Initiatives in the Tourism Industry in Vietnam

First of all, if you are looking for a website to learn more about Vietnam and particularly Saigon, I highly recommend this website – Saigoneer. Its section on street food is a great start. It’s in English and has lots of details.

There are a few upcoming initiatives announced recently in the industry:

  • There will be bi-weekly direct flights form Zurich to Saigon
  • Vietnam Airlines will soon operate direct flights from Danang to Japan
  • Vietnam Airlines is exploring the possibility of direct flights from Vietnam to America
  • Vietnam Tourism Association will soon carry out exams to classify tour guides in the country. Tour guides will be given 3 to 5 stars based on the results of the exams which will be free of charge and voluntary. Also, freelance tour guides are now mandated to be under contracts with authorized tour companies in order to do business
  • BBC Sport reported that a 2020 race in Hanoi, Vietnam was now secured barring an official announcement

Three points here. First, the tourism industry brought in $13 billion in the first half of 2018, an increase of 22% compared to last year. It is huge for a country like Vietnam. We have a lot to offer. A long coast throughout the country. An authentic and exotic cuisine. We have beaches, mountains and Mekong Delta, everything that a tourist can hope to experience. But our tourism has been plagued by the lack of standards in services leading to the poor return rate of guests. Our country is pretty much a myth that is worth exploring once and no more. In business, it costs 6 times more to acquire a new customer than to retain one. This is the same case. Even though the tour guide exam’s effectiveness remains to be seen (we Vietnamese are not known for world class execution), it is a small step towards the right direction. If we want to compete and have more guests return, maintaining high service standards is instrumental.

Secondly, having more direct flights is huge. Thailand and Singapore have two airport hubs in the region and look what the airports have done to their tourism. Direct flights will reduce the hesitation from guests when they have to make a decision on where to visit. Vietnam’s two biggest airports sorely need major upgrade. It’s a pity that some bureaucracy red tape has prevented the expansion of the airport in Ho Chi Minh City. We have the land to do so and the airport is ridiculously right next to the city center. I have been to quite some airports and I haven’t seen one that close to a city center. Nonetheless, having more direct flights will increase our appeal as a destination.

Lastly, I have been hoping for annual international event in Vietnam for years. Singapore’s F1 Grand Prix has been a remarkable success since its debut in 2008. Otherwise, Singapore wouldn’t keep hosting it. A race is usually a combination of music concerts, press conference, other activities and of course the racing itself. With the reach of Formula 1, Vietnam’s brand awareness which has been under-marketed due to lackluster branding and marketing efforts will hopefully be boosted.

Facebook & Privacy First Mentality

Quite a week for Facebook

It has been quite a few days for Facebook. First, two days ago on Techcrunch:

Facebook has confirmed it does in fact use phone numbers that users provided it for security purposes to also target them with ads.

Specifically a phone number handed over for two factor authentication (2FA) — a security technique that adds a second layer of authentication to help keep accounts secure.

Then, a bombshell was dropped yesterday. Per Wired:

ON FRIDAY, FACEBOOK revealed that it had suffered a security breach that impacted at least 50 million of its users, and possibly as many as 90 million. What it failed to mention initially, but revealed in a followup call Friday afternoon, is that the flaw affects more than just Facebook. If your account was impacted it means that a hacker could have accessed any account that you log into using Facebook.

Facebook’s track record in data security and privacy hasn’t been particularly stellar recently. 2018 is not 2010. Facebook doesn’t have the same dominant position as it used to in the social network market any more. Users have plenty of alternatives and substitutes to spend their time on. These scandals, coupled with its role in the “free speech vs hate speech” row, don’t do any good to Facebook’s image as well as its appeal to users when privacy has become more and more pressing as a concern to users.

Privacy & regulations

I have been resigned to the fact that there is no anonymity on the Internet and that complete privacy isn’t possible. Yet, when users trust a company with their data, whatever the data is, it’s the company’s responsibility to protect such data. As many important aspects of our lives take place on the Internet, the need to feel safe online is more overwhelming than ever. Without feeling safe, how could users feel comfortable using a service? Privacy and data security will be, if not already is, expected by default of companies. It’s not a nice-to-have feature any more. It’s a do-or-see-your-competitors-get-ahead game.

But companies are not in the business to lose money. If they are not legally required to bolster their security, don’t expect them to. That’s why companies fought hard against GDPR or privacy laws passed in California this year. And this is where I don’t understand the criticisms of some towards regulations such as GDPR. Yes, no law is perfect, especially in the beginning. That’s why we have amendments. GDPR is not an exception. It is a great first step to give power back to users and force companies to be liable for their actions/inactions.

A common criticism that I came across towards GDPR is that it makes it too expensive for small companies and startups to comply, widening the moat or competitive advantage gap between giants such as Google/Facebook and SMBs. Well, if a company with a deep pocket and better security measures has 10% of its 500,000 in user base breached, the impact is 50,000 users. If a small company with fewer recourses and much weaker security measures loses all of its 50,000 users, the impact is the same as in the first scenario. Hence, breaches at SMBs can have significant damages and ramifications as well.

Sure, the best case scenario is to have different levels of compliance applied to companies of different size. I’d love to see that happen. Nonetheless, without privacy regulations, imagine how much companies would care about our data and how much of a mess it would be. Despite having HIPAA in place, every year has been a banner year of cybersecurity in healthcare in the US and healthcare organizations spend 3% of their IT budget on cybersecurity. Verizon reported in their 2018 Payment Security Report that only 40% of all interviewed companies in North America maintained full compliance with PCI. Despite all the scandals related to data security in the past, Facebook still lets more unfortunate events happen. To be fair, I don’t imagine having impeccable security is easy. However, would companies even try to secure your data without any legal requirements?

Progress happens when we raise standards. Would cars be more environmentally friendly if we hadn’t enforced regulations on emission quality? If a university wants to raise its standard for incoming students, will it lower or raise the requirement for GMAT/SAT? Will a drug be safer for patients if the FDA enforces more or fewer tests? Big companies have the means to comply with stringent privacy regulations. Small companies/startups, though difficult, have more access to capital funding. Plus, public cloud providers are investing to have their infrastructure compliant with many compliance regulations (See more here for AWS compliance and Azure compliance). Regardless of size, companies have to take privacy seriously and consider it an integral piece of the puzzle, a competitive advantage if done right or a threat to their competitiveness if ignored.

Coworking space + Managed Services?

I have been thinking about the prospect of marrying the two concepts: coworking space and managed services?

Coworking Space

Coworking space shops help individuals, startups and even big corporations operate without worrying about renting office, meeting rooms, equipment, or Internet. Members can also rely on these shops for tasks such as mailing, forwarding or receiving guests at reception desks. The main premise of coworking space is to help businesses focus on what matters by outsourcing low-ROI tasks to the host and to get off the ground with as low a fixed cost as possible. Moreover,  there is another marketed value proposition that coworking space facilitates random interactions and access to like-minded individuals, potential team members or investors. It may be true. Some try to offer added values such as workshops or consulting. Nonetheless, such propositions are commoditized now. There is no differentiation among coworking space providers. If we follow the continuum of resource sustainability by Jeffrey Williams, coworking space seems to fall into fast-cycle bucket. In that bucket, the only way to compete is fast time-to-market

Continuum of Resource Sustainability

Source: How sustainable is your competitive advantage? – Jeffrey Williams

Managed Services

Think about managed service providers as your extended IT department. Their primary premise is the same as coworking space providers. Managed service providers help companies to manage mundane & low-ROI tasks such as patching, updates, monitoring, installing and to start a business with a low CAPEX. Instead of spending a lot of money and time procuring hardware and setting up your own environment, you can go to Managed Serviced Providers and everything can be ready in a matter of hours or a day. Additionally, your developers don’t have much experience in migrating to public cloud? These providers will assist you. You want your developers’ valuable time on real innovation and coding instead of managing public cloud environments? These providers will do so for you. While these public cloud providers have incredible global footprint and a variety of services, they don’t necessarily offer great customer services. Unless you are willing to pay for technical assistance packages that can run up to $15,000/month, there will be little hand-holding. That’s why managed AWS market has a CAGR of 13.9%

Why not combining the two?

The two services share the same primary premise. Most startups and businesses nowadays leverage IT to gain competitive advantages and meet customer needs. Chances are that many startups or small businesses at coworking space leverage Internet and the cloud extensively. If coworking space shops can bundle managed services with their memberships, it will create more value and appeal more to members. If a coworking space can have at the minimum one or two certified Azure or AWS engineers in-house to help guide startups with their infrastructure, wouldn’t that be something of value?

In my mind, it makes sense to offer an infrastructure-level service that every Internet startup will need. Eventually, if enough coworking space providers offer managed services as well, there will still be no differentiation. The keys are time-to-market and the art of bundling and pricing. It’s quite intriguing to not see many coworking space shops do so. Perhaps, I am missing something. Or not.

Sinemia and MoviePass

If you live in the US and are a fan of watching movies at cinemas, chances are that you have heard of a company called MoviePass. It is famous for its unprecedented business – $10/month for one ticket every day. The company has suffered a great deal financially and operationally for its business model, including an urgent financing round to keep its servers running, downtimes, unimpressive customer services and frequent changes to its pricing.

In the subscription world, the mandate is that once a user subscribes, the more the subscriber consumes services/content, the better and marginal cost is trivial. Take Netflix for example. After a successful subscription, a user can watch as many movies and for as many times as possible. Netflix takes in minimal marginal costs (probably for servers, storage and networking) for every time a movie is watched. In the case of MoviePass, it’s not the case. Every time a ticket is dispensed, MoviePass pays the cinemas either the full amount of the ticket or the majority of it. Slap on it the cost of marketing, financing and operations and the business loses money.

How does MoviePass make money in that case? I suspect that MoviePass prioritizes growing its user base to the point that it is big enough for the company to convince cinemas to cut its a much better deal. Advertising can be another avenue.

The failure of MoviePass is also from the customer segmentation perspective. We moviegoers differ from one another in our consumer behavior. Some go to cinemas every week, some go for only blockbusters and some only do so once in a while. The difference in behavior requires multiple offerings from MoviePass. The less frequent users don’t feel motivated to keep a subscription every month. Movie junkies who go as many times as possible will bleed the company dry. There are some users who look at the release schedule, subscribe for only one month in which I can watch movies I like and then unsubscribe, myself included. Such users don’t offer much value to MoviePass as they don’t, ironically, consume enough to contribute to MoviePass’s value as a company.

The “one-size-fits-all” model that MoviePass is famous for doesn’t take into account any user behavior. Unsurprisingly, it failed.

Sinemia today announced an unlimited plan. For $30 bucks, users can get a ticket every day and advanced bookings are allowed (not possible with MoviePass). The difference obviously is a higher price tag that comes with the plan. I suspect that even at $30/month, it is still a money-losing deal for Sinemia but it is less damaging than a $10/month plan. Moreover, Sinemia has 5 different plans now. Each appeals to a different segment of users.

Sinemia

To discourage users from unsubscribing early, Sinemia enforces an initiation fee for monthly-based plans. That way, users care more about the subscription and are motivated to stay longer. If users unsubscribe, Sinemia gets more revenue in return. If users want to avoid the initiation fees, the only way is to be locked in for a yearly bill.

Even though Sinemia has multiple plans and higher pricing points, Sinemia will try to enlarge its user base and leverage it for a better deal with cinemas. What I think will be appealing to cinemas is that Sinemia can prove that it attracts moviegoers in unpopular times during a day. Movie slots are perishable. Once it goes by, there is no way to recover it. Hence, cinemas would be interested in putting butts on their seats during low-traffic hours. If Sinemia can prove that it is able to deliver that, its position will be stronger. Anyway, its business model is saner than MoviePass’.