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Hi, everyone. Welcome to the daily podcast. The podcast where we discuss things with the news and social media that’s interesting to us as business nerds and as entrepreneurs. I’m James and I’m joined by my co-host, Marcella. Hi, May. How are you? Very good, thank you. So today we have got three topics. One that’s fairly sort of newsworthy and current and a couple of others which are a bit more about the practicalities behind e-commerce and online selling. So first up, this is a question or a talk pace which has come up because of some sort of personal experience with some of the people that we know, some acquaintances of us. And the question is, it’s like if you are looking to set up an e-commerce site, there’s a number of different options for you to do that. Two very common and relatively easy ways of doing that is you can use Shopify, which is, you know, a law, the largest possibly platform for doing e-commerce online. We can set up your own store and away you go. And the other one is using e-commerce, which is, I think the most popular e-commerce kind of plug in theme setup for WordPress and Web presses of, say, a very, very popular platform for just the Web in general. So many I think a third of the web is run by WordPress or something like that. So, you know, there are there are pros and cons of each. So how about you? You tell us, Mazzello. What what what is that? Your problems, your acquaintances came across when they were sort of trying to set up with these kind of things.

Yeah. So I think and this is not only for these two platforms, but in general the financial system.

And I have a direct experience in their financial system with FinTech. I found it. So all the compliance departments are getting crazy. Sometimes they will be shot bank accounts or without telling you why. And then you could be out of business. So so Shopify, essentially, they have they they can get to that situation or you can be thrown into that situation because they give you certain options on payments, on payment gateways. So. So their best one or the one, they’re the best option. When do you see Shopify will be to use five payments? Because your charge I think is two point nine percent and you get paid quickly two days. So if you call, you know, quick turnaround of goods, then it’s important. Or if you’re doing drop shipping, you need to get paid quickly and at the lowest possible cost. But if you use other payment gateways, then you need to pay. She’ll be fine.

Plus the other fees.

You can also get paid later. So it starts getting worse and worse as you go through other options. So then if you’ve got a problem with complaints of Shopify, it’s a huge bottleneck for your business. Whereas if you have your own website and you use more commerce, which is free, then you can connect to that.

Then you cover full operational e-commerce site and then you just plug in any other payment gateway that you get an arrangement with.

And you can use Stripe. You can use PayPal to cheque out. I mean, you can shop around. So I would say my personal recommendation, what I have done before is to use WordPress. But of course. And then the setup is a little bit more complicated compared to Shopify. But I think in the long term, you have more control over your your business. So if you’re planning to go big, if you want to i2. Right. You know something, maybe she’ll be fine. A quick way to do it.

You don’t need to to sign anything. You don’t need a server. You don’t need probably Othmane. So. So a web domain. So then you just get this plan play essentially. But don’t be, you know, put off WordPress because you need to do a bit more of a setup because that setup is very easy. In fact, we have a video on our site on how to do it, but there are plenty of videos there. So, yeah, I think it’s very cheap and easy way to do it. So I would go for WordPress unless you want to just iterate something quickly. You are not not ready to scale it yet. But anytime from the moment you decided you want to go serious, you know, with your product or service, I would. War press or any other platform? Bob, where you have control over your payment options because payments is a huge bottleneck and yet key to your business continued.

Absolutely. I think context is obviously the devil’s in the details here, right? Because I think your choice is going to depend greatly upon your sort of personal context and your business context. And I think you’re right to point out that effectively what you’re coming up against is platform risk. Right. So when you choose to go and use something like Shopify, as in you are using someone else’s platform to get you get pros and cons and the pros are you get to jump ahead.

And a whole class of problems already pre solved for you by the platform. You don’t have to come up with your own, you know, code for the e-commerce. You don’t have the house journalists to do any. There’s a whole bunch of problems which go away. But then there’s a few actual problems come along because you are dependent upon someone else’s permission to do the thing that you’re trying to do. And so depending upon how risky, in inverted commas, your the thing that you’re trying to do is or how risky your context is or how risky you appear to those platform holders, that’s the thing which is going to sort of drive a lot of that decision making. So for example, if you are a very vanilla e-commerce seller who is based in the US and is selling something super low risk, relatively low price, something like that, then by going with something like Shopify that you’re very unlikely to be come across any problems with being like turned down because the product is considered too risky or turned down because, for example, you don’t have a US Social Security number or any number of other sort of risk or fraud based cheques that they may be doing. Whereas if you, for example, are, you know, based in a Latin American country and you want to do business through US company, you might set up a U.S. company wherever or if you want to do it through a company which has been set up in a sort of not the US or not the UK. Then the likelihood is, is these sort of hoops you have to jump through and all the fraud cheques and things like that are going to be greater. And so it starts to move the calculus towards. Okay, well, the more the less exposure I have to platform risk and the better I am. Because, you know, you can spend a lot of time and energy and money and opportunity cost setting this thing up, only to have the sort of carpet yanked from underneath you by the platform for some really esoteric reason that you have little to no control over. And they’re not that interested in sort of trying too hard to reinstate you. They care more about sort of protecting what it is that they’ve got already. So I’ve got an example as well. A friend of mine and a couple of friends of mine are doing some business in some slightly sort of grey areas. So things like psychedelics and plant medicines and tobacco and things like that. So they’re trying to they’ve got an e-commerce business where they’re sort of involved in selling these stuff. They’re not. None of this stuff is illegal, but it’s all, you know, slightly riskier products or more hot, more regulated products than just like standard, you know, things that you might sell on the Internet. And they’ve been on they’ve sold or works. They’ve sold on Shopify. They’re sold in various places. And all of those platforms one by one, and sort of said, nope, sorry, can’t do that. Most of those platforms, for example, just have a blanket ban on tobacco, even though the class of tobacco they’re actually selling is not as highly regulated as, for example, cigarettes or things like that. And in actual fact, the trouble, don’t forget as well, is actually the payment gateways are also a platform. There are a necessary platform. You have to use a payment gateway pretty much, but they are the trouble they’ve had is not only with the e-commerce platforms, but they’ve actually had trouble with the payment gateway platforms because the payment gateway platforms aren’t keen on the fraud and so chargeback risk that comes with some of those classes of product. So a very much depends upon the sort of context that you’re going with, like. So the park they’re having to go down is the really old school, like late 90s, early 2000s thing, which I remember clearly from when I first started in web development, which is where you had to go to a bank and get an open a specific merchant account. And then you had to go and you had to open a specific merchant gateway account with like world pay or one of the, you know, the real low level payment providers and then put that altogether and do the necessary, you know, fill out reams and reams of paperwork and send this and that here and there and all the other. And, you know, all of these platforms like Shopify and Stripe and things like that, they they all take away that whole class of hassle. But you are then beholden to them and they’re sort of regulations and things like that up at the top. So I think it’s very much the case of assess your own personal contacts in your business context and then. If you consider yourself to be relatively low risk, then a platform is a good, you know, good leap ahead. You effectively sort of start the race a few metres ahead of all your competition. So you might as well some take advantage of that. But if there’s a chance that if you put putting all your eggs into that basket and only having the basket, which way from under you, then you should probably reconsider. I.

Yeah. Adding to that, which I agree. But you’ll be surprised how of these compliance teams will get so on it. They don’t. There is not, you know, cheque list or any guidelines on what’s risky or not.

Some are of use, as you are mentioning before those categories, but others are not uneven. Forget about the prote order service. You could be a U.S. resident sailing with a U.S. company in the US. And but let’s say you source their goods from other countries and then they may just shut your account because you are sending money to China, even Mexico. I have experience questioning on why we were sending money to Mexico. And, you know, Mexico has all these drug cartels problems and so on our in the financial sector lending.

But our subsidiary there.

But then yet they don’t like, you know, trading our money inflows or outflows with other countries that they consider as high risk. So it’s not only that the product or where we are based, it could be where we are sourcing it as well. So get many things to consider. There is no guidelines. So it’s tricky. So you should know when you’re jumping into. She’ll be fine. Should we fire county or not? Not necessarily. You know, all this stuff. So then you’re scaling and overnight you may be stuck out of business for until you get it sorted. So, yeah, just bear this in mind next time.

Yeah, I. One thing that we haven’t touched upon, which is one of my sort of personal engineer programa sort of pet peeves, is that WordPress as a system about we we won’t go there. Not not on this occasion. So next up is a tweet which is which is somewhat related to that kind of topic. And this tweet is talking about from a guy called Sahal, and he’s talking about the difference between all having the experience as an engineer to know when to sort of release a product into the wild or to release something, a feature or something even working on. And he writes, A big part of being a great engineer is the difference between, okay, it works and I’m done and it works. I fix the most common edge cases. I’m aware of more user experience issues. But let’s put them in the backlog for now. Let’s shift. I know there’s more work to make this great. Now, that seems sort of quite specific to sort of programming and engineering and product management. But I think it’s more generally applicable than that. I think it’s more applicable to sort of business in general, particularly early stage growth stage businesses. And what you saying there is this over time, you kind of learn this lesson of you. The only time that you actually learn anything about what it is that you’re doing as a business or in terms of the product you’re trying to put into the market is by exposing it to the market. And the right time to expose it to the market is not when you spend a lot of time smoothing off the rough edges and perfecting all the various moving parts and making sure it’s perfect from the idealised utopian plan that you’ve planned, either in your head or on paper or wherever it is, the best time to get feedback is as early as possible, but not too soon, which sounds like a really sort of fluffy. Well, how on earth do you know when it’s not too soon? Not too late. It’s just writes the Goldilocks problem. Right. But you get a feel for that over time. And various people over the years are sort of weighed in when that when that sort of time is best. I can’t remember exactly who said it, but it was probably Marc-Andre Eastern, the Venerates and Horowitz, you know, you want to. I was pretty Graham, actually. Y Combinator said, you know, the best time to release something is when you feel slightly embarrassed about it. Because then you then, you know, for a fact that you haven’t put in too much work. But you also know that it’s not completely non-functioning horrendous. And the only response you’re going to get from the market is is like, well, that’s just a steaming pile of whatever. That’s not going to work. And. I think so. I think what’s Ohio is done here is actually so hit on a very specific part of that calculus that you should sort of pay attention to when you’re doing that. So. And the thing that he sort of pulled out there, which is important, is, is that. There’s an 80 20 to all of this, right? You know, there’s always an 80 20 parade. I was a genius. There’s always an 80 20, an 80 20 is is what’s the most common use case or the your customers are your market. What’s the most common way that they’re going to be interacting with this thing or using this thing or experiencing this thing? Spend a little time making sure the most common case is case of full. But in those cases, which are the outliers or, you know, the one in 10 or two in 10, I get to experience don’t worry about those so much because, of course, like you will probably get some feedback from your customers saying, well, this edge case over here doesn’t work. And it’s like, no fine cheque. I know that doesn’t work. What I’m most concerned about is what is that the core thing that I’m trying to test or I’m trying to find out about? Does that work? Because you can always, always go back and flesh out something, flesh out the remaining 20 percent. You can always get someone to do that or do it yourself. But you don’t really know this yet. You want to learn stuff in the sort of core, core area of the product or service. And because that’s the thing that’s gonna be make or break. Right. You know, like that you’re going to have a certain sort of profit margins or certain gross margins and they are going to be influenced by the core of the thing, not so much by the edge case of the thing. So in your sort of previous businesses and the businesses that you run it, you sort of come across any of these kind of cases where you like you released too early or too late or when they passed was just right.

Yeah. So I think it’s one of their most, most difficult questions for entrepreneurs. And I agree with you that it applies not only to engineers, but actually to any company building approach, because eventually it does. You can hire engineers, but you still need to make us. He shows us entrepreneur when is good enough to go to market. How much should you spend on drug development? So I think also it depends on the industry. So financial services, you cannot release an unfinished product or broked with bugs because I could be regulated, you know, and you are managing other third parties money. So I would say, yeah, on financial services is a tough industry for innovation because he’s arguably the most regulated one. But also. Yeah.

You carve out like a high bar on standards and you need to meet lots of stuff on security, soil and records and this and that. But I mean, there there are other industries as well that you cannot launch an unfinished product for sure, like rockets. But any form of transportation? I would say so. Any form of transport industry in general, like a car. Like anything like a bike. Because any mom is functioning, you know, on any of those products could hurt someone. You could get sued or whatever. So also, I mean, of course, far more industry or the doesn’t need to even farm. It could be an even in the in the food industry. You know, you need suka certain quality, so you cannot just take it out there. But when it comes to tech products, usually you can I treat probably not with a high end gadget like phone or computer, but especially with software you can deafen, you shoot actually released a simplified version. And if you don’t know when it’s good enough, just as you were pointing out before, and I think it’s important to understand that it needs to be simple in order to escape. So you need you do need to concentrate on your core single feature or single features, single most important features. Ideally, if it’s one is better. So you just need to make sure that it is good enough for that feature. And then other features are probably not well attended, but that’s fine. And then see or validate if that scales. And if it does, then you can go on and build all the ecosystems surrounding that core feature because you know, that’s gonna take you.

That’s going to be at the heart of your business. So, yeah, you better make sure that works on you. You should try to out with the less possible budget on that script as possible because you know, you have competitors. Yeah. So. Yassa will always come back to a lean Start-Up. I think that’s an unquestionable. Yeah. Business method or method methodology or approach that it’s mandatory for. Unless your industry is not, you know, fit for that bar, otherwise you should find a market fit with a lean Start-Up approach. Yeah.

So talking of the Lean Start-Up are a bit of info for the day. Today, we’re recording this on the 10th of September 2020. Yesterday was the first day of trading for the long term stock exchange. The long term stock exchange is the brainchild of Erik Reece, who is the guy who wrote Lean Start-Up in combination with Steve Blank. And it’s something that he’s been working out for a long time. So after the publication of The Lean Start-Up and a lot of stuff that he was doing there, I think he actually started this project in about 2012. So it’s taken a long time to come to fruition, which I suppose is unsurprising when it comes to something as regulatory, sort of complex as a stock exchange. So they probably shouldn’t be too surprised by that. But, yeah, it’s been something he’s been talking about for a while, and it’s something that I’ve been sort of pretty interested in. And the background is all of this. So the underlying thesis, all of this is that he thinks and many other people think that the way that the modern sort of public markets work has a very short term focus. So once you become once you only become a public company, then you are there’s a whole bunch of actual regulations come on board. There’s a whole bunch of extras and reporting requirements and legal requirements, things like that. And one of those is the quarterly sort of returns or the quarterly reports of how the company is doing. And it and the argument is, is that basically it focuses public companies on on sort of short term quarterly performance figures rather than the sort of longer term success of the company. Now, obviously, no management group or anything like that or ownership group is going to be, you know, disinterested in the long term viability of their company. But when you hire CEOs and executives and things like that and you compensate them based upon the quarterly performance of a company, then you shouldn’t be surprised that certain decisions are taken to improve a given quarter’s results that may be detrimental to the sort of longer term performance of that company and that company’s stock price. And that there are whole classes of business where actually a longer term time horizon would be better for the company. And, you know, and the argument goes, is that the reason, you know, you can see that this is a problem or you can see that this is something which does affect the market because of the difference in the way that the markets or how or the trajectory of companies from sort of start to finish or turning public has occurred, like how it used to happen in the sort of 50, 60, 70. Isn’t that how it happens now? And so, for example, there’s been far, far less IPO shows than in previous years. And, you know, the original purpose of the market was a way for a company to raise money. Right. You know, they would they would go to the list on a stock exchange and they would raise money and they would use that money to help grow the company. And in return, you know, the public, in inverted commas, would get access to, you know, buy into that company and do the necessary and something which happened less and less. The valuations at which companies are IPO ing and joining the stock exchanges are getting higher and higher and higher. And so not that it’s a broken model, it’s just that the is becoming a narrower model. And there’s been another things like, for example, you know, a lot of companies or so Start-Up companies, particularly Silicon Valley companies, are able to raise a lot of money and stay private for a very long period time because they can get high seed valuations, they can get very high. Valuations are higher. So serious ABC deals, et cetera, rounds and their exits aren’t necessarily to IPO. So in a lot of cases, exits are selling to extraordinarily large companies like Apple or Facebook or whoever it might be, and they don’t actually come to market. And so the that’s the the usual as a retail investor doesn’t have access to the growth stage of a lot of these companies, because by the time they hit the markets, they’re already sort of pretty mature. And so you’re left with people. You know, the only people who are able to sort of take monetary advantage of the growth of these companies are regulated investors because their particular America, they’re the only people who are allowed to invest in that thing. You have to be a regulated investor. I’m not sure of the exact details of what that is. But I think you have to have a minimum amount of money. You have to have proven a whole bunch of stuff. And. So the subtlety here is this Long-Term Stock Exchange and the way it’s launched is that in order to list on the long term stock exchange, you have to have certain corporate governance things in place, which means that you sort of that your corporate governance of you as a company is more dialled into longer term performance than it is short term performance. And you can also actually do less so if you don’t have to list just on the long term. So stock exchange, you can select shares, you can listen a number of different stock exchanges and the long term stock exchange. But the minimal about the minimal barrier to entry is that you have to have these certain sort of corporate governance at governance things in place as say. What are your thoughts, Marcello, on this as a as a as an idea and also kind of like some of the implementation details?

I think it’s a very interesting idea.

Clearly, this be contrarian and I read like I think we need more of those here. Yeah. As much as possible in the wards, but also for entrepreneurs. So I discard this because a few these projects so that yeah, I think it’s even if it doesn’t scale, it provides options for companies, entrepreneurs, and you always need someone, you know, with capitalism which works or at least until now. So Cust brewing to work. But then if you take it too extreme, you know, it has some collateral damage or externalities. They call it in economics. So for instance, you are saying now is too much concentrated then investment capabilities into lie, big asset managers or whatever, hedge funds, some unknown institutional investors, private equity. But now it shouldn’t be like that. But also, companies are trying to you are not thinking long term. Also, for instance, you have them know climate change, for example. So debt date companies are not bother much with climate change because it’s a long term problem and they are driven, you know, the CEO of that company. He needs to make it work within the next year or two or five, not within the next 30 or 50 or a hundred years. So especially in the U.S. or Western countries, usually in China or eastern countries like Japan, they tend to think long term. And there are very few companies that think long term, maybe like now. But you need those outliers or more like contrarian or entrepreneur. You are an. Yeah, Guy said that put this concept forward later on, can change things like Elon Musk with renewables, not only with Tesla for cars, but that can extend to any other form of transport. And there is long term and also it’s not even only for transport. If you are a former energy consumption point of view, if you think long term, then if you are going with solar and wind, which is the most likeable options that we have, then you will need storage. So thank you. So in the battery business as well. So because that will help, you know, the full transformation towards renewable energies. So that’s a long term case. That’s why also when Tesla shares grow, I mean, it’s very volatile and there’s a lot of hype. But the I think long term, maybe 30, 40 years, they’re building something, you know, Amazon and these guys have a long term view. Now, e-commerce is booming, but he was ahead like 20, 30 years, you know. And then with the rockets as well. I mean, space industry, that’s long term as well that this year.

So so it’s interesting specifically in the case, because he’s obviously got Tesla, which is a public company, and then he’s got Space X, which is a private company. And so he’s got two very different kind of demands on him as a CEO or M.D. of those of those two companies. And he’s got a very different way of operating. And he famously, you know, had his meltdown moment where he was smoking weed and saying that he wants to take a Chrysler private again. Four hundred and twenty dollars per share or whatever it is, which is a fraction of what he’s worth now.

Yeah, I think it is indeed a very good example and also he was under so much pressure with Tesla because of not delivering the quarterly results on profits and output of cars manufactured. So and it almost went broke. Tesla so bankrupt. So which is insane that now a state like superstar combine and that was all due to short sellers, some pressure from, you know, Wall Street analysts saying, oh, no, you are not turning a profit down. You will not get here or there when he was more idealist, you know, looking towards make an impact long term. And earnings are very resourceful guy. So if if I mean, he was challenging what he was trying to do. But if he goes through that, I’m not sure lots of people, he can go through that or are prepared or can even afford to go through that.

Yeah. Kick out some options that other companies wouldn’t. That essentially the short term, the mindset or rule based stock exchange is they they killed innovation. And actually many of these large public companies, they don’t, you know, at all. So even the tech companies, I’m very critical, you know, on that day.

Yeah. Apple, I don’t think it’s, you know, I.T. enough or has not been doing it after Steve Jobs. They’re just milking it. And then even Google is trying to do it that way. They have been trying. But broadly, that’s because the founders were around until recently. So, yeah, usually very few entrepreneurs can keep the long term view. So if these new stocks change the long term, so the change can provide a framework for that. Like an option for entrepreneurs to, you know, try to think on radical solutions, which will take time. And as long as investors are language that and if that gains traction, that will be amazing.

So, yeah, kudos for him. I will keep monitoring how he’s doing. Yeah. Looking forward to their success.

Well, I think we’re definitely in agreement there. Yeah, for sure. I’m I’m super interested in that kind of side of things. I’m in my opinion as well. I don’t I don’t think they went quite far enough, but I think that’s probably because of, you know, it’s taken them a very long time to go through like the regulators and things like that. So I think probably pushing too far, you know, risks not having it at all. So I think that this is a good first step. But I’m I’d be keen to see things like high frequency trading and things like that sort of mitigated in this kind of market, because I think there’s a bunch of problems which occur from that kind of thing as well. Mitigate in the sense that. There should be choice of market. Right. So you should be able to choose whether to invest in the market where that thing exists or where it doesn’t. You know, if there are certain biases in the market, then, you know, it should be your choice. At the moment, there is no choice, you know. If he is either invested in the stock market or don’t, you’re gonna be exposed to the you know, the the problems and the benefits that are brought by the high frequency trading. So note would definitely be very interested in seeing where the long term stock exchange goes. Thanks very much for listening. We’re back every Tuesday and Thursday. Please cheque out our YouTube channel where we post this podcast on our other videos. Search where net workers. That’s two words. Or you can find the links in the show notes for this podcast. If you’re interested in help, mentorship and courses for entrepreneurs and starting businesses, please cheque out our website, which is at networkers dot com. So Nexon to buy.

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