Tag Archives: #Content in Context

Making an Impact at Startup Victoria’s Pitch Night

Posted on by
1

A relatively new term that was coined around the time of the GFC, “impact investing” can be seen in the same light as CSR, TBL, ethical investing and conscious capitalism, whereby businesses combine purpose with profit, underpinned by strong and open corporate governance, with the specific goal of delivering social and environmental outcomes. Not to be confused, of course, with NFPs or social enterprises.

The latest pitch night hosted by Startup Victoria, with support from impact VC investor Giant Leap Fund, presented four startups that all aspire to bring about some form of social impact, in areas such as: transport for women; gender diversity in the workplace; mental health; and training for disability support workers. (Surprisingly, there were no pitches from startups with a direct environmental impact.)

In order of appearance, the startups were (as usual, links are in the titles):

Diverse City Careers

Offering a new approach to recruitment, DCC only work with employers who meet their standards on workplace policies for women. Currently seeking $1m in investment, they claim that 50% of their candidates get shortlisted, and 25% get hired, and already have 80 accredited employers on their books.

Using an endorsement model for accredited employers, as well as standard recruitment services, DCC is able to generate both annuity and transaction revenue. By ranking employers and holding them accountable for their own policies, is able to promote best practice and establish industry benchmarks. DCC is now moving into industry and media partnerships, and plans to build a dashboard for analytics.

The panel of judges were keen to understand how DCC will maintain its point of differentiation, as well as build on its definition of diversity (e.g., transgender, transsexual and intersex). And given that there are federal initiatives already in this space, does an accreditation from DCC have as much value or impact?

Enabler

According to data provided by the presenters, around 1.9m disabled people in Australia need support workers. With the introduction of the NDIS, the number of trained helpers needs to grow from 300k to 600k, and there are currently 3,500 disability service providers to help train, recruit and employ these support workers. A key challenge is the quality of available education, with providers only spending $1,265 per worker per annum on training and development.

Enabler is seeking a $250k seed investment to launch a new product, comprising core content and training modules distributed online and delivered via mobile devices. With a focus on personalised content, Enabler is already in talks with 11 service providers and engaging with existing paying customers (who represent as few as 70 to around 1400 end users).

The key challenge I found with this pitch was the lack of explanation on why current training content and materials are proving to be so inadequate (even allowing for differences in individual learning styles). For example, what makes Enabler’s service so much better, and how will it achieve sustainable personalization in a product that needs to be both scalable and economically viable?

Shebah

This is a ride share service for women drivers and passengers (and their kids and pets), that grew out of economic and social necessity. It started life as a project on Go Fund Me, has since pivoted to Shebah, launched a mobile app, and is now available in Melbourne, Geelong, Brisbane, Gold Coast, Sydney and Sunshine Coast (with Perth, Darwin and Adelaide to follow).

Adoption among the disability community has been a notable side effect (e.g., enabling customers to get to medical appointments), and each driver gets a free consultation with a CPA about setting up an ABN etc.

Experiencing 40% growth in volume (and 100 new accredited drivers per week), the founder is asking for $500k funding to hire an in-house engineer/developer to build additional app functionality (such as pre-booking), scaling the business and growing to a minimum 1,000 rides per day. The app can already take multiple currencies, and there has been interest from Mexico, South Africa and Brazil.

With the various issues facing Uber and the gig-economy itself, the judges were naturally keen to understand how Shebah regards its own drivers (i.e., employees or freelances). For registration, tax and accounting purposes, Shebah drivers are treated as independent contract workers (sole traders), with no required minimum hours. (The founder mentioned potential plans to offer drivers share options in the business, which could prove an interesting business model.)

Despite some reasonably high-profile media coverage, Shebah has not undertaken any advertising campaigns, relying instead on general publicity and friendly ambassadors.

Asked about customer experience measures, the founder mentioned average waiting time, and driver retention as key indicators (apparently, the only 4% of Uber drivers last more than 12 months). Shebah also acknowledged that their fares are cheaper than taxis (but more expensive than Uber) with an average fare of $25, representing a margin of less than 10%

Limbr

With a tag line of “a place to be real”, Limbr is an app-based platform that is designed to take some of the stigma out of mental illness, and provide easier access to mental health services.

Despite the staggering mental health statistics, two-thirds of sufferers never seek treatment. To break down some of the barriers and overcome access issues, Limbr offers a three-tier service: a free “social network”, a personal dashboard tool, and online support from qualified mental health professionals (“listeners, coaches, therapists”). The revenue model is a combination of subscription fees and commission from provider sales, plus evidence-based public funding.

The founders recognize it’s a highly fragmented market, so therapists are interested in the referral aspect of this new channel to market. (One challenge is that the current $10 bulk bill rebate to see a therapist is not available for e-health providers.)

The app plans to use popularity to drive traction, and while the message that it’s “OK to share” is designed to be positive and encourage a healthier approach to mental illness, there was some concern that in some ways, the internet has normalised the issue. The presentation mentioned that there are 20m posts about depression on Instagram. So, isn’t social media, along with increased isolation and anti-social online behaviour part of the problem?

Asked by the judges about privacy, authentication and trust, Limbr plans to go to market via therapist advocates, and will focus on moderation and data analytics.

Based on the night’s presentation, the judges awarded Shebah first prize, and it certainly was the most engaging and rounded pitch of the four.

Next week: More on Purpose

 

Expert vs Generalist

Posted on by
2

My recent blog on the importance of experts prompted one reader to comment that he preferred the term “specialist” (in a non-medical sense) to “expert”. This got me thinking about the notion of “experts” as distinct from “generalists”, and whether we need to re-evaluate our assessment of skill, competence and aptitude when assessing someone’s suitability for a task, project or role. (And these days, is “generalist” itself something of a pejorative term?)

A few days later, I was having coffee with a strategic consultant who is known as a future thinker. He describes himself as an “extreme generalist” (with no hint of irony), because he has wide-ranging and multiple interests, some of which, of course, he has deep domain knowledge and experience. But because his work and his curiosity take him into different realms, he maintains a broad perspective which also allows for the cross-pollination of ideas and concepts. (I think we all recognize the value of analogy when problem solving – taking the learning from one discipline and applying it to a new scenario.)

Separately, but in a similar vein, I was discussing career options with a senior banking executive, who did not want to be pigeon-holed as a banker, because her core skills and professional experience would lend themselves to many industries, not just financial services. So in her case, this expertise would best be applied in a particular type of role, not in a specific domain, or a specialist capability.

And during an earlier discussion on leadership with yet another futurist, I found myself debating the notion of situational styles, as opposed to structural models – both of which require skill and expertise for CEOs and managers to be successful. But broad experience will be just as important as formal methodologies, and general business knowledge just as valuable as technical specialisation. (On reflection, as with so many constructs, it’s not a case of either/or – more a question of adaptation and dynamics.)

As a result of this ongoing dialogue, I was challenged to develop what I might describe as a 3-D model, comprising the following axes:

“Generalist”/”Specialist”: In product management terms, for example, the generalist understands the full end-to-end customer life cycle and the production process. Whereas, a specialist might know their particular part of the process extremely well, but has little to no awareness or understanding of what might come before or after. (Think of those frustrating customer calls to utility, telco and insurance companies – in fact, any business with highly siloed operations – where you get passed from one “specialist” to another, often revealing contradictory information along the way.) At the extremes, this dimension might be described as the difference between knowing a subject “a mile wide and an inch deep”, and knowing it “a mile deep and an inch wide”.

“Novice”/”Veteran”: This is probably obvious, but I don’t necessarily mean seniority, age or tenure in a specific role. When it comes to new technology, for example, someone who is new to the role, but who has just been trained on the latest software and equipment, may have better technical ability than someone who has been doing the same role for several years (and thus, has more knowledge and experience), but has not refreshed their skills. Although I concede that in many situations the incumbent veteran may have better developed problem-solving, trouble-shooting and decision-making capabilities. This axis is also really important to consider when transitioning older employees to new roles within the same organisation or team – if they were younger, they would probably be given more time to adjust, adapt and grow into the role. Whereas, an older employee may simply be expected to “pick it up” much more quickly, with less leeway for learning on the job, because of assumed expertise.

“Broad”/Narrow”: Here I am thinking about aptitude, rather than the degree of specialisation. Drawing on the idea of using analogies, someone with wide experience and a broad perspective (sees the big picture, displays both critical and design thinking) will have quite different qualities to someone with a very narrow focus (especially within a very specific domain or area of practice). Based on the particular context, do you need an all-rounder, or a placekicker? This axis also relates to the age-old issue of organisations only wanting to hire square pegs for square holes – it might make sense in the short-term, but risks stagnation and lack of fresh thinking over the long-term.

Assessed along these three dimensions, we might see that an “expert” could be qualified according to how highly they rate based on their overall “depth”, measured by criteria such as experience, knowledge and reputation, as well as formal qualifications.

Next week: Making an Impact at Startup Victoria’s Pitch Night

 

Token Issuance Programs – the new structured finance?

Posted on by
Reply

We’ve known for some time now that Blockchain and Bitcoin were designed to disrupt the financial services sector. But I suspect that not even the earliest proponents of distributed ledger technology nor the most avid supporters of crypto-currencies anticipated how far and how quickly that disruption would spread. In addition to P2P payments and lending, alternative stock exchanges, and self-executing smart contracts, recent events suggest that digital assets issued on Blockchain infrastructure are themselves the new source of venture capital, that they may even come to be seen as the new form of structured finance (albeit with less complexity and more transparency).

Image: Maria’s Cakes founder issues her own record…. (Source: Maria Lee website)

In the past few weeks, we have seen Token Issuance Programs (sometimes referred to as ICOs – “initial coin offerings” – or token sales) raise extraordinary amounts of capital – $53m for MobileGo, $150m for Bancor. Even allowing for the fact that VC funding rounds have been increasing in recent years, these results are quite staggering – given that the sellers of these tokens have not had to relinquish any equity, or incur any debt either. Because tokens do not represent shares in a company or units in a corporate bond. Nor are they securities in the usual sense, as they do not create any interest or obligation other than an entitlement to be granted a given number of tokens at a predetermined price.

Of course, these tokens may carry the right to use proprietary software or access marketplace platforms, and even acquire future products. In this way, they also resemble crowdfunding projects. But because of the potential returns generated by the increased value tokens may accrue (a combination of network effects, scarcity and market appreciation), there is buyer demand for new tokens backed by the right project.

These token sale results have also benefited from the increased price of Bitcoin, Ethereum and other leading digital currencies – or perhaps the other way round? – as investors get more comfortable with this new asset class. That’s not to say there isn’t talk of a market correction, or even a bubble. But despite the apparent risks, and the occasional exchange outage, new token issuance and crypto-currency trading are generating growing interest – not just from currency speculators, but also asset managers and traditional investors. No doubt helped by developments in markets like Japan, where crypto-currencies are now a legally recognized form of payment.

As for structured finance, some projects are looking to issue tokens that are linked to or represent an underlying asset, such as a pool of loans. In the case of securitization, for example, Blockchain technology can not only help to structure the token issuance (via smart contracts, for example), it can also provide better transparency on the underlying loan performance (using real-time repayment data from bank feeds, for example).

Of course, there have been some speed bumps along the way for Blockchain-derived assets, most notably the infamous DAO “hack” of last year.  Plus, the price of Bitcoin continues to display considerable volatility, which makes it harder for some investors to embrace. And if anyone is wondering why this week’s blog features an image of a Hong Kong cake shop owner, it relates to the Asian Currency Crisis of 1997-98. Maria’s Bakery was a famous chain of shops that sold coupons at a discount, that could be redeemed for cakes at any time in the future. It was a practice that spread to other retail sectors. But during the market jitters caused by failing currencies and a tightening of credit, there was a run on Maria’s coupons, which coincided with a 2% fall on the Hong Kong stock exchange. This may have been coincidental, but it also demonstrates that financial markets can be sidelined by the most unexpected events. Like, who would have made the connection between over-extended home owners in parts of the USA with the worst global financial crisis for 80 years…?

NOTE: The comments above are made in a purely personal capacity, and do not purport to represent the views of Brave New Coin or any other organisations I work with. These comments are intended as opinion only and should not construed be as financial advice.

Next week: Expert vs Generalist

The network(ing) effect

Posted on by
2

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?