Industry.AU
Going to America – online business from down under
by Geoff McQueen on Jul.02, 2010, under BusinessWeb, Entrepreneurship, General, Industry.AU
Unfortunately, though, running an Australian business in a global market sucks. A lot.
This post tries to outline an approach to setting up your Australian internet business so that you can trade on close to a global market scale, competitively. And that means being able to price your product in US Dollars, and get paid in US Dollars, without getting completely screwed by transaction, currency exchange and lots of other fees.
This post is a work in progress, and will be updated as better advice and the pain of real world experience corrects assumptions/guesses. If you’ve got something to ask or contribute, please do so in the comments.
Getting Paid in USD
When it comes to the global marketplace – particularly online – the only game in town is US Dollars. A big chunk of the market is in the United States, people who aren’t are largely aware of how to convert from USD into their own currency, and most importantly of all, when prospective customers are comparing offerings and prices, they’ll be benchmarking your offering against your competitors, who’ll be pricing in USD.
If prospective have to think and convert your currency of choice into USD for comparisons and then their own currency for the cost to them, they’re probably going to have to reject you.
So, you need to get paid in USD if you’re selling online to a global market.
There are roughly four ways I’ve found to get paid online in USD as an Australian.
- Use a US Gateway and set up a US entity
This method means getting a business, a bank account and a tax identification number set up in the US. It involves cost, paperwork and dealing with the IRS. However, it also means you can access very competitive pricing from gateways – the people who link your website to the credit card payment networks and thus get money into your account. A couple I’ve found – Cocard and Authorize.net in combination – are going to cost me US$18/month and their fee is only 0.15% above the credit card company interchange rate. Pretty compelling, but now your business has two bank accounts, two legal entities and two currencies to do accounting for, not to mention the risk of double taxation and other inter-government scams. - Use a European Gateway and set up an EU entity
The next option I’ve come across still involves creating an entity, but in this case it is more of a piece of paper entity. No bank account, no legal structure, no double accounting. As far as I can tell, you pay a small fee to someone like simpleformations.com, and then you find a company who’ll give you a merchant account such as www.nochex.com who can take credit cards, and they’ll deposit the funds as a wire transfer into your Australian account.
Unfortunately, all the options I have prices for at the moment have a minimum monthly transaction of A$3000 or so. - Use an Australian Gateway who supports multiple currencies
As far as I’m aware, the only option open to Australian businesses who want a merchant account that supports multiple currencies is the National Australia Bank. I’ve made an enquiry to find out what the current state of affairs is on this, everyone I’ve talked to who’s tried this has had a terrible experience. A search for “nab merchant account rant” on Google turns up gems like this and this. I’ll update this post if this option surprises me and becomes even remotely competitive, but I’m not holding out much hope. - Use a US ‘Reseller’ style company to collect credit card payments on your behalf
This option is lowest setup effort, but it also provides less control, is least professional for users and costs the most in transaction fees. Companies like Plimus or Fastspring are effectively becoming our retail or reseller front end, reselling our product, and so all client interactions and payments go through these companies. They also charge up to 10% for their effort (and risk taking) getting between you and your customer, which while compared to traditional retailing and channel’s isn’t crazy, but they’re not actually finding you customers and handling client support the way a regular retailer or reseller would; 10% for payment processing is very high. If you’re only doing small amounts of revenue, this might work, but if you’re trying to build a business that is more than a hobby, this is a stretch.
Having reviewed a bunch of the crappy options, the direction I’m leaning towards is setting up a US entity, opening a bank account, and getting a tax identification number.
Having a US entity, bank account and tax identification number
The idea of this post is to save future Aussie entrepreneurs some of the hassle/drama/uncertainty associated with doing business globally. If you’ve got any knowledge of any of this stuff and could affirm or correct any of these assessments, I’d really love to hear from you in the comments or by emailing geoff.mcqueen – at – hiivesystems DOT com!
While I recognise that spending hours on this while we’re trying to get AffinityLive ready for launch is a bit stupid – this is what you pay accounts for, right? - I’ve found in business that understanding the fundamentals of these sorts of things yourself is priceless – after all, as a Director, it is me, not an adviser, who’s on the hook. Additionally, whether it is in IP law or other areas, understanding the basics means I’m in a better position to assess whether one adviser or another is more expert, and thus make the best decision about who to go with.
US Entity
Business registration in the US is handled on a state by state basis. One of the most appealing states for registering your business is Delaware – their fees are low, they have no sales tax (whereas in California it is close to 20% and the state is still almost bankrupt), they don’t take to kindly to people suing company officers and they are “friendly” like the Swiss when it comes to confidentiality. Handy.
There are a bunch of different entity types you can register in Delaware. The most common types as far as I can tell are a C-Corp and an LLC.
C-Corp
A C-Corp is like an Australian Limited company. Note that it isn’t equivalent to a Proprietary Limited (Pty Ltd) company, as a C-Corp has to have officers, needs to file returns to the state, and a bunch of other stuff. Nothing too scary, but more formal than you’d be used to if you’re running your own Pty Ltd company.
The company can file its own tax returns with the IRS (Federal, not state).
A C-Corp can keep hold of its own money from a tax perspective, paying dividends only when it wants to. It also doesn’t have limits on the number of shareholders like some of the other structures, so it is a good type to use if you’re looking to raise a round of capital by selling equity to investors. This entity is pretty much what you’re used to with running an Australian company, but having a C-Corp makes the repatriation of funds to Australia a bit more interesting, and makes transfer pricing a potential issue, as the C-Corp is a full company, and your Australian parent operation may well be a shareholder – or the only shareholder – but the IRS will treat the C-Corp as its own entity.
A Limited Liability Company (LLC)
An LLC is a particularly curious beast. It is like a company in that the business shields the owners and officers from personal liability should the business fail and have debts. It can have a bank account and trade just like a regular business. However, it can’t submit its own tax return like a company and pay tax – instead, the profit that the business makes flows through to its “members” (like shareholders), and they pay tax on it just like it was any other form of income.
In this sense, an LLC is much like an Australian Trust structure. And the way the Australian Taxation Office treats these LLCs – also known as “hybrid vehicles” because they tend to be more like a partnership where the “members” or shareholders can be natural persons and companies – is pretty good from what I’ve read so far. More on that later.
Registration
Regardless of the structure you follow, registering the company in Delaware is fairly inexpensive; there are a ton of agents out there who’s job it is to do just this sort of thing.
Just one example is IncNow.com, and the cost of registering an LLC and being up and running within a week is under US$300.
Annual fees are in the range of US$120 – also fairly reasonable at $10/month.
You also get the forms you need to submit an application for an Tax Identification Number (TIN), which your merchant account people will need you to have to set up your account with them.
Franchise & State Taxes
In Delaware, they make their money by charging a small “Franchise tax”. From my reading, this would be around $90/annum. Bugger all really.
IRS and Federal Taxes
While business setup in the US is a matter for the state jurisdictions, it is the Federal Government you really need to worry about. Like in Australia with the ATO, the IRS are very bureaucratic and hungry for your money.
Every year, they require all taxpayers in the US to pay income tax and file a tax return – this includes not just individuals, but also companies, members of LLCs, etc.
If you’ve got an entity and a bank account, odds are that means you too. I’ll outline a bit more of what I understand the alternatives and situation to be in the Tax Returns section below.
Australian Taxes, Dividends and Double Taxation
Of course, if you’re running your company/business from Australia, you’ll have your regular dealings with the ATO to worry about too. This in and of itself isn’t a problem, but bringing together multiple tax jurisdictions around your taxable profits is asking for trouble – if someone’s going to get f*cked, it is going to be you.
Tax returns and not getting double-screwed
While there are undoubtedly a bunch of issues to address with running an international business and dealing with governments, the one that I’m trying to get to the bottom of with this post is tax.
Basically, I don’t want to be paying tax on the same income twice, and where possible, I want to be paying the lowest rate of tax I can on hard-earned profits.
Situation
Everything from here on in is assuming we’re running the US operation through a Delaware LLC, with a bank account in the US, and credit card based income coming into this US bank account.
There will be a few thousand dollars a month - initially - of expenses in US Dollars, mostly things like hosting fees with our US hosting provider, and a few odds and ends like local US phone numbers and such. All other expenses – our rent, our staff costs for product development and client support – will all be in Australia and paid in Australian dollars.
All income for our AffinityLive.com product sold to clients outside Australia will come through this LLC, with clients paying recurring monthly, quarterly or annual subscriptions in the hundreds of dollars via credit cards per client.
As a result, it is expected that the US entity will be quite profitable compared to the Aussie HQ given its lower fixed costs.
Complying with the IRS
As far as I can tell, running an LLC means that you’ve got two choices – the LLC can submit its own tax return acting as a corporation – a 1120 form – or its “members” can submit tax returns for their own share of the income that is distributed from the LLC.
To simplify things, we’re currently planning on completing our US tax return using a an 1120-F form, which is what a foreign company completes to declare income earned through their business activities in the US.
The IRS agent I spoke to today told me that we’re effectively declaring the income as Australian company income, earned through US business activities, and the LLC in this case is a financially transparent entity that doesn’t complete its own tax return.
If you submit a corporate tax return as the LLC, you’ll be taxed on your profits the normal way; I think it is around 33% or so. Then, you can repatriate your after-tax income to Australia, and the IRS is pretty much done with you.
The standard tax year in the US is a calendar year; again, to simplify things, we’re going to complete an 1128 form to move our tax year to be July to June and thus in-sync with our Australian financial year.
Witholdings
In some situations – and I don’t quite understand thesem but they seem mostly related to property transactions? – the IRS will also withhold a percentage of your dividend on top of the tax they’ve already collected.
One of the reasons to go with an LLC over a C-Corp and to use the 1120-F form, completed as the Australian parent, is to avoid dealing with dividends and transfer pricing issues at all, so hopefully withholding won’t be an issue for us.
Foreign Tax Credit
Australia has a tax treaty with the United States, which means income earned in the US is taxed by the US, and once it is repatriated to Australia, you get a credit from the ATO for the tax you’ve paid.
In a way it isn’t quite this easy, as the ATO will actually “gross up” your dividend to put the amount the IRS took away from you back on, at which point the ATO will calculate the amount of tax payable as if it was all Australian money, and then it will credit you for the amount you paid to the IRS on the US income, and you’ll then owe the ATO whatever extra tax they say you owe them. I think this is there so that ATO gets to charge you Australia’s tax rate and get more money out of you for income earned in places with lower company tax. What I don’t know is whether the reverse applies, and the ATO will allow us to “deduct” all of US tax from our total tax payable (since the US rate is a bit higher), or whether the ATO will have it both ways – charging you more tax when the other country has a lower rate, and saying bad luck and quarantining foreign income and tax when there is a higher international rate.
No Franking Credits on US post-tax earnings
When a company declares a dividend and pays its shareholders, the shareholders need to account for that income as part of their normal tax return process, and pay tax on that income at their marginal tax rate. In Australia, a concept known as Franking Credits means that Australian taxpayers don’t have to pay tax on the whole amount of the dividend, since the dividend has already had company tax come out of it. It is a fair and great system, but unfortunately, the dividends that come as a result of internationally taxed income don’t get franking credits.
The following example, courtesy of a great newsletter from the team at Johnston Rorke, shows how you could lose almost two thirds of your hard earned profits to taxes due to this lack of franking credits. In the example, a foreign company makes a $1000 profit, the company tax rate in the foreign market is 35%, and the personal tax rate for shareholders in the Australian parent company is assume to be 40%. They’ve also included a dividend withholding tax rate.
As you can see, even allowing for the Foreign Tax Credit (note the “Nil” as the tax payable in the Australian company), the fact the shareholders have to pay tax at their full marginal tax rate (no dividend franking) means the effective tax rate on the end shareholders is a horrible 64.9%.
Things Still to Work Out
There’s still a lot of questions in the above.
I currently don’t have a good handle on exactly how the ATO will treat the income that comes via the LLC, as it is what the ATO calls a Hybrid Vehicle. While it would appear that the ATO will recognise the tax credit, I want to know for sure that this is the case, and unfortunately for me, researching this information on the web is pretty tricky, as the ATO has been making changes in the last couple of months – see http://law.ato.gov.au/atolaw/view.htm?docid=”AID/AID201077/00001″ for information that at the time of writing this post, was less than 3 months old.
I also want to understand the C-Corp scenario a bit better – particularly the dividend withholding issues – in case we find for legal or investor reasons we need to step up from an LLC to a C-Corp.
Another thing to look into is the option of setting up a structure in a tax friendly third country. Capital Gains tax in Australia is particularly horrible for entrepreneurs; not only do we have profits and incomes taxed, but if we manage to sell a company we’ve spent tens of thousands of hours and much personal risk building over many years, the tax man then wants to tax the money you get from selling the company at the top marginal tax rate in the year you sell it, in effect taking half of your pay off for success as tax. Other countries like Hong Kong and Singapore don’t have similar capital gains tax situations, however, since all the IP is currently owned by an Australian based company, and changes would need to be very well thought through as moving the holding company to another country would be expensive because it would trigger a capital gains tax event at the time of moving (since a company you set up in, say, Singapore, would be buying the Australian company, and the ATO would tax the shareholders – you – on that transaction even though no real money changed hands).
If you have any knowledge of how this is treated through first hand experience, or can point to an online article that explains it a bit more clearly than the ATO website tax rulings, I’d really appreciate you leaving a note in the comments.
Market Planning & Industry Categories – ANZSIC gets updated
by Geoff McQueen on Oct.08, 2009, under BusinessWeb, Entrepreneurship, Industry.AU
I’ve spent a lot of time over the last few months doing marketing planning for Hiive Systems. Unfortunately, our product is targeted at the professional services sector – think consultants, creatives, advisors, and that sort of thing.
I’ve been really conscious in this marketing process NOT to just keep on doing what we’ve always been doing, so thinking about existing clients and then defining our target market based around them just isn’t good enough. I’ve been thinking through industries based on my experience and memory – almost brain-storming – but it is a pretty crap way to do things, and certainly isn’t an extensive data set.
One of the best ways to work would be to start with a big long list of industries, and then tick those sectors that look appealing for closer examination. Unfortunately, Google has completely failed me – asking for a “list of professional service industries” came up with a bunch of very poor listing websites.
Going to more official sources, the primary list I’m aware of, ANZIC, has always seemed to me to be pretty poor. There’s a special category for fur trappers, but anyone who does anything related to marketing – from consulting through to web development through and beyond to display advertising – is bundled into the same generic blob.
Today, however, I realised that the ANZSIC list was updated in 2006, to reflect the way that industries have changed and evolved since the list was last compiled in 1993. Now with a lot more detail in the service sector – the one that keeps growing in an advanced economy like Australia’s – this list is actually useful.
If you’re interested in seeing it for yourself, the ABS have a copy (publication number 1292.0) at their website. Hopefully if you’re trying to write a marketing plan, this will help you out too…
#publicsphere in Wollongong
by Geoff McQueen on Aug.29, 2009, under Entrepreneurship, Industry.AU, Politics, Technology
The third #publicsphere event was held in Wollongong yesterday (with nodes in Melbourne and Brisbane joining in). With all things that involve an open forum and public consultation, there will be some good bits, and some bits that don’t quite do it for you.
In terms of contributions to the debate in the form of a paper or submission, you really can’t go past the Silicon Beach Lifeguard paper, assembled by Elias Bizannes along with a small army of contributors and editors from the SiliconBeach community. Here’s a video of Elias introducing the paper:
In addition to the paper/submission approach of SBA’s Lifeguard paper, there were also a lot of other good presentations.
Silvia Pfeiffer from Vquence gave a fairly sobering analysis of the challenges and opportunities facing the Australia startup sector. While much of it wasn’t new information for those of us who do this stuff every day, Silvia’s presentation did a brilliant job of assembling a plethora of issues into cohesive lists and constructs, and while I knew about the pieces already, the way she put them together certainly had me coming away with a much clearer picture of our situation. Hopefully her slides will be up on her Slideshare account soon.
Another stand-out presentation in my mind came from @nambor (Rob Manson). After getting the undivided attention from everyone in the room in Wollongong thanks to the coolest set of chops in the room, he proceeded to share how the challenge of succeeding has less to do with “supply side” factors than the (neglected) “demand side” factors. He wasn’t talking about economics (specifically): he was talking about success in technology. The basic thesis is that tech types want to keep pushing supply side – concepts like ‘building a better mouse trap’, ‘build it and they will come’, ‘lets keep innovating’ – while the demand side – taking the time to show tech users how their productivity and lives can be improved by new stuff is really poorly done and needs more focus. This principle, which played then into his main thesis of Diffusion is the Innovation, was then expanded upon. Rather than me butchering it, I’ll just embed his presentation here.
The day itself wasn’t all geek, however. Towards the end, we had a great presentation from Tim Parsons present from a creative perspective. As you’d expect from a futurist in the creative space, the presentation was exquisite. The content itself was great for stimulating some ideas and discussion, and I really thought the sentiment that “Online Culture is the Mainstream”, and not something reserved for geeks anymore, was a great observation, and something I really agree with (since now I’ve got mum on Facebook, and my girlfriend blogging). Anyway, the slide deck is at embedded below (it still looks great, but Tim’s passion in delivering it made it 10x better)
There were many other excellent presentations through the course of yesterday that I haven’t got the time or enough good quotes to include here in this post, but the good news is that the Senator’s team will be uploading the video (which was already streamed, but probably needs to be cleaned up a little and spliced into talks) next week. I’ll update this post then with a few links (including a link to me own impromptu talk on Skills, Talent and Education).
The political power of the digerati?
by Geoff McQueen on Jul.31, 2009, under Industry.AU, Media, Politics, Technology
I’ve been planning to write a post on this for ages, but time has gotten away. Seriously. Since March the 26th. That’s the day I felt politics in Australia be changed by the internet.
It was the day Senator Conroy went on Q&A, the ABC”s live question and answer show, where he was inundated with questions – apparently over 2000 of them – from members of the public raising serious concerns about the proposed compulsory, national filtering scheme that Conroy – whether by choice or hospital pass – is the front man on.
My objection to a compulsory filter is on the record, so I really enjoyed hearing from the Senator – someone I’ve met since – try and defend his policy. From my perspective, it seemed like the Senator really didn’t want to defend it on its (lack of) merits; any time a Government in power invokes the names, acts and policies of their predecesssors, it is pretty clear they’re trying to avoid responsibility for the current state of play.
But this post isn’t just some rehashing of some persons opinion on a political matter – God knows there’s enough of that already.
No, the thing that really struck me during this experience back in March was how real time contributions, combined with the unique Twitter backchannel, opened my eyes to the noise, if not influence, of the digerati.
The speed of posts, quality of insight, and general ability to shape and resolve community sentiment online was truly breathtaking. I’ve never seen anything like it, and it will forever remain with me as a memory, something I’ll either look back on as a start of something, or as a glimpse of what might have been.
After the interview on Q&A and the extensive level of real time participation I shared with others involved in the debate, I started to wonder about what it all meant for our society, and the political process that for a century or two has been forming policy, laws, regulations and getting on with governing based on a representative system.
As I see it, there are three potential scenarios.
Option 1: The Digerati and Representational Politics
The first scenario is that we’re going to continue with a representative political process, but influence will move towards messages that are facilitated by the digerati. In this model, a small number of individuals are going to be elected/empowered to represent us citizens. They’ll be responsible for voting on laws and approving regulation, they’ll promise to consult with us and our general levels of apathy will ensure only a minority will engage with the political process beyond the ballot box. The positive thing about this scenario, however, is that more direct interaction, feedback, campaigning and consultation will happen using interactive technologies, today represented by websites, email and Twitter. It will be much easier for members of the public to make some noise and be noticed through the online environment, but at the end of the day you’ll still be trying to convince a person with 46 chromosomes to make decisions you agree with, with the option every 3-4 years of expressing your displeasure and voting them out.
To see this form of political interaction really take effect, more and more of us will need to become political animals. Our social networks, our digital interactions, our posts on Twitter, and more, will become influences on the perspectives, opinions and voting intentions in a more tangible and effective way than the media currently does. If Channel 9 tell me a movie is good, I’m going to take it with a very large grain of salt. If a good friend makes an impassioned plea that a policy is going to hurt their family or the environment, I’m going to give it a lot more credibility because of the shorter social distance. Is this a good thing? I don’t know. Many of the reforms that have our country in a much better place than most of Europe today – surrounding labour markets, trade, and to a (depressingly) lesser extent, welfare, aren’t popular and even though they’re right, perhaps a digerati backed political process wouldn’t have supported/allowed them…
Option 2: The Digital Revolution & Legislative Democracy
This situation is potentially the most revolutionary of all, and involves us, as citizens, voting directly on legislation, regulation, and the policy that frames these decisions. While the consequence of this sort of change wouldn’t mean the abolition of representative politics, it would change the dynamic; instead of voting for chair fillers who make up the numbers, we’d vote for politicians who are then charged with the responsibility of ‘selling’ their policies (or alternative policies) to their electorates. Their approach will need to be interactive and engaging – a bit shock for a number of politicians who are just making up numbers as pay-back from their party machines until they can make it to their generous pension scheme entry ages and retire – but in principle it could work quite nicely.
Of course, there are many potential problems with this model. While you’d be hard pressed to find an impartial citizen who’d vote down a 90% punitive tax on finance executive & worker bonuses for people who just deal in other people’s money without wearing any of the risk if things go pear shaped (as they did last year), there are numerous bills that are pretty dry and boring, and more disurbingly, you’d probably get pretty good support for a nut-job bill that promoted protectionism and increased tariffs, or, even worse, foolish and frankly racist immigration controls. This model certainly isn’t perfect, but then the current system (below) is hardly a pretty picture.
Option 3: Unrepresentative, 1901 Issue Myopia
More than a few of the 3 of you who read this post are probably thinking, “Hey, not everyone is online, not everyone is going to try and get involved. This digerati participation concept is really unrepresentative”. And you’re be right. But I’d argue, with more than 80% of Australian households now having the internet, the options above are a lot less unrepresentative and skewed than the status quo.
The third option I see is a continuation of a myopia where our political representatives remain wrapped in some of the most unrepresentative systems and irrelevant issues than ever, and we continue to be affected and held back by it.
Our current government is the Labor party, an organisation that until recently had it enshrined that at least half of their voting delegates to their national policy setting conference were appointed/sent by Unions. As demonstrated so dramatically in NSW in 2008, when the Labour Government of Day disagrees with these conferences, the results can be dramatic: effectively, the Union movement in NSW took down a Premier and a Treasurer, and put a multi-billion dollar hole in the State’s finances to protect the parochial interests of their members who like the idea of continuing to be employed by a benign employer who wouldn’t make sure things ran efficiently.
To look at what this means for our democracy, it is important to realise that only 60% of our population are in the labour force (lets say 12.6m out of 21m in Australia). Of that 12.6m, about 650K are currently unemployed, so we’re dealing with closer to 12m workers. Last time I checked, about 15% of these workers were part of Unions (it has been on a downhill slide for a long time now), which means we’re dealing with about 1.8m Australians, a bit over 8% of the overall population, who control more than half of the Government. If you look at the heritage of many of the members of our Government, you’ll see a a long history in labour relations, focused on a 20th Century fixation on industrial relations and a preference in having all people equal, but of course some more equal than others.
The current prevailing model is where around 8% of the community have a dramatic level of control, and only a small fraction of that 8% actually care two hoots; they are just paid up members who have to vote for someone, and they let others run their political campaigns, often without a lot of consideration for the wishes of their broader constituents (I’ve seen this first hand more than once, and it isn’t pretty to see employees left unemployed by their representatives happy because they managed to estabilsh a precendent for others).
The digerati, through either influence and replacing the media function, or through direct participation, certainly isn’t perfect. There are many potential issues to address, and it isn’t like the current gerrymander enjoyed by groups who think industrial relations is actually the business of government – news flash: its the economy, defence, social issues, and not controlling the minute details of employment relationships that matter the most to our nation – are going to give up their narrow ideology easily.
But on the 26th of March, as thousands had their say, and even more participated online, I saw a glimse of the future where we could actually play a bigger part in shaping the country we live in, and the sooner we move beyond being governed by the narrow interests and ideologies of union hacks and lawyers, and instead harness the participatory power and intelligence of our citizens, the better!
Get your product/service into CeBIT’s Webciety Showcase – FREE!
by Geoff McQueen on Apr.03, 2009, under BusinessWeb, Entrepreneurship, Industry.AU, Technology
CeBIT is happening in a month and a bit in Sydney, and this year they’ve decided to focus the eyes of the tens of thousands of show visitors on a new showcase section, called Webciety. Webciety is going to showcase a dozen of Australia’s hottest web-software companies, and if you think your company deserves to be there, you can enter a competition to win the wildcard Webciety spot.
CeBIT is Australia’s biggest technology trade show, and it is on for its 10th year in Australia this May, between the 12th and the 14th. I’ve been involved in CeBIT in Sydney for a number of years now, and I even managed to squeeze in a visit to the original big-daddy CeBIT in Hannover, Germany in 2006.
As a tradeshow, CeBIT has a pretty broad range. While checking out the latest gadgets and marvelling at the ever-increasing size of flat panels each year has been pretty impressive, I’ve sometimes felt like software – particularly the web software space where I’ve always played – is a little bit scattered and doesn’t pack the punch it should.
This year, however, things are going to be different with the Webciety showcase.
The Webciety part of the show is designed to showcase how web-based technologies, products and services play an increasingly important part in our lives. After debuting in Hannover in March this year to an incredible response from visitors, the Australian organisers have decided to make the Webciety feature a centrepiece of the Australian show.
CeBIT is a pretty incredible event, with around 35,000 people attending Sydney’s show last year. In these tougher economic times, people are hungrier to find better ways to work, and if the experience at the 2009 show in Hannover last month is a guide, there should be a large number of high quality and very interested attendees heading down to Darling Harbour in May for this year’s show.
If you’re keen to get your company and its product/service included in the showcase, the good news is that CeBIT has set aside one of the Webciety spots as a “wildcard” entry. By nominating your company, you could find yourself included in this prestigious showcase, completely free! Entries close on Wednesday the 22nd of April 2009, so get in quick!
My chat about #nocleanfeed with Sharon Bird, MP
by Geoff McQueen on Jan.07, 2009, under Industry.AU, Technology
A month or so ago I was prodded by @pat on Twitter to take some direct action on the #nocleanfeed issue.
For those wondering what the hell #nocleanfeed is all about, check out http://nocleanfeed.com. From their website:
The Australian Federal Government is pushing forward with a plan to force Internet Service Providers [ISPs] to censor the Internet for all Australians. This plan will waste tens of millions of taxpayer dollars and slow down Internet access.
What started as an election promise by the ALP during the 2007 election campaign to make a voluntary “clean feed” managed by the ISP available to households (as a counter the Howard Government’s initiative of funding the licence cost of software managed on your home computer) expanded into a proposal for a national, compulsory filter that no internet user would be able to opt out of.
While the compulsory list would be less of a nanny and would filter less content out, it would still mean every Australian would be subject to a filter, the likes of which is only found in places like China and Saudi Arabia. Worse, the super-evil list wouldn’t ever be made public (for fairly understandable reasons) so as a free country, we’d be being censored without any transparency; thoughts like 1984 and Big Brother then come to mind: after all, who watches the watchers?
Anyway, taking @pat’s prod, I emailed my local member, Sharon Bird, Member for Cunningham (ALP), and asked if she’d be prepared to meet me for a chat about it. Thankfully she was very open to a chat and keen to learn more, and we had an hour long discussion today.
My approach was to try and put aside the discussion about censorship, and I think it worked pretty well. In fact, trying to separate the merits of censoring some of the dark corners of the internet – since people have a range of views along – and declaring that the censorship debate right and appropriate, but putting it aside and talking about the problems with the filtering proposal, is a good approach for everyone interested in stopping the compulsory filtering of Australian internet access.
Instead, having defused the debate about whether it was right or wrong to restrict access to some material, I turned my attention to the two big problems with the compulsory filtering, which I saw as:
- Filtering web traffic will slow things down; for a new government that stood and won on a broadband enhancement platform, this seemed like a strange thing; and,
- Filtering web traffic won’t achieve their censorship or child protection objectives; it’s impossible to create a definitive list of dodgy stuff, filters are easy to get around with Proxies and VPNs, most of the dodgy stuff getting around the net travels via P2P or Email, and lastly, I’d be more worried about a kid being groomed by a real world paedophile in a chat room or on a social network, than I’d be about them searching out porn.
So, how did it go you’re probably wondering?
Overall, I was really impressed with Sharon’s grasp of the way the internet works. She’d been briefed to an extent before Christmas, but that was more about where the pilot was up to. She had read the Crikey article from this week about the Filter and appreciated that internet != web browsing, and that Peer-to-Peer plays a big part in how content gets around the world.
We talked in general terms about the objectives of the proposal to filter the internet, and boiled the motivations down into three groups:
- The government is trying to make it harder for baddies to get up to no good, such as browse kiddie porn;
- Parents want to make protecting their children from online nasties the government’s responsibility; and/or,
- The government made a political pledge in a campaign where they needed to court traditionally conservative voters, and being seen to do something about unsavoury content on the net was a necessary part of getting elected.
We then talked about how these three motivations were (mis)served by the concept of a compulsory national internet filter, and I pointed out:
- People doing nasty stuff don’t use websites. They use private P2P networks, they use VPNs and they do a range of other things to cover their tracks. If this was really the Government’s priority, take the hundred million plus they’re committing to the filter and give it to the AFP instead; they can then pose as kiddie porn traders and take the creeps down in a sting (like they do quite well from time to time already)
- The most dangerous thing for a kid isn’t looking at some porn; its being groomed in an online forum, social network or other place where people interact virtually, and for them to be manipulated to the point where they give out details like addresses, phone numbers, or God forbid, agree to meet someone in person without telling their parents. Sure, parents don’t like the idea their kids are looking at porn, but I reckon they’d be much more scared of them being physically or psychologically abused. The filter isn’t going to make any of this less likely, and if parents build a false sense of security that the government has made the internet safe for kids, so they don’t bother supervising, then the filter makes the internet a more, not less, dangerous place for kids.
- This motivation makes the most sense, but I pointed out that the ALP went to the election promising an opt-in clean feed for households, funded by the government. While many people think any sort of filtering is a bad thing, I really just object to it being compulsory. When it’s compulsory, my internet connection slows down. My business is less competitive. And then the government – perhaps a future government – has a tool to stifle free speech. If the Federal Government wants to waste hundreds of millions on a project of negligible use, I’m not going to start a movement: us Aussies are too laid back and we’re used to our Government’s wasting money – don’t get me started on the $10B bogan cash bonus fiscal stimulus package to prop up retail sales for products we just imported anyway – to get upset about them funding a voluntary feed.
All in all, Sharon was very interested, quite informed on the basics, and appreciative of our arguments and where we’re coming from. While remaining appropriately uncommittal, at the end of our chat I felt like she had a good understanding of the issues and consequences of putting in compulsory filtering technology.
This government has been very very strict on not breaking promises so far, and asking them to abandon the concept of a clean feed at an ISP level, funded by taxpayers is going to be an uphill battle. The solution looked pretty obvious to Sharon and I at the end of our chat: for the Federal Government to fund an optional clean feed for people to opt into, possibly supplied by a subset of ISPs who will take on additional technical complexity in return for government largesse, and to return the idea of a compulsory nation-wide feed to the “that was a stupid idea, wasn’t it” bin.
Other noteworthy parts of our chat included:
- Sharon suggesting that a better interface between the Minister and Industry might be a good thing; given the ALP have put on the record how important the feel internet infrastructure is to our economic future, the idea of a specific internet subcommittee in Infrastructure Australia could have merit
- When we talked about what it would take to filter P2P traffic, and we discussed Deep Packet Inspection, Sharon grasped the concept quickly and remarked “that would be like the Government filtering every single phone call people make”, with the obvious inference that that sort of thing would not stand.
- In Sharon’s office at least, they’re getting about an even 50/50 split between people who support the filter vs those who object to it; when we talked further though, those who support it are really arguing the merits of censorship, where those arguing against it are taking more of the line above – arguing the specific weaknesses, failings and collateral damage of a mandatory filter.
So, in summary, I came away from my chat with Sharon more impressed than I expected to be; those of us in technology fields are used to politicians who don’t have a background in them trying to make decisions and laws about them: and generally making the wrong decisions. On the contrary, Sharon was cognizant of the fundamentals, and was willing to learn more and explore the consequences of the proposed plans.
I’d encourage anyone reading this to get in touch with their own local members. Feel free to use the approach above as a template if you’re interested. If you have success, please post a note in the comments explaining who you got a positive/negative hearing from. Before legislation goes before Parliament, it has to be discussed and voted on in Caucus, so if we can build a list of MPs who understand the issue, and support the principle of the ALP delivering an optional, opt-in filtered feed, if they’re going to waste our money on filtering at all, then we stand a much better chance.
Using FoxyProxy and a spare US Web Server to unlock Pandora
by Geoff McQueen on Jan.06, 2009, under Industry.AU, Technology
I first discovered Pandora as a houseguest of Mike Arrington’s back in early 2006, and was immediately hooked. Unfortunately a year or so later, back in Australia, Pandora started blocking access since I wasn’t coming from a US IP address – all over about music licencing territories and a dispute over internet radio royalties that played out until late 2008 in the US alone. While I can’t blame them for picking their battles and deciding the rest of the world could wait until they’d saved their business, I was pretty disappointed as an avid user and fan.
After reading Mike’s latest “Products I can’t live without” post, I thought I’d put 20 mins of work into getting access to Pandora back again. Getting first time access to Hulu and other sites that block international users is on the agenda too, but I’ve got Pandora back now, and I couldn’t be happier. Here’s how I did it.
Ingredients:
- Firefox web browser
- FoxyProxy plugin
- Someone else’s Proxy Server or an Apache Web Server on which you can configure mod_proxy
Method:
- I’ll assume you’ve got Firefox. If not, step 3 is probably going to seem a bit tough.
- Install FoxyProxy. You might see a warning about the plugin being unsigned. This is common for open-source plugins, and since Mozilla recommend this one, I reckon you’re fairly safe, so choose OK.
- When FoxyProxy first loads (following a restart) it will probably ask you whether you want to configure it to use TOR (The Onion Router). If you don’t know what that is, choose no.
- From the FoxyProxy options (which will be open by default on first run, but which can be re-opened by clicking on the “FoxyProxy” link in your status bar (the bit at the bottom of your browser), you need to configure a your rules so that attempts to go to Pandora go through your (or someone else’s) US based Proxy Server, as described below in “Configuring FoxyProxy”.
What is a Proxy
In the sense we use it here, a proxy is a computer that makes requests for web pages, images and other we content on your behalf to another server. So, you make a request of the proxy, and the proxy then makes the request to the destination server on your behalf, and when it gets a response from the destination server – in this case, Pandora.com – it receives it and then passes it back into your browser.
In default mode, Firefox (like most web browsers) can only run with one proxy server configured at a time; this is problematic because while I want to use my Proxy to access Pandora, I don’t want all my traffic crossing the Pacific (twice): it would slow things down a lot when I’m browsing Australian websites.
This is why you need FoxyProxy: it allows you to apply logic and rules to what traffic you send via the proxy, and which you let go through normally (usually directly). You can even define different multiple proxies, each of them having their own rules or patterns that bring them into play.
Before configuring FoxyProxy, you’ll need to have a proxy server to use. Here, you’ve got two options: you can try using a public open proxy, or if you’ve got a web hosting account that gives you access to Apache’s configuration files, you can make one yourself.
Using a Public Proxy Server
Using a Public Proxy Server is pretty easy, although there’s no promises as to the reliability of the servers you want to connect through: remember, Pandora is streaming radio, which means if the Proxy your using is being used by a lot of other people, you might not have enough bandwidth to suck the music stream down through.
I did a quick Google search, and the xroxy.com list ranked pretty well. I can’t vouch for it or any of the Proxies it lists, but it looked OK. If you don’t have access to your own Apache server in the US, this is what you’ll need to use.
Making Apache a Proxy Server
If you’ve got access to an Apache server, you can make your own Proxy in a few quick minutes. I’ll take you through the steps now.
- Open httpd.conf, or a file that httpd.conf includes, often found in /etc/httpd/conf/httpd.conf or somewhere similar, in your favourite editor.
- Scroll down the file, and look for a LoadModule directives that mention “proxy”. There are two we need to make this work: mod_proxy and mod_proxy_http. If they’re there, then you’ve got the prerequisites you need.
- NB: If the line that mentioned them has a # at the start of this, that means they’re currently disabled: remove the # at the start of the line to enable them the proxy functionality in Apache.
- If you can’t find these directives, it might be that your hosting company doesn’t let you edit your core httpd configuration file. This isn’t uncommon, particularly in shared environments. If you’ve got the ability to edit at least some configuration files, you might get lucky and find that mod_proxy is enabled already, so keep perservering cross your fingers.
- Now we’ve established that you have proxy (or we’re hoping you do), its time to configure the proxy. My configuration (with the IP address for Allow from changed) is below:
ProxyRequests On
ProxyVia Off
<Proxy http://*.pandora.com/*>
Order deny,allow
Deny from all
Allow from aaa.bbb.ccc.ddd
</Proxy>
- The block of code allows people from the IP address listed in the Allow from line to access www.pandora.com, streaming.pandora.com or any other prefix of pandora.com, as well as allowing those people to access files and subdirectories of *.pandora.com. MAKE SURE YOU PUT YOUR OWN IP ADDRESS IN THE ALLOW FROM DIRECTIVE. You can find your IP address from the aptly named WhatIsMyIP.com site.
- When you’re done, do an apachectl configtest and if Apache is happy, do an apachectl graceful to reload the configuration files.
Once this is done, it’s time to configure FoxyProxy so that your browser actually makes requests to your new proxy when you’re trying to go to Pandora.
Configuring FoxyProxy
Configuring FoxyProxy wasn’t too hard, but if you’re not familar with the terminology, its easy to feel confused. Here’s a step by step.
- Inside the FoxyProxy options box (you can get to it using the instructions described above), you want to click on “Add New Proxy” on the right hand side.
- On the next screen, under the “General” tab, give your Proxy a name. If you’re using a public proxy, use the name from the listing website; if you’re using your own, give it a name like “MyProxy”.
- From the “Proxy Details” tab, enter the address of the proxy. If you set up your own proxy, this will be your server’s hostname or IP address. You also need to choose a port: if you set up your own server using the Apache instructions above, it will likely be 80; if you used a public proxy, look for the number after the : in the address if they don’t specify an explicit port number. Also, if you created your own Proxy using Apache, leave the SOCKS box unticked.
- The “URL Patterns” tab is where you tell your browser to use this proxy whenever you’re going to Pandora.com.
- Click on “Add New Pattern”
- Type a name for the pattern that makes sense to you, eg, Pandora
- Type the following into the URL pattern box: http://*pandora*/*
- Leave the default radio buttons (whitelist and wildcard)
- Click on OK to save the Pattern, and then OK to save the FoxyProxy settings, and then close.
- Now, you need to enable FoxyProxy. Simply right-click on “FoxyProxy” text in the status bar, and choose “Use proxies based on their pre-defined patterns and priorities”.
- Try going to www.pandora.com – this is the real test of your Proxy server, and whether it will let you pass traffic through to Pandora. The following results might give you an idea of what where a problem lies:
- 403 Forbidden Error: the Proxy isn’t letting you get through to Pandora.
- If you’re using a pubic proxy, then they don’t like you, or don’t like Pandora. Either way, choose another proxy.
- If you’ve set up your own Proxy using Apache, you’re either coming through from a different IP address than you thought (check for typos on the “Allow from” line), or you’ve typed in your “<Proxy>” directive incorrectly; check there for typos too.
- If you get the “restricted” page from Pandora telling you your IP address is outside of the US, then one of the following has occured:
- If it shows you your IP address, then you either haven’t turned FoxyProxy on (make sure you do Step 5 above), or you’ve made a mistake when setting up your URL Pattern: go in and have another look.
- If it shows you another IP address, like that of your Proxy, then Pandora doesn’t think the Proxy is in the US. Use another Proxy.
- 403 Forbidden Error: the Proxy isn’t letting you get through to Pandora.
These are a few instructions that worked for me: they’re not going to work for everyone, and they don’t take into account the myriad of different ways you can set up Apache servers in particular.
Hope you’ve found them useful – if you’ve got questions, please post them in the comments and I’ll do my best to answer them.
It feels like there’s a community forming…
by Geoff McQueen on Jan.06, 2009, under Entrepreneurship, Industry.AU
Just a few late night reflections on the (Sydney-centred) Australian Startup Community, and more particuarly, SiliconBeachAustralia.org at the centre of it.
While I’ve personally been playing the startup game on and off for a while now (first with Internetrix, which is now pretty established, then Omnidrive that taught a lot of lessons on how not to do things, and now Hiive Systems, which we soft launched over the Christmas break), including time in Australia as well as Silicon Valley, I’ve never really felt like I’ve been part of a community. Whether the community I associate with SiliconBeach existed or not in the past is something for others to say, but from my perspective, feeling like being part of the startup community is a fairly new thing.
Almost by definition, being an entrepreneur is a lonely existence.
It isn’t that we’re loners, antisocial or isolationists – there’s good reasons for feeling alone a lot of time.
Firstly, we’re kinda busy a lot of the time - more so than most of our friends or family seem to be – trying to create our dreams, but it really just comes across as being workaholics. Sure, we’re having fun in a perverse way with the stuff that really drives us crazy as we learn the things that don’t work, but it does make for a certain amount of loneliness.
Secondly, the things that we care about - investment, scaling, staff, company structures, marketing and so many more topics – isn’t really pub conversation, so while we’re quite happy to talk about whether Hayden should be dropped from the next Test or not, it probably isn’t the thing at the top of our mind.
I’m sure there’s plenty of other things that lead to being a bit lonely in our endeavours, but its late, and I’ll leave it at that…
The thing I’ve been most impressed about professionally over the 6 months or so is that I’ve seen a community start to form and take shape. Again, it probably existed long before I noticed anything or was included, but this is my blog, so I’ll take a naive 1st person reference point or we could be here all night.
So, why do I think a community is forming?
Firstly, entrepreneurs are building relationships. Real relationships. I’ve actually made real friends, people I’ve enjoyed beers with, had lunches and dinners with, and more than anything, have gotten to know and respect. I like these people, and really enjoy their company, and they seem to tolerate mine. Why are we forming real friendships and relationships? It surely isn’t just the work: I think its about a shared lifestyle, a shared passion, and a shared outlook. I might never work with any of them, and I don’t really care – while entrepreneurship (and thus by proxy business) might be the common thread, its the people at the ends of this thread that are worth knowing. This isn’t some virtual social network substituting for real friends and human relationships.
Secondly, people are having real conversations. Talk is cheap? Sure it is, but it takes time and effort, and you know a community is forming when there’s care and passion in the talking. There’s been a few little dust-ups and differences of opinion, but that’s a good thing in moderation: people care enough to contribute, and as long as they listen to the other guy/girl’s point of view, it’s all good. On the lower friction side of the equation, and following on from the relationships thing above, I’ve just come off a 40 minute Skype chat with @Nickhac, someone I wouldn’t have gotten to know – and massively appreciate and value taking the time to talk to – if it wasn’t for the SiliconBeach community.
Thirdly, people are interacting, not just occassionally, but through both casual and signifcant events that cost much more than money – they cost time. It’s now 4 months since StartupCamp was held in Sydney, and StartupCamp II is coming in a couple of weeks. This is on top of the regular Friday Drinks, a range of other events including BBall, and finally the conference circuit which those of us too busy can follow thanks to the likes of @kcarruthers. 2009 is looking like a bumper year for quality interaction in the entrepreneurial scene. I’m really looking forward to StartupCamp II in Sydney, and I really hope Geekdom can handle us, since there’s something like 90 people already signed up to come. I’m mildly concerned about what we’ll do without Bart there to guide us, but hopefully we learned enough last time around on the maiden voyage to have a stab at it.
A big thankyou… to you
So, in summary, I’d like to thank Elias for kicking off SiliconBeachAustralia.org, and I’d also like to thank all the other people who’ve contributed to the 1400+ messages over the last 5 and a bit months. Lets keep this community growing, and don’t be afraid to say hi – introduce yourself on the list, come along to StartupCamp or follow the action on UStream or startup-australia.org or technation.com.au if you’re too far away to make it in person.
But, most of all, if you’re an entrepreneur, you don’t need to be lonely…
Telstra’s Letter to Shareholders – a lot of talk, no real explaination
by Geoff McQueen on Dec.18, 2008, under General, Industry.AU, Personal, Technology
Last week, Telstra got booted from the National Broadband Network process, where the Australian Federal Government will be spending about half the amount of money they (wasted) on the bogan bonus to fund/subsidise an improvement in Australia’s broadband capacity down to the last mile.
Telstra, the largest telco in the country, apparently didn’t like the concept that some Govt money in the process might mean the new network actually involves competition between the network, wholesale and retail divisions of the value chain: one network with cost recovery, then a number of wholesalers, and then lots of retailers. You know, competition on a utility.
Anyway, they submitted an incomplete report, and the Govt kicked them out of the process for non-compliance. Their share price then copped a hiding, double digit losses even in a rising market, since it is pretty clear this new network is going to be “where its at” for the next generation of Australian fixed-line internet access. The government will need to legislate to ensure the successful builder gets access to the copper and other Telstra infrastructure, and it would have been much better for them to have been in the game. But they had a dummy spit, and now the pressure has been on for them to explain their incompetence to their shareholders, including yours truly.
Here’s the letter. A lot of talk, but no explaination. What a disappointment.
The Perils of Credit (cards)
by Geoff McQueen on Dec.13, 2008, under General, Industry.AU, Technology
On a recent trip that included China, half a dozen stops in Europe, and some time in New York and San Francisco, someone skimmed my corporate credit card. My bank, Bankwest, has a pretty impressive fraud detection system, and when someone (I think based in China) made a $1 transaction (so as to test whether the number was valid, before either selling the details on or coming back to try and clean me out), the bank’s team caught it and gave me a call.
Unfortunately, I was in the US at the time, and for some reason they didn’t see fit to leave a message, so all of a sudden, my card stopped working, but it was at the tail end of the trip, and I decided I’d look into it when I got back, thinking it might have just been a normal effect of running out of credit limit or something.
After getting home and calling the bank, I was told all about the fraud, that the card had been deactivated, and that they’d send me a new one.
With a number of automatic transactions with suppliers now rejecting, there was only a little bit of hassle involved with telling them the new number. Everyone except TPG internet.
With the new number in hand, I dutifully logged into their web control panel and updated the details. The system accepted them, but a short time later sent me an email and told me that the card wasn’t valid. I logged in again, thinking I must have mistyped a number or two, but again, after a while, an email came through rejecting things.
Not I thought they might have had something wrong on their end, as I’d been buying fuel for the car and paying other vendors successfully with it, and I made a note to come back in a day or two to try again.
This went on for a little while, until I got a call from the bank after I’d made a number of large transactions internationally in a short period of time. While confirming the transactions were legitimate, I happened to ask the caller from the bank whether she could see if there was anything wrong with the card that would explain why TPG’s transactions were failing.
She looked back through the records, only to see that TPG was trying to process my card with an expiry date of 20/22, ie, a month much greater than 12 in the year 2022.
When I got my email reminder from TPG accounts the next day, I replied and explained in some detail what I’d discovered, and asked if someone could give me a call or reply via email with an update on what’s happening at their end.
Later that day, upon getting to my home office, I tried to log on, only to find I’d been disconnected. I called through to their phone number on the bottom of their accounts email, and selected accounts, only to find I’d called 10 mins after they’d closed for the day. Of course, they then hung up on me. So I rang again pressed 2 for tech support, thinking I’d play dumb about my connection not working, and hope they’d take my credit card over the phone and reactivate or unblock the account. Instead of being placed in the support queue, however, I was just told they couldn’t help me right now (presumably too many people in the queue, but the system didn’t say that) and promptly hung up on me. Customer service: FAIL.
Giving up, I called the next morning, and after 15 mins on hold for accounts, I told my story to an outsourced phone support person. I tried to explain my situation with some difficulty because of language issues, and she tried to take the CC payment over the phone. Again, it failed. She put me on hold, and then 10 minutes later, hung up on me. Repeating the process, and now getting having been at it for almost an hour by this time, I am finally asked some details about the card, like the bank it is with. “Oh, we’re sorry, we’re having problems with some Bankwest cards”.
So, while on one hand I’m frustrated by the scammers who nicked my details and made this all necessary, I’m actually more frustrated with TPG. Their system had a problem, and they then disconnected me and made me jump through hoops to try and diagnose and solve it, and even with the accurate information, it still took an hour to have someone recognise it.
They’ve now demanded I give them a different credit card, or access to draw money out of my bank account, but I’ve told them to get stuffed – they should fix their system, and email me when they’ve done it. No one else I’m working with is having any problems, and given the quality of their website – design last touched in 1997 or something I think – and their poor quality customer service, I wouldn’t be surprised if they were massively cutting corners on their payment processing gateway: there’s some things you just shouldn’t scrimp on.
If they do this again, I’m off to Internode, who I heard nothing but great stories about while at OSDC last week.
