#AngelCube favours B2B #startups…

Posted on September 1, 2015 by Content in Context

The latest intake to AngelCube‘s accelerator program presented at the recent Startup Victoria meetup event. It was interesting to see that all 6 pitches were aimed at B2B audiences, since I have heard several angel investors and startup advisers express a strong preference for end-consumer products (or those with 2-sided markets). Perhaps there is more appetite for enterprise solutions, despite the longer lead times for sales, and the challenge of strategies required to displace incumbant products.

Whether there is a new interest in B2B startups, or whether more founders are identifying B2B opportunities, there’s probably some further analysis to be done. Meanwhile, here are the 6 fledgling startups in the order they pitched on the night:

1. Peer Academy

Peer Academy aims to “change the way professionals learn”. It does this by offering students access to open enrollment classes via an online market place. The classes are conducted by facilitators and experts (“hosts”) who have been “screened” for quality by Peer Academy, with a focus on “soft” management and leadership skills.

Peer Academy hopes that students will act as “warm leads” for corporate sales, by taking their classroom experience back into their organisations, and acting as champions or brand advocates. With follow-up introductions to training and HR managers, Peer Academy then curates programs for corporate clients, by matching training needs to individual users.

I like the notion of “peer-to-peer” learning (although I presume that the hosts are expected to have more advanced and developed skills than their students), and there is certainly a trend for alternative learning platforms. At least one major bank has expressed interest in sourcing corporate training via Peer Academy, who take a 30% commission on course sales.

A huge challenge will be to engage corporate clients who already have established relationships with trusted training providers, or who have existing panels of approved organisations, or who outsource training procurement to third parties.

2. Jack

Workplace wellbeing is becoming big business ($5bn and counting?), and in the process, sedentary workers are in the firing line. According to Apple CEO TIM Cook, “Sitting is the new cancer”, and hence the recent fad/trend/fashion for sit-stand desks which is driving market interest in ergonomic solutions. The team at Jack have built a device that can monitor how much time people are sitting or standing, and even provide some feedback on user posture.

As you would expect, Jack uses cloud connectivity to monitor user activity, and to relay data via cross-platform apps and dashboards. It also uses elements of social media engagement and gamification, and has already launched a pilot scheme with several desk suppliers, as well as a paid beta at a well-known payments provider.

Customers will buy the device plus pay for a monthly subscription service. There is a direct competitor, but Jack claim their device can be retrofitted to any sit-stand desk. The unit price is much higher than, say a Fitbit, but since this is not a consumer product, Jack is confident it can sustain current pricing.

Finally, with the data it aims to collect, Jack reckons it may even be able to help reduce insurance premiums, although this will no doubt be subject to actuarial scrutiny, Work Cover and OH&S requirements, as well as data privacy issues.

3. Coin-Craft

In the professional services and consulting sectors, tracking project costs and resourcing have become highly demanding activities – witness the plethora of project management, costing, billing, ERP and time-tracking solutions on the market. Based on personal experience, the founders of Coin-Craft have identified a specific need among architects, and have built an all-in-one tool for Project Management, Cashflow Analysis and Resource Planning. Built “for architects by architects”, Coin-Craft is designed to help clients stay optimal, by managing staff over/under utilisation, and tracking cashflow projections.

The system also claims to integrate with third-party accounting software, and has around a dozen firms using the service, with another 30 in the pipeline. Although Coin-Craft have chosen a niche client base to protect their market entry, they claim the solution can also be adopted by engineering practices, graphic art studios and project management firms.

However, feedback from the audience suggested there are already similar, mature products that are tracking individual billable hours against specific projects, so Coin-Craft may need to work on their value proposition and differentiation.

4. CurveUp!

As social media and content marketing become more ubiquitous (if not more sophisticated), companies need to understand the value of their direct marketing spend. Mostly, they can do this via web analytics, e-commerce tracking, campaign conversions, and cost of customer acquisition. According to CurveUp! however, measuring the ROI of your PR activity is not so easy using “conventional” social media monitoring tools. For example, CurveUp! claim they can deliver tailored reports to show which blog post or article converted to a ticket sale for a concert or event.

Currently using web and online sources only, CurveUp! track mentions and link this to customer data. Some platforms, such as Instagram, are harder to track, and even via a possible API solution, it will only be possible to monitor the number of views and shares, but otherwise little or no data will be available.

However, at least one online market place has expressed interest, and CurveUp! has the potential to integrate with Facebook and Google, so that clients could possibly use campaign codes to track referral activity from mention to firm sale. Overall, the service will need to align itself with the ROI outcomes linked to PR campaign goals – which will vary between clients and markets, depending on organisational KPIs around brand advocacy, share of wallet, products per customer and customer satisfaction.

5. TribeGrowth

In a similar vein, the team at TribeGrowth claim to have built “artificial intelligence for social media marketing“. Their goal is to help clients build an audience and get customers, via the use of “intelligent engagement” to generate conversions.

Initially targeting startups, professional service providers and the hospitality sector, TribeGrowth offers a tiered monthly subscription service, and claims to be a (cheaper) alternative to agencies or even Twitter ads.

Currently in private beta (and so far, only designed for Twitter and Instagram), TribeGrowth focuses on audience growth by careful selection of connections and influencers. According to the founders, this is not “pay & spray”, but uses machine learning to refine audience outreach and engagement.

6. SweetHawk

Finally, and in what was probably the most technical presentation of the evening, came SweetHawk, which is building “voice for e-commerce”. I have to confess that, although I had previously heard about this product, I’m still not totally clear how it works.

In essence, it’s an outbound platform that enables companies to have more focused/targeted real-time conversations with warm sales prospects, namely people who are visiting their websites. Personally, I would find that a bit spooky, if I was browsing a site and suddenly a widget popped up asking me if I wanted to receive a call right there and then. Isn’t it a bit like stalking?

The business model is designed to offer tiered services in return for monthly subscription fees – depending on call volumes and functionality, such as workflow tools. I would see it as sitting somewhere between an outbound sales call centre and a SaaS-style inbound helpdesk solution.

On the plus side, I do see the opportunity to deliver superior and more responsive customer service, except that SweetHawk appears to be a sales and prospecting platform, not an after-sales or support solution. I’m also used to live chat tools that pop up on various software and other service sites I use, so I would probably engage with a similar offering if I was browsing to purchase.

Final Thoughts

While none of these pitches has so far demonstrated anything truly disruptive (but let’s not criticise them for that), they all seem reasonably sensible and logical solutions using a mix of digitally-driven technologies (cloud, mobile, social, peer-to-peer, data analytics) that we are all increasingly familiar with. So, rather than major game changers, I see each of them building on established platforms. By refining the potential that new technologies and business models are creating, they are tapping into better-defined client needs rather than taking a “build it and they will come” approach.

In conclusion, I was generally impressed by the 6 pitches on offer, although some of the presentations will no doubt be reworked in light of the audience feedback and Q&A, and before the plucky founders hit the investor road show organised by AngelCube.

The event was hosted by inspire9, and sponsored by BlueChilli and PwC.

Next week: More on FinTech – another look at data and disintermediation

Tourism: Time to Get #Digital

Posted on August 25, 2015 by Content in Context

In the latest State of the Nation report, Roy Morgan Research shone a spotlight on Australian tourism, an industry which has the potential to make a larger contribution to national GDP following the commodities boom. But the industry needs to get smarter at leveraging digital technology and embracing disruptive business models to ensure sustainable growth.

Melbourne’s White Night Festival (Photo: Paul Jeffers for The Guardian)

As the report highlights, digital is disrupting traditional operators through “automation and variable pricing of everything from hotel rooms to airline seats”, which combined with huge changes in media consumption “is impacting the very essence of the industry”.

What does this mean for the industry, and how should it respond? Here is a quick overview:

1. Tourism is a major contributor to exports and to GDP

According to data from the Department of Foreign Affairs and Trade, tourism generated over $14bn in exports in 2014, and is #5 after iron ore, coal, natural gas and education.

In particular, revenue from Chinese tourists, especially “Free and Independent Travellers” (FIT), grew 19% in 2014, and now accounts for around one-third of in-bound tourism revenue.

With an increasing proportion of Australia’s population born overseas (in large part driven by people coming here to study or to work from China, India and South East Asia), it’s only natural that their friends and family will come to visit them for holidays. And since they are likely to be more affluent visitors, they can afford to curate their own itineraries, rather than be locked into package tours.

2. Great attractions need even better infrastructure and UX

It’s no longer enough that Australia can boast many of the best natural, cultural and lifestyle tourism attractions in the world. Increasingly, catering for the “visitor experience” means that travel operators, hotels, resorts, attractions and destinations need to consider things like:

Multilingual and multicultural capabilities
Internet & WiFi access
Smartphone compatibility
Signage and navigation aids
Integrated services (e.g., transportation and visitor attractions)
Content and interpretive tools

3. Market and digital disruption means more choice for travellers

Disruptive market forces mean that tourists have more choice, and can access the sharing/informal economy, such as Uber and AirBnB.

Digital disruption also means a myriad of ways to discover, book and pay for transport, accommodation and services, aided by numerous apps that can bypass official travel and tourism services.

Visitors not only have more choice, they are more likely to be well-informed, having done their research before they arrive, aided by social platforms that offer personal reviews and recommendations.

4. What are the reasons tourists come to Australia (and what do we do with them once they are here)?

I don’t have any official data, but anecdotally, tourists come to Australia because in general they believe it’s safe (notwithstanding shark attacks and venomous insects), it’s clean, it’s unique, it has variety, and for some the language is also a convenience.

Whether it’s natural scenery, food and wine, cultural events, sport, historical sites, gambling, surfing, trekking, arts festivals, fashion weeks, galleries, museums, beaches, or just hanging out in coffee shops, Australia has a lot to offer.

I’m obviously biased, but Melbourne alone hosts a full calendar of cultural, sporting, culinary and commercial events – there’s something significant happening every month of the year:

Major Festivals – Jazz, Comedy, Film, Arts, Fringe and Cabaret (plus the Laneways Festival)
Special Events – White Night, SuperSense, Winter Masterpieces, Gertrude Street Projection Festival
Sport – Tennis, Spring Racing Carnival, AFL Grand Final, F1 Grand Prix, Boxing Day Test
Commercial – Food & Wine Festival, Design Week, Fashion Week, Art Fair, Trade Expos, Professional and Industry Conferences

And did I mention the coffee shops???

5. Some further opportunities?

Digital won’t displace these attractions; in fact it should make it much easier for tourists to discover, connect to and interact with them before, during and after their visit.

Digital can also help curate the whole end-to-end experience, from suggesting thematic itineraries, managing personalised bookings and organising customised events, to providing travel information and advice in advance, updating information throughout their stay, and keeping in contact with visitors once they leave.

And a personal plea – can Melbourne’s trendy restaurateurs that don’t accept bookings offer an app to let customers know when their table comes up on the waitlist?

Declaration of interest: The author currently consults to Roy Morgan Research. These comments are made in a personal capacity.

Next week: Update on AngelCube

The future of #FinTech is in Enterprise Solutions

Posted on July 14, 2015 by Content in Context

Talk to anyone involved in FinTech, and apart from telling you the sector is “hot”, there’s little consensus on what happens next. Despite positioning itself as a disruptive force within financial services, much of what goes on in the sector is either driven by regulatory reform, or by technological developments in allied fields. Most of the disruption so far is in retail and B2C services, yet the more significant opportunities are likely to be found in enterprise and B2B solutions. But as The Economist commented recently, “The fintech firms are not about to kill off traditional banks.”

The Current State

In broad terms, FinTech is working in four main areas:

Cryptocurrencies
Payments
P2P lending
Financial Advice and Planning

The first two are responding to dual technological advances – namely, the use of block chains and cryptography; and increased sophistication around mobile and GPS. Patrick Maes, CTO of ANZ Bank, has stated that “Bitcoin and block chain are the first payments innovations in 2,000 years.” He also has a FinTech “wish list”.

The second two (at least, within Australia) are benefitting from regulatory changes, such as the new positive consumer credit reporting regime, and the Future of Financial Advice reforms. And when the National Payments Platform scheduled for 2017 mandates real-time settlements, everyone will have access to immediate inter-bank payment services.

Of course, there is some overlap among these categories, which in turn are also benefitting from developments in big data analytics, mobile solutions, social media platforms, and consumer trends like crowdsourcing and the shared economy.

It may be interesting – but it’s not whole picture

Disintermediation May Not Be Enough?

Most of the FinTech disruption has been in the nature of disintermediation – displacing the role of traditional banks and merchant services in providing payment solutions, point-of-sale facilities and personal loan products. But given the relatively small margins on these services, you either need to have a totally different cost structure, or a significantly large market position to achieve scale and volume.

You will have seen the above infographic, often quoted with a sense of wonder at how these companies have built huge businesses seemingly without having to own any physical assets. Well, yes, but dig deeper, and what do we find? The banks have always worked on the same principle – they take customer deposits (which they don’t own), and then lend them to borrowers (whose secured assets they don’t own unless there is a default).

The main difference is that banks are highly regulated (unlike most of these digital market disruptors), and as such they have to hold sufficient capital assets to cover their exposures. Meanwhile, the banks finance the car loans taken out by Uber drivers, they provide credit facilities and export guarantees to Alibaba traders, they underwrite the mortgages on properties used for Airbnb, and will likely provide e-commerce services to advertisers who use Facebook.

For me, probably the last major FinTech disruptor was Bloomberg (founded back in 1981), because it changed the way banks and brokers accessed news and information to support their trading activities, by introducing proprietary analytics and data tools via dedicated terminals, screens and datafeeds. So successful has Bloomberg been that it now owns about one-third of the global market for financial data, and is the single-largest player (albeit by a very small margin over main rival Thomson Reuters – itself, a merger of two key data vendors). Plus Bloomberg is still privately held.

The Future State

I don’t believe FinTech can truly come of age until a major enterprise solution appears. For different reasons, Stripe and BlueDot could be on their way, but both are primarily operating in the consumer payments sector.

I have written previously on the areas where FinTech could impact institutional banking and securities trading, including loan origination, data analytics and risk management. I’ve also reported on the opportunity to disrupt traditional market data vendors by changing the pricing and consumption models. And elsewhere, I have hypothesized on how banks’ trade finance services could be disrupted.

The areas where “Big FinTech” could truly make a difference are:

Counterparty Risk Management
Predictive Credit Risk Analytics
Loan Pricing Models
Unit Pricing Calculations
Collateral Management
Portfolio Performance Attribution
Sentiment-based Trading and Risk Pricing

However, the final word should go to Patrick Maes, who suggested that a huge opportunity exists in deposit products linked to customer loyalty programs and frequent flyer points – what if your credit card points could be used to finance a car lease or as part of the deposit on your first home?

Next week: Change Management for Successful Product Development

The David and Goliath of #Startup #Pitching

Posted on June 30, 2015 by Content in Context

Anyone wanting to follow the startup scene in Melbourne will quickly discover that there are meetups, hackathons and user groups nearly every night of the week. Who needs a social life when we’ve got startup happenings to keep us entertained, busy and off the streets! The frequency and close proximity of these events can lead to some interesting contrasts; one such example came when Oxygen Ventures‘ annual splash The Big Pitch was held the same week as UpWork‘s more modest Networking & Pitch Night (part of The Pulse Meetup). It was almost a case of David and Goliath…

The biggest difference between the two events was the prize on offer – the Big Pitch offers the winners up to $5m in venture capital funding; The Pulse offers $500 in Upwork credits (and high fives all round). No doubt, the application, screening and selection process is more onerous for the former than the latter. And as was frequently pointed out once The Big Pitch gala proceedings got underway, this competition is “serious” and “adult”. But that’s not to say that the entrepreneurs pitching at The Pulse weren’t equally passionate or serious. Most of the finalists at The Big Pitch had already launched products and were gaining market traction, as had several of those presenting at The Pulse.

So, in the interest of objectivity (and pure entertainment), here are the 10 pitches I watched across the two competitions, in no particular order, with my personal comments on each. Without going to the respective websites, can you work out which startup finalists belong to which competition?

LaundryRun

Too little time, long day at work, or just can’t be bothered doing your washing? Let LaundryRun pick up your dirty clothes at a time of your choosing, and bring them back when you need them all nice and clean. Tapping into the trend for concierge services for busy inner city hipsters, hackers and hustlers, LaundryRun is joining the likes of YourGrocer to outsource domestic services.

Given that the founders already have a traditional laundry and dry-cleaning business, one assumes they know to make the economics work (they claim the customer pricing is comparable to walk-in trade). Plus they have had some early media coverage, and it makes sense to focus on higher-density neighbourhoods, especially if they can establish regular pick-up and drop-off schedules.

But the problem will be in getting enough repeat business, although if most of the collection and delivery is done in the evenings, maybe that addresses the need for consolidation (and gets round peak traffic hours).

Gamurs

As I have confessed before, gaming is not my thing. I don’t see the appeal, I barely understand the jargon, and I certainly don’t have any aesthetic appreciation for the advertising, graphics and branding that goes into these products. But I accept that it’s a big business, and that the gamers of today are possibly the software geniuses of tomorrow.

Gamurs claims to be the ultimate social network for all things gaming. It has had some user interest (probably because it is a free platform), but it felt that there was nothing really new here. Despite a dedicated team, and some impressive growth projections (albeit only for Australia) it was difficult to see where the revenue would come from as there are competing channels, and the games industry is built around platform and brand verticals.

The pitch mentioned “content consumption” a lot, but I had no idea what that meant, and I was left thinking this was simply an on-line magazine for enthusiasts and hobbyists.

EpicCatch

I’ve seen this exact same pitch before. It’s cute, and has an interesting angle on the online dating model. Sort of MeetUp meets Tinder, with a focus on curated dating experiences. But other than some neat one-liners, this presentation was really an in-person advert designed to drive customer usage.

I’m sure the business will do well among its target demographic (although not quite sure they have this totally figured out), but unsurprisingly it did not win because according to some recent research, VC’s don’t like the dating business model.

Biteable

This self-serve provider of templates for animated videos presents a very neat idea, and was established to fill the gap between expensive agency services, complicated pro tools and clunky DIY apps. It’s free to use, but for $99 you can remove the Biteable watermark.

There are limited options for changing some aspects of the template content, but maybe this will form part of the up-sell model. However, the numbers look questionable – how many repeat users would there be, and wouldn’t frequent users go for professional solutions anyway?

Perhaps there are strong niches or use cases that Biteable could explore, rather than trying to gain traction across a wide market?

CoreCool

Referring to the number of fatalities in India’s recent heat wave, CoreCool demonstrated a human need for their simple low-energy heating and cooling solution, especially for the elderly and the infirm. Using tested technology to regulate core body temperature (in essence, a contact heat exchange unit), CoreCool also sees a market in the recreational and well-being sectors.

If the product makes any claims as to its medical or health care benefits, it may need to comply with the relevant class of therapeutic goods regulations. It was not clear whether any clinical trials have been undertaken or whether the product is subject to any patents. However, there was lots of support for the idea among the audience.

Development challenges include scaling production to achieve retail pricing, and maximizing battery life.

FLEET

This was a project that proved very popular with the audience, even though it is still at concept stage – quite literally, it has not yet got off the ground. FLEET plans to bring cheap satellite internet to the estimated 60% of the world’s population that are not connected, or don’t have access.

With impressive scientific credentials, a passionate presenter and market research to back her case, it was easy to see why this pitch was many people’s favourite. But without the co-operation of incumbant telcos and their willingness to trade with a third-party platform, FLEET may struggle to establish a business case, unless they can hook into alternative distribution technology and supply chains.

At the very least, FLEET could provide a shot in the arm for Australia’s satellite industry.

Blinxel

Pitches always look better when the presenter can provide a product demo. Such was the case with Blinxel, a startup that is looking to bring simple and low-cost AR/VR video and hologram-like content to your smart phone or tablet.

Using a dedicated depth camera, Blinxel can capture video content, then upload the file via the cloud to your device. The team behind Blinxel is a bunch of enthusiastic 3-D content producers who want to disrupt the current high-cost model, which is also wasteful, as little content is recycled and OEM’s are apparently locked into proprietary technology.

I can see many uses, from education to tourism, as long as the content creation process is scalable, the need for stand-alone technologies can be minimised, and the price/speed/quality equation makes sense.

SocialStatus

Aiming straight for the marketer’s heart, SocialStatus aims to provide social media analytics on steroids – although only supporting Facebook pages at present. With a focus on peer and industry benchmarking, SocialStatus is building its expertise around the key metrics of engagement, growth and click-thru rates.

Adopting a freemium model (plus a 2-tier subscription price) and using simplified tools (canned reports and automated data from streamlined metrics), SocialStatus looks clean, easy to use and speaks directly to content marketers and community managers.

Unless they can protect their analytical IP, and extend coverage to other social media platforms, I think SocialStatus may find it difficult to defend their position.

Meet&Trip

A simple pitch: if you are travelling overseas, and want to connect with fellow travellers who might be interested in planning and sharing a road trip, this is the solution for you. Claiming that Facebook and other social networks don’t allow you to create time and location-based forums that are both moderated, curated and for a specific purpose, Meet&Trip aims to connect users with similar interests and lifestyles.

It’s a nice idea, but other than being specialist bulletin/message board, I can’t see what else Meet&Trip has planned, or how it intends to fund itself.

In the analogue world, most major cities and tourist destinations used to publish magazines dedicated to the interests of travellers, backpackers and itinerant expats. They had classified adverts of the kind: “planning a trip to Uluru; share expenses and driving; no boofheads”. Maybe this still happens? As an aside, London’s Antipodean community used to park and trade their dormobiles along the Thames Southbank – so anyone looking to buy a VW Combi and “do” Europe with like-minded travellers knew exactly where to go.

Storie

I have to admit, when I heard this pitch, my immediate reaction was, “Oh. Yet more video content that I don’t have time to watch (or care about).” And despite the apparent novelty of being able to capture, edit and share content from within the same app (i.e., build a series of scenes into a story before you hit “publish”), it felt like yet another social media pitch in search of a business solution.

Kudos to the young team for bringing their idea to our attention – but to me it felt like it was trying to take the best bits of YouTube, Vine, Instagram, Facebook and Tumblr without adding anything radically new.

As with Biteable (above), my recommendation to Storie would be to explore commercial opportunities among deep or niche content-rich markets, rather than trying to scale across shallow, thin and widely dispersed public audiences.

Conclusions

The winners in their respective competitions were SocialStatus and CoreCool, with honourable mentions for LaundryRun, FLEET and Blinxel.
We are starting to see some further variegation among startup pitches – more firmware, hardware, B2B – but the bulk are still pushing consumer-based, ad-backed products targeting the (over)crowded markets for sharing social, mobile and video content.
Reflecting Melbourne’s ethnically diverse startup scene, a significant number of these pitches were made by recent migrants to Australia.
Several pitches confined their growth potential to the domestic market – which is understandable, but self-limiting. Despite its reputation as a relatively early adopter of new technology, by and large Australia is still quite conservative, with a tendency to favour incumbant brands that operate in semi-protected duopolies and oligopolies (supermarkets, telcos, banks, newspapers, automotive).
I don’t believe in disruption for its own sake, but few of the pitches offered truly disruptive business models, other than through pricing (i.e., charge nothing and hope that advertising will cover the costs) or via self-service solutions. I would like to have seen more disruptive intent around supply chains, distribution and channels to market.

Next week: Deconstructing #Digital Obsolescence

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