A Tale of Two #FinTech Cities – Part 2

Posted on October 11, 2016 by Content in Context

It feels like the inter-city #FinTech and startup rivalry between Melbourne and Sydney is starting to get personal. The blow-up between Victorian Small Business Minister, Philip Dalidakis and Freelancer CEO, Matt Barrie over StartCon is perhaps the most strident example, but other discontent is bubbling underneath the service.

Let’s take a look at what’s actually been happening around #FinTech in Melbourne, and try to understand what might be the cause of this apparent disquiet:

First, the recently announced LaunchVic grants have been met with a mix of gratitude, bewilderment and some sour grapes, based on the people I have talked to in the start-up community. There was a sense of “jobs for the boys”, “usual suspects”, “who?”, and “yeah, good on ya”. Nothing new there, then, when public money is being handed out. High-profile beneficiaries of the initial A$6.5m of grants include FinTech Australia (as part of a major FinTech Conference to be held in Melbourne), FinTech Melbourne (which is now the largest group of its kind outside the US and UK), inspire9, Startup Victoria and Collective Campus.

Second, Stripe‘s CEO, John Collison was in town to celebrate their 2nd birthday in Melbourne. (This is the 3rd time in 2 years Collison has been in Australia – he must love what we are doing here? Or maybe it’s the Victorian government incentives that attracted Stripe to set up in Melbourne: see below.) This time around, there were some major announcements among the celebrations, including:

25% of Australians have paid for something online using Stripe
Stripe is launching “Connect” in Australia – making it easier for local businesses to roll out payment solutions in multiple markets overseas
Stripe continues to keep its APIs as simple and streamlined as possible – they even support Amazon’s Alexa voice recognition system

There was also a panel discussion with some of Stripe’s local clients, and a Q&A with Collison himself:

Andre Eikmeier from Vinomofo commented that payment solutions (like all technology) should be invisible, and just work in the background
Ben Styles from Xero explained that integration with Xero’s own APIs is critical, and that they have co-developed some products
Nicole Brolan from SEEK said that thanks to Stripe, her business is finally allowing clients to pay invoices on-line

Asked about innovation, Collison argued that mobile phone technology was the spur for services like Uber. However, he’s not especially engaged with Blockchain, as he does not see the use case. He thinks the next major innovation will be in medtech (telemetrics & wearables), and machine learning (speech and image recognition). As he said, “driverless cars are not just about the sensors but what the data is telling you. We know more about the health of your car than your own body.” He also had some words of advice to aspiring local entrepreneurs and startup founders:

Having a global or international perspective is determined by your markets, your competition, and access to specific talent pools.
It’s probably wrong to aspire to be like Atlassian – you need to understand WHY Atlassian has been successful, not WHAT it did or HOW it did it – which means getting back to core values and core purpose.

Third, as the Stripe celebrations started to kick off, across town FinTech Melbourne hosted an event starring Alex Scandurra, from Sydney’s Stone & Chalk FinTech hub. This was billed as a “pre-launch” for Stone & Chalk’s planned foray into Melbourne, and was part information session, part FinTech love fest, and part fan-boy hangout. Scandurra’s presentation was quick to point out that the “plan is not to bring Stone & Chalk to Melbourne, but to create Melbourne’s own Stone & Chalk”. (Spot the subtle difference?)

To its credit, Stone & Chalk is home to 300 people and 75 startups, has helped start 21 companies and create 150 jobs, and participants have collectively raised $100m in funding, although Stone & Chalk does not take equity. Scandurra also commented that FinTech is not an industry in itself – it is a horizontal that serves all industries.

There seems to be a lot of local clamouring for a FinTech hub in Melbourne. However, unlike the NSW government which has directly partnered with Stone & Chalk, I understand that the Victorian government is not prepared or able to “invest” in such a project – and certainly not before there is some private sector funding on the table.

Meanwhile, the founder of a rival payment system expressed his frustration that the Victorian government “sponsored” Stripe to come to Australia, but won’t offer similar support to local startups. Another FinTech CEO I spoke to was irked that Stone & Chalk would appear to be breaching its own mandate if it set up shop outside NSW.

In fact, could be argued that Stone & Chalk was established in Sydney to directly compete with Melbourne’s startup ecosystem. In large part, this is thanks to the huge success that the Victorian government continues to have in luring major tech companies and global startups to come to Melbourne. Names such as Zendesk, Eventbrite, Slack, Square, Stripe and now Cognizant.

If the debate over Stone & Chalk coming to Melbourne is about creating a local FinTech hub (whether or not the Victorian government tips in some money), we have to examine the need for such a hub. For example, is it simply a question of real estate, so that all the FinTech startups can be co-located in one place? If so, I would have thought that was easy to resolve: there’s a lot of empty office space, and Melbourne rents are cheaper than Sydney; also, a growing number of office landlords recognise the mutual benefits and knock-on effects of hosting co-working venues in their buildings.

We also have to consider if Melbourne’s existing FinTech startup eco-system/infrastructure is willing to come together to underpin such a hub. If so, what is the hub going to do? What is its purpose? What is the missing piece that the hub is designed to fill? And who/what/where is best placed to fill that need/gap?

Looking back, Melbourne has been the home of a number of FinTech businesses, that are now global public enterprises – IRESS, Computershare, Touchcorp, Novatti, for example – so there is obviously something in the local water (or coffee). For me, however, a key barrier for FinTech specifically, and startups more generally, is the inability to connect to institutional funds and investors (Clover being a notable exception?). Other obstacles include the stodgy procurement processes used by the public sector and many large corporations, which make it more difficult for startups to compete for work, and the reluctance by enterprise clients to try a local product or service unless it has been tested and proven elsewhere.

Finally, on a more positive note, it was very interesting to see that founders from Atlassian and Vinomofo are backing Spaceship, a new superannuation fund appealing to a younger, tech-savvy audience.

Next week: Bridging the Digital Divide

#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

#Startup Victoria’s Pitch Night – @ParentPaperwork takes the honours…

Posted on September 2, 2014 by Content in Context

The repositioning of Lean Startup Melbourne as Startup Victoria continues apace, with a formal Pitch Night hosted by Inspire9, sponsored by Bank of Melbourne, Bluechilli and The X Gene, and featuring an expert panel.

The 5 plucky pitchers were (in order of appearance):

Arts ‘n Smarts – An early childhood learning platform, offering a subscription service comprising monthly home deliveries of craft materials for use in structured play activities. The business has identified strong channel potential via play groups, partnerships with content providers and craft suppliers, and cross-over sales from the gift and baby/toddler markets. However, the panel felt that the subscription revenue model needed more analysis, and there was a risk that they were “pitching to the converted” – that informed parents would already be engaged in their children’s learning activities.
CreoLud – Custom 3-D printing for Dungeons & Dragons figurines which aims to fill the design gap between concept and production. Given the somewhat esoteric nature of fantasy board games, it was unsurprising that the panel were a little perplexed by this pitch. However, quoting some McKinsey research suggesting there is a $16.2bn global market for broader physical gaming and figures markets, this pitch could represent just the start of a growth trend in customisation and personalization, leveraging 3-D printing technology.
ParentPaperwork – Online student consent form service for schools that uses standard e-mail templates, a secure website and real-time reporting. By adopting a SaaS model, the business eliminates the need for software installation, app downloads, or social network registration processes. Although each State education system has different purchasing models for schools, the panel clearly recognised the potential to scale the product and take it overseas. However, there were concerns about privacy and confidentiality issues; and while there may be a crossover to the school enrolment process, another similar local startup, CareMonkey is already gaining traction and incorporates permission slips into its solution.
YourGrocer – This home delivery service for local suppliers has been featured in my blog before and continues to grow its customer base and weekly revenues at a steady rate. The combination of local shopping with added convenience is very appealing, but the panel quickly challenged the business to specify how it will grow out of its single-suburb service, currently based on a sole delivery van and driver. There appears to be some “creative tension” about how to expand the business beyond the borders of Brunswick – the choices being either to hire more full-time drivers, to build a franchise network, or to establish a marketplace of independent owner-drivers.
StageLabel – Describing itself as “a crowd-funded label bringing democracy to fashion…“, this online venture recognises the high failure rate for new designer labels, but is banking on its market disruption strategy for success. The business model is to test and validate new designs in pre-production, then gain funding to go into production. The business will also offer strategy sessions on pricing and production, and take a lower sales commission on successful projects when compared to the traditional retail mark-up. With over 80 designers already signed up, partnerships with fashion schools and launch events at Melbourne Spring Fashion Week, the business is hoping to outmanoeuvre competitor betabrand which only produces own-label designs. In their feedback, the panel concluded that the idea represented “high effort, low volumes”.

On the night, the audience voted ParentPaperwork as the winning pitch, earning them a chat with Square Peg Capital, mentoring from two panel members of their choice, and temporary co-working space at Queens Collective. The successful team graciously acknowledged that all 5 teams had collaborated to help each other hone their respective pitches, and no doubt there has been a huge amount of individual effort and collective goodwill in helping to bring these startups to a wider audience.

FOOTNOTE:

This meetup was just the latest in a growing number of pitch nights coming out of the local startup scene (in the wake of similar events such as the AngelCube graduation nights, Melbourne University’s Accelerator Program, and Oxygen Venture’s BIG Pitch). If you don’t happen to live in Melbourne, or can’t get out in the evening, you could always tune into “That Start Up Show”.

Health Warning: Entrepreneurship is not all Plain Sailing

Posted on June 10, 2014 by Content in Context

Last month’s gathering of Lean Startup Melbourne was devoted to the emotional and psychological downsides to being an entrepreneur. Whether building a startup or managing a successful corporate career, we are accustomed to reading about business success stories; but while we do learn something about corporate failures, we don’t hear much about the personal cost when things don’t go as planned.

But first, given the seriousness of this topic, if anyone reading this feels in need of help then there are some excellent information and support resources available listed here. There are also some useful reference articles such as this.

The evening’s panel Q&A discussion was preceded by a very moving account from Tom Howard, co-founder of Adioso on his own challenges in building a startup, about which he has written here. Tom’s frank and honest story about dealing with personal struggles while trying to manage investor expectations was neatly summed up in this observation: “Writing essays on our struggle was some of the best marketing.”

The panel members were drawn from a mix of startup, entrepreneurial and corporate backgrounds, and their stories revealed episodes of depression, near-bankruptcy and burn-out – tales possibly all too familiar to some experienced startup veterans in the audience, or merely spectres of what the future may hold for other budding entrepreneurs eager to learn from their peers. One of the panel, Andre Obradovic is now a public speaker on mental health issues, and has channeled his own experiences into advocacy and raising awareness.

If there was one recurring theme that ran through the discussion, it was the surprise at what happened to them – seemingly successful individuals who suddenly encountered severe setbacks (personal, financial, emotional, psychological), that came close to derailing their ability to function in their roles (as people, partners, parents or employers). The positive conclusion was that in recognising what was happening, and doing something about it, these individuals have managed to rebuild their lives and their careers, and are probably all the stronger and more resilient as a result.

Meanwhile, a number of hopeful startups were brave enough on the night to showcase their projects in the evening’s Startup Alley: Influx (outsourced customer support for online businesses), Cloakr (mobile device solution for coat check services), Jutsu (personal goal-setting app), Followus (social media site management for small business) and Brakeboard (braking systems for skateboards).

Finally, the evening’s event was sponsored by a clutch of generous supporters: Mondelēz International, InnovAction, Zendesk, Bluechilli, The X Gene and hosts Inspire9.

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Tag Archives: Inspire9

A Tale of Two #FinTech Cities – Part 2

#Startup Victoria’s Pitch Night – @ParentPaperwork takes the honours…

Health Warning: Entrepreneurship is not all Plain Sailing