Kids? Sure, but I have known some startup CEOs who could use this.
When I read that Infospace’s stock price had dropped 22% on reports that it has lost its largest customer, Cingular, and that analysts were calling for the company to shut down and return cash to shareholders, one word came to mind: oligopsony. (That is how my mind works.)
A monopoly describes a marketplace with many buyers but only one seller. The market for PC operating systems is effectively a monopoly, dominated by Microsoft. A monopsony is a market with only one buyer. This is rarer, so the word is unfamiliar. The market for tanks and helicopter gunships in the US is a monopsony.
An oligopoly is a market with many buyers but just a handful of sellers, and an oligopsony is a market with many sellers but just a few buyers. So few that they "can play off one supplier against another, thus lowering their
costs. They can also dictate exact specifications to suppliers, for
delivery schedules, quality, and … pass off much of the risks of overproduction,
natural losses, and variations in cyclical demand to the suppliers." (Wikipedia.)
The market for mobile content and applications in the US is an oligopsony. Four buyers dominate the market - Cingular, Verizon, Sprint (including Nextel), and T-Mobile - but there are hundreds of sellers like Infospace. Consequently the buyers have extraordinary power: power to dictate contract terms, to rein in suppliers that are too ambitious, and even to summon competitors into existence for suppliers who have none. Even if you get to be big and successful, when you only have four possible customers, losing one means losing at least 20% of your revenue overnight.
If you were checking Infospace’s stock this week, you might have guessed that the ticker was INFO (it is actually INSP). INFO is the ticker of Metro One Telecommunications, which was until a few years ago one of the biggest providers of directory services to the US carriers - the original mobile content business. When you called 411 from your wireless phone, Metro One answered. Then the company lost its contract with Sprint, and began a long slow decline from around $150 to $2.50.
How do you make a billion dollars in this kind of market? You can grow your business as fast as possible into one of a handful of powerful sellers - an oligopoly to counter an oligopsony. This has been the strategy of almost every mobile content company to date, and so far none has succeeded. Or you can market your content directly to consumers. Not surprisingly, many new startups in the mobile content market are taking this approach. It will be interesting to see if any of them are more successful than Infospace.
Gratuitous picture of a baby vicuna being bottle-fed by Summer in Peru
You may be wondering why I have stopped posting pretty pictures of macaws and llamas and started writing about technology companies. It’s an abrupt change I know, but the honeymoon is over (literally, not metaphorically). (Well, definitely literally.) I enjoyed our trip more than I can say, but I am glad to be home, and excited about what’s next.
What’s next for me - professionally - is a new startup. I don’t know yet whether I will be joining an existing company or starting one from scratch. I don’t know if it will be on the west coast or the east. But I plan to write about the process. I hope that by doing so, I will learn a lot from the people who read this blog: suggestions about what I should be looking and who I should be talking to, as well as concrete advice. If this is useful to other would-be entrepreneurs, great.
There is some risk that by disclosing what I am doing this way, I may help a competitor or just end up looking like an idiot. But I think that the benefits greatly outweigh the risks.
I still have a few thousand pretty pictures from our trip that I haven’t posted, and a lot of thoughts to go with them, so do stick around if that’s all you are interested in.
One night in Tokyo I made a pilgrimage to the New York Bar on the top floor of the Park Hyatt Hotel, where Bill Murray drank away the night in Lost In Translation. For fans of the movie, the bar is smaller than you expect, there’s a cover charge, and a lot of elderly Japanese businessmen chatting awkwardly to very young companions. But there are panoramic views of Tokyo, which doesn’t have many 52-storey buildings, and there really is a gaijin jazz band. I was hoping for Midnight at the Oasis, but settled for My Funny Valentine.
At the time I was working for a Japanese company, and the movie struck a chord. Not the mid-life crisis or the sexual frustration, but the sense of isolation in a land where every sign and gesture is strange.
I had always thought of doing business in a foreign language as an expensive but straightforward encoding/decoding problem: English to X, X to English. But it’s not. The meaning of many English words is specific to western culture. Most of the time we don’t even notice, because western culture is so ubiquitous. But when the culture is very different, mere translation is not enough. Even the simplest words can be misunderstood. For example, the word Yes.
There are at least three different ways to misunderstand the word Yes in Japan; that is to say, three that I have learned so far. I call them The Yes That Means I Am Listening, The Yes That Isn’t There, and The Yes That Means No.
The Yes That Means I Am Listening
In an American meeting, when you are speaking and everyone else is nodding their head and saying yes it means that they agree with you. If they don’t agree with you, they either say so, or they say nothing at all. In a Japanese meeting, when you speak everyone else listens, whether they agree with you or not. And they are very attentive. To show how attentive they are, and how much they appreciate you making the effort to speak to them, they nod their heads and say yes.
Oops. You start skipping parts of your presentation, because they clearly understand and agree. They grow confused, but are too embarrassed to say so; instead they listen even more attentively, and say yes. You think the meeting is going brilliantly, and then … a question that doesn’t make sense if they agree with you, a challenge on a basic issue, or perhaps they just get weary of you and call a halt. And you have no idea what happened. They said yes, didn’t they?
The Yes That Isn’t There
Or, The Absence Of No. The Japanese hate to say No, and hate to hear it. To be denied anything is to lose face; better not to ask at all. But if you must ask, you do not do so directly. You raise the issue briefly in an unrelated meeting, or over lunch, or on the golf course. You build consensus. You are sure that the answer is going to be yes before you explicitly make the request. The meeting where that actually happens is a formality, and everyone knows it. Or ought to. It’s like a cannibal barbecue: if you don’t know who’s for dinner, it’s probably you.
Enter the gaijin. You ask questions in meetings and you usually expect answers. When you don’t hear a no, you either assume a yes or assume that a yes is still possible. So you keep rephrasing the question until your exasperated Japanese host refuses to talk about the subject any further. If they invite you back to talk more, you think that’s a good thing. Well, maybe. But whether the answer is yes or no, the only purpose of that second meeting is to communicate it. The decision has been made, and you weren’t there. What’s for dinner again?
The Yes That Means No
At the end of a disappointing sales call, you say to a Japanese buyer "You don’t want to buy our product, do you?" She says "Yes," and you get very excited. But nothing comes of it, and you feel deceived.
More a matter of grammar than culture, perhaps. In English, the Japanese or her interpreter should have said "No, I don’t" or just "No", because the word No should always be paired with a negative statement. But in Japanese, the literal response is "Yes, I don’t" or just "Yes." It takes an experienced interpreter or translation software of rare discrimination - backed by a very expensive errors & omissions policy - to take the Japanese word for Yes and render it as the English word No.
If it was just grammar, this wouldn’t be much of a problem. The correct meaning would be clear from the context. But culture compounds the error. Perhaps you heard The Yes That Means I Am Listening, or The Yes That Wasn’t There, so you are already confused. Having made it clear in her own way that the answer is no, the Japanese buyer isn’t interested in correcting your stupid mistake. She may not even realize that you didn’t understand her, thinking that your happy tone at the end of the call was a professional courtesy, a reminder that it’s only business.
This is not meant to be an exhaustive account of what can go wrong when English-speaking people open their mouths in Tokyo, just a sketch of the doubt and confusion that can surround a single, short, simple word like Yes.
Never go to a meeting without a skilled interpreter, someone intimately familiar with both cultures. Spend time with that person, and get them familiar with your industry, so that they understand the terms of art. Do not rely on the interpreter provided by your hosts. Do not tolerate any paraphrasing of your words or what your host says. And do not take Yes for an answer.
For an in-depth account of the potential for cultural misunderstanding between Japanese and Americans, I recommend Haru Yamada’s Different Games, Different Rules.