Tag Archives: #startups

CSIRO – what price #innovation?

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Last week Startup Victoria invited scientists and researchers from CSIRO to come and talk about some of the projects they are currently working on. Around 400 people turned up to listen to fascinating presentations on flexible solar panels, 3-D titanium printing, flexible OLED lighting, robotics, wearable kinetic dynamos powering textile-based battery storage systems, high-speed instrumentation using FPGA, and micro-manufacturing processes.

logoFrom the outset, the emphasis of each presentation was on the practical application of these inventions. The goal of the evening was to encourage entrepreneurs and founders from the startup community to connect and engage with CSIRO’s project teams. There was an open invitation to co-operate with CSIRO, via R&D, prototyping, IP licensing and commercialisation initiatives.

The evening was generously sponsored by Cogent, PwC, Elance-oDesk and BlueChilli, hosted by inspire9, and ably compered by Leni Mayo; and in place of the usual Startup Alley was a team of experts offering free advice to startups, organised by Two Square Pegs.

As well as showcasing its latest developments in nano-technology, materials, fabrication, energy generation and workplace automation, CSIRO wanted to remind the audience that they have development and test facilities, which are available for commercial use at very economic rates to the right sort of project. It’s all part of a broader charm offensive, in part designed to raise awareness of the great innovation that has come out of CSIRO (e.g., WiFi…), in part to counter the challenges of reduced government funding ($111m in cuts over 4 years).

To me, CSIRO would appear to be pretty good value for money based on the $700m+ government contribution (which probably accounts for about 70% of current budget). CSIRO generates income from industry for research and other services, and earns royalties from patents and other IP it licenses. But its challenge is to demonstrate its true economic value, either as a contribution to GDP, or as a return on investment to the government (and to the wider community).

On the one hand, CSIRO is not an investment vehicle – yet on one level it operates as an early-stage VC fund, identifying which projects to “invest” in, and securing commercial returns via patents and other licensing streams. Nor is CSIRO a listed company, but without the benefit of its research and inventions, many companies traded on the ASX might not be as financially successful.

Ironically, CSIRO has been involved in research on the future of Australia’s $1.4tn superannuation assets – part of the effort to work out how to put these assets to better use, both to generate more sustainable income for Australian retirees, and to ensure the nation is investing in the right sort of infrastructure, innovation and international growth opportunities.

Traditionally, superannuation funds and other institutional investors have shied away from early-stage projects, especially home-grown startups, either because they are deemed too risky, or because the technology is not well understood. Yet some investors are willing to allocate part of their funds to Silicon Valley VC’s, only to see some of that money flow back into innovative Australian startups (a phenomenon I have previously described as an “expensive boomerang”.)

I’m no economist, but if there was some analysis done on the value of the “CSIRO Dividend”, it would both be able to secure current government funding, and attract long-term funding via the Future Fund or similar investment vehicle.

Post Script: Soon after this post was published, the Federal Government announced its Industry Innovation and Competitiveness Agenda, which among other things is seeking to generate a better return on investment on for innovation.

Next week: The Three Pillars Driving the Online Economy

 

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

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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”.

 

 

 

 

Stripe’s John Collison: “Better to be #disruptive than incumbent”

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In a Melbourne fireside chat with Paul Bassat (hosted by NAB and Startup Victoria) Stripe‘s co-founder and President, John Collison offered the insight that “it’s better to be disruptive than incumbent”.

Incumbency comes with all the baggage of legacy data, semi-redundant systems, siloed business operations, and customers with long memories.

Whereas, a nimble and agile startup like Stripe can cut out inefficient and lazy business processes – especially in areas like online and mobile payment systems. And in doing so, a disruptive service can make us think, “how did we ever manage before this was invented?”

Collison was careful, though, to point out that Stripe is working with the banks, not against them, in case anyone thought his company has designs on becoming a fully fledged financial institution. “We simply want to make the payments business more efficient.”

Stripe’s approach is to leverage engineering skills and solutions “to fix first world and middle class problems”. Precisely so – why would you want to undermine the system (payments and transfers between banks and their customers) that gives rise to your very existence?

Collison also reflected that never before has it been possible for such a small number of people to create such enormous value, very quickly – citing the fact that WhatsApp had a mere 55 employees when it was acquired by Facebook earlier this year for $19bn. (Stripe itself, founded in 2010, had about 100 employees when it was valued at $1.75bn around the same time.)

While WhatsApp does not yet generate revenue, its valuation as a disruptive IM platform is largely based on a notional value per user, and what that may represent in terms of data from customer analytics or premium pricing for add-on services.

But you don’t even need to be a startup business to disrupt an existing market, as the music industry continues to discover to its cost – you simply need to be part of the demographic that is used to “free” stuff, has no real concept or appreciation for IP, refuses to pay for anything on the internet, and develops brand loyalty based on likes, shares and number of views. Even Stripe would be out of business if everyone switched to peer-to-peer money transfers without wanting to pay commissions or transaction fees.

 

 

 

 

Let It Bleed: Expert Advice for Building Your Dream #Startup Team

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Building a perfect team while also building a business can make or break any startup venture. Thanks to Startup Victoria, a panel of startup experts came together at last week’s gathering of Lean Startup Melbourne (with generous support from BlueChilli, General Assembly, The X Gene and hosts inspire9) to share their wisdom and insights.

To kick-off, Didier Elzinga, founder and CEO of Culture Amp gave a lightning talk on the theme of why culture eats strategy for lunch (a phrase often attributed to Peter Drucker). In a startup environment, culture is a key asset (especially in the beginning when you might not have much else…) so it’s not something you can easily pivot – in fact, culture is the fulcrum around which the business creates momentum. Most of us understand that our brand is our promise, but we often overlook that our culture is how we deliver it:

“Culture is what you are willing to bleed for, so who are you willing to bleed with?”

Didier then joined fellow panelists Tim Webster, formerly of Uber and now with Kllective, and David Hobson from Elance-oDesk to discuss how to build a successful startup team:

First, the team needs to feel a sense of connectivity, regardless of their workplace logistics. That means having opportunities to get together in person, and not just on conference and video calls. It will also be easier to establish and maintain a positive working environment among remote teams if the organisational intent is clearly stated from the start, backed by relationship building and appropriate communication tools.

Second, hire people for their core skills (hacker, hustler, hipster…) but only if they are also willing to learn, grow and evolve. It’s also essential to hire people in market. Use behavioural interview techniques to help identify the right people – whatever the role. Candidates are less likely to tell you what they think you want to hear; and it’s easier to explore how candidates got from one job to another (not so much what roles they have held).

Third, although you can outsource your IT, accounting, legals, HR etc., don’t outsource your culture. Getting the right fit of people to match what your culture needs is paramount. Set out the issues that aren’t negotiable or that you won’t argue about – but keep realigning with your culture to mitigate the risk of monoculture.

Fourth, focus on the end game – but don’t overlook the need/opportunity to seek new revenue streams. This diversification can be challenging for founders, but if channelled appropriately can result in ‘creative dissent’.

Finally, brand and culture are what customers think about when they hear a company’s name. So, this may require a balance between individual goals, and team and organisational outcomes.