In the spring of 2009, Canary Wharf, one of London's most important business districts, resembles, to a large extent, the UK economy in microcosm. Banks occupying tall buildings dominate the skyline, but these shell-like edifices seem shorn of mystique; swish shopping precincts with opulent names like Cabot Place and Canada Square are replete with chain boutiques possessing more discounts than customers; and the mood, a potent mix of uncertainty, confusion and nihilism, fits that of an economy experiencing a crude reality check. |
However, aside from those industries associated with a population that is battening down the hatches in anticipation of a financial tsunami - lingerie, computer games and take-away pizza - there is another element to the British economy which is barely mentioned in the mainstream media, but which is thriving: businesses commanded by those entrepreneurs who did not buy into the myth of growth through leveraging irreplaceable assets for purportedly infinite credit lines, but who built enterprises in a purer and, in the Anglo-Saxon world, almost forgotten form.
Nadeem Azam is one such entrepreneur. Born into a family of south Asian immigrants in the northern industrial town of Bradford in 1972, he developed a fascination for computers from an early age, and by his mid-teens he had already programmed and marketed the cult adventure game "Escape to Actium" (1988) on the Commodore 64, garnering critical acclaim from the likes of industry publications such as Computer and Video Games. In fact, so prodigious was his coding talent that at 16 years of age, Azam received an offer to go out to California to work for a then relatively unknown software publishing house by the name of Electronic Arts.
Eschewing the San Mateo sunshine to pursue his academic ambitions - Azam was the top performer in his high school of more than 1,000 students, regularly monopolising prizes given for exceptional performance in examinations - he headed for the bright lights of London as a 20-year-old graduate, wanting to make it big in writing, his other major passion. But after a succession of jobs at local titles such as The Kensington and Chelsea Times - and authoring some scoops which made it onto the front pages of national newspapers - one day in the mid-1990s, Azam stumbled across a new medium called the Internet, and his life's trajectory was to alter beyond recognition.
In contrast to many of the Internet businesses of the time - boo.com is amongst the more famous in this respect - which lavished money on sumptuous offices and state of the art electronic equipment before dismembering in the carnage of the dotcom bust in the year 2000, Azam brought a punk ethic to the ritzy - and, for the large part, economically indefensible - landscape of commerce on the Internet. Operating out of a small flat off a major arterial road on the northern edge of central London between the neighbourhoods of Euston and Camden Town, he had but the one computer, a beat-up PC with the ironic moniker of Marilyn, a machine which has since gained legendary status within the industry. In the days when broadband connections were the stuff of fantasy for all but the wealthiest, and narrowband Internet Service Providers charged by the minute for web access, Azam would log on to the Internet only sporadically, doing as much of his work offline as possible.
This approach was nothing less than the creation of a supremely lean business model, but Azam's austerity contrasted painfully to the credit-fuelled euphoria that was infusing much of the rest of the UK economy at the time. Moreover, as a mere Internet affiliate - in essence, someone who sells another person's products online in exchange for commission payments - he constantly found himself at the mercy of large companies who unilaterally changed their terms and conditions, often in a brazenly collusive manner, to his detriment.
But instead of cashing in his chips, Azam compensated by working harder than ever before. Ninety and 100 hour weeks became common; then the distinction between work and leisure collapsed altogether. In the dead of night, while the rest of the city was either asleep, intoxicated or both, Azam was at his computer terminal, amassing knowledge about the most obscure aspects of web commerce, learning new programming languages and automating as many of his websites, which by mid-2002 numbered more than 50, as possible.
At first, there was little ostensible improvement in Azam's predicament. Insanely long hours were not translating into bigger revenues, yet the cost of living in the UK's capital city was exploding seemingly exponentially, something that Azam keenly felt as a lone entrepreneur. Prognoses showed that any increase in revenues would be more than offset by increases in the cost of inputs. Even Azam himself was beginning to doubt whether his business model had any relevance for a world in which large volumes of credit, seemingly available on tap, were distorting the economy beyond recognition, and rendering savings- based capitalism into an object of historical curiosity.
Yet, for a number of reasons, such doubts were to prove more misplaced than anyone could have imagined. Firstly, the demographics of the online market transformed as "traditional" businesses, most of which had taken the best part of a decade to adjust to the new reality of the Web, realised that they could make and save phenomenal amounts of money through having Internet affiliate programs of their own. Paying commission to affiliates as a small percentage of a successful sale was suddenly recognised as the virtually risk-free income stream it always had been.
All those countless thousands of hours of absorbing information about every aspect of e-business meant that Azam, the guru of his field, was in the perfect position to capitalise on this trend, and he found his consultancy services oversubscribed. Within a short space of time he had gone from being a sole trader to hiring teams of staff, firstly in emerging markets such as Argentina and India, and then in the UK; similarly, headquarters was no longer a small flat in an area increasingly blighted by the scourge of drugs, but the first floor of a Georgian building in the literary quarter of Bloomsbury.
Secondly, his reputation for hard work and exceptional attention to detail had spread across the Internet; furthermore the fact that he had never stopped developing new skills engendered formidable synergies. While he had started off as a simple affiliate, his knowledge of other e-commerce sectors, such as e-mail marketing, web design and online public relations was also amongst the best of anyone in the country; moreover, Azam's linguistic flair and precision marked him out in an industry where communication is dominated by the use of emoticons. This combination of graft and talent meant that clients such as Warner Brothers, Orange Telecom, Hilton Hotels, Fitness First, British Telecom, ITV and a whole host of other brands of international repute were soon beating a path to Azam Marketing's door.
And thirdly, the worldwide credit implosion put Azam Marketing in pole position to benefit from its specialist knowledge in what occupied, until fairly recently, a niche position in e-commerce: cashback websites. These sites, which are basically large online stores where registered users can get a discount (typically 1 to 7 percent) off any items that they purchase, have mushroomed as consumers who would not have thought twice about splurging thousands of pounds on a home cinema system as little as two years ago now realise that many of them are only a couple of pay packets away from financial ruin. It would be no exaggeration to say that Azam Marketing is the runaway leader in the UK cashback sector: in conjunction with its partner VAC Media, it has sealed over 100 such contracts with the likes of household media names such as Trinity Mirror plc (145 newspapers) and Newsquest (217 newspapers) to name but two; at the time of writing, its most successful rival had garnered six.
Many of the juiciest of these multi-million pound contracts were agreed in Canary Wharf, where some of the UK's biggest media groups are based, and it was here that OhmyNews met Nadeem Azam to talk about the potential of cashback sites, the state of the UK and global economy, the future of the novel, and, albeit briefly, the 2010 football World Cup.
OhmyNews: Cashback websites seem well-placed to succeed in a recession. But can they weather a boom?
Nadeem Azam: Cashback sites are ideally-placed to help people in both a recessionary climate and more successful times. The reason is because whether you are buying low cost items or luxury goods, whether you're flush with cash or whether you're hard up for cash, cashback websites will enable you to save money on your purchases. To give you an example, we have...cashback websites that target more affluent demographics, and those cashback websites have as much activity levels, and as much interest [in them], as those which may target the mainstream audience. And you'll get people who'll book all kinds of things, or who'll buy all kinds of things, such as for example: flat-screen televisions, or staying at five-star hotels, or luxury holidays. The great thing is with higher-ticket items, you're actually making more money back, ultimately, in cashback. So even people who are well-to-do, and even when the economy does turnaround, whenever that may be, will always be able to utilise cashback services, and be able to make money back, on what they're going to buy anyway.
Why have major media groups which sell millions of newspapers every day been so keen to launch cashback sites?
Newspapers have always had other avenues to generate income above and beyond their cover price, and the classified advertising that they have in the newspapers. They've often had - to take the example of one of our client VAC Media's white-label cashback partners, the Daily Mirror newspaper - a reader's offer, whereby you could buy all kinds of items at low cost, and order it from the newspapers. These would do particularly well in the pre-Internet era, and have continued and are still successful. But newspaper groups, as with all businesses, are constantly looking for new avenues to generate income. And with the fact that cashback is now the "in" thing, I think that quite a few media groups and newspapers have decided that it's an additional channel for them to generate an income in these times, when other forms of advertising are not generating the same amount of income that they used to.
Azam Marketing has secured around 100 cashback contracts, over ten times more than any other digital marketing agency. Why is this?
I think if you talk about having brought on board ten times more white label cashback partners than any other company, I could quite easily say that we work ten times harder than our nearest competitors. We make ourselves available to people who make enquiries about the services that VAC Media, our client, offers, the services that Azam Marketing offers or the services that all our dozens of other clients offer; we make ourselves available from 0800 hours all the way up to 2230 hours, seven days a week. That's publicised on a thousand and one websites all over the Internet.
To give an example of what this means in practice: we've had a few cases of companies emailing me at 6 p.m. I've rung them back within seconds, spent two hours on the phone to them explaining everything [relating to their requirements], worked with the team all night to create a dummy website for them, had a meeting with them the following afternoon, and have come back to my office within 24 hours of their initial e-mail with a signed contract in my hand. As the old Yiddish proverb goes, "If you want your dreams to come true, don't sleep."
The UK economy is viewed as the sick man of the developed world. Recently it was revealed that the UK has spent around 20 percent of its GDP on bailing out banks. How has this affected your business, if at all?
Ever since about 1999, I've been boring my friends and my colleagues to death with talking about the UK economy is being mismanaged; about how an artificial boom is being created; about how things are going to come crashing down like a pack of cards before we can say "Gordon Brown". And ever since 1999, I've been creating Azam Marketing to develop a business strategy that will boom and prosper in economically-difficult times. We set up structures that allow our business to run efficiently, with a low-cost base; at the same time, we've devised strategies that ensure that our clients receive a level of service that no company in the UK provides to their clients.
And, by the grace of God, I can say that while we did not prosper in the boom times in the way that other agencies and affiliates did, while we did not milk the good times with short-termist, grow-fast, pile 'em high, rake in the money schemes, and blow money in the way other businesses did, and while we did not enjoy the good times, and spent the money we were making investing in the business and developing cash reserves for an economic slump, now I can honestly say that whereas I was dramatically wrong in predicting that the recession would happen several years ago, and was dramatically wrong in believing that we at the precipice of a collapse as far back as 2002, 2003, 2004 and 2005, I can say that as regards us being in the position that we are now and as regards the strategies that we developed in those years for an economic downturn, I feel vindicated.
The bubble has finally burst, and I am excited I can finally enact the strategies for us to prosper in a recession that I have been planning for the last decade. Our net profit has increased 160 percent in the last six months and we have doubled our staff [during the same period].
Back in 2006, I wrote an article for OhmyNews International entitled "Pop! Britain's Bubble Economy Confounds Experts". Similarly, as you mentioned, you were one of a handful of others who were warning about the imbalances in the UK economy. Why do you think that so few others, including many who are now feted as experts, perceived the potential for the unravelling of the UK economy?
The level of commentary, analysis, debate and discussion, the level of journalism, the level of discourse amongst the so-called educated classes in England is based on people who are not necessarily fully aware of their surroundings and the mechanisms by which business and the economy function. Going to St. Paul's School [an exclusive boys' school in Barnes, London] does not mean that you know about the functioning of macroeconomic structures; ditto if you have done a course in A-level economics, or you've gone on to do a business studies degree or economics degree. A lot of people spun themselves as pseudo-experts and pseudo-gurus based on second-hand knowledge that was being passed around; what their peers were saying.
And it was a case of the emperor with no clothes: just because everybody else was saying, not least the person who is now the leader of the country, that for the first time...since as far back as Britain has been an industrialised country, that the cycle of boom and bust - which this economy has a preponderance towards, and has major, severe structural deficiencies that lead to that - was eradicated, and that property prices would rocket forever: nobody dared question this absurd proposition.
And I think that people such as yourself, who commented on this in numerous articles, and perhaps myself, who dared to say that the emperor really does have no clothes, were seen as doomsdayers, quacks, weirdoes, pessimists; it's not a great position to be in.
Richard Branson has said that now is a very good time to launch a business, and that "there will be many Richard Bransons" produced as a result of this recession. Do you see any silver lining to this economic cloud?
Undoubtedly, it's a lot cheaper to rent office space, to hire staff, to get away... you can get away with paying more reasonable staff salaries - though within Azam Marketing, we've increased salaries substantially to reward the team members for the success that we've had - but other businesses would be able to hire staff for lower salaries.
I do believe that a recession is a great to start a business, if you have the funding to be able to do so. Some of the most successful businesses that we have nowadays were conceived in previous downturns: 16 out of the 30 corporations that make up the current Dow Jones Industrial Average started during a recession. And when the economy did pick up, they were able to capitalise on the subsequent economic booms that followed. Undoubtedly, for entrepreneurs, it is a time whereby people should not be frightened to be brave, and look for the opportunities that are out there.
Much of the global economy seems to be imperilled by a model of cheap credit being a chief driver of economic growth. Do you think that economic models that rely so heavily on the proliferation of credit and speculation, as opposed to saving, will be discredited in the long term?
The mores I was raised with and subscribe to are those which are prevalent in large parts of the world: you never borrow a penny from anyone, unless you are more or less at the point of starvation. It is the ultimate act of humiliation to live off somebody else's money.
When I moved to London, a decade and a half ago, I could not afford my electricity bills, but I never borrowed a penny from anybody - I did not put my heating on in the winter.
If you can afford to buy something, buy it. If you can't afford to buy it, don't buy it. Simple.
These are the mores that British society subscribed to up until very recent decades. The concept of borrowing money was the ultimate act of degradation for an English gentleman. The disease of debt that the Anglo-Saxon economies have spread to other countries is what is now causing the chickens to come home to roost.
Are there any profound cultural implications arising from this global recession?
I'd like to think that by not having money for us to go out and celebrate somebody's birthday party every second Friday, we'd have the time and space to think about more esoteric and metaphysical things, the things that ultimately matter, such as: why we're here; what our purposes in life are; and whether we should help our brethren or not. But those are hopes that I have a feeling are just fantasies.
Who will come off best from this recession? Will it be the US, will it be China? Will it be Europe? Anyone?
There's a famous quotation from the economist John Maynard Keynes which says: "Capitalism is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work for the benefit of all". The people who will suffer the most from the global economic downturn will be the doyens of capitalism who subscribed most to the "greed is good" mentality.
To say that you're a literature buff is an understatement. Could you please tell us your favourite 20th century novel, and the reason(s) why it is your favourite work?
There's so much good literature [from that period]. The 20th century - which I fear may not be the case for the 21st century based on the output thus far - produced such an avalanche of breathtaking literature that I would not even know where to begin. F. Scott Fitzgerald, George Orwell, Philip Roth, Franz Kafka, Aldous Huxley: these are the writers who have most inspired me, alongside less well-known authors such as Bernard Malamud.
In December last year, the Internet gained its billionth unique user. Faced with this, is the novel doomed, or can it reinvent itself?
That is a good question. The novel and the poem are the only art forms that allow one to delve into the innermost recesses of the human mind. And in an era of insubstantiveness, and [given] an ever-burgeoning proportion of the population for whom it is beyond their capability to read anything more complex than a few words on Twitter, I fear the novel will increasingly become a niche art form that will become the preserve of the intelligentsia. It is a tragic thing.
But the reality is that for those people who choose to immerse themselves in quality reading, the fruits are not only borne in terms of being able to cogitate with greater depth, or to muse about things outside of one's immediate everyday concerns, but also to enhance one's intellectual capacities and thereby profit in one's everyday life. And the proof of this is borne out by a fact pertaining to my favourite publication, The London Review of Books: over 60 percent of its readership earns more than ￡40,000 per year.
Finally, we are well underway in the qualification process for the 2010 FIFA World Cup in South Africa. Are there are teams or players that you're particularly looking forward to seeing during the finals?
Deco [of Portugal]. I'd love to see Deco. He's a magician. I don't get the chance to see him at Chelsea; I'd just love to see him performing. [In fact] the whole Portuguese team, when they come together, are pure magic.
And Kaka [of Brazil]. I really do believe that this World Cup and the World Cup afterwards [to be held in 2014 in Brazil] will see us seeing Kaka at his pinnacle.
2009/04/19 오전 8:32
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