are overrated, and profits
perhaps even more so.

"Why? Two reasons. First, because VCs are
professional nit-pickers. Give them something to find fault with, and
they’ll do it with abandon. I generally tell people to come to pitch
meetings with less information rather than more. Sure, you’ll get
pressed for more, but finesse it. Presenting a full and detailed plan
is, nine times out of ten, a path to a "No" — or at least more
time-consuming than having said less.

"Profits are a different
issue. Being profitable too soon gives investors, rightly or wrongly,
an idea of what the margins are on the business, as opposed to what
they could be in some perfect world. As a result, it takes a mighty
force for them to not start wading in with discounted present value
worksheets, and the like, thus hammering your valuation and generally
making funding much more complicated (and equity consuming) than if you
were wildly unprofitable."

  1. The fuzzy thinking about not having a business plan. 

       

    • Maybe once in a while a venture capitalist will take a deal without having read, maybe without having seen, a business plan; but if so, it involved a star system founder who the VC already knew, a great track record, a business already up and running, and users and traffic or sales to validate the idea.  And even in that case, does not working with a detailed formal thick, coil-bound business plan document mean the funding deals were made without a business plan?  No, not likely.  A plan isn’t a formal document, at least not necessarily; it’s a series of organized thoughts and projections, it’s accountability, and commitment.

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    • Do you really believe Twitter didn’t have a plan? I like Robert Scoble’s post on the subject, he says that is just "bulls**t."  He adds: "…if you REALLY think you can get funded without having a business plan you’re probably smoking something illegal."

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    • And while I’m on the subject (of fuzzy thinking, not of smoking something illegal) the idea that entrepreneurs have just a pitch presentation, instead of a plan, is also wrong. The plan, whether it’s a formal document or not, is built into the presentation. You should never do one without the other.

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    • And — rant continues — it’s wrong for opinion leaders to throw around this loose talk about not planning.  We’re supposed to be giving entrepreneurs good advice, and "don’t plan" is bad advice however you cushion it.  Planning is good.  Set your goals, set the steps to achieve the goals, plan your resources, allocate according to priorities, and track results.  Always.  The fact that somebody somewhere was successful without a plan doesn’t mean "don’t plan" is ever good advice.  Somebody somewhere may have gotten straight A’s in school without working, and somebody somewhere may have won a marathon without training, but does that really make it a good idea?  Come to think of it, the guy who ran the first marathon did it without a plan, and he died.

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    • Disclosure: I’m a business planner, I’ve written books and software for business planning.  No question about bias: I am biased (and proud of it).

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  2. VCs are investors, which makes them partners.  You should choose investors as carefully as you choose a spouse. You’re going to live with them for years, and either win with them or lose with them.  So why should you try to blind them because they’re going to nitpick?  What about accountability, and perhaps even commitment?  I had VC investors in my company for a few years, and they were allies, collaborators, and valuable help.  I was grateful for comments on our plans.  People pay for plan reviews, and these are your partners.  Am I getting too emotional on this point?  How bad an idea is that?

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  3. "Being profitable too soon gives investors an idea of what the margins are …"  What?!  Read that paragraph again.  He isn’t serious, right?  That’s just a bad joke, isn’t it?  One of the dumbest ideas I’ve ever heard of is seeking dumb investors. 

— Tim