Posts Tagged 'Money'

June 29, 2007

Business Ethics Simplified

In this day and age of Sarbanes-Oxley internal controls, SAS 70 certifications, and myriad other regulatory, compliance, and audit issues that I won't get into , business ethics might seem to be a lengthy and complex topic.

In reality, it isn't. Back in the dark ages when I strolled the halls of SMU, a crusty Econ 101 professor named Jack Stieber proclaimed that there is only one ethical mandate in business: "Within the bounds of the law, maximize profit." There are no more ethical rules necessary to follow in business.

I have heard others phrase a similar thought as "maximizing shareholder value". I disagree with that approach because there are things that management can do to influence the stock price that aren't necessarily tied to maximizing profit. Basically, if you can maximize profit, the stock price will take care of itself.

In response to Prof Strieber's proclamation, there were a few students who responded, "But sir, what about ?" and Prof. Stieber shot them all down. Here is one of the more interesting objections:

"But sir, what about a business owner who hikes the price of bottled water to a ridiculous level in a disaster-stricken area that has lost its water supply? Are you saying he's being ethical by maximizing his profit from price gouging?" Prof. Stieber responded something like this:

Assuming that his pricing policy is legal, he's still being unethical because he's actually not maximizing his profit. Sure, he may reap a short-term gain but when the water supply is back on, those forced to buy his extortion-priced water will take their business elsewhere. So in the long term, he hasn't maximized his profit and thus has behaved unethically. An ethical decision during that time might have been to keep selling water at the pre-disaster price or maybe even donating some to build goodwill among his customer base. This could have cemented a long term relationship with the customers who would provide repeat business again and again and thus maximize his profit over time.

That being said, when a business maximizes it's profit within the bounds of the law, it's a "win-win" for the customers, stakeholders, and shareholders. In my next post, I'll explain how SoftLayer earning profit is a win-win for both the customers and the company.

-Gary

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June 22, 2007

Money, Money, Money

The term "Digital Super-Highway" seems to be quite prophetic as the monetization of the internet seems to be exploding from all angles. Monetization of the internet is something that we are always focusing on here since a good portion of our customer base turns our underlying infrastructure into a revenue-generating engine for them, be it through Value Added Services, enablement of SaaS business models, e-commerce activities or whatever focus our customers have (which are too many to list).

I always knew the monies on the web were staggering, but I was caught off guard the other day when I came across an article in Business 2.0, "The Man Who Owns the Internet". The article is about Kevin Ham, who has built a $300 Million Dollar portfolio of domain names. $100,000 for Greeting.com, and $31,000 for Christianrock.com and so on. He's a domain name mogul.

In a technology world, this seems to be the "day-trading" of the internet. The other portion of this article that struck me is the monetization of the typographical errors in domains, referred to as "Typo Squatting". We have all accidentally fat-fingered a key here or there and after closing the 85 pop-ups, the monies are moving like a slot machine with triple 7’s across the board. In an article referring to the monetization of Typo Squatting, companies have built multi-million dollar producing firms on capitalizing on a misspelling here, a lack of dash there, etc. Just for reference, it seems that www.softlater.com is already taken, which means my dream of typo squatting my way to retirement has taken a drastic turn.

With the tools we have put in place through the API and the private network we have really streamlined the enablement of the monetization of the internet, which when we talk to our customers it’s at the forefront of both of our minds. The successes of our customers ensure our success, so putting these tools in place are essential. Not to give away the secrets of others, but I have peeked into the private back-end network and seen things like credit card processing gateways, server to server data transfers, licensing gateways and numerous other activities that are surely streamlining the money making processes for our customers.

So I am not sure that when the term "Digital Super Highway" was coined that we ever thought there would be toll-booths along the way, but its clear that these are here to stay.

As a side note, if anyone is interested in sharing their monetization stories, feel free to drop me a line at bizdev@softlayer.com

-Sean

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