Category Archives: Business Planning

Are Start-Ups a young persons’ game?

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Last week’s Lean StartUp Melbourne meeting was devoted to the AngelCube accelerator program. Given some of the high-profile start-ups that have come through this process, it was hardly surprising that nearly 400 people turned up to hear various AngelCube alumni share their personal experience (as well as to enjoy some free beer and pizza, courtesy of the evening’s sponsors: inspire9, BlueChilli, Kussowski Brothers and PwC).

First up, there were lightning talks by 3 successful program graduates: the team behind fantasy sports app developer C8 Apps, Ash Davies from self-publishing platform Tablo, and Phil Bosua, the technical genius at LIFX who designed the WiFi-controlled LED bulb. All of them vouched for the benefits of the AngelCube program, and offered key learnings – such as “fail hard, fail fast, fail forward”, and the value of having a disciplined weekly cycle of iterative product builds. Access to quality mentors was also a key factor.

Then Indi from OutTrippin joined the guys for a Q&A panel session, facilitated by AngelCube co-founder Nathan Sampimon.

Some of the accelerator program insights on the night were quite revealing –

  • it’s all about product-market fit
  • a solo founder will usually struggle on their own
  • be prepared to either pitch or pivot at the weekly program reviews
  • the $20,000 seed funding (for 10% of your business) doesn’t go far…
  • a B2B concept is less likely to be accepted to the program (due to longer sales cycles)
  • the model is founded on lean methodologies, frequent iteration and getting to an MVP
  • people with at least one start-up project behind them tend to do better
  • the AngelCube angels are investing in the team as much as the idea

But are start-ups really only for young(er) people? This question has been posed by Dan Mumby, from Melbourne’s StartUp Foundation, which offers a different sort of program aimed at would-be entrepreneurs who may have all the trappings of middle age: family, job, mortgage…. which means they have different personal and financial risks to consider.

On the other hand, as at least one AngelCube participant said, if you are serious about founding a start-up, “your first job is to quit your job”.

Another, broader challenge facing the local start-up community is a lack of serious investor interest. According to one panel member, “In Australia, getting funding is a joke unless you are literally digging for gold”. This may change with the launch of VentureCrowd an early-stage equity funding platform. (But it looks like it will be a struggle – at the time of writing, none of the 20 or so deals publicly showing up on VentureCrowd’s website have attracted any funding.)

An alternative funding model, based on the sweat equity principle, is a venture bank, like New Enterprise Services that essentially matches ideas with expertise through a risk-sharing process.

I always recall the advice I was given by one serial entrepreneur when I asked him whether start-ups are for everyone (regardless of age). He replied: “Unless you can afford to invest at least $20,000 in your idea, and support yourself for at least 6 months while you develop it, then maybe it’s not for you.”

Pause : Edit : Delete – My new year’s resolution for content management

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Last week, Apple confirmed it had acquired SnappyCam, an iPhone photo app that is capable of taking 20 frames per second.

At first glance, this seems like a great improvement on the iPhone camera function – until you start to think about some of the implications:

1. Does this mean we’ll be creating (and uploading, sharing, archiving) 20 times more digital photos than we do already?

2. Does Apple intend to remove some other functionality from the iPhone to make way for this enhancement (on the basis that they have just about packed in everything they can in the current iPhone 5S, and processing power and memory capacity are relatively finite)?

3. When will we ever find time to look at all these superfluous/supernumerous photos that Apple will be encouraging us to take?

For myself, I realise that I actually take far fewer photos than I did 10 years ago. In fact, I have never owned a digital camera, and basically lost interest in photography when it became virtually impossible to obtain film for my Nikon APS SLR camera. Previously, I had been using one of the very first Canon IXUS APS models, and before that, for many years I owned a solid and reliable 35mm SLR camera – a Praktica that was made in the former East Germany.  And while I have been using an iPhone to take photos for several years, I do so much more rarely than with any dedicated camera I have owned, even though the smart phone camera technology is much easier and more immediate.

Perhaps the ease of use is part of the problem with digital photography – there’s so little effort required, and practically zero cost involved, so it’s natural that some people just snap away with very little thought or consideration. Besides, if we don’t like a particular photo, we can just delete it. But I wonder if we are being disciplined enough in consigning our mistakes to the Trash icon. Yes, we save, upload and share our better attempts (and maybe we will look at them more than a few times over the years), but do we cull the rest?

I reflected on this as I began the process of clearing out my attic prior to an imminent house move. I found a large box of photographs, all neatly arranged in albums (by chronology and geography – no option to “tag” who was in the shot), representing a major investment in time and money over the years – the cost of the cameras themselves, the effort in composing each and every shot, the cost (and anticipation) involved to get the prints back from the developing lab (plus the mix of sheer horror and pleasant surprise with the results – and those frequently patronising labels telling me the film was under/over exposed… And while I do recall looking at some of these photos from time to time, for much of the past 10 years they have sat ignored and untouched in that same box. I’ll be the first to admit that not every picture was vital, essential let alone unique (for example, how many other tourists have taken photos of the Great Wall of China?), and while many of them still evoked vivid memories, and most of them conveyed a sense of narrative, I realise that I had to impose a more stringent editorial policy on what was deemed worthy of keeping.

So, in the age of digital content, when it seems we can take an infinite number of photos, capture endless hours of video, stream non-stop music and download whole libraries, I am resolved to adopt the following approach to my own content management:

PAUSE

Before saving/archiving any new content, take stock and consider whether I am ever going to want to view/watch/listen/play/read it again.

EDIT

Having decided it is really worthy of taking up space on my hard drive, catalogue it appropriately for easy retrieval. In addition, undertake regular culling of the archive. (What I found to my taste 5 years ago might not appeal today…)

DELETE

Anything that does not survive the above processes must be erased (not just backed up to the cloud or to another hard drive).

As businesses and organizations, we would also do well to apply a similar pruning process to our own operations, especially when we are facing certain constraints on capacity and resources. For example, before embarking on a new project or launching a new product, shouldn’t we be asking ourselves: what projects/products can we discontinue? When setting annual budgets and targets, shouldn’t we be questioning our assumptions on “continuing operations” – just because “we’ve always done it this way”, doesn’t mean we should continue to do so. When we reflect on what is important, can we really be sure we aren’t carrying any excess baggage? Part of this process will be driven by the need to prioritise resources, part of it will be determined by understanding what our customers and stakeholders truly value. Ultimately, what remains will likely be determined by its purpose and its relevance.

If you haven’t looked at that photo on your smart phone in over a year, what is it still doing there?

Focus, Focus, Focus: from great idea to MVP in one (not so) easy lesson

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Last week’s Lean Startup Melbourne session explored what it takes to turn your great startup idea into a minimum viable product (MVP) before launching in the market. And as the entrepreneurs pitching their product ideas soon found out, it’s all about focus: on the problem you are solving, on the solution you are offering, and on connecting with your target customer.

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The evening’s event was once again hosted by Inspire9, and generously sponsored by BlueChilli, and the ever-entertaining and animated Kussowski Brothers, along with newcomers Startup Victoria and Xero.

As well as a panel comprising 4 of Melbourne’s leading startup experts, there were a couple of lightning talks from Sidekicker and Attendly on how to find a tech co-founder, and how to identify your customer respectively.

On to the evening’s brave pitchers:

First up was ClassWired, a platform for helping ESL classes go digital. Building on personal and professional experience, the product aims to make ESL lesson content more social and the student experience more personal. The challenge is that the ESL market is divided between a handful of major players (who are easy to identify, but could leverage their scale to deploy their own solutions), and a large pool of independent teachers (who are harder to reach). While a need may exist for more interactive ESL content, the panel felt the revenue model lacked clarity, and as yet there was no compelling reason for customer adoption. ClassWired could establish some differentiation through superior instructional design, or by building content development tools for use by tutors.

Next came a presentation by Reflow, which entertained and baffled in equal measure. The product is designed to handle high-volume messaging traffic, from sensory, mobile and web sources across logistics, apps and environmental monitoring. Although the pitch was deep on technical domain knowledge, and again drew heavily on personal and professional experience, the panel was unclear as to the precise problem being addressed, and the solution being offered. Talk of “virtual hair dryers” and “sensory message overload” only helped to confuse the audience. Maybe there are opportunities in outsourcing, or in data analytics – but with cheap and plentiful hosting capacity out there, Reflow needs to find some focus.

Changing tone and gears came StillReel, which streams digital art to an LCD monitor near you. With the idea of bringing limited-edition digital artworks to a wider audience, StillReel offers a monthly subscription model, and is exploring the consumer, commercial and corporate markets. Leaving aside the concept of scarcity value in digital art, the overall feedback suggested that the market needs to be clearly defined, and the offering made more explicit. Is it simply art? Is it entertainment? Is it pandering to the elite? From my perspective, Brian Eno has created a different model via 77 Million Paintings, and no doubt social media is already “liberating” digital art and video from the galleries and museums.

Curated shopping service, YourGrocer offered the best and most succinct presentation on the night, and told a great story about how the experience of “validation in Brunswick” has helped them build a viable business connecting local grocery outlets with time-poor customers. With several options for revenue streams, supplier partnerships and even a franchise model, YourGrocer could be spoilt for choice – but like everyone else, they need to focus (and decide whether they are a community service, a social enterprise or a commercial venture).

Finally, MeetLinkShare offers virtual data rooms – a service somewhat clumsily describing itself as “The Swiss Army Knife of Mobile Collaboration”. Having built a proven platform for secure team-based document and content sharing (including annotations, tags, custom fields, multimedia and version control etc.) the team is now contemplating two significant (but quite separate) market segments: 1) Virtual Data Rooms for SME’s and 2) Private Tutors. They are also seeking a new round of funding. Again, the panel’s recommendation was to find their customer focus, although with some smart and distinct branding, it’s possible that MeetLinkShare could service both markets.

Conclusion

Having a great idea is not enough – as I learned very early on in product development, there may be an opportunity in the market, but is there a market in the opportunity? A couple of things missing from most of these presentations were:

  • a clear definition of both the upstream and downstream markets;
  • an understanding of the customer value chain (and how to monetize it); and
  • the specific contribution that each product, service or solution brings to their chosen domain.

It was also apparent that each of the pitches have opportunities across indirect applications, or within adjacent markets – so part of the challenge is knowing how to gain sufficient traction in one segment that will provide momentum (and relevance) to move into the next growth phase.

Disclosure: The author is not affiliated with any of the businesses mentioned in this blog, although he does acknowledge the receipt of 2 free beers and a couple of slices of pizza from the organisers.

6 Melbourne Graduates of Boot Camp for Start-Ups

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Another Monday night in Melbourne’s silicon laneway, another Monday night meeting of Lean Start-Up Melbourne. This month’s event, generously supported by inspire9, Kussowski Brothers, BlueChilli and Alphastation, featured 6 start-ups who have recently completed the AngelCube accelerator programme.

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In no particular order, here are Angelcube’s Class of 2013:

A couple of the presenting founders, Tablo and Coinjar, have both been mentioned previously in this blog. I’m still very impressed with the simplicity of Tablo, a self-publishing platform for ebooks, and if they can figure out a B2B or aggregation model, I think they will have a great future.

As for Coinjar, the idea is right (a trading and merchant platform for Bitcoins) but there are still too many regulatory uncertainties and other risks associated with virtual currencies. And as the good people of Hong Kong know only too well, even established voucher schemes such as cake coupons backed by real money and physical goods can have a detrimental effect on local markets…

OutTrippin is a cross between 99Designs, TripAdvisor and Airbnb – selling curated travel itineraries and booking facilities for FITs (free and independent travellers). My sense is that while there is an opportunity in this space, the trick will be to successfully match trip planners and holidaymakers. Given the initial focus on the niche honeymoon market, it will be interesting to see how much traction OutTrippin can generate in the next 12-18 months (given the long-term planning logistics of most wedding events….).

etaskr is an insourcing solution for larger companies – combining elements of Elance, Freelancer, oDesk, Yammer and LinkedIn. It aims to match employee skills (not job function or department) with specific tasks, to enable organisations to better utilise available resources to meet fluctuating workflow volumes. Based on audience questions raised on the night, etaskr may need to look at back-end solutions that facilitate intra-company cost allocation and revenue recognition – good luck with that one!

I will be the first to admit that I can’t really get my head around c8apps – a mobile gaming platform for fantasy sports. I’m probably the wrong demographic for this type of offering, so I can’t really express a view – but the fact that c8apps claim to have some significant media deals in the pipeline and are engaging with several major sporting codes probably means they are doing something right; unfortunately, I just don’t get it myself.

Finally, OziRig is bringing custom-designed professional rigging equipment to the global  film and photography industry. Essentially a component sourcing and assembly model, OziRig aims to undercut the competition on price and service – but several members of the Lean Start-Up audience wondered about the risks of copyright and design infringement.

These 6 graduates of the boot camp for start-ups are now embarking on a round of investor pitches in the USA. I wish them well and every success.

Footnote: Thanks to the sponsors for some much appreciated beer and pizza on the night. And for a couple of alternative perspectives on the evening’s events, please check out my fellow bloggers: Chris Chinchilla and Innerloop.