Tag: markets

How business is done on the Internet

April 7, 2008 / elias

Day in and day out, the Internet continues to show innovations from people all around the world. Yet for all these innovations, it all comes down to the very core of trying to do business in a new way.

I’ve been doing some research recently for an internal publication my firm produces on the future of the entertainment and media industries, and I wondered what exactly does it mean to do business on the Internet. Whilst there are some brilliant thoughts on what business models on the Net are, I think we lack a proper analysis of what it means to do business.

Below is a summary of my understanding from a consumer perspective of doing business (enterprise is a different beast), but which I think will help people better understand how it all works.

First of all, we need to split the three key factors about business:

Business models: What the structure of a business is.
Revenue models: How the business generates cash from customers to fund its operations.
Product models: What the product is that you provide to your customers to generate the cash

Too often, these three components are mixed as one or the same. Another thing that happens, is we struggle to classify the Internet because it contains so many different types of business. Breaking it down gives us more complete view.

Business models

The first thing to understand, is how a business is structured of which there are three varieties:

Destination: driving consumers to a point ie, a website that you try to drive usage by consumers. This was very much what the early Internet was in the manifestation of the world wide web; websites attempting to get ‘eyeballs’. Your business model is based on the premise of getting people to visit your destination.
Platform: a service that you try to build usage by creating an ecosystem for. Arguably, the web is the platform but in reality we are seeing a different type of platform akin to the Microsoft Windows approach of creating a core service that others can build on. You could classify the web2.0 view that websites are communities in this, whereas there are companies trying to create operating systems on the web for widgets that are a similar thing. Your business model, is built on the premise that people interact on your service or use your platform.
Network: a service that people use regardless of where they are on the Internet. This type of business is about attaching to a user as they use the Internet. It’s almost like the flipside of the above two models: instead of having everyone come to you, this is about following everyone wherever they are. Your business model is built on the premise that people use your service in a decentralised manner.

Revenue models
Revenue models are a key factor to understand as they are what sustain long term changes to an industry that is currently been pushed by venture money and acquisitions from the dominant players. There are four types of monetisation models that I can observe:

Fees: Payment of a fixed amount for access or usage of goods and services over the internet
Subscription: Payment of a fixed amount on a periodic basis for access or usage of goods and services
Commission: Payment of a percentage fee of a transaction
Attention: Consumer gives their time, such as viewing an advertisement, in exchange of goods and services

Product models
There are three types of product models:

Markets is the term I am using to explain when businesses use the Internet as a way to allow others to transact goods and services. The product offered by these companies is effectively a mechanism to do commerce. For example, eBay offers a product model that gives the ability for people to auction goods. Their product is to offer the facility for vendors and consumers to transact. They are like a shopping centre, giving space for vendors to sell and centralising the space so that consumers know where they can buy from these vendors. Markets offer the ability to perform trade of some sort with other parties
Hypermedia is the term I am using to describe any type of content offering to people. Philosophically, it falls under the “new media” category that I have previously linked to and I use the term coined by Ted Nelson which is the broader term coined at the same time as “hypertext”. Effectively, you are offering content to a consumer in an Internet environment. Formally defined, it is access or supply of content via visual, audio and/or text over the Internet
Utility computing is what you can call search engines, web applications, and the software as a service variety, which essentially is about providing computing services for information. Maybe a better way to define the concept is that they are computing services that allow for productivity through information retrieval, creation or management.

It is important to note that a business doesn’t have to restrict itself to just one of the above sub-categories. A business must have at least one business model, one revenue model, and one product model (or rather, they should – web2.0 startups seem to forget the revenue model bit). But within those groupings, it doesn’t have to be just one.

Take for example Facebook, which was initially a destination business – people logged in, viewed peoples profiles and their news feed, and the company generated value for the user by them ‘visiting’. With the launch of the applications platform, Facebook became a platform, because it allowed other entities to build on top of its core service. In this regard, Facebook generated value by creating an ecosystem of applications within its confines. As for a network model, Facebook is yet to to this, but imagine if they created an ad network like Google’s – whereby information about you in Facebook is used to determine what advertising to see across the entire internet. Here the value is that Facebook helps add to your experience across the entire Internet (despite being off the actual site)

So as a concept, below is my matrix of doing business on the Internet (I’m graphically inept, but I want to illustrate the three dimensions conceptually). What do you think?

If you can draw better than me (not hard), I’ll credit you on this post!

Update May 27 2010: Rethinking this two years on, I think this still stands as a rough analytical framework. But I now believe that business model makes sense for the overall discussion above (ie, the combination of all the components), and what I term as ‘business model’ in the post is actually more like the ‘operating model’ of a web business.

Climate change: forget the science, it’s real for the market

September 22, 2007 / elias

I recently sat through a two hour presentation on climate change at work. My employer this year (a big four firm) has been mobilising to respond to the market with a climate change solution for our clients – and the things happening are amazing. They want to be first-movers in what is a huge business opportunity. Even through I have had dealings with people on the climate change team, it wasn’t until I sat through this presentation that a few things clicked for me: climate change is real. And I am not talking about the science – it’s real for the market economy.

I wouldn’t be doing any justice if I attempted to explain what I learned, however I will explain something that was a big realisation for me. This guy that spoke is a world expert, and he reckons more has happened in the last eight months of his career regarding climate change than it has in 25 years of his career. To understand why, is to understand the realisation of the markets.

Increasing shareholder value

If it’s one phrase that sums up corporations working within the framework of capitalism, it’s about “increasing shareholder value”. It’s a term that is mocked because we are sick of hearing it, but it essentially explains the market: investors make money by putting their money where they can generate more value for their buck. Value creation is the centre of everything – a start-up company generates value through innovative new products that people buy; a tax agent generates value by reducing your tax expense; a real estate agent generates value because they can sell your property at a higher valuation. In the context of corporations, people make money in companies through returns: a higher share price means a higher value of that share or piece of property. Companies are judged on their profits because more profits reflect a higher return an investor gets from that entity; just like a home being sold, it reflects the additional value they can generate from that piece of property they own.

Profits reflect shareholder returns, which come in two forms.

1) dividends, which are cash payouts from profit distributions to shareholders. An investor wants higher profits, because it means more cash for them on their existing shareholding – it reflects a better return on their investment.

2) retained earnings, which is when a company doesn’t pay the dividend but holds it so they can fund future growth. More profits, means extra cash to invest to generate more growth in the entity, which ultimately means more value. If you buy a share for $1, and the company grows and your share is now $2 – you are a happy chappy because you’ve effectively doubled your money.

How climate change now has a price

Lets say we generate x amount of carbon tons a year. The objective of climate change, is that we can reduce the amount of x with time, and then get to the stage where we can grow sustainably, which means for every x we generate, we can offset that bit of carbon so as to to generate a net of zero on the environment. That’s called sustainable economic growth.

Lets say y is the amount it costs to remove a ton of carbon dioxide. Meaning y represents the expense of generating carbon. So if you times x with y – that equals the amount it will costs to remove the carbon dioxide we generate so that we have a net impact of zero on the environment (or at least, the cost to reduce emissions). If the government forces you to reduce your emissions, like they force you to pay taxes, that expense has now become very real.

How much a ton of Carbon Dioxide will cost is a big issue yet to be settled, but as you can tell y is an important number because it determines how much it costs for you to reduce your carbon footprint. A very conservative estimate is that it costs 25 US dollars to remove 1,000 tonnes of carbon. The reason I say conservative is because more recent evidence suggests it is actually a lot more than that (I think he quoted 40 euros). Using the $25 figure, he said that it will cost us $15 trillion to remove carbon dioxide. There is so much pressure on governments from voters, lobby groups and the like, that governments (like here in Australia) are going to mandate that you offset your carbon emissions each year. The Kyoto agreement is saying a 60% reduction from 1990 levels by 2050 for example.

Now as an investor, I am thinking my investments have a share of the pie of a $15 trillion expense that they have to pay each year. That’s expensive. Expensive stuff reduces my profit. Reducing my profit means lower returns for my investments (ie, lower dividends, lower retained earnings to fund growth). Holy crap – this climate change thing is eroding shareholder value. Crap crap crap – I want to start knowing what my investments are doing to tackle this future expense. I want more accountability, alongside the financial reports that companies are mandated to provide (and which tells us about profit).

And that is exactly what the investors that control $41 trillion dollars – one third of the worlds money -are currently saying.

So much more to say, but I just want to share that point: climate is real economically and the environmental cost is being built into the market mechanism. There are a lot of issues that are yet to be resolved, but you’d be stupid to start ignoring the massive developments occuring, because its getting nearer to an agreement where it will affect every transaction we make in our economies.

Poland, Prague and Budapest

November 22, 2005 / elias

When it comes to my blog, I love using regions. Updating it, whilst is valuable in retrospect, is an absolute pain in the arse when I have to write them. For that reason, I have created a new region of the last three countries on my trip. Poland, Czech Republic, and Hungary – I dub thee the "Visegr?É¬°d Three" (Slovakia, you be quiet now). Thinking back on those nearly three weeks, the memory is a bit scant, as it was just one big drinking binge. But it turns out I have an audience on this blog, so I’ll pretend I learnt something. I spent about 11 days in Poland ?¢‚Ç¨‚Äú although I regard three of those days as ‘bad hangover’ days so I don’t think they should count. Of those 11 days, four were in the capital Warsaw, four in Krakow (with a day trip to Auschwitz-Birkenau), and another three days in Wroclaw (pronounced VROTZ-wahf). In the Czech Republic, I spent four days in Prague, and in Hungary about three days in Budapest.

All three of these countries are very different from each other: the Hungarians are descendants of the Magyar tribes that swept across Europe terrorising the continent until they settled there, and later ?¢‚Ç¨‚Äú the Hapsburg Empire (which became the Austro-Hungarian Empire), a dominant force in central Europe during the late Middle Ages that lasted until WWI. The Poles are Western Slavs, and together with the Lithuanians after a Royal marriage that sealed the deal, had an empire that stretched from the Baltic and Black seas. The people of the Czech Republic, inhabiting the ancient lands of Bohemia and Moravia, are linguistically and to a lesser extent ethnically related to the Poles. The Czech people have been invaded by Hapsburg’s, Nazis, Soviets and tour groups. They may not have dominated Europe like Hungary or Poland, but they have always been valuable territory for the empires that held them.

Corner of a building in Prague

What makes these three very different countries so similar however, is their location. The Czech Republic is smack-bang in the middle of Europe, and together with Hungary and Poland, are a large component of Central Europe. The significance of this is that Europe has a very rich history, and heck, if you are in the middle, it means you’ve been involved in almost everything that has touched the continent. For example, their locations has meant that none of the local problems have remained local: when Czechs rejection of the Roman Catholic Church in 1418 resulted in the Hussite Wars; the revolt against the Hapsburg’s in 1618 started the horrible Thirty Years’ War; the annexation of the Sudetenland in 1938 was the opening scene to WWII; the reforms of the 1968 Prague Spring, led to tanks and soldiers from all over the Eastern Bloc to suppress it; and the peaceful overthrow of the government during the Velvet revolution stands as a model for freedom-seekers, such as the recent revolutions of Georgia, Ukraine, and Armenia. Lets also not forget that before Franz Ferdinand was the name of a band, it was also the name of the Hungarian prince that was assassinated by a Bosnian-Serb in Sarajevo – and is what sparked World War I; whilst Poland experienced the brunt of one of the greatest and most horrific wars of our history (WWII) – evident to the modern traveller by visiting Warsaw and Auschwitz-Birkenau . These three countries play no small role in the European story.

"The one who does not remember history is bound to live it through again" – George Santayana

Something that striked me about Poland was the law enforcement, and the observance of the law. A simple example is the pedestrian crossings ?¢‚Ç¨‚Äú in most cities I have visited, you get either one of three types of driver attitude towards them: the type that will stop once you have started crossing (Sydney); the type that won’t stop, but swerve around you as you cross (Tehran) and the type that make you wet your pants, as you run across like a headless chicken to avoid being hit (Athens ?¢‚Ç¨‚Äú with the complimentary verbal abuse whilst you run). In Poland however, I merely had to look at a crossing, and a car would slam on the breaks! Another example was when I visited the Russian markets in Warsaw, and my friends and I were going through some pirated CD’s to buy (which may I add, looked more professional than a CD in a record store). As we were looking, the men and women quickly hustled us, and in two seconds, had the CD’s completely out of view. A few seconds later, a police officer strolled by. When he was out of sight, we were able to resume our commerce. Turns out, as they showed us later, they have a sophisticated monitoring network, where they know the exact movements of police near them so they won’t get in trouble. Whilst the funky headsets and organisational skills impressed my two companion friends, I was more stunned by the event itself: copyright enforcement to me is a sign that a country is very well developed. For these guys to sweat when the police officer walked by, tells me you’ve got a very well functioning government enforcing the law. That is the basis for a strong economy ?¢‚Ç¨‚Äú especially for something as abstract as intellectual property, which is the basis of a certain buzz word that will solve all our problems like your paycheck and grandpa’s erectile problems.

On the right bank, the Red army stood there, as the Nazis demolished Warsaw

On the right bank, the Soviet army sat there at they watched the Nazi’s burn Warsaw to the ground – the Soviet’s were meant to be on the same side as the Poles. People speculate that Stalin let the Nazi’s do all the hard work, and crush any resistance, so that he would have a clean slate when he occupied the city.

Unfortunately the only "New Economy" thing about Poland, is that they actual have a free market now. And it’s not going down to well: unemployment is high. One of the most talked about backpacker stories, is the Krakow-Prague overnight train ride, where you get gassed while you sleep, only to find all your valuables missing in the morning. A Polish guy in Wroclaw, told me that the worst line of them all, was the Wroclaw-Prague line I was about to get on in one hour (needless to say, I didn’t get much sleep that night). The theft of course, is because of the high unemployment ?¢‚Ç¨‚Äú estimated at 18 percent by this guy I talked to.

Right next to the Warsaw train station: a funky new building

I found Polish people to be one of the highlights of my trip there. Watching the people in a Polish nightclub became one of my favourite pastimes, as the way Poles dance amused me. I am not saying they are bad dancers, but simply, different from other places. Women for example, seem to have an inbuilt hip-shaking movement which is incredibly sexy, but also seems just a natural as someone breathing. The men on the other hand, are so enthusiastic ?¢‚Ç¨‚Äúwith a big cheesy grin, and they dance like they are skiing a ski-slope. Very amusing.
Without resorting to specific examples, the general vibe of the place was very positive. When you travel, you create a lot of theories, my most recent one was that countries that were formally oppressed, have very grumpy locals. But the Poles shut that theory down in flames, as I found everyone to be smiling, laughing, and generally happy. Possibly also a little smart-alec ?¢‚Ç¨‚Äú in Warsaw, all the strip clubs are located on (Pope) John Paul II Street.

Despite the positive feeling I had from the place, at the back of my mind, I could not forget the atrocities these people had to face. Warsaw is a city that was razed to the ground by the Nazis (as the Soviet’s sat watching) ?¢‚Ç¨‚Äú travellers visiting the city moan how ordinary it is, but when you think of its history, you see things differently, and appreciate the Polish spirit. For example, they painstakingly rebuilt their Old Town, with only pre-war pictures and paintings to guide them. The city felt eerie for me. Krakow is a much more beautiful and vibrant city than Warsaw, for obvious reasons (it wasn’t bombed). But everyone visits Krakow, so you probably knew that already. I had a friend that I used to work with in Sydney, that lives in Wroclaw, and I really liked that city as well. Both cities have amazing Market Squares (Krakow’s is the largest in Europe ?¢‚Ç¨‚Äú Wroclaw not far behind) and they both have an atmosphere in their old towns which I really liked (locals strolling by, entertainers, tacky shops and restaurants). I arrived in Wroclaw at 11pm, and my friend dumped my bags at the local hostel so we could party: Wroclaw and Krakow, like any other university town, is a bit of fun as well. All the Poles I met in Wroclaw, had come from other cities in Poland, and would tell me how much they loved the city and how it is the best one in Poland (Krakow comes close, according to them).

Krakow during Independence Day, also known to us as Remembrance day (November 11)

Auschwitz and Birkenau are something else ?¢‚Ç¨‚Äú where it is estimated estimated that between 1,100,000 and 1,500,000 people were murdered by the Nazi’s. I ended up touring the sites on my own, missing my friend’s group tour, but which instead turning into a more powerful experience for me as I did it on my own. I was surprised I didn’t get as emotionally affected as I thought I would, but then again, I consider wanting to punch a wall on two separate occasions as minor outbursts. What made be sick was the evidence of children being killed ?¢‚Ç¨‚Äú as 12 years old children were treated just like the adults. What really got to me, was seeing a presentation of children shoes. That is, children aged no more than five years old. Walking around Birkenau, which was where most of the exterminations took place, was chilling (and it was a lot of walking ?¢‚Ç¨‚Äú the site is 171 hectares large). It became very dark when I was touring the huge site, and visiting the compounds of the prisoners and seeing their living conditions, was something that made it hard for me to swallow. Seeing the ruins of the furnaces and gas chambers on Birkenau, as the Nazi’s attempted to cover their crimes on their retreat, just reminds you how recent all of this was.

The Nazi’s tried to cover up evidence of the killings that occured, by blowing up the gas chambers and furnaces

When I met up with my friends later that night and shared our experiences, they told me how angry they were to see the Jewish children fly the Israeli flag around ?¢‚Ç¨‚Äú their point being, it is that nationalism that created conflicts like this. That is usually something I would say, but I don’t really share that sentiment. Sitting in on a Jewish memorial service where the furnaces were in the dark as I wound up my tour on Birkenau, was definitely an experience I am glad I had.

Half the reason I went to Prague was to visit Veronika and Pete ?¢‚Ç¨‚Äú two old friends and workmates. The rest of the reason was because I just had to see what the fuss was about. Just as I suspected, not much ?¢‚Ç¨‚Äú a great city, but way too much hype. It has one of the best integrated transport systems I have been on, and the buildings are very pretty. But that’s exactly the problem with Prague: it’s pretty. It’s a place you visit with your girlfriend, on a weekend away. Having said that though, as my friend Petr showed me, it’s way too much fun for the single (and not single) man.

Prague’s city centre – the big building is the national library, me thinks

Veronika and Pete miss Australia because of the friendliness of ordinary people. As a contrast, Veronika would complain how clique and rude Czech people were. She reckons, and she is by no means an ugly girl, how hard it is to meet people at a club ?¢‚Ç¨‚Äú everyone goes out with their groups of people, and refuse to socialise with other people, because you just don’t do that. Foreigners provide a breath of fresh air to Czech people, because they can break out of that clique.

Prague: pretty.

Pete also reckons the emphasis on looks here has created a bulimic culture amongst women. He puts the figure at every second or third girl – and a quick look around the club proved him right, as all the girls looked unrealistically thin. On a related conversation I had with this American I met at the hostel who was about to start teaching English, he says how back in the States, everyone raves on about how beautiful Czech women are. However he says they are not beautiful but just skinny! "Everyone is so fat in America", he was saying, "that they see a skinny girl and they go gaga here".

The Soviet museum in Prague deserves a mention. Seeing the communist posters to inspire workers, made me realise how similar communism is to capitalism, with slogans talking about ‘efficiency’ and ‘output’. It was funny to see words I had always associated with capitalism, on a communist poster.
Watching a video about the failed 1968 revolution left me feeling mellow. A pop group mentioned in the video called the Plastic Group of the universe (I am sure it sounds better in Czech) used these lyrics: "Throw away your brains, throw away your hearts. Throw away everything that makes you human, and become pigs". For me, those words really help sum up the things I have learnt about communism and Nazism in the last month. Having just read Stalin’s biography, a quote on the wall helped sum up what took me 500 pages to find out as to how he could do what he did: "One death is a tragedy; one million a statistic". Like a spoilt seven year old with divorced parents, the Stalin’s of the world can get away with murder, because they don’t feel the consequences of their actions as no one will reprimand or tell them. And yet even Stalin was capable of breaking down, when his son was captured by the Nazis ?¢‚Ç¨‚Äú because the suffering of the war then became personified with a familiar face. There is no such thing as monsters in history ?¢‚Ç¨‚Äú only people detached from reality. It’s not hard to smack them back, it’s just that some need to be smacked harder than others.

Budapest’s House of Horrors on the other hand, annoyed me. Of all the museums I have seen detailing atrocities of the Nazis and communists, this was the most extravagant of them all, but also the worst. It was too fabricated, and too glossy. When you are talking about horror, take the gloss out.And while we are on it – Budapest as well, was very different from Prague, and as a city I much preferred it as it had more character. Although a girl that helped me at the train station, said she hated it: good for a few days, bad for living here.

My experience with Hungarian people was something else as well. Whenever I was with a group of friends/travel companions, I always saw the rudeness of Hungarians. But in the few times I was alone, I found Hungarian people to be very nice and friendly. Even though I regard Hungarians as friendly, the incidents of rudeness really stuck in my mind ?¢‚Ç¨‚Äú like for example, a guy at the ice-rink, literally shooing this woman away, like she was some intruder to a military base, when she inquired when it re-opened.

Budapest’s parliament

Hungarian’s also just look different. Maybe it’s my historical knowledge that helps colour my perceptions, but if there was one word to describe them it would be "warriors". The men looked very different, very rough and tough. They were also weird: when I went to the baths with some of my female friends, there were incidents when men would just stare. Sure, my friends were pretty, but no one stares like that unless you are a psychotic.
Budapest definitely ranks as one of the most memorable cities I’ve been to, and one which I would put top on the list to visit again. The city has a character which I think all the former Ottoman Empire lands have, like Belgrade and Sarajevo. The baths are an amazing experience, and I really wished I had more time to do the rock-climbing tour underneath the city. It is hard to talk about cities as to why you like them, and it can be done, but this blog posting is getting way to long.

Budapest’s Heroes square

Something I didn’t mention at the beginning of this posting, was one other similarity the three before-mentioned cities have in common: the are all new members of the European Union. And rising stars whilst they are at it. According to a study published by The Economist Intelligence Unit, the Czech Republic ranks as the third most attractive country in the world for off-shoring, after China and India. Whilst cheap labour has something to do with it, the location of the country and its relatively well developed telecommunications and educated workforce help contribute to this.

But notice I said location was an important factor. Like before, the location of these three countries at the centre of Europe’s next big empire (the EU) means that they are again in the spotlight. Expect to hear about these three countries a lot more in the future, as the Visegr?É¬°d group play catch up to the rest of the developed world.

Estonia, Latvia and Lithuania

November 4, 2005 / elias

A t-shirt I saw today best describes the three Baltic countries I have just spent two weeks in: “I love Lithuania…but where’s that?”
Lithuania, like Latvia and Estonia, are countries everyone seems to have heard about, but know absolutely nothing about them. Synonymous with communism with my parents generation, and Eurovision with my generation, the Baltic three actually have a rich history and give the traveller a diverse experience, whether it be in beautiful countryside, evidence of Soviet brutality, or good ‘ol stag parties (cheap alcohol, beautiful women, bargain flights from England = a perfect weekend away with the boys).

I spent three days in Tallinn, the capital of Estonia, and two in its cultural capital Tartu. I spent five days in Riga, capital of Latvia. And I spent three days in Vilnius, capital of Lithuania, which included a small day-trip to Trakai.
Tallinn I didn’t like because it was a superficial tourist town. Tartu I didn’t see because I spent most of time indoors with my hosts (met a girl in Paris, and she and her friends took care of me – hard to sightsee in the rain). Riga I don’t remember – something to do with four dollar Vodka bottles (dollars as in Aussie Pesos, more like three USD). And Vilnius is quiet and quirky – I’ve been very entertained.

The reconstructed castle at Trakai – Built more in mind to make money from tourists, than to actually reconstruct it how it was. The Lithuanians had a joint empire with the Polish that stretched from the Baltic to the Black seas. The castle is built on a island, with several other islands bridging it to the main land

Tallinn plays up its medieval history, which I found a little tacky. Nevertheless it is a pleasant city, and to give it credit, I never ventured outside of the Old Town (the suburbs, like honestly!). Tartu on the other hand is a university town, and as such has that special dynamic found in any university town: hot chicks. Ho ho. Actually what I mean is a vibrant feel about it. But the chicks were hot as well. Not that I could notice because I was freezing my buttocks off. However I did notice the new construction works, like a huge shopping mall that replaced a beautiful market apparently, and which my friends hate – big ugly, capitalistic buildings.

Riga, like much of Latvia itself, is a beautiful city. Unfortunately, the hostel I stayed out was a crazy party place. It literally killed me. Vilnius is hilarious – for example, my hostel is located in the ‘breakaway republic’ of Uzupis, across the river from the centre of the city. The republic comprises of drunks, artists, and squatters. There is a statue of Frank Zappa (the only one in the world apparently), and a few communist statues that the locals left because they thought they looked pretty (everything else got pulled down – not as pretty I suppose). At the same time, it was chilling, as I visited the Museum of Genocide victims – the former KGB local headquarters and torture chambers today – I am still shaking from the experience.

Gas chamber at the KGB Headquarters in Vilnius. Under the glass panels there were items from people that perished here.

Estonians are closely related to the Finns, and more distantly, the Sami (indigenous Laplanders) and Hungarians. Latvians look like and are considered Nordics, evidenced through the strong historical, cultural and religious influences gained over centuries during Germanic and Scandinavian colonisation and settlement.
The Lithuanian ethnos – a Baltic tribe originally – has been influenced by Slavic and Germanic peoples in the past. Genetically Lithuanians are one of tallest peoples in the world (I didn’t notice). One eighth of Lithuanians are immune to HIV which is also one of the highest percentages of immunity in the world (according to wikipedia.org) – whilst Estonia has the highest proportions of people infected with HIV.
Latvians and Lithuanians belong to the Indo-European branch of languages. One thing I found absolutely fascinating, was testing out a theory my grandfather has, which is that the
Lithuanians are linguistically the most similar to the Greek language. Whilst four plus thousand years has created a completely different looking ethnicity for both nations, as well as variation in language from the tribes they both apparently originated from – I could still see a lot of similarities between the language, which was startling as Lithuanian and Greek – despite both Indo-European languages – are completely different sub-categories.

Never leave a drunk German in the same room as me

Some words I found from the Chinese restaurant, and whilst walking in the streets (English – Lithuanian – Greek)…this is incomplete, would appreciate corrections.
Chinese – Kiniskos – Kinezos
Noodle – makaronu – makaronia
salad – salotos – salata
squid – kalmari – kalamari
pepper – paprikomis – paprika
cucumbers – agurkai – agouryia
fried – kepta – kafta
pineapple – ananasais – anana
rice – ryziai – ryzee

And the following signs I saw, I am guessing because of the similarity to Greek.
stomatologijos – in Greek, stoma means mouth, and logos is -ologist. Not sure if there is a Greek equivilant, and what it is in english. Mouth doctor?
Dentist – odontologijos – odontodeatros
Orthodontist – ortodontas – greek?
Photographer – fotografijos – fotografos
chocolate – sokoladu – sokolata

Update 19 December 2005: As shown by a commentator below, I am wrong. And chatting with my father, as to my grqandfathers theory, I apparently misinterpreted him: my gradfather believed the similarity existed due to the grammatical structure of the language, not actual words. Whoops.

By the river in Riga

There is intense pride in all the people of the Baltic’s that they have independence, as they have a relatively large land mass but a rather small population (Estonia – 1,332,893, Latvia – 2,290,237 , Lithuania – 3,596,617. Source: US Government). The intense pride is because the Baltic three, used to have the Baltic Blues, as there were constantly dominated. With a long history of occupation by their stronger neighbours, they declared independence in 1918, fought independence wars against Germans and Russia’s, and were recognised as independent countries in 1920. Twenty years later, they “elected” to be part of the Soviet Union, something they are still extremely pissed off about.

Estonians, Latvians, and Lithuanians were deported en-masse to Siberia, and the lands were populated with Russians, as part of Stalin’s attempt to eradicate nationalities. The affect in this post-cold war period – is a lot of Russians in the local community, where they are not just sizable minorities, but in the case of Latvia – a majority in all the cities.

What it looked like on the other side of the Iron Curtain

Now, having just come from Russia, I don’t think this is a bad thing: I like Russians. But apparently, the Russians of the Baltic’s are different from the real Russians. They are the Hispanics of America, the Albanians of Greece and Macedonia, the Moroccans of Western Europe, and the ?¢‚Ç¨?ìAsian?¢‚Ç¨‚Ñ¢s?¢‚Ç¨? of the UK. In other words, the poor, criminal segment of the population. Well, perceived in that way anyway. This problem was exemplified by my bus trip into Estonia.

My bus from St Petersburg to Tallinn, had me sit next to a friendly girl. Anastasia was a 22 year old university student, who was returning home from a semester in St Peterburg. Her English, though not perfect, was decent. Although she calls Estonia home, she can’t speak Estonian beyond a few basic phrases – her English is better than her Estonian. And her parents don’t speak any Estonian. Ethnically she is Russian, and yet despite living outside of Russia, she and her family make not efforts to integrate into the country they live in. They live in Russian neighbourhoods, she went to Russian schools, and parties at Russian clubs. Why bother learning the local language?

Exhibition at a Tallinn historical museum, just before the Soviet stuff, and just after the medieval traders exhibition. This was the history of women’s undergarments. I left a message in the guestbook demanding equality: where are the men?¢‚Ç¨‚Ñ¢s?

On one of my nights out in Riga, I struck a conversation with a promotions girl trying to get me to buy Finlandia Vodka, but ended up trying to get me to join her at a Latin/Cuban dancing concert the next day. I asked Anna if she was Russian. “Noooo! I am not Russian” in a accent that could only make you smile (or maybe it was the costume they made me smile). Anna, as she told me, does not like the Russians. Anna, also, does not understand why I like Russians. To her, a Russian is an old, arrogant babushka who refuses to integrate into her beautiful country. To me, a Russian is a two metre tall dark-haired but light-eyed supermodel, with more university degrees then I can count.
At another bar, this time in Tallinn, I asked the waitress if she was Estonian or Russian – even though she looked as Scandinavian as they get. She didn’t like that question – I never got that glass of water. Whilst the guy at the Riga tourist office was more informative, not so much with what he said but with the look of disgust on his face: “They Russians. They just cause us trouble”, whilst looking outside at the protest some old Russian’s were making outside of the Town Hall. Apparently, in Latvia 45 percent is Russian speaking (although 29 per cent is ethnically Russian, according to the dude in the office).

Those damn Russians: protesting at the privitisation of a gas company. This is the image peoples seem to have of the Russian community in the Baltics (the others being thugs on the street, and prostitutes)

With a history of occupation, you would think that now they have their independence, they will resist any pressure to give it up. So said those drunk fellows we met at a pub in Tallinn, who played the tough guy routine, but whom I later sobered up with an arm wrestle (popping someone?¢‚Ç¨‚Ñ¢s ego is one of life’s great pleasures). They don’t like the European Union, because it threatens their sovereignty.
Laura, my friend in Tartu, sees it differently. Slightly more intelligent, and sober, she said that as much as they don’t like it, they have to. It is for their own protection, because their country is simply too small, with extremely large neighbours threatening their existence. I must say, I agree.

Economically, the countries seem to be booming, thanks largely to their recent EU accession. In fact, whilst Western Europe fears Estonian cheap labour for example, it appears that the Estonian economy actually has a skills shortage with the very things the Westerner’s fear will flood their markets: plumbers, electricians, and other basic skills. With a booming economy, also comes booming prices, however wages don’t seem to be moving in line. In 1995, Latvia’s minimum wage was 28 Lats (40 Euros) per month – with the government now deciding to move the current 80 Lats (113 Euros) a month to 90 Lats (128 Euros), which makes Latvia the lowest in the EU. In the mean time, the average wage is about 120 Euros a month (on a 39 hour week). But remember to not let statistics fool you, because ‘average’ means half of all people earn less than that – one of the girls at the hostel in Riga told me, that an average wage is about one Lat an hour (1.4 Euros). I took that to mean, that’s what a smart 20 year old student like her makes.
Latvia has the lowest wages, although I didn’t necessarily find it to be the cheaper country. Lithuania’s average wage is 145 Euros a month, and Estonia’s 158 Euros. In comparison, the UK average wage is 1,160 Euros a month.

Update 23 November 2005: A commentor has brought to my attention that these figures are inaccurate. The source of the figures above is from an article by Sue Birze titled “Another Day, Another Lat”, for the The Baltic Guide (in English about Latvia) September 2005. The article’s figures were sourced from “EIRO, 2004”. Looking into the numbers, they don’t make sense. For example, the article talks about minimum wages and yet the table of wages states ‘average monthly’ wages, when the figures in fact correlate with minimum wages. A little researching into the source confirms that the reporter put the wrong heading on the table. The Estonian Government (PDF)states that the average wage, for example, is actually 8,845 Kroon (565 Euro) for June 2005. These figures give a better overview for wages and the labour force. I am not even going to provide new figures, because of the exponential growth that these countries are experiencing, will mean that the figures will already be out-of-date by the time they are released to the public.

A cultural museum in Tartu. Never trust an Estonian to build your house. Never.

Whilst people whine and moan about the EU becoming too powerful and empire-like, the EU is doing something else in the former Eastern Bloc. With NATO and EU flags proudly flying in the sky, the Baltic three are reorganising their laws, society and infrastructure under the guidance of the EU. The result is that it is giving a new generation of people – my generation and hopefully older- the opportunities their parents were not allowed to have. Freedom.

Looking out of a KGB’s guard post, in the HQ in Vilnius. The torture rooms left me shaking.

Macedonia

June 8, 2005 / elias

This is driving me nuts. I have just spent the last hour or two going through my e-mail, and my Internet-cafe neighbour is having cybersex with some Arab. Actually, I think he is in Turkey, but she has been showcasing some Arabic words. She started with teaching him Macedonian – yelling “da! da! da! (yes! yes yes!) – and now she has mellowed, calling him her ‘lotus’ and asking “why has this happened to us, I want to be near you. Honey” whilst smoking a cigarette. Think of a phone-sex line, where there is a fat woman on the other end moaning and groaning. Except this girl isn’t fat – just ugly. And really loud. Really fucking loud. Damn it, I did it. I tried to not swear in case any kiddies are reading this, but I feel some much better now. FUCKING SHUT UP.

Okay, much better.

Ohrid. Pictureresque.

Macedonia has been quite delightful (Greece get over it – I am not calling them Skopje, or the (Former Yugoslav Republic of Macedonia). I got in Friday night, and tomorrow morning (Wednesday) I will be leaving my temporary home for the last few days, in Ohrid. Ohrid is described as the tourist Mecca of Macedonia. Lots of Churches here as well, which goes back to Ohrid’s historical importance. It is right beside Lake Ohrid, which is approximately 2-3 million years old, and is one of the world’s oldest lakes and the Balkans biggest. Given its age, there are a lot of unique biological aspects, like that freakin’ animal that sounds like a baby laughing. It took me half an hour to work out it came from the lake.

“I love you honey. I. Love. You” Can someone please get this girl a vibrator?

Ohrid is a great tourist destination. The Old Town looks like any modern cosmopolitan city’s shopping arcade, with the latest fashion, jewellery stores, and cafes and restaurants abound (although funnily, about 90 per cent of these restaurants either have ‘Pizza’ in their name or make it a focal point of their menu). It is very scenic with the surrounding hills, and the lake. But the best thing is the cost of living: my first two nights were in a fully equipped private apartment, which cost the equivalent of 10 Euros a night. My remaining three nights were in a private room in the Old Town, for about six Euros.

And then there was the food. You could eat yourself silly and not want to think about food and drink for another 24 hours, with just 10 Euros. A main meal, like lets say – Pizza – costs about 100 Denars. My Hungarian Goulash tonight cost 150 Denars (60 Denars to the Euro). Add a few drinks, and a salad, and you could pay 300 Denars (five Euros) and be very satisfied. There are high-speed internet cafes all over the place, asking for one Euro an hour. Why I am so surprised, is that although the cost of living is comparable to Albania, the place looks every part like a modern European city (unlike Albania, which is a permanent pile of rubble and construction). And minus the foreign tourists; whilst plenty of Australians come, they are all ethnic Macedonians. I stood out like a sore thumb with the locals. I would like to think it’s because I am a good looking guy, but I think it’s just because I looked so different to everyone. Although I must admit, the women did tease a lot…

Yes, it is true. The women here are beautiful. And they definitely know how to shake that arse. Apologies to all you feminists out there, but if you are wondering why you are 35 and still can’t find a husband, maybe you should learn from your Slavic sisters when it comes to style. Unfortunately I have been told that I missed out this year – the fashion this year is tight jeans with stomach showing. Last year it was mini-skirts with g-strings showing. Just as well I came this year – I had enough trouble trying to conceal my grunting at the glamour?¢‚Ç¨‚Ñ¢s walking past me.

Chruches. Everywhere in Ohrid.

However for every positive, there is a downside: the men. Absolute scum bags. Not all, but a lot of con artists. I was seen as a walking money bag. You would as well, if you worked a minimum wage job in any developed country! The problem, as everyone would complain to me, was the economy – which I suppose is why Eastern European countries and the Balkans are famous for these con-artists, as their economies are still a mess. Half the people I spoke too dreamt of one day leaving – however the other half were very proud of the country. I think my second landlord, was the most eloquent in explaining this to me.

Nikola is a 38-year old university graduate (in economics), working for the police as an investigator. Actually, he was in a team of six that was selected by the US state Department for anti-terrorism training, so this guy is no monkey. He has three kids, and a modest house in the Old Town, where he rents the top rooms for some extra cash. He, like everyone else, said the economy was very weak, with no developed export markets and no opportunities for work. The wages are super low – Natasha, a girl from a tourist office, was telling me she gets paid 200 Euros a month. Eljah, a pimple-faced 18-year-old tax driver whom I used several times as my personal chauffeur, says 200 Euros is a lot – he said he averages about five Euros a day.

However unlike Natasha and Eljah, Nikola realises this is just temporary and is willing to sit it out. “Every country has problems at different stages. In this age for Macedonia, it is the economy”. He sees it as a temporary phase as the country develops itself. However what we both agreed on was that Macedonia desperately needed to be part of the European Union (EU) for that ‘phase’ to ever pass. However with the French and Dutch rejecting the new EU constitution these last few weeks, it might mean it will take longer than hoped. (It will happen – as Nikola said, the EU has become too strong to just disappear now.)

I become very fond of my afternoon chats with Nikola. Despite the fact he hasn’t used English since primary school, I could feel his English improving by the minute, as we used sign language to have conversations about global imperialism and the rise of India and China (and America?¢‚Ç¨‚Ñ¢s future), as well as what Macedonia needed to do to get ahead. If anyone was watching the time when I was saying Macedonia needed to look at emerging industries, not old economy industries such as biotechnology against agriculture – I think they would have died laughing. How do you explain biotechnology to someone who doesn’t speak English?

Macedonia is a fairly small country, with about two million inhabitants. The country gets bullied around by its neighbours because of its size, and its economic dependence on countries like Greece. However the economy is the only bad thing about this place, and it is only bad if you want to live here. If you want a holiday, I highly recommend Ohrid. It is four hours from Thessalonica in Greece.

As for my experience in the country, it has been okay. I went to a nightclub on Saturday on my own, which was a little weird, because I have never been to a nightclub on my own. I had to pay five times the normal cover charge (like I cared, it was only five euros). I met some girls there who were very playful until the drunk mafia guy came. He was a Melbourne-based Macedonian, and he had a gun on him. He got me free drinks, so I wasn’t complaining. However, I wasn’t arguing with him either.

Macedonian flag

But I have had enough being the rich tourist amongst all the other tourists, I have to get out of here. I better go and pack my bags – my bus to Nish in Serbia leaves in just over three hours!

Update:Who would have thought, that a 5am bus trip to Skopje (transit point for Nish), would have me sitting next to a tall, blue-eyed, blonde-haired, beautiful woman who was super intelligent and from a wealthy family (a rare thing in itself in Macedonia)? We got cosy on the bus and spent three hours talking non-stop! But the reason I am including this update is because she was able to explain something to me which finally helped me understand a major issue, and which I think deserves to be included on my posting about the country.

Macedonia is now being divided into two versions – traditional Macedonia, and the Albanian Macedonia, whom refuse to integrate into the local population, and adopt the country’s traditions and culture. There was a big war in North Macedonia in 2001, and a treaty was signed. We are not talking about some petty differences here. There are some huge tensions, which I sensed, but didn’t understand. The war is still recent memory, and it doesn’t seem like the issue is resolved. Something bad is brewing.

There is a a lot of racism in the country over Albanians. Why you may ask? Well it is not the Albanians that have settled and adopted Macedonian life, but the refugees and illegal immigrants that flooded the country during the Kosovo war. Ethnic Albanians now constitute about 20 per cent of the population, and have become such an influential group, that the country has to accommodate for them. The Albanian language just recently became an official language of the country, and various other measures have been put in place, which quite rightly, are making the population quite angry. As Karolina lamented, she feels like she doesn?¢‚Ç¨‚Ñ¢t know what her identity is. To get a pubic sector job, she is required to learn an entirely new language! It is a bit like the Hispanic situation in America, where all these illegal immigrants that crossed the border from Mexico, have become such a powerful minority, that the politicians are scared of them. And like the Spanish kids, they refuse to speak Macedonian and speak only Albanian.

To cut a long story short: we haven’t seen the last of the Balkan wars. The South of Serbia, and the North of Macedonia will be on our television screens in the near future.

As for Macedonia’s economy, she was also able to explain a few things to me as she is an economics student. It appears the country is trying too hard to satisfy EU requirements to become a European Union member – rather than actually make any efforts to develop the country itself. It seems like pretty much all of Macedonia’s problems, stem from the former Yugoslavia. With respects to the economy, what she meant was that all the industries and factories were in other parts of Yugoslavia – not present-day Macedonia. The result was that the disunion left the country with an inheritance of nothing.

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Macedonia

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