The network(ing) effect

To paraphrase Metcalfe’s law, the value of a network is proportional to the number of connections, squared (n²). Which is why valuations on social media platforms like Facebook and networking services like LinkedIn are mainly calculated on the number of users and subscribers, based on the volume of transactions and a notional value of each member engagement that can be sold to advertisers and other third parties. But as a user, these networks are largely two-dimensional – you are either “connected” to someone (or not), or you “like” something (or not? – Facebook does not support “dislike”). Whereas, in the real world, our relationships and connections are more multi-faceted, and our preferences are more nuanced than binary.

I was recently reminded of the 1990’s dinner party game, Six Degrees of Kevin Bacon, and the notion that we are all connected to each other by no more than six degrees of separation. At a networking event last month, I was talking to a senior executive from a major bank, whom I had just met. Within 5 minutes, we realised we had a number of mutual connections. In fact, when I looked at LinkedIn, I discovered we had more than 20 “1st degree” relationships in common, most of them deep network connections I have maintained over many years. And although LinkedIn was helpful in confirming the “proximity” of our business and personal networks, it was only by meeting in person that these links would have been identified.

Similarly, at lunch last week, a business associate I’ve known for several years’ mentioned names of two people he had been working with this year, in completely separate contexts and in unrelated situations. Turns out that I knew both of them personally. Again, LinkedIn may have been able to “confirm” these relationships, but the “value” was in already being connected.

So, this may suggest that the true network value of Facebook and LinkedIn is overstated, because:

a) the number of potential network connections far outweighs the number of actual connections

b) the limitation of binary classification of relationships does not allow for the depth and complexity inherent in our networks of relationships

c) neither platform allows users to build contextual connections (apart from basic linear profile information).

In the end, the quality of relationships wins out over the number of connections. As Kevin Bacon so aptly put it:

If social media and networking platforms measure success only by the number of “likes” and “followers”, then they devalue the importance of building deeper connections and sustainable network relationships.

Next week: Token Issuance Programs – the new structured finance?

Update on the New #Conglomerates

My blog on the New Conglomerates has proven to be one of the most popular I have written. I’d been contemplating an update for a while, even before I heard this week’s announcement that Verizon is buying the bulk of Yahoo!. Talk about being prescient…. So, just over two years later, it feels very timely to return to the topic.

Image sourced from dc.wikia.com

Image sourced from dc.wikia.com

Of the so-called FANG tech stocks, when I was writing back in May 2014, Facebook had recently acquired WhatsApp and Oculus VR. However, apart from merging Beats Music into its own music service, Apple has not made any big name deals, but has made a number of strategic tech acquisitions. Meanwhile, Amazon has attempted to consolidate its investment in delivery company, Colis Privé, but got knocked back by the French competition regulators. Netflix finally launched in Australia in March 2015, and within 9 months had 2.7 million customers, a growth rate of 30% per month. Finally, Google has since renamed itself Alphabet, and purchased AI business Deep Mind.

Over the same period, Microsoft appears to have reinvigorated its strategy: back in May 2014, Microsoft had just completed its acquisition of Nokia. Since then, Microsoft has announced it is buying LinkedIn (following the latter’s purchase of Lynda.com in 2015), but has also shut down Yammer, which it had only bought in 2012. The acquisition of LinkedIn has been framed as a way to embed corporate, business and professional customers for its desktop and cloud-based productivity tools (and maybe give a boost to its hybrid tablet/laptop PCs). On the other hand, Microsoft has a terrible track record with content-based products and services, as evidenced by the Encarta fiasco, and the fact that Bing is an also-ran search engine. I think the jury is still out on what this transaction will really mean for LinkedIn’s paying customers.

So, what are the big tech themes, and where are the New Conglomerates competing with each other?

First, despite being the “next big thing”, VR/AR is still some way off being fully mainstream (although Pokémon GO may change that….). Apple and Google will continue to go head-to-head in this space.

Second, content streaming is not yet the new “rivers of gold” for publishing (and the sale of Yahoo! might confirm that there’s still gold in those advertising hills….). But music streaming (Apple, Spotify, Amazon and Google – plus niche services such as Bandcamp and Mixcloud) is gaining traction, and Amazon is building more content for SVOD (to compete with Netflix, Apple and Google). But quality public broadcasters such as BBC, ABC and NPR are making great strides into audio streaming (via native apps and platforms like TuneIn) and podcasting. One issue that remains is the fact that digital downloads and streaming still suffer from geo-blocking, and erratic pricing models.

Third, Amazon continues to build out its on-line retail empire, even launching private label groceries. Amazon will also put more of a squeeze on eBay, which does not offer fulfillment, distribution or logistics and is a less attractive platform for local used-goods sellers compared to say, Gumtree.

Fourth, Amazon is making a play for the Internet of Things (which, for this discussion, includes drones), but both Apple and Google, via their hardware devices, OS capabilities and cloud services, will doubtless give Amazon a run for its money. Also, watch for how Blockchain will impact this sector.

Finally, payments, AI, robotics, analytics and location-based services all continue to bubble along – driven by, for example, crypto-currencies, medtech, fintech, big data and sentiment-based predictive tools.

Next week: Another #pitch night in Melbourne…

 

 

 

 

The David and Goliath of #Startup #Pitching

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…

Screen Shot 2015-06-19 at 5.58.28 pmScreen Shot 2015-06-19 at 5.58.57 pmThe 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

 

How to survive as #Digital Adaptors

Marc Prensky coined the phrase “Digital Natives” back in 2001. At the time, it seemed like a reasonable way to explain the gap between those who have grown up “speaking” digital, and those who have had to learn to it as a second language, and in the specific context of Prensky’s thesis, those who have to teach digital. But is the label still meaningful or helpful? Has it been reduced to a marketing tag?

Source: Charlotta Wasteson (Creative Common - some rights reserved)

Source: Charlotta Wasteson (Creative Commons – some rights reserved)

Bridging the Digital Divide

Since its inception, the term “Digital Native” has since been used to describe a key characteristic of Gen Z (otherwise known as “Generation I” or even “I-Gen”), those born since the early 1990s and who have only ever known smart phones, tablets, social media, digital music, video streaming, online search, instant chat and photo sharing.

But a generation later, I think the tag is increasingly redundant – it’s less about learning the “language of digital”, and more about engaging with the digital evolution: those who are the best “Digital Adaptors” will find it easiest to cope and survive in a constantly disruptive and disrupted world.

The key to being Digitally Adaptive is learning how to make the best use of the available technology, apps and social trends so that they work for you, and not against you. For anyone who says they have missed the digital boat, I would simply refer them to people like my parents’ generation (active retirees in their 80’s) who have had to learn to use tools such as Skype and Facebook long after their retirement.

Digital Can Be Learned

I recently asked a client of mine, a Gen Y entrepreneur, what the term “Digital Native” meant to him: “Someone born in the 1990s, who has used digital technology from early childhood.”

He did not think the description applied to him, even though there had been computers at home when he was growing up, because he had not used computers in school from day one, and because he had not really learned how to code. (In fact, given the choice, he would have probably learned computer programming instead of a mandatory foreign language.)

This is someone who prefers to use Facebook Messaging instead of e-mail or even SMS, and who is never without a smart phone and/or laptop, and works in an industry where digital technology has caused considerable disruption to the old business models, while introducing many new opportunities. So, even though he is not a “Digital Native”, he has learned to adapt and can navigate his way through the landscape.

Another acquaintance (Gen X entrepreneur) was far more bullish on digital evolution: “The only human skills required in the future that cannot be digitized or computerised are creativity and critical thinking. We won’t need to communicate via written words and numbers because machine learning will adapt to our requirements, anticipate our needs and do the calculations for us.”

His business is now part of the shared economy (one of the many “dialects” that digital natives speak) so he, too has learned to adapt.

However, the more significant developments are among baby-boomers. These are experienced entrepreneurs, business people and professionals who have embraced digital as part of their continuing personal development, and then applied the learning to create new products, services and business models that harness the power of digital. OK, so they may not be fluent in Emoji, and might not know what the coolest trending #hashtags are, but they have seen the possibilities presented by digital, and are embedding them in the way they innovate, create and manage new opportunities.

The Natives Are Restless

There have been many recent studies about the impact of “digital” on our lives – whether it is the paradox of multitasking, our shortening attention spans, the need to be constantly plugged in (and the fear of missing out…) and the gulf between our virtual and real lives.

I think the common theme is that digital has not necessarily made us smarter or cleverer – even though we have access to infinite information and a smart phone can do in seconds what might have taken several hours on a mainframe computer. Instead, digital natives (and those who have become “naturalised”, to stretch Presnky’s metaphor) are increasingly impatient, don’t appreciate that some things still take time, and are yet to realise that instant gratification not only makes us lazy but dulls our appreciation for new experiences.

Moreover, without an understanding or curiosity for how things really work (the UI/UX is all you need to know…), digital has not really empowered us to think for ourselves, nor explore the depths of what the technology might be able to do for us. Instead, we are reduced to the shallows of “Likes”, “Follows”, “Shares” and “Retweets” in the hope/expectation that someone will reciprocate. For example, I recently heard of a new business that writes on-line dating profiles for their clients. While outsourcing such tasks may be efficient for time-poor digital citizens, it suggests we are only prepared to engage in the process at a superficial level, and in doing so we risk making ourselves more digitally dependant.

This digital monomania afflicts young and old alike – witness senior citizens getting hooked on social media – and can become self-limiting, because our interactions with a touch screen and our on-line/virtual relationships are seen as ends in themselves.

Digital Survival Kit

In my own case, I would not be classified as a digital native – we certainly didn’t have computers at my school (the most high-tech we got was a language lab with reel-to-reel tape decks, cathode ray oscilloscopes in the science class, and photo screen printing in the art room). And the only coding I learned was BASIC, with the aid of a Sinclair ZX81 home computer.

Home computing circa 1980

Home computing circa 1980

But at every stage of my career, I have had to keep up with (and in some cases, be an early adopter of) digital technologies, mostly through being self-taught and by learning from experience, as well as maintaining a natural curiosity whenever something new comes along. I would not describe myself as a technologist, but more like a tourist, who tries to learn a few words and phrases before they travel abroad.

In order to survive the digital deluge, here are a few things I do to keep abreast of current developments:

  1. Beta test new apps – developers are usually looking for beta testers, and it’s a great way to get access to stuff before anyone else, and often for free. I also attend product launches and workshops where developers and product managers can showcase what they are working on.
  2. Blogging etc. – apart from this weekly blog, and in addition to my social media accounts and social networking tools, I also maintain a Bandcamp account and SoundCloud page, where I upload my own compositions (many of which are created with iOS apps)
  3. Meet-ups – I attend numerous meet-ups for startups, technology, entrepreneurship and innovation, to network, to learn about new ideas and to watch pitches in action (e.g., events organised and promoted by Startup Victoria)
  4. On-line “How To” courses – YouTube and user forums are useful sources of instructional guides on how to use new apps, software and hardware (especially music, video and graphic design tools). For more in-depth content, I sometimes dip into on-line libraries from General Assembly and SitePoint
  5. Hackathons – In recent months I participated in a FinTech weekend hackathon, and took part in a MedTech startup competition. They took me out of my comfort zone, exposed me to new ideas, introduced me to some brilliant people and provided insights on alternative perspectives which I might not otherwise have considered
  6. Newsletters – There’s loads of stuff out there, but a few industry newsletters worth scanning on a regular basis are Beta.List, Gizmag and Mantra – but no doubt you will find similar publications that serve your needs. And using aggregation tools and curation apps can help you to manage the information flow
  7. Personal development – underpinning this digital immersion (and this may sound counter-intuitive!) I participate in alternative real-world education and training communities such as the Slow School of Business. This helps to keep me grounded (theory is great, but what practical things can we do?) and also provides some context for how the digital “learning” can be applied to collaboration, co-creation and community projects.

Don’t be a Digital Dropout

I’m not saying that all things digital are wonderful – and certainly, there is much that is unhealthy in the way digital impinges on our ability to think for ourselves – but it doesn’t pay to ignore it completely. By all means, ration your use of digital tools and devices, schedule time when you go totally off-line, and learn to switch from doing task-oriented activities to purely creative or abstract “play” alongside your digital engagement. Above all, find a way to embrace digital that works for you, establish a “digital persona” that you are comfortable with, get advice from people you trust, and perhaps like a tourist, learn to blend in….

Next week: Victorian Government’s plan for Innovation & Entrepreneurship