Why most new products fail

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.

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Leading Innovation: Harvard’s Prof Linda Hill

Smart leaders are no longer casting themselves as solo visionaries, but are rather rewriting the rules of innovation, so claims Harvard Business Professor Linda Hall.

Together with a few other CEO-types, I was privileged to spend a half day with her recently in Perth courtesy of the RAC. She writes on leadership of innovation, and her central case was the recently departed Director for Technology and Innovation in Obama’s White House, Tom Kalil. Tom had the difficult job of trying to build innovation throughout the various realms of government (and of course, he was then summarily dismissed by You Know Who who then put his son in law in charge of the same project.)

Tom had to build coalitions, get funding and convince the most conservative types that change was necessary. Innovation was not an option, it was an imperative. He did this by talking to people, being open, listening. It was all on the tight time frame, as his appointment was political. But huge amounts of progress was made, and he left with a very high reputation. He spoke of creating “policy entrepreneurs” and made it acceptable (and, indeed, the norm) to have innovation in government.

Knowing that most conversations in organisations happen horizontally, he knew he had to break down silos to get communication going up and down the organisational levels.

Leading innovation requires an organisation to do two things at once:

  1. One group looks at the present (exploit) and does the best they can with the current state
  2. Another group looks at what might be, the future state (explore)

The difficulty comes, argues Professor Hill, in integrating the future with the present.

Leadership is about dealing with change, whereas management is about dealing with complexity. Leading change is the not the same as leading innovation.

Value Creators can close a ‘performance gap‘ (between where we should be and where we are), and Game Changers can close the ‘opportunity gap‘ (the different between where we could be and where we are), the moon shots. Leaders need to be game changers.

Leadership is a multi-levelled skill:

  • manage yourself ~ make yourself an instrument, have intent and impact, make an emotional connection
  • manage your network ~ build relationships, with those that can help you reach your goals
  • manage your team ~ develop those you have control over

Leadership run amok is a state where high achievement, high affiliation and power balanced people work hard, have high maintenance, but can balance all the main drivers. Great leaders unleash the powers within their teams, from where innovation comes.

Uber disruption

share and share alike

Last week I got the chance to listen to Jerry Hausman, an economics professor from MIT, who spoke on ‘Startups – will their economic models take over?’ – a topic close to my heart.

The 70 year old econometrician started by pouring scorn on Twitter (‘I mean, don’t you have something better to do?’) which I thought was wonderfully ironic, given his audience contained the esteemed business leader and well known Twitter aficionado, Diane Smith-Gander, who was tweeting away live at the time. The point he was making was he was not necessarily a raving fan of these new businesses, despite being an avid user of Uber (‘They are 40% the price of taxis in Boston – in fact you could do away with public transport and give everyone Uber vouchers and it would be far cheaper for government’).

Uber’s valuation of US$62 billion and Airbnb’s of US$30bn defines them as ‘unicorns’ (valued over a billion) and have come from nowhere in less than 10 years. This was simply not possible when Jerry (or most of us) were growing up. ‘Stanford university was a backward country college, not even Ivy League, now people drop everything to get in there.’ Stanford has spawned Yahoo!, Google, Hewlett and Packard, Youtube, LinkedIN, Netflix, Paypal, Cisco and Sun among its alumni and is known as the ‘billionaire factory’.

The poster child of the sharing economy, Uber, has been incredibly disruptive forcing regulatory fights (and invariably, wins) in 68 countries and 450 cities. ‘Uber keeps dropping its prices and driver compensation, yet Uber wants to maximise revenue, so has to drive huge increases in sales.’ argues Hausman, ‘The drivers are earning less and less – in the US they only drive 13 hours week – and they also have to run their own cars paying for maintenance, petrol and depreciation.’ Jerry pondered if the Uber drivers were getting a good deal or not, and thought not.

In the US, cars are only used 4% of the time, and with regulation lagging the fast development of Uber, there is still upside for the company in terms of usage, and savings in costs for users. Imagine if the continued rise of Uber and their ilk meant that cars were used 25% of the time (a 6-fold increase). Many of us may get rid of our second car, or even give up owning a car altogether, as ownership made less and less economic sense. Imagine what would happen when self-driving cars become the norm, that you can hail easily through an app. What would that do to traffic congestion, car accidents, the environment, public funding of new roads, the health system, taxation, the insurance industry, car industry and car park revenues? This would disrupt many sectors, and drive fundamental changes (some for the better, some worse). But it does hinge on the economic model for Uber and their drivers working, and the public’s acceptance of the car sharing economy. Airbnb can do likewise for accommodation. I see many startups trying to be the ‘Uber for the x industry’. It’s the startup ‘model du jour’. We teach our children to be good sharers, might we as adults do likewise?

Jerry is not a fan of regulation, above the minimum, as he sees it crowding out efficiency and entrepreneurship. His favourite phrase was ‘I’m a fan of capitalism between consenting adults.’ Any large industry that has been over regulated over time is ripe for these new models to take hold. ‘How about the real estate industry’?, I asked him, ‘Is anyone, or could anyone uber that?’ Jerry replied, ‘It’s easier to uber your car ride, or your stay in a hotel, as we’ve all given lifts to people in our cars or had people over to stay. But the average person simply does not sell their property very often, so it’s not something they feel comfortable doing on their own. It’s a big ticket item, often their largest financial asset. That’s not to say it can’t happen, ever, but that will be a more difficult one to disrupt.’

I agree, and it’ll probably take some time before the real estate transaction is done directly between buyer and seller, but I also bet some people somewhere are working on this, and over time, even this transaction will be changed irrevocably. My advice to real estate agents, as it is for taxi drivers and hoteliers and anyone in a regulated industry, is to be aware of these creeping changes that can disrupt your entire industry, seemingly from nowhere. Don’t scoff at the technology, have an interested and serious look into it. Stay relevant. Keep your customers close. Don’t assume anything. If you wait until you’re waving placards on the steps of Parliament against some well funded and beautifully designed upstart to get interested in the sharing economy, you’ve already lost.

TEDxPerth – food for the brain

TEDx
For the fourth time, TED has come to town, or rather ‘TEDx’ – the independently organised TED event run by volunteers. As always, it was a sell out.

I made it down by tea time to hear the last 3 speakers, and the chat around the Concert Hall was of another terrific day, full of eclectic talks on all manner of subjects.

TED talks were established in 1984 and usually involve a single speaker. Talks can be no longer than 18 minutes and must be under the umbrella theme of ‘Ideas worth spreading’. What a great tag line – says it all.

The subject matter can be as broad as the presenter’s imagination, with topics ranging from mental health to astrophysics to experimental music to rock formations.

TED itself is a not-for-profit organisation and, now in its fourth decade, has become a global phenomenon. Beyond the official TED conferences, with ticket prices reaching $US6,000 or more, there are the independently run TEDx events, organised by volunteers and priced under $100, and thousands of talks shown for free on the TED.com website.

The first official TEDxPerth event ran at the Octagon Theatre in 2012, and was a sell out. Attendees received 12 talks on a variety of subjects from 12 Perth locals, including meals. It’s like food for the brain.

TEDxPerth has sold out every year since (tickets are usually gone inside a day), prompting the move to the larger Perth Concert Hall in 2014, which is where TEDxPerth was held again this year. The audience was a mix, but I’d say the vast majority were 20-somethings.

All TEDx presenters are carefully coached beforehand, with the talks being filmed live on stage. Some are then selected for main TED.com website. The first TEDxPerth talk to garner global recognition in this way was from former Business News 40under40 winner Hamish Jolly with his 2013 ‘Shark Suit deterrent wet suit’ presentation, which has attracted more than 2 million online views to date.

Some of the most popular TED talks of all time include Sir Ken Robertson’s 2006 talk, ‘Do schools kill creativity?’ with 35 million views, (spoiler alert, the answer is an unequivocal ‘yes’), and Simon Sinek’s 2009 presentation ‘How great leaders inspire action’ (24 million views and a must for anyone in a leadership position), which told organisations how to ‘find their why’.

My favourite talk I saw on Saturday was Callum Ormonde’s “How to unboil an egg” – see picture above – well, that was not the title, but it might as well have been. The  PhD student made his discovery in an expected way during a late night at a UWA lab. As far as I can understand it, his centrifugal (vortex fluid) device could unpack proteins so, for example,  a cooked egg would return to its previous liquous state. “Surely that’s impossible,” he mused, “you can no more uncook an egg as you can unring a bell.” But he did it, and he showed a video of the thing actually ‘uncooking’ before your eyes.

For this he won the Harvard ‘Ig Nobel Prize’, the light hearted (yet serious) award that “makes you smile then think”. His vortex device has a more noble goal of developing new cancer treatments, making nano-drugs deemed impossible to date using traditional methods. #GoCallum

Innovation, the new buzz word

Einstein thinking

Since new PM Malcolm Turnbull, in his first address to the nation, challenged Australians to embrace change and innovate, everyone seems to be talking about ‘innovation.’

But what does it mean, and why’s it so important?

Technically, ‘innovation’ means ‘new’, as in a new method, a new way of doing something, or a new invention. It’s synonymous with being clever, successful and on the cutting edge. Turnbull, a successful businessman in his own right, has experience in these things. He went from lawyer to investment banker to IT entrepreneur and made multi millions in the process.

Rabbiting on about innovation is not enough, but grasping the challenge, seeing the positive and actually doing some different things, is important. As Albert Einstein reminded us – “we cannot solve our problems with the same thinking we used when we created them.” He also famously said that the definition of ‘madness’ was trying the same thing over and over and expecting a different result.

We have to try new things. You get points for trying. Seriously, you do. Because you learn, and no one will forsake you if you give something new a try. The Finnish company Rovio Entertainment spent 6 years and laboured over 51 failed games before their smash app hit Angry Birds came out in late 2009. Since then, its been downloaded 3 billion times – 3 billion! – plus various spin offs such as multiple versions, merchandise, a TV series, a movie and several theme parks. From an app. From a multiple-failed game developer. In Finland. If that’s not inspiring, I don’t know what is.

Six years on, even Rovio cannot rest and is having to innovate further. They’ve recently laid off a third of their workforce, mirroring staff cuts at Zynga (who make the Facebook game Farmville) and King (Candy Crush). The more successful you get, the more imitators and competitors try to knock you off your pedestal. You knocked others off to get there. That’s how the world works.

Nice though Australia’s resources base is (many countries would kill for this, and, often, do start wars over this stuff), we are not a cheap place to do business, and need to occupy the technological heights if we are to remain competitive and continue living the life we’ve had so good for so long. 23 years of uninterrupted economic growth is under threat. It’s no time to rest on our laurels, or pretend that new things aren’t changing how the world works, fast. As the PM says, we need to embrace technological change “as our friend“.

Consider the following:

  • In latest Global innovation rankings, Australia is 17th, no change from our 2014 position. Sweden, Switzerland and the UK occupy the top 3. The US is 5th, Singapore is 7th … Germany and New Zealand sit above Australia
  • According to a Deloitte Report (2015) one third of Australian companies face imminent and substantial disruption by digital technology and new business models
  • Another report from 2014 suggests 25% of Australian GDP is under attack in next 10 years
  • San Francisco-based Uber has taken 9% of Aus taxi industry ($450m of $5bn) from a standing start inside 2 years (~ consider how well entrenched, regulated and supported this industry thought it was pre-2013)
  • In the Crossroads’ economic complexity map, Australia ranked 74th in world – we are just too reliant on too few traditional industries. Sweden is one of the most diverse.
  • In 2014, $47bn was invested in Australian resources while $1.5bn was invested in tech
  • In the last 5 years, Australian startups added 1.5m jobs. Meanwhile, large businesses are culling staff numbers. In the US 80% of new jobs (in a run lasting now 67 consecutive months of net job creation) have come from new/small business.

Consider further…

  • Singapore has allocated $14bn over next 5 years for investment in startups/tech
    – funded 15 incubators
    – matching funds 85% to 15%
  • Israeli government supports 22 incubators, invests ~ 85% of their budgets
    – has led to 5x private investment in follow on funding
  • Meanwhile, our WA government invested $6.9bn in royalties for regions, and $20m into tech startups
  • Other States in Australia have a Minister for Innovation, but not WA

We’ve got a way to go to catch up, but perhaps the message will get through. To the innovative belongs the future. It’s always been thus.

How I judge a pitch

Pitching aint easy

I’ve had to pitch in my time, and I’ve seen a few pitches (real and for competitions), and occasionally someone comes to pitch their startup business idea to me.

When judging the value of a pitch, here’s what I look for…

1. Solves an existing/large customer problem

The first thing I look for – is there a clear, sizeable customer ‘problem‘ this new idea is solving? So many pitches look like they are describing really cool ideas, but dig down a little deeper and there is no obvious problem being solved. I’ve fallen foul of this myself. Launching aussiehome.com, we had an idea we were solving the problem of property searching, but our paying customers were real estate agents. There was no problem of property searching for them, buyers came to them anyway (and had done so for years) through newspaper advertising. We may have been solving the problem of property seekers, but they weren’t our customer, they weren’t paying us any money. It was real estate agents who paid (through monthly subscriptions) for our service. Once we got to know the real estate agents’ problems, we launched services for them. That kept us a alive (just)… but it was a close run thing, and an important lesson learned.

* Please note – if you can’t answer #1, do not bother going any further! *

2. Scalable, protectable idea

OK, so you have identified a clear, sizeable problem you can solve for customers who are going to pay you to solve that problem for them. How easy it is going to be to protect that position? How scalable is it? Are you capable of taking the idea to scale and extracting the value? Will you be swamped with competitors and imitators who will take the market from you? When we did our startup we thought we had 3-6 months before someone would copy our map-based property search idea. It was actually much longer than that (18 months or so), but in fact the maps had nothing to do with our competitive advantage. It was the speed of client acquisition, keeping the clients on and keeping them happy that made our business protectable. By the time realestate.com.au and others came to town, we were 3 years old, had great client relationships and could protect ourselves. Before then, we were vulnerable. It took 5 years to really make any money from the business, such we could actually pay dividends to shareholders from the profit earned.

3. Rivals’ reactions factored in

Speaking of competitors, you must recognise that all markets are dynamic. As you enter the market with your services, your rivals (and potential ones, yet to launch or move into your market) have a vote too. They can react in various ways, moving on product, price and promotions. Have you thought through how their moves could affect your strategy? Have you innoculated your clients against the changes your competitors can make? What would you do if you were them? Think a few moves ahead. I meet people who seem to forget that markets can change. The current status quo is just a series of conversations making up a perpetual ebb and flow.

4. IP or secret somehow protectable

Allied to this last point, is there some legally protectable ‘secret sauce’ at the core that makes your idea a knock out? I presume you have the right trademark protection around your brand name, logo design (this easy to acquire, but also very important). Have you some patent on some important process or innovation that you are using? Is the patent secured, or on its way to being secured (“pending”)? Is it reasonable to suggest that what you have (as an edge) is giving you an unfair advantage over incumbents and any potential entrants?

5. A clear market opportunity

Without a clear market opportunity, with potential customers wanting to buy your products at a price you can make a living on, then you don’t have a business. What makes the opportunity an opportunity as of now? How long will that opportunity stay open for (what’s your ‘window of opportunity‘)? Remember, markets are dynamic. Do you have weeks, months or even years? How is it that you (and your team) are going to be the people to exploit this opportunity? You need clear answers here, and do not fall into the ‘China numbers’ trap. I hear so many people say “Oh, the market is huge, $5.6 billion in Asia-Pacific alone, and if we only got 1% of this market then our revenue would be $Xxx million”. Better tell me how you are going to get your first 10 paying customers on board, how you are going to service them, and then tell me how you are going to scale from this 10 to multiples of 10, and 100, and 1000.

6. A great team

Often the investors do not necessarily understand what you are doing, the opportunity you have and how you’re going to do it, but they do know people. They will want to know who your team members are, what they bring to the table, and why you and your team are going to be the winners in this particular case. In the end, this is what they are investing in. People. The sort of people who will do what it takes to bring in the plan, make the sale, stay up late, work long hours, tweak the pricing model, adjust the product from feedback, be patient and persistent.

7. Cost of production & client acquisition as compared to price

Once we are sure you have a market, then some pretty straightforward economics come into play. How much is it going to cost to make the widget, or provide the service, compared to what you are going to charge (and customers are willing to pay)? Average costs may come down with increased output, so how many paying clients do you need to ‘break even’ and make the profits you are hoping to reap? I’ve had potential investors triple my costs and half my projected revenues, and only then decide whether to invest, so make sure things are robust. There should be clear daylight between your running costs and the projected revenue, but also guard against the unrealistic “hockey stick” revenue projections so often seen in pitch decks. Reality is rarely a hockey stick, it’s usually a slow, hard climb up a very long shallow mountain.

How much does it cost to acquire a new paying client? Hopefully, this cost will fall over time as you gain scale and your reputation grows. Ultimately you will want your clients to do the selling for you (by referring your service to their contacts), but well before they do this, investors will want to know what assumptions you are making around promotional activities which lead to sales, and the cost per new client as distinct to what it costs to then provide the service. All this needs to be covered by revenue. I’ve seen SaaS (software as a service, or subscriptions) products launched where the cost to acquire a new client is well in excess of what that customer is paying per year. That’s a journey you don’t want to undertake.

8. Strong clear business model

Investors will want to look at your overall business model. My favourite for online business is subscriptions (SaaS) which includes a monthly or quarterly or annual payment, which renews automatically, and where the new client coming on just starts paying upfront and uses the service without much human interaction. No expensive sales force or marketing plans required, it’s a slow organic build, but once past the point of break even, every new client is almost pure profit. Believe me, it took us 5 years at aussiehome, but on the other side of that hill are beautiful green pastures, bubbling brooks and gamboling lambs. You can sit under the tree strumming your mandolin, the sun is shining and it’s heavenly. Well, maybe not quite, but you get the picture. I’m not saying advertising or etailing cannot work, they can, but subscriptions models are wonderful, and the ones I favour.

9. Disruptive to existing market

This is not a prerequisite, but often in the area of tech startups you are disturbing an existing market, and forcing it off in another direction. Uber, Netflix and AirBnB are classic examples, and have each become billion dollar businesses in a relatively short period of time. It’s the tech subscriptions model at scale which is wonderful, and in each of their cases, they did not have to invest in heavy capital things like cars, TV stations or hotels. They thought about an existing market in a different way and used the power of online connectiveness to create value. Each one started out in a niche market before scaling to national, regional and global size. How I would have loved to have heard their initial pitches. I wonder if they truly understood the massive new business they were creating. I’d like to think not. They have a problem they wanted to solve it, and went out there and explored.

10. Exit opportunity

Remember, investors are also thinking “how realistic is it that I am going to get my money back, how many times over, and when?” Investing in tech startups is about as risky as betting on a horse, but even with a horse race you have a realistic understanding how you might get some money back, and when. You presume it’s gone, but if it returns, it returns many times over, and it’ll be a few minutes time (or not at all). Angel investing in startups is often a patient activity. Besides a dividend at year 5, it was 6 years before our investors even got a sniff of an exit opportunity, and 10 years before the final trade sale. If you are taking money from investors (and there could be very good reasons NOT to do this at the very stage you’re at) then it’s a responsibility you should not undertake lightly. For them, it’s an investment opportunity, that’s all. They need to know what realistic avenues they have for crystallising the/any value in their ownership, and when – a trade sale, dividends, an IPO, a merger, management buy out… all of the above?

I hope this is a useful list. It adds up to 10, as it happens, which is a fluke. I have probably missed some important factors, or over played others. But to me, with 15 years experience on all sides of tech startup land, it’s what I deem to be the major factors I look for these days …

San Francisco, not SF, San Fran or Frisco

PRICELESS: While at Dropbox HQ I see a guy dropping off boxes

PRICELESS: While at Dropbox HQ I see a guy dropping off boxes

Don’t call San Francisco ‘San Fran’, ‘SF’ or ‘Frisco’ – the locals never refer to their city that way, you only look like a tourist. Which I was last week, on my second trip to the world’s tech capital, taking in SugarCON (SugarCRM’s annual conference) and a few other things along the way.

San Francisco (or “the city”) is a unique place, mixing quaint Victorian townhouse architecture with the pulsing modernity of an all encompassing tech boom and amazing views from its many road peaks and bayside vantage points. Jazz and piano bars adorn the central Union Square tourist traps, cable cars (only 3 lines remain) trundle noisily up and down passing roadside diners, which frequent every street corner. There’s a restaurant that puts garlic in everything (I mean everything, including ice cream), the school where Joe DiMaggio grew up (and the church where he posed for wedding pictures with Marilyn) and the country’s first topless bar (which is still open, and no, I did not go inside).

ha-houses

Walk south of Market Street (‘SOMA’) and you pass by the offices for Yahoo! (ironically placed right next door to the San Francisco Chronicle), Eventbrite, Klout, Weebly, Wikipedia, Zendesk, Yelp, FitBit and DropBox. The flood of tech people head to the city, chasing limitless streams of VC money that has put upward pressure on rents and house prices, making it an expensive place to live. As in Perth, people are being forced further and further afield, and the commutes are getting longer.

gg

The place is cool, in more senses than one. The sweeping mists and fogs roll in across the Golden Gate bridge, bringing plunging temperatures to the city, while surrounding areas stay warmer. The winds that whip through the up and down streets are chilling, but walking around you feel the place is cool (in the trendy sense) and you don’t get badly hassled by street panhandlers as you always are in New York. Yes, around Union Square there’s someone on every street corner asking for money, but they do it in such a charming, friendly manner. They wish you well, no matter if you drop a dollar in their tin or not. Some openly tell you they need it “for weed”, with a cheeky grin.

ha

Speaking of cannabis, I was there (coincidentally I hasten to add) in the Haight-Ashbury (hippy) district on the 19th April, which is the eve of ‘420‘ – the day synonymous with everything and everyone that worships marijuana. They had come in droves from far and wide, and were already camping out in Golden Gate park. All drab colours, ear piercings, distant faces, glazed smiles and large black dogs.

crabDown at Fisherman’s Wharf, you’ll taste the finest clam chowder on the planet, along with the sweetest crabs. As one nearby sign simply read (how I loved it’s simple ‘call to action’ message): EAT CRAB. The views out to Alcatraz straight ahead and the Golden Gate bridge to the left have to be some of the finest anywhere. The seagulls are also the largest I’ve ever seen, at least twice the size – I gave them a wide berth.

Overall, you feel this place can do anything. It screams innovation, while also tipping a nod to its own history. You understand why people beat a path to its door, and why innovators in cities across the US and the globe are seemingly envious of the attraction San Francisco has for the next Facebook, Instagram or Google. It’s well worth a visit.

Maps and me

Abbreviated version of a talk I gave to WA Spatial Excellence Awards 2014 last Thursday. You can view these slides on Slideshare.

I love maps. I reckon I first became aware of mapping when I was 10 years old, in a geography class, and we were using those wonderfully drawn British Ordnance Survey maps.

The geography teacher (wonderful old Mr Law) made the subject come alive. I was fascinated by all the detail on those OS maps, the churches (showing whether it was a spire or a tower), the post box, the gradient lines… even where there was nothing, there was detail.

Today sadly people are, as a rule, map illiterate. A recent US poll revealed that eight out of ten want to bomb Syria. Sadly, a similar number cannot locate Syria on a map.

Laughable if it were not so dangerous. I feel much the same every time there’s another report of a lorry wedged in some old alleyway because its driver used sat nav instead of common sense, or when I read that park rangers in Victoria keep being asked for the postcode of mountain peaks.

Who needs a boring old map and compass when you can just tap in the address for Mount Bogong and follow the screen on your smartphone?

As atlas sales plummet so those getting lost rises. Funny that?! According to Mountain Rescue England and Wales, the total number of call-outs in 2004 was 965. Last year the figure was 1,486 — an increase of 54 per cent.

But the real sadness in all this, quite apart from all those idiots with hypothermia and all those stranded juggernauts, is that millions of young people seem destined to grow up without appreciating the sheer beauty of a decent map. I had that joy, and it has held me in good stead.

I am certainly not denouncing all the joys and seismic progress we owe to digital mapping. I am a digital business guy.

It is telling that when the British car industry was designing the new State Bentley for the Queen’s Golden Jubilee in 2012, the designers asked the Palace what sort of sat-nav device Her Majesty would like installed in her state-of-the-art car.

Back came the reply: none at all. The Queen and Prince Philip, it turns out, prefer an Ordnance Survey map. And, as far as I am aware, the State Bentley has never got lost.

I alighted on these West Australian shores 17 years ago, and after doing an MBA here at UWA changed career course, going from being a school teacher to an internet entrepreneur.

Our idea was to put real estate on maps on the internet. After all, property is all about the 3 Ls as someone used to say… Location, Location, Location. Why couldn’t we see properties for sale or rent on maps on the internet? Well, no one had done it before, so we set out to find out how to do it.

Imagine our delight to find that Perth was a centre of GIS expertise – take an isolated mining town like Perth or Vancouver and there ye shall find GIS technology. We knocked on the door of Prof Julie Delaney here at UWA and asked her is what we wanted to create was possible.

Sure it was, she said and gave us a few GIS consultants to go see. 5 months later we launched aussiehome.com, as far as we know, it was the world’s first interactive map based property site.

We plotted the properties on the map, so people could see where they were, alongside the schools, parks, beaches, shops and transport systems. People buy a lifestyle when they buy a house. They buy into the local community. They want to see what’s around, what the neighbourhood is like. Our initial maps were very rinky dink, but they sort of worked. We deployed 4 types of mapping software, and spent $100ks to get them to work.

Our tag line was “putting your home on the map”, which we thought was quite clever. Although it seemed to confuse some, as did our name, as people used to walk in off the streets looking for home loans.

A few months after launching in 1999 a real estate agent rang us up and told us to hide the address of the properties on the site.

“Which bit about a map-based property web site are you not getting?”

Stony silence.

A few years later none of them really worried about showing the address; the era of open information had set in; giving away more info reduced the tyre kickers anyway. It meant real estate agents could spend time with those that wanted to buy; they’d seen everything on the market already.

And so we built ourselves a nice little online business all due to our distinctive mapping, 7 years before Google Maps came along and gave it away. The software, data sets and consulting fees were significant, but it was a worthy investment. It was our sizzle, and to us, we were proud to be pushing the envelope. And when Google Maps came out in Sept 2006, we leapt on them and made them sing.

We were the first to introduce mapping directions to every property, and as far as I know, the still only site to allow users to map their home open route according your starting route and where and when the open properties were located.

When apps came along, we transferred this to the app environment – an obvious move, as people had these devices with them as they went around looking for properties.

10 years went along and we sold the business to REIWA, and my team and I got to run reiwa.com. I stayed for 3 years before moving to my current role at Business News.

2 weeks ago I notice reiwa.com has relaunched with mapping at its core – even the new logo tips its hat to Google Maps. Their tag line “be WA streetsmart” is all about mapping.

At my current position at Business News, I am looking to how we can use mapping to show off our amazing array of data – how about mapping every business in our Book of Lists (4000 businesses and 14000 executives), mine sites, map stories where relevant, show where the public companies are and quantify the market cap of West Perth? All possible.

Where is mapping going into the future?

Presumably more accuracy, more handiness, more mapping will surround us – corrected sat nav, and I hope beautiful mapping will appeal. People of all nationalities intuitively understand what maps are. Mapping is, you could say, an international language; and apart from great music what else is there that can do that?

There will be business opportunities wherever mapping itself helps solve problems. For what I have discovered about business can be distilled into one sentence: if your customers have a problem that you can solve, then you will create value for them; if you create value then they will pay; and if they pay, you’re in business. (It’s amazing how many businesses forget this simple rule.)

I am sure most of you are doing some really cool stuff, and for that I salute you. Keep going, keep pushing the boundaries. We’re living in exciting times and the best ideas are still to be discovered.

Thank you for this opportunity to address your Gala Dinner; congratulations to all of you that work in the spatial industry, and well done to those walking home with awards tonight.

Atrophy would be a catastrophe

moveable objectAs you may know dear reader, I spend  bit of time among the startup tech community here in Perth, WA. Like the startups themselves, the scene is a very small part of the economy, but has potential.

Small businesses are the ones that create jobs. Often it’s the larger businesses that are cutting them. 80% of jobs created in the States post GFC are in the small business sector. The hot areas are bio tech and tech overall.

I attended a bio tech innovation breakfast this week, and the issues they described could have been spoken by any player in Perth’s startup scene:

  • lots of great ideas, tech and businesses here
  • too few ideas being funded, not enough venture capital
  • in absence of capital, some having to choose the public listing route
  • or the ideas leave Perth, or stay dormant

In trying to describe what is happening, I use the word ‘atrophy‘. Because that is the danger at the moment – with little or no funding, these ideas will either not get developed, or get developed elsewhere as others jump on the idea or the best ideas leave for funding opportunities elsewhere. Many of these ideas will not amount to much, but how would we know without getting enough of them going? A small business might create 4 or 5 or more new jobs almost immediately, for as little as a $50k to $150k investment. Depending how quickly the business gets sustainable, suppliers to that business will benefit, as will the clients using their new products and services. More employment, more growth, improved lifestyles, better products. A nice multiplier effect. The more such businesses get funded, the more successes we will have, and the more confidence and experience will develop among the community. A virtuous circle.

Atrophy describes the ‘partial of complete wasting away of a body‘.

We are in real danger of having the whole Perth tech startup scene suffer this fate. What a catastrophe that would be.

Picture credit: Mahabalipuram monument

 

Trends in Video + Social

video + social

Yesterday I attended  XMediaLab’s ‘Video + Social’ conference. There were 5 main speakers, with information ranging from what you can do with video, to how trad media is dying (if not already dead) to how mobile fuels the demand for video via social. And loads more besides. It’s all about great content, and the Milennials (born after 1980) are feeding the frenzy… oh lordy.

Duane Varan ~ Capitalising on a multi screen universe, @duanevaran

  • bio metrics can measure ppl’s interest during TV watching; during the US VP debate Repubs were all doing fine until the ‘moment’ (Biden said to Ryan “what, so you’re Jack Kennedy now?”) – the bubble popped, and the debate changed thereafter – yet the media did not pick up this; we can measure this in real time
  • cross platform devices makes for more complex world; in fact all ads create near same responses on any device, so the device does not make a difference (discovered 10 years ago in Perth)
  • day after recall is low ~ if TV only there is 60% recall, but with 2nd screen this plummets (less than 10%) ~ becos the 2nd screen becomes the 1st
  • = huge problem; the solution is build a “cognitive bridge” – have same ad banners/creative on TV and 2nd screen and then recall crosses over; have synchronised virtual banners
  • research shows ppl like to choose, choice enhances impact of ads; but not a forced choice. If you get the choice wrong, impact implodes
  • the longer the exposure, the higher the impact; it’s about time, not views
  • interactivity is good, it can triple purchasing intent; interactivity stimulates anticipation, but the ad that follows then gets v little attention (you don’t want to follow one of these ads)
  • but don’t over try at interaction; some demographics don’t like it, so scale it back; you can ruin the story, and in the end it’s the storytelling that works best
  • interactive gaming meant the actors looked unbelievable as they had no motivation; but if you keep the same ending/beginning, this can solve the issue
Samir Bangara ~ Cracking the Da Vinci code of Online video; @samirbangara
  • by 2017 it will take 5mn years to consume all the video that will traverse the internet in a month
  • 70% of all net traffic will be video; 1bn YT users, 100 hrs of video uploaded a minute. You cannot watch it all
  • G+ is not a social netwk (altho it’s the 2nd largest) it’s an integration of all G does
  • Gen X are on the way out, the Millennials (born after 1980) will dominate content creation and consumption
  • 1994 Banner ads had 78% CTR (click through rate), now it’s 0.2%
  • FB has now brought video into streaming news
  • Likes less important, sharing and engagement is the currency
  • FB side banners less important, integrated sponsorship and updates more useful
  • Sponsored content ~ communications, not selling; ppl shun ads, ppl want to consume content: self publishing, ongoing process
  • digital mkting = no story, just selling
  • spon’d content = evolving, growing fast, real time mkting,
  • 30% Milennials in US watch NO TV at all, but hours and hours of online video every day
  • Disney bought Maker Studios for almost $1bn ~ collaborate with 60k content providers, multi channel network, monetise most of YT traffic, 250m users/mth
  • eg Pewdiepie videos: Swedish game maker, 25mn subscribers – https://www.youtube.com/user/PewDiePie You may not like it, but it’s probably not for you, the traffic is immense (40mn views/video)
  • So ~ set 3 do’s and 2 don’ts and empower your 20-somethings; let them loose
  • don’t use YT as a catch up or video dump; use 1/10th of your TV ad budget to create 30 videos with engaging content
  • humour is overdone, go for emotion
  • destination is irrelevant for users, they just want the content
  • partner with creators, become a multi channel network; create huge amounts of findable content
  • on spon’d content, spend <30% talking about your own brand, >70% talking about something else
  • create ebooks (HubSpot do this best, and drive consulting off it), video, blogs
  • “if all research was right, then 9 out of 10 shows would not fail!”
  • “Crowdspeaking”: e.g. Thunderclap ~ look at it, Obama used it; allows your message to go out FROM ppl’s social networks, simultaneously. How powerful is that?! ~ https://www.thunderclap.it/en
  • Troye Sivan, Australian, 18 years old, 1.8mn susbcribers: https://www.youtube.com/watch?v=HL8Qfz0voqk 909k views in a week
Dan Hon ~ Big Advertising’s view of video, social and mobile: @hondanhon
  • everyone hates advertising!
  • FB comicon ad, used real ppl, humour, and FB show how groups/gregarious we are
  • P+G used emotion (far stronger) & story telling to tie their brand to Mums to the Olympics: https://www.youtube.com/watch?v=hyiLPj94BBQ
  • “do the hardwork to make it easy”
  • social “are” networks, social has splintered
  • mobile is the interface, mobile is a multiplier
  • this is what computers were meant to be, always on, everywhere, in your pocket: not just on every desk, for everyone. This is now a reality
Richard Cardran ~ How to turn content archives into gold
  • recontextualise archive content – thru cut downs, cut ups, supercuts and dubtitling …
  • cut downs ~ present the narrative but snack size
  • cut ups ~ all the ‘D’Ohs’ from Homer Simpson in one reel,
  • or Nick Bertke (from Perth!) 9 min views of Snow White: https://www.youtube.com/watch?v=qs1bG6BIYlo his channel >https://www.youtube.com/user/Fagottron
  • supercut ~ muti referential from many sources; e.g. “Too Doo” Pink Panther theme:
  • use The Internet Archive, it’s free, Rick Prelinger: https://archive.org/details/prelinger
  • dubtitling ~ adding new titles to existing footage, Bonnie Tyler song, Downfall clips
Rachel Dixon ~ Does social drive media or media drive social? @viocorp
  • most successful YT channels are earning $100ks maybe, but rest are earning v little
  • yet, they get bought by big media for multi-millions
  • video on demand (VOD) is working, e.g. tonton.com.my with 1m viewers a day; catch up TV in Malaysia
  • iphone is a studio in your pocket
  • algorithms and editorial work, but not without editorial; you can’t just be purely data driven
  • big dollars are in editorial and algorithms
  • native ads (sponsored content) is a big deal
  • read Luke O’Neill “The Year we broke the Internet”, Esquire; http://www.esquire.com/blogs/news/we-broke-the-internet
  • understand recommendation engines, it drives traffic
  • Read “Year Zero” novel by Rob Reid (2012) ~ was Bill Gates an alien to hold back progress in computers?! http://www.amazon.com/Year-Zero-Novel-Rob-Reid/dp/0345534514
  • Talk is cheap, content is expensive!

For more: http://www.xmedialab.com/videosocial/

or: https://twitter.com/search?q=%23xmedialab&src=tyah