digital

We need to educate the investors

/ Charlie Gunningham / 5 Comments

Startup-image

In the recent Business News corporate finance report for calendar year 2018, I added up over $9.1B worth of equity capital raisings for WA companies, across 504 deals ($18M+ per deal).

How much went to early stage private (Pty Ltd) tech companies?

$28M.

That’s less than 0.3% of total raisings.

So, this proves there IS money in Perth ($9B of it!), but NOT yet for early stage private tech companies. Well, there’s $28M a year, which is not nothing (and MORE than there was a few years ago), but it’s still a drop in the relative ocean.

A company I came across recently – one of the best startups I have seen – told me they went to 130 meetings, and pitched their business 130 times before raising a cent. They had 129 ‘no’s; before a single yes. There was no one I could introduce them too, they’d seen them all.

Where did they raise money from? Singapore. (Everyone in WA and Australia passed.)

Over the past 6 years we’ve seen the development of a pretty strong local ecosystem for startups – startup weekends, meetups, co working spaces, accelerators, incubators, pitch nights, media interest.. etc.

The education of startups & founders is happening and well entrenched. There’s no excuse now for your lonely tech entrepreneur not to know what they are doing – they could wander down to Perth Morning Startup, join the upcoming Startup Weekend or pitch at Perth Angels, Innovation Bay or plus-Eight tech accelerator. They should find their way, knowledge and people if they put their mind to it.

What we need now is the EDUCATION OF INVESTORS.

People with money to invest in businesses need to be taught HOW to do this in the early stage tech sector.

People who’ve made money will fall back on what has worked for them in the past. That’s perfectly natural. And if you are a Perth investor, then that probably means via ASX companies, mining investment & commercial property, whipped up by the brokers of West Perth.

We do not need much to swing the startups’ way to make a material difference.

If we could raise it from 0.3% to just 1% then we would be tripling the amount of investment. To $90M or so a year.

Imagine what that could do.

Not for ASX companies or rushing companies (too early) to a listing. For private, early stage, little or no revenue tech companies that could scale and become the next Canva.

99% can still go to ASX, mines and property. Just carve off 1% of early stage, scaleable businesses, that could “do a Canva” and grow to $1B valuation in 6 years.

By the way, Canva failed to raise money in WA too. They tried, for many years. In the end, a chance meeting with a visiting American VC in Perth set them off on their road, assisted by Lars Rasmussen (ex of Google Maps and then on Facebook). Canva moved to Sydney.

Yes, we need more startup success stories. You can point to a mining billionaire, and several property or ASX multi-millionaires. Business News is full of them. You bump into them walking down the Terrace.

But to get more success stories, we need more early stage investment. We need to ‘throw more darts at the dartboard‘ to see if we can hit some bulls eyes.

I don’t know which ones will succeed, but I know within the 300+ startups in Perth, there could be the next Canva, HealthEngine, Moodle, or whatever.

So, we need to EDUCATE the investors on HOW to invest in startups; how to value them; how to spot the potential wheat from the chaff; how to be patient; how to give advice; how to mentor.

The monied classes have a lot to give in this respect. They also offer more than money; they have hard won experience, contacts and savvy.

Perth Angels do their master classes – which is great! – but in a way they are preaching to the converted. Members of Angel groups.

We need to reach more of those that have money, know they probably need to invest in tech, but have no idea how to start; but are willing.

How do we reach them I wonder?

~~

[Sources: Business News, Techboard]

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Being your own (digital) worst enemy

/ Charlie Gunningham / 1 Comment

A few days ago I was trying to get me some car insurance, having bought a little run around Toyota for the eldest child, who is now learning to drive…

So, there I was looking up the usual car insurance companies, and comparison sites, and seeing what kind of a deal I could get for my precious first born. I began with a Google search – of course – and scoured some of the websites thereto thrown up in my direction.

A few minutes later I was trying to complete an online quotation form and seeing what the thing would cost me. The number seemed a bit high, so I tweaked a few variables, and was still getting an answer I didn’t much like.

So I rang the company – their call centre number was clearly displayed on the same page – and a very nice lady answered and helped with my query. It seems you don’t need to insure the driver, as they are an L-plater, and cannot get insured anyway. YOU, as chief driver, sitting in the passenger seat, would be the insured driver.

Ah-huh. Makes sense.

So I tweaked the online quotation form and – bingo – out popped a number that was far more to my liking. Simultaneously, the nice insurance lady told me her number, and it was $100 more than the same number I was staring at on the screen.

So, we had the same, exact insurance, from the same company, at the same time, and the online quote was significantly less than the one I was being quoted on over the phone.

How could that be? Had I done anything wrong online? Nope, it was all correctly done.

So I asked the lady if she could get me the same quotation, and I could buy from her. To which she prompted said (and this blew me away)…

“Sorry sir, I cannot help you with the online quotation. Is there anything else I can help you with?”

This response flummoxed me for a few seconds. What the..?

‘Hold the phone,’ I thought, ‘Is she saying that she cannot help me complete an order online for her own insurance, on her company’s own website, the same one with the phone number showing that I rang her on?’

Her silence was golden. My jaw dropped.

After a few seconds, I think I said “Oh… thank you very much, goodbye”, got off the line and duly completed my insurance online saving myself $100 or so.

This whole nonsensical episode got me thinking as to the logic of the rules that she was (presumably) being told to follow.

Did the company only provide phone assistance to those not able to do all the quotations online? As the online quotation involved less cost (no human being being paid to be on the end of a phone) is that why they offered it cheaper online? For the exact same product?!

But as I was already online and used their published phone number – ON THE SAME WEBPAGE! – to contact them in person, why were they not then allowed to even help me submit online?

They could have lost me as a customer at that very point.

I could have printed off the quotation, gone to a rival car insurance place and told them to match or even beat it.

Or I could have shoved their business through a fit of pique. (Happily, dear reader, I am not that small. Well I think not anyway.)

Surely, the call centre staff in the insurance company should be empowered to use their common sense, help close the deal, provide a service and take the customer’s money? No matter what mechanism that is done by? Online, phone, letter, walk in, carrier pigeon, steam engine, wax tablet..!

Why compete against yourself? Isn’t the market competitive enough?!

Here we are, 25 years or more into the internet age, and people are perfectly happy to buy online, and in many cases, happier. They are doing so in droves. Have you been to a shopping strip lately? Yeah, nor have I.

Online, customers don’t get hassled by pushy sales people, can shop when they like, compare what they are buying easily, get independent reviews, have their order placed immediately and get back to what they were doing 3 minutes earlier. No commuting, no parking, no rain, no 40 degree days, no fines.

If businesses are going to fight against online, and put up unnatural barriers for their customers, then they will struggle to maximise the benefits of their digital transformation. Indeed, they could be sowing the seeds of their own digital disruption. Butting heads against themselves.

Think like the customer. Think user interface, and customer experience. It’s not you you are trying to better, it’s the customer you should be focused on serving.

Always. And in every way.

The Coffee Meeting Pitch Mistake

/ Charlie Gunningham / 2 Comments

I was speaking with an American CEO a few years ago, just after he had been in Perth a few months.

“What’s the biggest difference between doing business in the States and here?” I asked him.

“You guys sure love your coffee meetings,” he remarked, “Everyone just rings me up or emails and says ‘Let’s catch up for coffee!’ ‘Can we do coffee?’ ‘We should do a coffee!’

“If I said ‘yes’ to all those requests, I’d be able to sky uphill!”

Yep, that’s how we roll in the great state of WA. The coffee is great, the weather is lovely, and there are plenty of good coffee shops around. A $4.50 mug of skinny flat white can last an hour, and in that time you can get a lot of business done.

The Coffee Pitch

When I assess a likely startup or innovative project that comes to me for some grant funding, I like to start with a coffee meeting.

For starters, it’s a neutral venue, so is less stressful for either party. Stress is not conducive to learning the best about a particular idea or person. You want both sides to relax, and be themselves.

I also have a very fine coffee shop just a 3 minute walk from my house, which overlooks a lake. Very nice, very convenient.

If things go well, and there is something worth considering, then the next meeting may very well be at the company’s own office. But for now, we’re in a coffee shop near where they work, or by the lake.

So we sit down, order our drinks, and start a conversation.

This is where I get to observe the entrepreneur(s) in question. How well can they articulate their idea? How well can they explain their solution, and give me a potted history of their own experience to date. I want to hear about their team, and what they have built, and the market they are attacking.

But most of all, I want to hear one thing coming through – I want to hear them tell me all about the big, global problem their potential customers have, and why those customers will pay them to solve it.

Often, this is not what I hear about.

Too often, I am feature bashed with whatever gizmo they have built. They have fallen into the simplest and most obvious trap there is – falling in love with their product.

Of course you have to build a product or service for your customers. This is the thing they are going to buy right? It has to be wonderful, disruptive, novel with superb UI.

Sure, but building the product is the easy bit.

Selling it is going to be the hardest thing. And you will only make a sale if you are solving a big, hairy problem for your potential customers.

So, the first thing I want to hear from the coffee meeting, after the initial small talk is, what huge problem have they uncovered, that no one else has, and explain why customers will pay to have it solved, and solved by them.

Forget the product for now. As you take it to market, new information will arise and they will have to make product changes anyway. If they are wedded to the product, they will be less likely to change it. So don’t tell me how great it is, and all its features. It will change. It will have to.

Tell me about the customer problem. Tell me about the customers. Who are they? Why do they have this problem? Why will they want you to solve it for them? Why will they choose your solution? How are you going to reach your customers? Why will it be YOU that solves this, and not someone else? How many of them are there?

If you are pitching, over coffee or on stage or in a boardroom, START with the problem.  First slide. First sentence.

Spend most time on this, and the rest of your pitch will flow naturally.

Because only if the potential investor or government grantor believes there is a real deep customer problem will they believe there is someone who might pay to have it solved. And only if customers pay will you have revenue, and only if you have revenue will you have a business.

Latest Internet Trends: Mary Meeker

/ Charlie Gunningham / Leave a comment

Every year since the mid 1990s, Mary Meeker has presented the latest internet trends in the US and globally.

You can view her here delivering the latest trends for 2018 (she speaks for 33 minutes). In typical style, she speed clicks through no less than 294 slides at a rate of 1 every 6 seconds. Don’t blink, as it’s one of the most amazing presentations you see.

So what? Well, not only is the content good, but as I have mentioned before, the ‘Trend is your Friend‘.

If you’re running a tech business, or any business really, you need to know which way the world is going. It’s far easier than swimming against the tide…

  1. Internet growth is slowing – not surprising for something that has over 50% market share globally; there are now 3.6B people connected.
  2. Digital media use still growing – up to 5.9 hours a day.
  3. Devices are better, cheaper and faster – we’re doing more with our devices, with coin exchanges and digital payments exploding.
  4. Voice is lifting off – the tech is now there for voice, with products growing.
  5. Data vs Privacy – companies are using data to provide us with better experiences, but we’re giving them enormous amounts of our data. “While it’s crucial to manage to manage for unintended consequences, it’s irresponsible to stop innovation and progress.”
  6. US tech companies investing heavily in R&D – a ton of money is being invested in tech companies. The top 5 R&D companies are tech companies, and fastest growing: Amazon, Google, Intel, Apple & Microsoft (with Facebook 11th.) Tech companies are now 25% of total market cap.
  7. E-commerce growing strongly – a lot of it is driven by Amazon. Integrated payment and customer support systems are exploding. Shopify even has an online exchange where you can buy and sell online shops, from within its own platform.
  8. Search continues to dominate – people find products via Google, but also Facebook and Instagram. Google is adding a commerce platform, while Amazon is evolving its ad platform.
  9. CTRs and CPMs are rising on platforms – cost is rising more than reach, but both are rising.
  10. Spotify converting most of its users to paid – driven by a great user experience.
  11. Mobile shopping growing fast – especially using video and gaming. Shopping = entertainment.
  12. Alibaba is now the leading retail environment in China – e-commerce sales in China is 20%, #1 in the world.
  13. US Household and student debts rising – while personal savings are low; relative prices are falling, people spending less proportion of their incomes on food and entertainment.
  14. Rise of the gig economy and sharing – leading to rises in flexible gig economy jobs, renting out spare home space on AirBnB.
  15. Transportation spending flat – cars are lasting longer, Uber driving prices down.
  16. More spending on health care – but there are signs that tech can bring prices down: “Let’s hope so.“
  17. While some jobs are displaced, others are created – service jobs have replace ag jobs, aircraft jobs have replaced locomotive jobs.
  18. US unemployment is low, consumer confidence high and rising – job openings at 17 year high.
  19. Most desired non monetary benefit is flexibility – tech and freelance work make this possible. 15M ‘on-demand jobs’ in the US, such as Uber, AirBnB and Etsy.
  20. Massive uptake in data makes data cheaper – also drives customer satisfaction and personalisation.
  21. AI emerging – “one of the most important things humanity is working on.”
  22. Cyber Security – a major sector.
  23. US vs China – China had 2 internet leaders 5 years ago (in Top 20); today China has 9. Rest are from US. Facebook and Google (US) dominate with ~2B users each, but Tencent and Alibaba (China) both have ~1B users each. AI growing in China, as are doctoral and first degree holders.
  24. Hunger for education – Coursera and Youtube learning courses/videos rising rapidly; lifelong learning & retraining.
  25. Change. Opportunity. Responsibility – “we’re living in an era of unprecedented change, and along with this come opportunity and responsibility.“

~~

About Mary Meeker

Former Wall Street analyst and now VC, Mary worked at Merrill Lynch and Morgan Stanley (where she was lead manager for the Netscape float and later on the Google IPO.) She published her first internet report in 1995. She is partner at Kleiner Perkins Caufield & Byers.

Main Image: screenshot of Mary Meeker presenting at Code 2018 Conference.

The Tyranny of Digital – being human in the digital age

/ Charlie Gunningham / Leave a comment

I attended a public lecture from Dr Paul Arthur last week, on the topic of ‘the Tyranny of Digital‘.

Dr Arthur, you may imagine from his lecture title, is not a fan of digital. Well, he kinda is, but he was there to warn us of the perils we are ‘sleep walking’ towards.

Talking Points

We are now living, as one writer puts it, a “liquid life” – which is disorientating our normal life practices.

Human knowledge is doubling every 14 months. In 1950s it was doubling every 50 years. In the future it could be doubling every day.

On an average day, humans generate trillion billion bytes of data. We’ve created a fertile environment of data for Google and others to trawl. For many years companies have been thinking ‘how can we collect as much data as possible, and work out later how to use it?’

We reach for our phone an average of 221 times a day; every 4.5 minutes. We’re device people now.

The Desktop PCs entered businesses and home in 1980s. They were not communication devices. This happened in 1990s, with the WWW and email.

Since 2010, computer power has been within reach of almost everyone. We’re constantly connected. We feel uncomfortable when devices are out of reach. 4B are now connected to the internet. 6B mobile phones are connected.

By 2025, most of world’s 8B population will be online. And this is already dwarfed by the 30B connected devices.

In April 2018, Facebook had 2.2B monthly active users (1/3rd world’s pop); Youtube & Whatsapp 1.5B each.

The recent #metoo movement has shown how a 2-way interactive group can create immense power over people who used to wield it.

The private has gone public. Every click or touch adds to it. We have a digital version of ourselves, separate from our true selves. ‘Everybody Lies’ – new book by Seth Stephens-Davidowitz – details this phenomenon.

It’s not all bad. Online areas can be safe, and allow people to express themselves and get help. We are instantly in touch with information that hitherto was hard to acquire.

Our internet experience is unique to us, tailored to what we have done before. This can entrap us in an internet of our own making, in a ‘filter bubble’.

“We’re sleepwalking towards a world run by algorithms, and we should be very afraid.” (‘Homo Deus’ by Harari).

Mass connectivity that promised greater understanding, now allows us to get whatever information we want, and can amplify our prejudices.

The Dark Web is ~500 times the size of surface web. Accessible to those with specific codes, software and permissions, invisible content from Google.

Can we create a private space, where we are not watched? Do we want to?

My Thoughts

OK, I get that in the information age, information has exploded. We create and consume lots of it. But aren’t we all in control of what we put online, when we go online, what we consume? Mostly.

Could we stop tomorrow, or at least temper what we post? I reckon I have done the latter, especially on Facebook.

My feeling listening to the good Doctor was that the audience (mostly middle aged) tut-tutted their way through all his facts and figures, almost bemoaning a ‘simpler age’ we have well and truly left behind.

Yet this is the same generation of people who now totally rely on the internet, and willingly use its power, while wailing against the idiosyncrasies of a younger generation who have known nothing else.

Are the kids and twenty somethings really all that bothered by their devices? They are digital natives and these things come naturally to them. Yes, they need protection and perspective, but the power they can now wield is immense, which can be used for good as well as evil.

Teenagers may reach for Snapchat and communicate that way, rather than talking, but teenagers have always been poor at expressing themselves. Middle aged fogies have been wailing against that one since the Roman times, and no doubt before.

Despite the recent ruckus over Cambridge Analytica and our data, I reckon most of this tech power is used for good.

Connecting. Checking in. Saying hi. Feeling a part of a group. Organising trips and parties. Who is seeing who when. Investigating places and products before purchase. Research and understanding. Producing and publishing. Laughing and entertaining. Expanding one’s brain. Communicating.

We can still remain human. Do human things. Be human. We’re just a bit more connected to everything, and all knowledge. That’s a good thing right?

Why most new products fail

/ Charlie Gunningham / Leave a comment

A better mousetrap does not necessarily sell. In fact, most of the time, it doesn’t.

If you build it, they will come.

Nonsense.

If they come, build it.

That’s pretty much the message I try to ram into new startups, imploring them to use the lean canvas, or some such method, to ‘just get out there’ and be nimble and responsive to customers’ needs, building up their business along the way.

These days, you can get a new startup going on credit card debt, build an MVP (minimum viable product), work with your first paying customers, get revenue coming in as soon as possible, laying the ground work for a possible scale up later on.

That way, you don’t risk piles of cash. Having less money also teaches you to work smart, fast and love your early clients to death. You’ll learn the fine art of on-boarding, and how small tweaks to your landing pages can make massive differences to your conversion rates and first revenues.

The fact is that most products fail.

Studies show that, depending on the category, 40% to 90% of new products don’t last. Every year in the US 30,000 new products are launched, but 70% to 90% of them are no longer sold after 12 months.

It’s also a myth that you have to be first to market. 47% of first movers don’t make it. Sometimes, even better products don’t cut through. Better, as in ones that have distinct advantages over incumbent offerings.

Why?

A classic Harvard Business Review paper (“Eager Sellers and Stony Buyers” by John Gourville) a dozen years ago laid out the reasons, yet we still see people ignoring the advice.

Gourville’s paper is a must read for anyone looking to develop and market a new product.

People are not always rational. I’m not talking about some crazy guy you see on a train or shuffling down the street. I mean all people, as a rule. Irrational.

For example: studies have shown that if you give people a 50% chance of winning $100 and the same risk of losing $100, most people won’t take the bet. In fact, you have to offer most folks a two to three times gain over a possible loss before they are swayed.

In other words, if they have 50% chance of winning $300 and 50% chance of losing $100 then more will go for it than not. But not if the 50:50 chance of winning was $100, or even $200.

The reason, says the theory, is that losses loom larger in our minds that wins. We may know what we have is not all that great, but the costs of switching means we are happier to stay with our current lot, than strike out and go for something potentially better. Unless the odds are stacked more heavily in its favour.

Put it another way, better the devil you know than the devil you don’t.

“Loss aversion”, says the paper, “leads people to value products they already possess more than those they don’t have.”

This bias is called the ‘endowment effect‘. And it is quite strong.

The implication is that if you are trying to get people to change their behaviour (use your bright shiny new object rather than the one they are used to), then your new product better have massive advantages, well communicated and understood, before your potential clients make the switch.

In 2007 and 2008, I was happy with my Blackberry. It had email, allowed me to surf the net (chunkily, but it kinda worked) and the keyboard was on the outside, much like the PC I was used to. It was way better than my old flip top Nokia phone.

Then came the iPhone. No keyboard. I heard rumours the batteries did not last. It took me til 1999 to make the move, but after I’d started using it, I never dreamt of going back to Blackberry. Nine years on, I still use iPhone.

Many millions did likewise. Blackberry subsided and never recovered. Apple went on to become the richest companies on the planet, and is inching its way to a trillion dollar valuation (it will be the first company to do so, if it gets there).

The fully electric car may seem like something fantastic (no more petrol pumps) but if you are not sure there will be charging stations, are you really going to switch to the Nissan Leaf?

The 9x Effect

Company executives tend to over emphasise the benefits of the new product (by a factor of 3) while the consumer tends to over emphasise the benefit of their existing product (also by a factor of 3).

This means that the new product actually needs to be better by a factor of NINE if it is to be viewed as equivalent to the incumbent.

Which is why you hear of innovators talk about the ’10x’ effect, which means their new product may have a chance.

I recently saw a new agtech service that would (at least) save the user 10 times the cost of the product itself. It should stand a chance. If they were going for 2 or 3 times uplift, little chance.

Easy Sells

The best new products are those that require little change for the consumers, while providing massive improvements on the existing product.

Maybe this is why hybrid cars have made a greater impact than fully electric ones. The consumer gets the benefit of better fuel consumption, but still has the knowledge that a petrol tank exists, which is something they’ve been used to all their lives. In time, perhaps the fully electric car will out, but for now, the hybrid serves a purpose.

Another implication is that you need patience. Patience is a virtue, as I tell my children at every occasion, much to their annoyance. Customer acceptance of a new way takes time. Google, Facebook & AirBnB all took several years to take hold.

It also means that you should strive for 10x improvement. Find believers, get them to be evangelical about the new product and spread the word.

But, whatever you do, do not believe that simply because your new mousetrap is better, it will sell. It will most likely fail.

The 3 drivers of digital marketing success, that most businesses don’t have

/ Charlie Gunningham / Leave a comment

With Australian companies feeling the pressure of digital disruption – a ‘damburst‘ if you will – new research has found three key areas that companies successful at digital marketing have in common.

The research indicates that a clear strategy, team-wide digital literacy, and using data to shape narratives inside a company correlated strongly with the digital success of Australia’s highest-achieving brands.

According to the research…

  • 85% of Australian companies believe their organisation has been disrupted by digital;
  • 51% are “somewhat confident” in their ability to execute their digital marketing strategy;
  • Only 29% of companies were “highly confident” in their ability to execute their digital marketing strategy.

The most confident companies — labelled “Digital Achievers” in the report — are on average 59% more likely to have seen 20%+ revenue growth in the past 12 months, and 6.5 times less likely to have seen a headcount decline over the last 12 months.

Although the “Achievers” said they had more people and time to execute their strategy, there was no correlation with company size — meaning the key difference was that resources and time were being used more effectively.

As far as individual skills, the marketers surveyed feel the most confident in social media and email marketing and gave themselves the lowest marks in marketing automation and SEO.

The independent research was commissioned by the Australian-owned digital strategy agency, ntegrity, in partnership with McCrindle Research, as part of their annual research into the Australian digital marketing ecosystem. Researchers surveyed 319 Australian marketing professionals between January and April 2018.

It’s incredible isn’t it that the things that are most important to the success of an Australian business are the very factors that businesses are weak at. The tsunami of disruption that is coming down the pipe at all businesses is only growing in pace and veracity, yet people seem to be looking in the wrong direction. Heads in the sand.

Once the wave hits, as it will, and is, often you hear complaints from business sectors about how ‘unfair’ the competition is, or totally unrelated things are blamed, such as immigrants or trade deals or the number of seagulls on the pitch walking clockwise.

I suppose this breeds an industry of digital marketing agencies. Certainly, all those I know in this industry – who know what they are doing – are doing very well, thank you.

It’s going to be be interesting to see how this all pans out.

Tech that did not exist 20 years ago, and tech that will dominate the next 20

/ Charlie Gunningham / 2 Comments

20+ years ago my wife and I moved to Perth, and, although the locals would still regard me as a b$#@ding Pom, we are well and truly settled. Perth’s been great to us. We love the place. We now have 2 Aussie kids, who are privileged to be able to grow up in paradise.

20 years has flown by, but looking back over the last two decades, it’s incredible to think what’s happened around the world and how all our lives have changed during that time.

For example, the following 25 tech businesses and services simply did not exist when we stepped off that plane in mid 1997 (the year each one started is shown):

  • 1997 – Netflix, Yahoo Mail
  • 1998 – Google, PayPal
  • 1999 – Alibaba, BlackBerry, Emojis
  • 2001- Xbox
  • 2002 – LinkedIn
  • 2003 – Android, Skype, Tesla, iTunes, WordPress
  • 2004 – Facebook
  • 2005 – Youtube
  • 2006 – Twitter, Spotify, BuzzFeed
  • 2007 – iPhone, Fitbit
  • 2008 – AirBnB
  • 2009 – Uber
  • 2010 – Instagram, iPad
  • 2011 – Snapchat

How many of these do we totally rely on every day? Imagine life without any of them. That was only 21 years ago.

The question now is: what emerging technologies will dominate the next decade or more?

Many analysts seem to think it will be the following…

  • Artificial Intelligence (AI) and Machine Learning
  • Internet of Things (Iot)
  • The Blockchain
  • 3D Printing
  • Mobile devices and mobile internet
  • Autonomous vehicles
  • Robotics
  • Virtual and Augmented Realities (VR/AR)
  • Wireless power
  • Nanotechnology
  • Voice User Interfaces, Virtual Private Assistants
  • 5G

And of course, loads of other things that we have not even heard of yet. None of us had heard of the top list 20 years ago.

Why Startups are easy, hard and mostly fail

/ Charlie Gunningham / 4 Comments

The romance of cycling into a co working space, armed with a skinny latte, tight jeans and hipster looks can draw many to the promise of giving a startup a go.

It could have been precipitated by being chucked out of that corporate job you always hated. Maybe you’ve struggled with an itch you just have to scratch. It might be the allure of untold riches that some startup founders accumulate.

Be forewarned, startups (and I mean a disruptive, scaleable tech startup here, not a Mum and Pop café business or some gardening franchise) are about the riskiest business you can set up.

Setting up your startup is the easy bit.

For some, raising money can be a breeze too. You either have some savings, can go a few months without earning anything or can convince some investors to pop some money in.

Spending that money, well, that’s easy too. We made this mistake when we set up our tech business many years ago. We raised money, quite quickly, and then we spent it. We had an office, some staff, a website… Ta Daaa, we had a startup!

Except we had no business. We had no clients. Well, none that would pay us anything. For a while at least. They were on free trials. And when they did pay, it was small bikkies compared to our monthly costs. Cash crises, sleepless nights and arguments ensued. We almost went under, a few times, but ultimately were saved by our investors, who propped us up (put more money in) while we shaved costs (me and my fellow cofounder took no salary for months) and worked out how to make it work. This was when the business really began.

Disrupting an industry, and the way it has been doing things, is hard. Change happens slowly.

But one thing is central, and never goes away, even when people forget this during the hype and excitement of a new business or disrupter.

You are only going to succeed in business if you find a big problem your customers will pay you to solve.

That’s it.

I have met so many (too many) startup founders who have forgotten this central truth – as I did, when I set out.

Because unless you solve a problem for your customers, they will not pay you, and if they won’t pay you, you haven’t got a business.

Too many founders like to tell me the wonderful features of their app or website, gushing about all the things it can do for its users. Too few tell me what problem they are solving, and how customers will pay them to solve it.

CB Insights have published a report into why startups fail, based on 101 post mortems.

What’s top of the list? No market need. 42% of failures cited this as their number 1 reason for failing.

In other words, the customers were telling them they weren’t going to pay for whatever service was being provided, in sufficient numbers.

The number 2 reason? Running out of cash. Which is the same reason as #1. You need to allocate funds wisely, and be sensible, but overall if you had enough customers willing to pay you to solve their problems, you’d find a way to stay in business.

#3 is “wrong team”. Businesses are run by humans after all, and if they can’t get on, or work together, or have complementary skills, then things can get tougher than otherwise. But you should be able to get rid of the bad people, and hire better ones.

#4 is “being outcompeted”. Someone else beat you to it. Their product is better made or sold or solved the customer problem better (there’s that customer problem again).

#5 was “pricing/costing issues”. Do you offer a free trial, for how long? What packages will then be on offer? How good is your onboarding, and conversion of free to paid? It’s a dark art, and also a science.

Most of these and other reasons are all versions of the same essential issue – not understanding the customer and their problem.

Interestingly, the venture capitalist Bill Gross gave a TED talk in 2015 on this subject. His research showed that the single biggest reason startups succeeded was timing.

Too late, and you’re dead. Too early is better than too late, but it can be hard. Getting the timing right, when the customers and industry are ripe for the disruption you bring, is gold.

Timing, says Gross, is more important than getting the right team together, or the brilliance of your idea, plan or business model, the execution of the strategy or adaptability and resilience.

Rebekah Campbell, Hey You and Posse founder,  writing last week in the Fin Review argued that her startup mistake was raising money in the first place. Don’t raise money at all, she said, but get out there nice and lean, and be close to your customers.

You can argue and debate all this until the cows come home, but in the end, it’s all about the customer. Don’t even think of setting up a startup until you have cracked the big, hairy problem your customers are going to pay you to solve for them.

The rest will then follow naturally.

The full top 20 list is below

While at the buffet table

/ Charlie Gunningham / 2 Comments

On holiday we gorge ourselves at the hotel buffet breakfast, something we do not partake of in our normal daily routine back home.

You can learn a lot about human nature, other people and perhaps yourself at the buffet table. Or rather tables, because arranged across 3 rooms are tables of food of all types and shapes and tastes. It is interesting to watch people’s behaviour when they are presented with an unlimited amount of food. More food than they can hope to consume. Food that would not other otherwise come within miles of one’s normal breakfast table. I rationalize this feast by arguing that this will last us til dinner. And often this is the case. After breakfast, we might strike out on a tour and eat nothing again til evening time. Yet, even with this defense, my 3 course breakkie is greed to the extreme. Someone cooking omelettes to my instruction? Great. Fruit juice, coffee, toast, cheese, salad, bacon, roast potatoes (for breakfast?), noodles and yoghurt. Wow, I’m stuffed.

Before all this though is the “wait to be seated” instruction. This is plainly written at the entrance, but in an otherwise open plan dining area, this is problematical as holiday weary families emerge from all parts and miss the sign. Although this morning you could not miss the meaning as there was a distinct queue, and I was in it. Despite this, a burly Russian waddled up with his family in tow and plonked his plastic credit card room “key” down in a table that just 30 seconds earlier had been allocated to another family, who were now at the juice counter. The Asian staff quietly informed him that the table was someone else’s and pointed him to our queue. He stalked off muttering something in a surly fashion. Later I saw him walking around looking for something. Rather than ask a kindly waitress, he took a marmalade pot from an empty table as his. He showed no compunction at this, it was the done thing. The same way he ignored the queue and tried to abscond a table for himself earlier. I do not blame the Russian necessarily, but one thing I have noticed on this island is the amount of Russian and Chinese tourists, something that simply had not existed last time I visited in the mid 1990s. Signs and menus in local restaurants and bars are all in English, Russian and Chinese (and nothing else – not even in Thai.) The opening of their countries and increasing wealth to a privileged emerging middle class has allowed more of them to become tourists. Every second family in our hotel is Russian it would appear. Nothing wrong with that, it’s just an observation. It might show changing times and increasing influence of these countries. I think I’ve heard but one American accent. The culture shock for them might be quite strong. The etiquette of queuing is not ingrained. Yet.

Back at the buffet table, I notice someone recognizable next to me. He’s taller than I imagined, looks fit and ripped, but the face is a give away. It’s Mason Crane, the newly tested English leggie who delivered the worst bowling analysis of any debutant in history just last week in Sydney. Despite this, analysts think he has something. Didn’t Warnie go for 1 fer loads in his first test?

So what do you do when a world class sportsman is standing next to you? Well, if you’re English like me, you smile and say nothing. After all, he’s on holiday poor lad, he’s only 20, has his girlfriend and parents and a mate with him. So I move on down the buffet and take my seat. Proof, should you need it dear reader, is in the photo (as taken by my dear wife) …

The buffet breakfast is convenient for the weary traveller, who can stoke up before a hard day battling the crowds at local tourist spots or around the pool. It’s also economic for the hotel, who don’t need to wait on tables besides ensuring the trays of food are replenished and helping people with some replacement cutlery or marmalade pot. Or, in one case, vegemite for a middle aged Aussie.

In this way, the holiday buffet contract is complete, and we can waddle off self satisfied to whatever the day has in store for us. Perhaps a game of squash can assuage the guilt of the 3-course breakkie? Maybe, just maybe.