Paul Wallbank | Paul Wallbank - Communications Professional

India goes digital

The Indian government looks to creating a digital startup culture

“If Indians can work in Google. Why can’t Google be made in India?” Indian Prime Minister Narendra Modi asked last week when he launched the Digital India program.

Digital India is an ambitious project based on three areas of vision; getting infrastructure to all billion Indians, digitally empowering those citizens and improving government through the use of technology.

Certainly the project has caught the imagination of the business community with Indian tech companies pledging $US 72 billion to the initiative with the promise of over a million jobs being created.

In the past, India has been notable for its slow, bureaucratic business ways but Prime Minister Modi is promising to change all of that under the Digital India initiative.

“The world is changing, quicker than ever before and we cannot remain oblivious to that. If we don’t innovate, if we don’t come up with cutting edge products there will be stagnation”

While India’s government is talking the talk, actually changing the nation’s business community is going to be a huge but not impossible task although the Digital India project has had a difficult history.

That task though is necessary as South Asia has for decades lagged the growth of the countries to their East however now countries like India, Pakistan and Bangladesh have the benefit of younger workforces while powerhouses such as China, Japan and South Korea age.

Should we see an Indian Google in the near future it won’t look like today’s Silicon Valley giants given the cultural differences between America’s Bay Area and India’s business communities.

However if we do see an ‘Indian Google’ it will be huge given the size of the nation’s domestic market. Like China’s Alibaba, a successful local enterprise can become a global player just based on its user numbers.

There’s many barriers to an Indian Google happening but those who scoff at the idea should remember how fifty years ago the thought of Japan being a high tech manufacturer were laughed at and the idea of China being the world’s factory was unthinkable.

Breaking the ennui – thoughts on new projects

Five projects to get minds working again.

To snap myself out of the current ennui that has swamped me, I’ve a few ideas for a crowdfunded project. I’m interested in what people think of them, the first two are Australian focused while the others are more international.

All five of them revolve around the changing global economy and its effects upon societies, communities and individuals.

These are the ideas and I’d be delighted to hear some thoughts on them.

True Australian stories

Australia is in a time of transition. The upcoming Federal election may well determine the nation’s development over the next half century.

The idea of this project is to get out into the regions and suburbs which aren’t being covered – if not outright ignored – by the mainstream media and talk to the communities, people and businesses about how their worlds are changing and what they are doing to deal with it.

Re-inventing Australia

After a quarter century of continuous growth Australia has to make decisions on where its economy goes next. Successive governments have identified resources, agriculture, tourism, finance and education as the ‘five pillars’ of the economy.

This project talks to the people trying to make Australia’s five pillars work along with looking at those trying to build alternatives.

The future workforce

How does the global future workforce look? Will we be all contractors for Uber or Upwork or are there other models developing around the world.

What does the next phase of the industrial revolution look like for workers in both the developed and emerging economies? This idea is inspired Sebastião Salgado’s work.

The Second City project

Every major city has a less prosperous neighbour – Sydney and Newcastle, Melbourne and Geelong, London and Birmingham, Beijing and Qingdao, San Francisco and Oakland are examples.

How are those second cities faring in a global economy that’s increasing the wealth of the rich? What are the leaders of those communities doing to reposition themselves.

The next Silicon Valleys

While we’re focused on today’s global centres like California’s Bay Area, London and Shanghai there are other emerging industrial centres that will be the next generation’s Silicon Valleys. Who are they and what do they look like?

I’d be delighted to hear readers’ thoughts on these projects and any other ideas for similar ventures.

Google Glass goes to the enterprize

The original Google Glass program closed down at the beginning of this year and bought to an end the first stages of the highest profile virtual reality headset project.

At the time, the company flagged Glass was entering another stage and now the 9to5Google site reports an enterprise edition is well underway.

Despite the focus on consumer and gaming applications, enterprise applications in fields such as logistics and safety have been the bigger immediate opportunities for these products.

Towards the zero defect economy

The Internet of Things promises to eliminate defects which is good news for most, but not all, industries

At 2.03 in the morning of July 11, 2012, a Norfolk Southern Railway Company freight train derailed just inside the city limits of Columbus, Ohio.

The resulting crash and fire caused over a hundred people to be evacuated, resulted in over a million dollars in damages and created massive disruption throughout the US rail network.

Could accidents like this be avoided by the Internet of Things? Sham Chotai, the Chief Technical Officer of GE Software, believes applying sensor technology to locomotives can detect conditions like defective rails and save US railway operators around a billion dollars a year in costs.

“We decided to put the technology directly on the locomotive,” says Chotai in describing the problem facing railroad operators in scheduling track inspections. “We found we were mapping the entire railway network, and we were mapping anything that touched the track such as insulated joins and wayside equipment.”

This improvement in reliability and its benefits to business is something flagged by then Salesforce Vice President Peter Coffee in an interview with Decoding the New Economy in 2013.

“You can proactively reach out to a customer and say ‘you probably haven’t noticed anything but we’d like to come around and do a little calibration on your device any time in the next three days at your convenience.'”

“That’s not service, that’s customer care. That’s positive brand equity creation,” Coffee says.

Reducing defects isn’t just good for brands, it also promises to save lives as Cisco illustrated at an Australian event focused on road safety.

Transport for New South Wales engineer John Wall explained how smarter car technologies, intelligent user interfaces and roadside communications all bring the potential of dramatically reducing, if not eliminating, the road toll.

Should it turn out the IoT can radically reduce defects and accidents it won’t be good news for all industries as John Rice, GE’s Global Head of Operations, pointed out last year in observing how intelligent machines will eliminate the break-fix model of business.

“We grew up in companies with a break fix mentality,” Rice says. “We sold you equipment and if it broke, you paid us more money to come and fix it.”

“Your dilemma was our profit opportunity,” Rice pointed out. Now, he says engineering industry shares risks with their customers and the break-fix business is no longer the profit centre it was.

A zero defect economy is good news for customers and people, but for suppliers and service industries based upon fixing problems it means a massive change to business.

Cisco expands its innovation centre network to Australia

Cisco opens its latest innovation centre in Perth to focus on the oil and gas industries

Today Cisco launched their latest Internet of Everything Innovation Centre in Perth, Western Australia. The facility joins the seven existing centres around the globe which includes Rio de Janeiro, Toronto, Songdo, Berlin, Barcelona, Tokyo and London.

As a joint venture with resources company Woodside and Curtin University, the centre will initially focus on the gas industry and will include a state-of-the-art laboratory, a technological collaboration area, and a dedicated space to show the Internet of Things in action.

Oil and Gas is one of the key sectors for targeted by Cisco in their Internet of Everything push with Brad Bechtold, the company’s Energy Lead, telling Decoding the New Economy earlier this year how the IoT is expected to deliver an eleven percent reduction of costs for the $1.5 trillion dollar a year industry.

Bechtold believes remote sensing and operations will be the driver of many of the cost reductions along with detailed analytics enabling more efficient operations.

Many of these technologies will be tested as part of Woodside’s Plant of the Future gas project with CEO Peter Coleman saying the scheme will link company’s knowledge base with artificial intelligence, data analytics, and advanced sensors and control systems.

“We are taking a collaborative approach to enhancing our operations as part of our digital transformation journey. This partnership will create a globally competitive centre for excellence that could be leveraged in our LNG operations, as we progress our remote operations capabilities,” Coleman said.

The Perth centre intends to bring together start-up companies, industry experts, developers, researchers and academics in an open collaboration environment to create a “connected community” focused on cloud, analytics, cyber security and IoT network platforms.

The Australian Commonwealth Science, Innovation and Research Organisation (CSIRO) has also flagged it intend to join the hub as part of its Square Kilometer Array deep space mapping project.

Another branch of the Australian hub is expected to open in Sydney later this year.

Getting fat on venture capital

Going for big investment dollars could backfire on the founders of startup businesses

“Raising money is like ordering dinner,” says startup founder Geoff McQueen about attracting investors. “If you’re only a little bit hungry, you should only buy an appetizer.”

McQueen was writing about his company, professional services platform Affinity Live, achieving its first round of funding. While the amount raised is a relatively modest two million dollars, the main gain for the company is getting some experienced business people on board.

Unlike many of the high profile billion dollar ‘unicorns’, cash flow positive businesses like Affinity don’t need large swags of cash to grow. As McQueen points out, big investment rounds put pressures on management and risks the company’s culture changing “from one of discipline and taking on the world to one of comfort and entitlement”.

Pushing out the owners

Another risk for founders is they could end up diluting themselves out of the business they’ve built, as venture capital investor Heidi Roizen points out it’s possible for the creators of a billion dollar startup to find themselves broke.

Roizen observes “venture capital is not free money. It’s debt. And then some”, something that’s overlooked by many commentators who think a fund raising – and the resultant valuation – goes straight into the pockets of a company’s founders.

Unless it’s Google Ventures doing the investment, it’s unlikely the founders will be buying Porsches after a VC round and usually the funding goes into growing the business. For many big name startups those capital needs can be huge as we see with Uber where reports indicate the company is currently losing two dollars for every dollar it earns.

Beating the burn rates

Most businesses though can only dream of burn rates in the hundreds of millions a year and their needs are far more modest illustrating McQueen’s point about excess capital.

As we saw in the dot com bust it was the lean and focused companies that survived the downturn, there’s little to think the next industry shake it will be different. That’s why companies like Affinity Live and founders like Geoff McQueen will probably still be around when the dust and hype settles.

Liability and the Internet of Things

What happens when an internet connected device fails?

In The Australian today I have a piece discussing the legal risk of the IoT.

Lawyers warn that manufacturers, distributors and installers all face the possibility of damages should their devices malfunction or not perform as advertised.

This risk is compounded by the data analysis with Michael Stojanovic of international law firm Bird & Bird citing the example of a gas monitoring device accurately detecting and reporting a surge but a company being liable because they didn’t warn their customer something was amiss.

Equally there’s a risk with misreported or lost data. This in itself is presents a problem as many of the software vendors currently looking at supplying the IoT have a ‘best effort’ mentality where they don’t accept responsibility for service interruptions.

While that attitude may have stood up before courts over the last twenty years, it’s unlikely to get much sympathy from judges and juries when critical systems are affected.

Like everything else in life, the lawyers are coming for the IoT.

Chasing the food delivery startup hype

The current Silicon Valley startup investment mania is for food delivery apps. How long will it last?

Every few years the tech community goes through a mania for a type of business. Five years ago it was deal of the day sites led by Groupon where around the world copycats firms gleefully accepted the money of eager investors.

Today it’s food delivery services and industry analysts CB Insights have mapped the investments of US Venture Capital firms in the sector.

Recent years have shown that tech investors like to flock in packs and the current focus on delivery apps is just another example. So right now if you want to pick up some VC money, setup something that delivers food to people.

If you’re lucky, the greater fool model might deliver a nice pay off as larger companies suffering from Fear Of Missing Out (FOMO) desperately grab some of the more higher profile players.

Be quick though as the mania tends to dissipate quickly as the hundreds of Groupon copycats eventually discovered. When the hordes move on, they don’t leave much for those left behind.

Internet adoption and wealth

US internet adoption rates tell us much about affluence between different groups

With 85 percent of Americans now online it’s safe to say the internet has reached saturation point in North America.

However not all groups have been as quick to get online and the Pew Internet Survey has a detailed analysis of adoption rates across different demographic segments.

The results aren’t particularly surprising with lower adoption rates reflecting class, race and education differences although older age groups are the fastest growing segment.

Ultimately adoption comes down to affluence with the key chart being the connection rates across income groups.

What the Pew report does illustrate is how critical the internet is to income levels and why it’s important for the disadvantaged to be connected for them to participate in the new economy.

For countries following affluent nations in internet adoption, getting disadvantaged communities connected might be one of the easiest ways they can improve national income, education and well being.

Pushing back on the greater fool startup model

Is the Silicon Valley greater fool model reaching the end of its days?

One of the features of the current tech investment mania is the ‘greater fool’ business model of building a startup with the aim of flipping it to a larger company.

That model is based upon gaining as much publicity and users as possible to justify a high price for further investme, a buy out or stock market listing.

In that environment making money is irrelevant, in fact to many Silicon Valley investors a profitable startup is less attractive to one burning investors’ capital.

Now New York’s top tech investor, Fred Wilson, says he’s sick of that model.

But I’m a bit sick and tired of the objective of every operating plan I see is to get the business to a point where it can raise money at a much higher price. That’s nice and it’s how the VC/startup game is played. But at some point I’d prefer to see an operating plan that has the objective of getting to sustainable profitability. And I do mean sustainable.

When the froth comes off the current investment market it will be the profitable businesses, or those with a prospect of making a return, with the best prospects of survival.

Fred Wilson’s pint is a warning for the many of today’s investors; profits matter and startups need to be able to show how and where they are going to eventually a return.

Shifting Microsoft’s culture

Microsoft CEO Satya Nadella continues to grapple with changing the company’s culture

“What would be lost if we disappeared?” is the question Microsoft CEO Satya Nadella claims is driving the company’s direction in his latest memo to employees.

In the email obtained by website Geekwire, Nadella told his staff redefining the company’s culture is key to success, “we can do magical things when we come together with a shared mission, clear strategy, and a culture that brings out the best in us individually and collectively.”

That culture though is not static and Nadella is describes how the company needs to focus on helping its customers through its cloud and Windows based products.

For Microsoft this is not new, the change from a desktop and server based licensing business to one dependent upon cloud subscription services has been a huge change for the business since the iPhone was released nearly a decade ago.

The challenge for Nadella however is to keep revenues coming in as the river of gold that was Microsoft’s Windows licenses slowly dries up.

One of the biggest changes to Microsoft’s culture could be in coming to terms that it isn’t such a huge and powerful corporation any more.

Why are public companies becoming rare?

Does the shift away from listed companies indicate a change in business and investment models?

The United States has only half the publicly listed companies of twenty years ago, writes Barry Ritholtz in Bloomberg View.

While the Initial Public Offering still remains one way for startup businesses to release wealth to founders and early investors, the number of mergers and acquisitions has seen the total number of public companies fall over the last two decades.

Most of the fall has been due to existing companies being bought out through mergers and acquisitions while there have been fewer new businesses listing to replenish the stocks.

Last year we interviewed Don Katz, the founder of talking book service Audible which was listed in 2000 and acquired by Amazon in 2008.

Katz found the running of a listed company was onerous and more value, and investment funds, was added by being part of a larger organisation.

The view of Katz and Audible’s shareholders that there is better access to markets and capital through larger companies probably drives much of the enthusiasm for M&As along with serving to increase the economic concentration of large corporations.

Ritzholtz speculates another reason could be the deepening pools of private equity and venture capital which mean newer businesses don’t have to rush into a listing to raise funds or give founders and early investors an exit.

Another reason could be that companies have become more profitable with US corporations being more profitable than any time since before the 1929 stock crash. More money coming in means it’s easier to fund the business using cash flow and investors can make a good return on dividends rather than share sales.

The cost of money could also be affecting listings, with debt so cheap companies can raise bonds cost effectively without diluting their equity or having the hassle of running a listed corporation.

Finally, it may be the ease of setting up a business makes listing not so necessary. A software company needs nowhere the capital required by a manufacturing venture so going to the market just isn’t necessary.

Should the lack of listing be a permanent thing then again we may see another force changing management and business cultures.