Minxymoggy's

According to Google Webmaster Tools, my sites have a 9% click through rate without Google +1s and a 0% with +1.

Putting that another way, of around 50,000 visitors a month not one is moved by +1s. The addition of the +1 button to both my sites and to Google’s SERPs has not created any impact to date.

At the moment this suggests the +1 button is any of the following:

• Limited to early adopters
• Not a popular click
• Mostly used by techie/marketing types and the SEO community who may yet to have develop significant reach into the mainstream consumer communities
• Significant amongst tech bloggers but unlikely to significantly impact other markets this Xmas

*Data taken from 7 of my own URLs. I also checked one client site and saw the same.

Anyone got contrasting data? Is +1 making a difference for you or is it the new Google Wave?

Amnesty International recently highlighted that 84% state owned bank RBS was in booming business. Specifically, it was funding companies who were involved in developing munitions that had been outlawed by international convention – cluster bombs. These indiscriminate weapons statistically have children as a third of all the casualties they cause and a full report indicates RBS’ links to the arms trade.

Whether British people bank with RBS or not, it’s their money that is being used to create these immoral and unnecessary armaments by virtue of the £20bn nationalisation during the credit crunch. I, together with around 10,000 others in the UK, took it upon ourselves to tell RBS we weren’t happy. Here is their response:

RBS Cluster Bomb email

To put it clearly, RBS are stating that they had customers who may have been breaking international conventions but they didn’t really know until various NGOs shouted it at them with adverts in the UK national press. You’re kidding me, right guys? The fact is anyone trying to get a mortgage at the moment knows full well that RBS know everything they can about their loans.

Take action to ask RBS to cut the BS. International security does not come about through proliferation of arms, especially dirty ones, and there are plenty of wars that could use reinforcement – the war on pollution for example. Email RBS via Amnesty.

Today I discovered a well made spoofing site that would probably fool those without eagle eyes (or a decade of hard coding experience). It all began with a Direct Message to a Twitter account I help with after we reciprocal followed a new follower who appeared to be in the same industry. The DM read (this is a verbatum copy with it’s typos in):

correct me if i’m wrong.. is this you in the video ?

This was followed with a link using the Tinyurl link shortener. I won’t post it here lest Google think I’m linking to malware.

Opening the link I found the following site using the URL www.itiwitter.com. This is what it looks like:

Screenshot of fraudulent Twitter spoof site (click for full size)

As you can see it’s a pretty good copy of the original and even includes the special effects that happen when you move your cursor into any of the form fields. There are however a few small details that are a giveaway:

Real Twitter Screenshot (click to enlarge)

As you’ll notice I have a wide screen monitor. On this you can see the band of Twitter Avatars extends the full width of the screen on the real Twitter but only part way on the fake one. It would probably look the same 0n a regular screen monitor. These avatars are linked on both however on the real Twitter they take you to that featured user’s account. On the fake on they take you to a 403 Error that states you do not have permission to access /. The avatars on the real Twitter are also rotating and one changes every few seconds. This is not the case on the fake Twitter.

If you see the footer of the real Twitter you’ll see there are links to Twitter in other languages. These are not present on the fake Twitter.

Here are 5 good ideas on Social Media Safety:

1. Have a different login for Twitter than your other accounts (ie don’t use the same login for Twitter, Facebook, LinkedIn, GMail, Y!Mail, Hotmail, PayPal etc)
2. Make sure you go to Twitter’s Settings and tick “Always use https”. This means your passwords will be sent through secure connections and cannot be eavesdropped.
3. Be careful what you keep in your DMs and what you give out by DM. If one of your friend’s accounts was compromised would you have anything in their DM inbox that you wouldn’t want seen?
4. Always check the URL when logging in online. Be careful as some combinations look very similar at a glance, for example www.twittter.com
5. Don’t use Twitter’s OAuth login on sites where you are storing other information, like your address. This is because if your Twitter account were compromised, the hacker could see what apps you’ve granted access to your Twitter settings. They then have one-click access to those apps and the extra information they contain.

I’m not a sociologist and confess my depth of ignorance towards the subtleties of that study, yet as a business owner I’m always interested to hear of trends within society and what they mean at both a personal level and at an economic level. With gems like “doubling the number of engaged workers will give you the future of the economy” and “where the engaged workers are is where the innovation is, is where the startups are and it’s where health is” I found this panel discussion of metrics for a new era at The RSA most insightful:

This is it. I’ve had it. I’m finally fed up with B*t Broadcasting Company. First I’ve had to endure their drivel about intervention in Libya being just. I’m certain that Gaddafi is a nasty piece of work and that there are atrocities being committed in that country. Yet we’re clearly not there to defend the people of Libya from persecution and rape. If that were our catalyst for action, we’d be active in Tibet, Timor, the Congo and many other regions of the world where violation of human rights is an everyday occurrence.

This is Going to Cost a Bomb

Libya, Iraq, Kuwait and even Afghanistan can all be linked to directly to the West’s addiction to fossil fuels. Civil war in Libya spikes prices at a time when the Western economy can least afford it and rather than seek to end our dependency it’s simply quicker to bomb. We’re impressed by the accuracy  of our aircraft’s missiles these days, yet would we be impressed by the maths:

Tomahawk cruise missile – cost per missile = circia £300,000

Number launched on day one: circia 110

Total cost of one element of operation on the first day alone: £3,300,000

That’s right guys. The US and UK blew over £3million on Tomahawk missiles on day one alone. That excludes the costs of the fighter jet’s fuel, bombs, jamming equipment, sailing ships and subs in and all the associated logistics. We’re easily looking at a conservative cost to the coalition of £10million a day. More likely it’s several times that.

What if we loose a jet? A Typhoon is known to cost upwards of £30million each, excluding pilot and munitions. A US F-15E Strike Eagle crashed near Benghazi – that’s over $31million at 1999 prices.

This gives you an indication of how bad our fuel dependency is, that governments can find it easier to justify war – with it’s huge cost when conducted in the modern high tech precision way – over diplomacy, sanctions and green alternatives. After all, let’s not forget – there is no guarantee that removing Gaddafi will make anything better for the average Libyan. I’m in now way defending him, yet this notion that democracy will naturally fill the void isn’t true. Iraq and Afghanistan are clear cases to the point. Even where an occupying force puts in a democratic framework, there’s no reason to suggest the locals want to accept it.

If we can help some people avoid torture and other human rights violations, that is a useful side effect. But let’s not kid ourselves. We’re not footing a bill of millions that may become billions because that.

Radiation - A Glowing Friend

The next absurdity to spew from the BBC was that radiation isn’t something we need to worry about. The author argues that much higher exposure to radiation is unlikely to cause harm based upon evidence from the UN retrospectively looking at Chernobyl and Long Island’s nuclear disasters.

I have some relatives who had lived through World War Two and become spread around the world. The brothers in the UK are still alive and kicking despite their ripe old age. Those in Eastern Europe under the fallout area died of Leukaemia. There’s no history of this disease in our family. I cannot scientifically prove that Chernobyl was the cause yet equally neither can the author or the UN scientifically prove that it was not. The world and particularly the Japanese have every right to err on the side of caution. Our understanding of the human body is laughably shallow despite the medical establishment’s best attempts to make itself appear all-knowing and one of the few things that is recorded with 100% accuracy throughout human history is that scientists continuously get things wrong. I accept that it’s no ill intention on their part; they’re simply doing the best they can with what they know at the time.

It’s fact that humans get it wrong more often than not. All the advances in science and medicine haven’t stopped cancer rates soaring to their highest ever levels in recorded history. Now the odds are at 1 in 2 – that’s 50-50 – either I’ll die from it or you will. Don’t panic that a nuclear reactor is leaking into the sea? Dear Professor Allison, you’re one chain reaction short of an implosion. We barely understand natural ecosystems, let alone the impact of man’s meddling on the environment. I’m thankful for the staff at Fukushima for working so hard to contain the problem. We’ll see how many are around in 40 years from now to share their memoirs.

The Stiff Upper Lip of the Beeb

Anti cuts march: Tens of thousands at London Protest. That’s the title of the BBC’s write up of the events in London on March 26th 2011. The next line reads “More than 250,000 people have attended a march“. Elsewhere is could be seen that 250,000 to 500,000 attended. So at what point does quart of a million to half a million become just tens of thousands? At very least it is hundreds of thousands. And given that the British are by culture the most likely to apologise when someone else makes a mistake, this downplaying of popular support and constant emphasis on what a costly nuisance these people are, is a grave disservice to the TV license paying public that fund the BBC. Unlike the French, the British are characteristically downtrodden. They rarely complain. They have to be massively annoyed to speak up. When half a million turn up to something as unenjoyable as an anti-cuts protest it’s a very serious indication that something needs to be done.

Last year I wrote a piece called “A Youth Well Wasted” for online thought leadership magazine, Imperica. My intention was to expose that disaffected youth will, by the very instinct to survive and thrive that runs in all living beings, try to find ways of creating a world they want to live in. When that is combined with technology the likelihood of setting off a spark in the powder keg grows. In the 1990s, kids used mobile phones to run raves. Nowadays we’re seeing angry young men use social media to launch revolutions across the Middle East.

I reject that the March was about a rich vs poor divide. Many of the marchers weren’t poor, they simply aren’t money mongering, cash hoarding capitalists. They prefer to spend the days of their life engaged in other matters, like people or family. They are the everyday people whose interest in everyday pursuits makes society possible. What is happening is that as more and more people see their future being eclipsed by the destruction brought upon society by the very rich, they quite rightly feel angry. All most people quite rightly want is the opportunity to live their life without too much State interference, whether directly in the form of legislation or indirectly in the form of taxation. The constant use of society as a cash machine by the rich is one thing; when the rich make the middle and working classes pay for their unpaid overdraft is another. Society needs rebalancing. The disaffected need some love to be shown to them and cutting away the services that will care for them if the radiation comes this way or bombing weaker nations is not solving the social problem, although it may try to tackle some of it’s economic symptoms.

As one tweeter said last night:

Truly impartial reporting would provide a balanced perspective from both sides. Yes we need to take action on the state of the economy and yes we need to work to protect the world from dictatorships, yet the truth is far greyer than is made out. The BBC consistently covers and frames stories from one perspective, and that’s why I’ve decided – I’m switching off.

Live Outside The Box

In the 1990s I had a television. I grew so bored of the endless stream of self serving broadcast media that I switched off. It wasn’t until sometime in 2001 I got TV again, this time with Sky and really it wasn’t mine – it was my other half’s. I realised that I’d missed nothing in all those years. From 2005 to 2010 I only had brief moments of TV ownership. Every time I have one, I’m reinforced in my belief that:

• Television destroys relationships – the more you get involved in the lives of others inside the box, the less you’ll be engaged with those outside the box
• Television destroys influence – most of the people I know who watch a lot of television have very little influence in their world beyond which channel to view. TV creates a passivity in people which in turn wastes their ability to influence since influence depends fundamentally upon getting up and taking direct action
• Television destroys truth –  there is little in the world that is universally true save that love is important and death inevitable, yet most people who watch a lot of television become very opinionated. Simply put, much of what we accept because of social proof just isn’t true
• Television destroys happiness –  programming needs viewers therefore high emotional content aids rating. The human condition isn’t meant to be masturbated in this way. It desensitizes us to real happiness and conditions us to live in short term emotional roller coasters

I’ve decided that for at least this year I’m going to plug into alternatives. There will still be televised media I’ll be watching, but not the BBC News. I’m not that interested in the BBC’s version of what happened yesterday. What I really want to know is what is going to happen tomorrow. Therefore the BBC serve me little purpose other than to infuriate myself.

I haven’t fully decided all of the channels I will be tuning into. I’m grateful for all the information that comes to me via my networks on Social Media and I also know that there are some great places to go where people are really engaged in thinking about how we can create tomorrow:

• The RSA’s Webcasts
• TED
• The Royal Society
• Chatham House

There are also some great contributors on Vimeo although it does take a little more hunting to find them. Lastly, Amnesty International, Greenpeace, The WWF and Friends of the Earth also have some insightful content that cuts the propaganda.

If you wanted to get the clearest perspective of the world you could, who would you tune into and why?

One of the core beliefs I’ve had since young is that we’re only on this planet for a short time and life is a one way road with no place for looking back. We should try to use our time well to create meaningful change in humanity whilst preserving the wonder of the natural world around us.

When I was growing up one of the most awful scenes at Christmas would be television reports of starving people in Africa. Famine after famine would befall the continent and great humanitarians like Bob Geldof, Midge Ure and Bono performed miracles in creating awareness of the situation – after all how long before the age of mass media communications were famines ravaging parts of the world whilst tsunamis, floods and earthquakes spread misery elsewhere? The need for aid and efficient international relief mechanisms became firmly entrenched in societies conciousness.

Once I became able to support myself financially I began regularly giving to various organisations who carry out work of incredible importance. Organisations like Medicines Sans Frontiers, the Red Cross, UNICEF and Oxfam were just some of the charities I supported. Whilst some of the stories they would report were a disturbing truth it felt good to know that I was helping them directly address these issues. Like everyone else I want these horrible parts of our world to go away. To wake up to a world where there is no starvation, where people don’t die from easily preventable illnesses or basic sanitation.

Without getting too John Lennon on you, I do believe significant change is possible in our lifetimes, in fact more now than ever. But it takes a great deal of bravery to look the awful sight of human suffering in the face. It’s easy to switch off and go for a drink instead. It’s easy to sign up for a Direct Debit contribution and hope it all goes away sometime.

A wise person once said:

How you do anything is how you do everything

I decided last year that I didn’t feel that I was personally doing enough to create basic standards I expect to be universally available in this world. I’m not talking an end to war (that would be amazing), a universal nuclear disarmament (bring it on!) or even and end to excessive taxation, corrupt government and dispicable corporate policy. I’m just setting the baseline at enough food and water for existence together with basic sanitation and dignity with the chance to work for a better tomorrow if you have the fire in your heart to do so.

I couldn’t live with myself thinking that just giving a contribution is enough to allay my guilty conscience. I want to see real change. In my lifetime. I don’t want to think that all I’ll do with my life is work hard to pay copious taxes so I can enjoy a few selfish pleasures from time to time as a means of avoiding facing the state the world is in. I don’t believe that things, in the majority of cases, happen just by chance. They happen by active involvement. Therefore in the spirit of one of my true heroes I went…

...back to the drawing board

Giving a regular contribution is an important means of charity and I am in no way dismissing it. If you are doing it, please continue this laudable practice. Unless you care to aim for a step higher.

My biggest concern with giving to charity is that whilst I know all the organisations I have supported have done countless everyday miracles in helping those in need, helping someone out isn’t the same as treating the cause of their problem. If a smoker comes to you with a cough do you give them syrup or tell them to get off of the evil weed? The only way to create lasting change is treat causes not symptoms.

I’m not sure quite how I first came to know of Shared Interest. Yet the idea quickly caught my attention – an ethical investment co-operative. More specifically I saw an opportunity to invest in a fair trade Olive plantation in Palestine. I’ve had a long conversation (several years) with Felicity Currie, a jewish South African who grew up through Apartheid and is passionately against the Israeli treatment of the Palestinians as she was of that regime. Her War Poetry brings home what the cameras try to hide. The people of a country so starved of basic needs they are forced to live off of grass. I’m not involved in making political assertions; I know both sides have blood and plenty of it on their hands. But I also know that starving the innocent is no way to create the circumstances needed for peace. I start to get desperate if I’m stopped from taking lunch. What the hell would happen if there was no food?

It’s not just in Palestine that Shared Interest operates. Imagine if in your business over half your employees had HIV/AIDS with an average life expectancy of 31. What if you were in a country where the currency was subject to crazy changes meaning that you might suddenly be unable to pay your staff or rent? The more I looked into it, the more I realised that despite our banks, taxes and politics, Western business owners have it easy. We have a stable base to build on and that security that tomorrow won’t be too dissimilar to today means we can plan and grow. More importantly perhaps, it also means we can take investment whether from friends, family, banks or the investment community.

Shared Interest is the world’s only 100% fair trade lender and they fill the cap in investment that these businesses face. Whilst I currently get 0% interest (see footnote for more) on my investment through them, 100% of it goes to create change; all administration is paid for through the interest earned on it’s investments. So whilst I could withdraw my money if I needed, at least I know it’s being fully utilised in helping fair trade businesses from Afghanistan to Zimbabwe and with near to 9,000 investors providing through it access to over £33 million in capital, I’m quite hopeful that a Co-op near you will be stocking some of the great fruits of it’s investments! From raisins and dates to bags and coffee, there are a range of producers. Most importantly, my direct financial connection to them inspires me to get more involved, to stay connected to what is going on and to buy fair trade products. It’s this active involvement that I appreciate most.

The following video gives a highlight on some ways that Shared Interest is worker to create a better world:

On the subject of interest and if there is none is it an investment at all there are a few points worth noting;

1. The interest rate on the investment is set by the directors of Shared Interest; whilst as stated earlier it is 0% at the time of me writing this, it’s not to say it always will be
2. Off all those investing in Shared Interest only 10.5% actually ask to take payments if any become available. 22.25% waive payments allowing it to go back into the society. 63.93% leave their interest in their accounts which then allows Shared Interest to earn interest on it and use that money towards administration.
3. My biggest return on investment is knowing that tomorrow need not be the same as today if we work together to create a fairer world

Lastly it goes without saying that the nature of it’s business – lending rather than giving – means that every effort is taken to make sustainable businesses from the funding, thereby creating lasting change. With partners like BBC Comic Relief getting involved to use Shared Interest’s knowledge of fair trade and local markets, investing in them seems likely to create some returns we could never get investing in BP, BAE or BAT – a vision of a reduction in poverty. I’m still giving regular or annual donations to certain social organisations like Amnesty and will continue ad-hoc donations to emergency relief but I feel the case for investing through Shared Interest to be special and worthy of focus. If you haven’t money to invest, know that just choosing a fair trade grocery when you are shopping will directly help someone somewhere else work their way out of poverty.

It’s not yet been 100 years since women in the Western world gained the right to vote. It was only in 1981 that Mauritania abolished slavery making it illegal everywhere. The world isn’t the same day after day. What you do really does make a difference and we live in the most exciting times in the entire history of mankind! For the first time in history we have the opportunity to eradicate so much suffering, to change the world and to truly celebrate the gift of life we all share. Whatever you can do is part of making history. Where will we be in 50 years from now? You decide.

In the last 3 weeks, I’ve been given hundreds of pounds to spend on Google’s AdWords online sponsored ad system. Not just the usual £50 or £75 for setting up a new account; these were targeted at existing account holders giving extra credit to get back into the action.

So what? Google gives some love to small companies and those who’ve burned using AdWords, right?

Hardly.

It’s the run up to the Christmas shopping bonanza. Cyber Black Friday rebenchmarks volumes of sales every year as channel shift continues to make etailers smile. It’s therefore the time of year when many businesses will pay for online advertising in order to reach more customers.

When more people advertise, the most common thing that happens is price wars. Most advertisers aren’t savvy enough to realise there are many ways to optimise ROI on CPC campaigns. Instead they assume that because they aren’t first, the best way to increase their profits is pay a higher price per click than the competition.

Google’s tactic of giving away thousands of pounds in free advertising to the uninitiated and unsuccessful therefore means that prices are going to rise for all. As prices rise, a £50 coupon can easily be eaten in one evening on a volume keyword campaign. And then it’s all on your credit card. In effect, it’s exactly the same as when the central banks started printing funny money in order to maintain values; by doing that they devalue the money that people have and revalue assets to an artificially inflated figure. Google is doing the same with bids.

Just as a pound doesn’t buy you as much bread as it used to a few years ago, a pound no longer buys you many clicks so pay attention to your ads and in particular your ROI. Know your CPA and conversion rates and know when you’re moving into unprofitable territory. Better still, make sure you have publishing assets that allow you to benefit from Google’s price inflation regime and cap your own spending around your monthly average revenues. This advertising bubble has a way to go yet; next year’s VAT hikes are going to increase CPA costs 2.5% and if consumer spending slows some merchants may try chasing  the dwindling pipeline. I expect QE2 from Google sometime before Valentines.

I’ve had a string of nonsense lately. One incident that particularly springs to mind comes from Dell. I ordered several PCs and when, a fortnight after the due delivery date one still hadn’t turned up I thought I ought to call.

“We’re sorry but the computer you ordered was sold to someone else” explained the Dell woman.

“What?” I staggered. “You mean I spent over a grand and a half on a computer from you and you sold it someone else? Why didn’t anyone tell me?”

“We don’t have anyone who is responsible for doing that. Sorry.”

Oh joy. After almost a decade of faithful custom for workstations, laptops and desktops I suddenly feel the case for moving to Sun workstations just got a lot stronger.

Once my workstation finally turned up, I needed to buy a monitor for it. Naturally Dell were shifted from the preferred supplier list. Who has speedy, reliable delivery, I thought, knowing full well there is a Maplins, PC World, Currys, Comet and Tesco’s Extra within minutes drive, all of which could supply a monitor if I could be bothered to visit. Amazon, I thought. It’s a no brainer, right?

22″ Samsung 1080p monitor ordered. Got my delivery date by HDNL. It comes. It goes. No delivery card left. Two days later I’ve time to log in to Amazon and contact them.

They’ll have left a card; use that to re-arrange delivery.

Thanks. They didn’t. Email two.

Sorry to hear that. I’ll contact them. It’ll be with you in a day. Here’s HDNL’s number in case you need it.

Thanks. It’s two days now. Shouldn’t it be here by now? Email three

Sorry to hear that. They’ll have left a card. Use that to rearrange delivery.

They didn’t the first time and they didn’t the second. In fact I doubt they came at all. I’ll contact them myself. Email four.

Delivery now scheduled for Friday.

Dear Amazon. It’s Monday. My monitor hasn’t arrived. It’s been 3 weeks for what should have been 3 days. I wish I just got in my car. What the hell was doing thinking that you could be trusted with something as simple as sending me a box you claimed to have in stock? Unless you have it with me by tomorrow morning I’m going to Maplins and you can cancel my order. Email five.

After the monitor arrived the next day (note: by City Link and not HDNL) I watched some Vimeo to make myself feel better. As synchonicity would have it up pops Seth Godin. His talk made me think about my experiences with these huge companies. They are both companies that seem big enough to be unassailable. Yet both proved to be unable to live up to their reputation. There is hope in that for entrepreneurs. It’s clear that Amazon and Dell are infallible. If that’s the case then someone could be doing it better.

Here’s Seth’s talk on why so many things are broken:

Seth Godin at Gel 2006 from Gel Conference on Vimeo.

A boat docked in a tiny Greek island. A tourist complimented the local fishermen on the quality of their fish and asked how long it took them to catch.

“Not very long.” they answered in unison.

“Why didn’t you stay out longer and catch more?”

The fishermen explained that their small catches were sufficient to meet their needs and those of their families.

“But what do you do with the rest of your time?”

“We sleep late, fish a little, play with our children, and take siestas with our wives. In the afternoons we have a snack at the beach or go into the village to see our friends at the Kafenio, have a few drinks and play tavli. In the evenings we go to a taverna play the bouzouki and sing a few songs, maybe break a plate or two. We have a full life.”

The tourist interrupted, “I have an MBA from Harvard and I can help you! You should start by fishing longer every day. You can then sell the extra fish you catch. With the extra revenue, you can buy a bigger boat.”

“And after that?”

“With the extra money the larger boat will bring, you can buy a second one and a third one and so on until you have an entire fleet of trawlers. Instead of selling your fish to a middle man, you can then negotiate directly with the processing plants and maybe even open your own plant. You can then leave this little village and move Athens or even London! From there you can direct your huge new enterprise.”

“How long would that take?”

“Twenty, perhaps twenty-five years.” replied the tourist.

“And after that?”

“Afterwards? Well my friend, that’s when it gets really interesting, “answered the tourist, laughing. “When your business gets really big, you can start buying and selling stocks and make millions!”

“Millions? Really? And after that?” asked the fishermen.

“After that you’ll be able to retire, live in a tiny village near the coast, sleep late, play with your children, catch a few fish, take a siesta with your wife and spend your evenings drinking and enjoying your friends.”

“With all due respect sir, that’s exactly what we are doing now. So what’s the point wasting twenty-five years?” asked the Greek fishermen?

And the moral of this story is:

Know where you’re going in life….  you may already be there

Times are tough. The credit crunch has sucker punched a great many businesses and individuals. An obvious early symptom was the withdrawal of any worthwhile interest rates on UK savings accounts. As I write this, moneysupermarket.com is showing the best available savings account rate as a paltry 3%. Just 5 years ago I was getting 6% interest on my current account.

And so off go the investors, taking with them for company a bunch of cheesed off savers who are disillusioned with the safety of UK banks and unincentivised by the meagre returns for the risk of inflation making them poorer by leaving the cash with the banks. First up comes a natural pile in to equities. The UK FTSE has many well managed and funded companies which throw off vast cash flows and can reward investors with dividend payments higher than bank interest. The risk is of course that company valuations – and with it your investment – may go up as well as down and there’s also no guarantee of dividends always being paid as RBS, Lloyds and BP shareholders currently know all too well. With economic conditions continuing to constrict, cash flow may become tighter for many businesses.

Where else can investors turn? Sovereign debt has become unpopular on two counts. UK gilts are paying low returns whilst overseas debt has been hit by the collapse of Greece and the certainty that it will default in the future, possibly bringing contagion elsewhere in the region and across the PIGS (Portugal, Italy, Greece and Spain).

Commodities are an interesting asset class for the trader yet much less interest to others since they generate no cash flow and pay no dividends whilst held. So an interesting alternative to the other alternatives is a UK founded company, Zopa, which works as a peer-to-peer lending system. A what? That’s right, a way to lend money to others as if you were your own bank. Zopa handles the credit checking, the gathering of money and will even chase up unpaid loans on your behalf.

But there’s no way I’d lend some stranger off of the internet a grand, I hear you wail! I’m glad you said that. Zopa agree! Their system works to mitigate risk. How? Let’s say you’ve £100 lying around your handbag, dying to be invested. Zopa will receive that money and issue it to borrowers in £10 chunks. So you’ll end up with 10 loans to 10 borrowers each of £10. A borrower who wants to loan, say £3,000 will be matched up with 300 lenders. This way if there ever were a default, the loss for each of the 300 lenders is only slight compared to if one lender serviced the entire finance requirement.

So how are you compensated for the risk? First off Zopa allows you to set your rate at which you’re prepared to loan. In fact the name isn’t taken from the Greek God of Mega-Wonga as it first might sound. Zopa stands for the Zone Of Potential Agreement. Simply put a Zopa is the range at which lending is going on in the market. A quick scan of Moneysupermarket.com’s loan rates shows the high street Zopa as I write to be between 7.7% and 11.9%. Now let’s put that into context. Those rates will apply if you’re:

a) credit worthy

b) borrowing a substantial ammount

c) paying it back over a predefined length of time, often 60 months (5 years)

On Zopa, just like a bank you set your choices as to who you want to lend to and at what rate. So let’s say a business owner with no debt from Chelsea approaches you. He’s looking for £15,000 to expand his empire and already has good cash flow. You may decide that to lend to him, you’ll accept a lower rate, let’s say 7%. He’s rewarded for working with you and you’re rewarded for lending your spare cash to others who are looking to get credit.

On the other hand, you may decide that his son, because he’s young, just finished Uni and without a credit history is a much greater risk. You may therefore decide that to lend to the Youth market, you’ll want rates closer to 13% in order to offset the risk that he may decide to spend his cash down the pub rather than repaying you your dues.

Whatever you decide, it’s your choice. You choose your rates and which credit sectors you are happy to lend to. Obviously the lower your rates the sooner your cash will be lent out and earning interest; holding out for higher rates will take a while to find matches. You can also choose to examine each individuals’ story or go for a auto-loaning to prospect who meet your pre-set criteria.

I chose to put £100 into Zopa to loan out last year. I set up criteria using auto-loan to the upper end of credit worthiness – the A* and A rated borrowers. My lowest rate was 7.1% and my highest 9.8%. My first loans went out in September and it wasn’t until October everything was out there. So it’s been about 10 months.

Of course Zopa take a fee for their service. It takes 1% p/a off of your returns or less depending on how quick you were to join. They also say allow for losses accrued by bad debt, something which I’ll spill the beans on in a moment – typical Zopa bad debt rates by sector can be seen here. Even allowing for 3% off of yield, we’re still looking at an asset class that’s typically returning higher than a UK FTSE High Dividend ETF and is in the range of most higher yielding equities – after deductions for losses are factored in. It compares reasonably with corporate bonds and is double to triple a typical savings account. Whilst it’s not going to turn you into an overnight millionaire, if you are looking for a place to park cash whilst the market turbulence subsides, it bears consideration.

Bad debt. It cracked the financial system and killed Lehman Brothers. Could it kill you on Zopa?

One of the funniest things is that since lending on Zopa, I’ve not had a single bad debt. In fact the reverse. I’ve had savvy, credit worthy types borrow money to close out other unfavourable loans from the high street, to do home improvements or to make other investments in properties and businesses. One of the borrower-friendly features of Zopa is that there are no “get out charges”. If someone wants to overpay their borrowings by a little or the lot they can. And that’s exactly what happened on my loan book.

Several borrowers took sums to achieve a purpose and then paid it back rapidly, generally within a couple of months. So whilst my return rate is factored in over the 36 month term that I prefer to lend on, these people were only paying the interest for the month or two whilst my money was in their possession. After that the cash was in my pocket, waiting to get back out there into the market and earn some interest.

It does seem that on the whole Zopa attracts a more financially aware type and certainly the management are. They’ve founded and run businesses including Virgin Money and American Express and they’re backed by investors who funded eBay, Figleaves, Betfair and Lovefilm. I know one member from the city who told me he’d made several thousand loans via Zopa and still hasn’t encountered default. Perhaps it’s the case that the money aware types that use it are more careful to use than abuse credit?

Whatever you think about Zopa, they’ve put a lot of time into explaining what goes on on the site and into building a sense of community around the platform. Individuals are known by usernames and you can see who your money is leant to and what they wanted it for. For those with the inclination to get more involved there are discussion board and member’s stories as well as the option of personally selecting and questioning those you would consider lending to before you lend to them.

I find the idea that it’s way of helping everyone to win except the fats cats appealing and my experience with Zopa after 10 months has been positive. I’ve made more than I would have if I’d left the money in the bank and having it loaned to another is great way of stopping yourself from dipping into savings since you can’t spend it if you don’t have it! Once loaned to another, you need to wait for it to be returned before you can transfer it out of your account. It also makes me feel good about myself that my cash can be used to help others get where they want in life and that I’m running my own bank – however tiny it is!

You can get started on Zopa from as little as £20 although I would encourage you to start with £100 since it allows you to spread your risk better. Play with the system until you feel comfortable it’s set up the way you want to lend; it’s very easy to use. And put it in the context of your broader investing strategy. If you only currently have savings, it seems like an interesting way to increase your returns. If you’re equities heavy, it’s a nice way to have some portfolio coverage that’s not going to sway rapidly with the FTSE. In fact it could be seen as a play on the popularity of stocks like Provident Financial (PFG) or International Personal Finance (IPF). Using Zopa is a way of you receiving comparable returns without the exposure to city fats!

If I remember I’ll make an update in October that lets you know how well a full year on Zopa went. If you want to check it out for yourself, please do so here.