Category: Innovation

Reverse financing a manufacturing revolution

3D electronics printing startup Nano Dimensions illustrates some fundamental changes in finance, business and manufacturing

Nano Dimensions may not have shipped a product since it was founded in 2012 but is worth $49 million dollars and was Israel’s best performing tech stock last year reports Bloomberg Business.

It’s not surprising that Nano Dimensions has caught the imagination of investors, the company was founded in 2012 to develop advanced 3D printed electronics, including printers for multilayer PCBs (printed circuit boards) and the nanotechnology-based inks those machines rely upon.

Should the technology prove successful, the application of those printers in fields like rapid prototyping is immense. The company speculates their devices may even get RFID tags down to the magical one cent figure which opens may opportunities in industries like logistics and retail.

In a GeekMe profile of the company last June, the writer even speculated Nano Dimensions could be heralding a disruption to the electronics industry similar to that the music industry faced when home users could burn their own CDs and stream music.

While that – and the speculation that 3D printing of electronic devices will kill Chinese manufacturing – may be some way off, it isn’t hard to see the potential of this technology.

The Israeli aspect of the Nano Dimensions story is interesting as well, with the company receiving a $1.25 million investment from the country’s office of the chief scientist after it was reverse listed onto the local stock market by taking over a moribund company.

For countries like Australia, Canada and the United States which are likely to have many moribund small mining and energy on their stock markets in coming years, such reverse listings may be an opportunity to spark their tech sectors with fresh capital and talent.

 

While Nano Dimensions is still very a speculative venture, the company illustrates a number of possibilities for 3D printing, electronics, the Israeli tech industry and the future of fund raising at a time when the Silicon Valley venture capital model seems to be under stress.

Another fascinating aspect of Nano Dimensions is that it’s one of the new breed of hardware startups, a field that until recently was dismissed as ‘too hard’ by most tech investors. Overall, the Israeli businesses an interesting company to watch for many of the aspects it touches upon.

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How the taxi industry lost its advantages

The struggles of the taxi industry show regulatory barriers won’t keep out competitors

In San Francisco, the Yellow Cab Company is filing for bankruptcy in the face of mounting insurance costs and competition from services like Uber and Lyft.

For most of the Twentieth Century, having a government controlled market was good for cab companies and those owning the rights to own taxis. In most places though it wasn’t good for drivers and passengers however as wages fell along with the quality the service.

In most cities, the taxi operators didn’t care as their industry was protected and customers didn’t have much choice. The problem was compounded by supine regulators who saw protecting the interests of industry incumbents as taking precedence over making sure operators provided a safe, reliable service.

With the arrival of Uber, this changed and passengers started voting with their wallets. Interestingly, despite Uber X and Uber Pool being illegal in most place, regulators and their political masters found public opinion was firmly against the taxi companies and owners who’d exploited them for so long.

To the horror of the taxi operators, they found the community and the market had shifted against them leaving them exposed to changes they had never expected. Now operators like San Francisco’s Yellow Cabs are paying the price for not focusing on providing a decent service.

For other industries, particularly those which have some sort of barrier to entry through government regulation, the taxi industry’s woes are an important lesson – focusing on service is the key to staying in business, not relying on keeping competitors out.

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Waiting for an innovation miracle

For most organisations innovation is harder and more complex than it seems observes Autodesk CEO Carl Bass

Many companies are waiting for an innovation miracle said Autodesk CEO Carl Bass at the company’s final press and analyst conference at the Autodesk University conference in Las Vegas late last year.

“Change happens when new people enter the market or companies find new ways to do things or they are scared by competitors doing something they can’t do,” Bass said in an answer to a question from a Korean journalist about dealing with changing markets.

“The two things I hear over and over again from customers – you stand back and scream because they are all the same – most of our customers want to innovate,” Bass continued.

Building for sustainable change

“Generally they mean they want to build sustainable, competitive changes. They want to create products that have the ‘Apple Premium’ that someone wants to pay more for because it’s the best product in the category and they want to sustain that for as long as possible.

“The second thing that’s almost universal with our customers is when they have a good idea, they want to get that to market as quick as possible. To the extent we supply the tools to help them fulfil those two big needs of ‘how can I innovate and do something I wasn’t capable of doing?’ or ‘how can I shorten the time between when I think about this to when I can sell this?’ Those are things that will motive people.”

At this stage Autodesk CTO Brian Kowalski chimed in, “there is slightly depressing moment in the innovation conversation where the customer says ‘I really want to transform into an innovative company. Can you help me do that using exactly the same tools, people and mindset I currently have. They are hopeful our answer will be ‘yes, we can help you.”

For those organisations Kowalski had bad news pointing out that creating a corporate environment that embraces change requires all three of the ‘people, processes and technology’ triangle. Just adding a new product over the top of the existing culture won’t change the business.

Sympathy for the corporation

Bass though has a sympathetic view towards those large organisations seeking to change.

“Companies do believe there’s some miracle that happens and one of the things I’ve seen most clearly is this idea among startups and VC backed firms is that big companies are just dumb and unaware,” Bass stated. “There almost no large company anywhere in the world that doesn’t know what is going on the world, some of these companies have whole armies of people whose only job is to figure out what’s new and exciting and interesting.”

“People on the other side don’t understand this, they (big company managers) know what’s going on and what’s different, they may not have the wherewithal to change but the idea that car companies didn’t see changes coming – that they couldn’t see a Tesla – they knew but there were a bunch of reasons why they couldn’t make it to the other side.”

Skilling the next generation

Another aspect that troubles Bass are the skills of the next generation of managers, engineers and software developers.

“The second thing I wanted to say about tools is that I go to a lot of universities and I talk to academics about what’s coming next,” he says. “What depresses me a little bit is the faculties have all sorts of new ideas and methodologies but they are teaching using old software tools. No student I know would want a twenty year old cellphone but they sit dutifully and learn twenty year old software. I think that’s one area they have to change first.”

 

Bass and Kowalski make some important points about the challenges facing organisations seeking to adapt to changes markets, workforces and a rapidly evolving society – it’s not easy and the issues facing all businesses are complex.

Paul attended Autodesk University in Las Vegas as a guest of Autodesk.

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The limits of today’s technologies – day two of Autodesk University

The second day of Autodesk University gave more insights into the future of design and manufacturing but it also showed the limits

The second day of Autodesk University 2015 in Las Vegas continued the focus on innovation and changing industries, the afternoon innovation session was particularly focused on some of the opportunities being realised in drones, pre-fabricated buildings and lampshades made out of fungus.

Brooklyn based designer Danielle Trofe gave a great demonstration of how she’s using fungus to create a range of sustainable light shades. Interestingly in a conversation earlier in the day with Autodesk CTO Jeff Kowalski the topic of growing products out of Mycelium, the vegetative part of a fungus that Trofe uses, was discussed in terms of smart packaging and biodegradable products.

Growing products out of organic material is one of the themes explored in Mercedes Benz’s Biome concept car which proposes to grow the chassis out of seeds. While realising that concept is some way off, Trofe’s Mush-Lume idea shows some products are already at that stage.

Rethinking prefab buildings

Following Trofe was Jos Mulkens, the CEO of Dutch building company Voorbij Prefab, who described how by using sophisticated design tools and 3D printing to make prefabricated building panels they had reduced to the time to fabricate elements from days to hours.

Mulkens gave a good insight into how design and production workflows are being accelerated with modern technology, particularly in replacing manual form makers to make the moulds for the precast panels. Voobij Prefab are flagging a lot of disruption heading for the building industry.

At one the media breakout sessions a group of senior Autodesk managers discussed the trends in design and materials engineering. This turned out to be an interesting session on the limits of current technologies.

Composite technologies

Max Moruzzi, Autodesk’s Principal Research Scientist, is a passionate believer in composite materials and the benefits they promise. However he conceded when challenged by his colleague Steve Hobbs, who joined Autodesk last year with the acquisition of  UK based Computer Aided Manufacturing company Delcam, about the structural properties of composites that we still have a lot to understand about how they behave and fail.

Bringing a touch of English scepticism to the panel, Hobbs pointed out almost all metallic components made by 3D printing require some sort of mechanical, subtractive finishing such as milling or polishing.

Hobbs went onto warn that we risk introducing a “hairball of complexity” into the design and manufacturing industries as people experiment with developing products with materials and techniques they don’t fully understand.

All the panel, which also included Carl White – Autodesk’s senior director of marketing for advanced manufacturing – and Benjamin Schrauwen who leads the company’s Spark 3D printing division, agreed that applying current design and manufacturing methods need to be rethought in the light of new methods being developed.

The limits of 3D printing

It was notable in the panel Q&A around the revelation that 70% of 3D printing projects fail, the panel put this down to the relative immaturity of software and machinery along with the technologies currently being poorly understood. Hobbs observed that for GE to 3D print their jet engine parts they rebuild and reprogram the printers they buy to their own higher specifications.

For the final session CEO Carl Bass and CTO Jeff Kowalski faced a Q&A from analysts and the media, that session was interesting in exploring some of the directions Autodesk sees industry and business heading and I’ll write more about that tomorrow.

Overall, the Autodesk University has been an interesting insight into the future of design and manufacturing along with the effects this has on other industries. With these technologies at an early stage, it’s a field that is going to evolve rapidly.

Paul Wallbank travelled to Autodesk University in Las Vegas as a guest of Autodesk.

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High hopes for the innovation dreamtime

The Turnbull government and its ministers face a big test in the upcoming innovation statement this week and will need to follow through with tangible results.

The Turnbull government and its ministers face a big test in the upcoming innovation statement this week and will need to follow through with tangible results.

In 1976 Clive James visited Sydney fifteen years absence from his hometown. In his book Flying Visits he described the changes that had happened during his time away including some observations on the nation’s thriving movie industry with the comment “premature canonization is the biggest threat facing the young Australian film director today.

James’ words came back to me at an Australian Israel Chamber of Commerce in Sydney last week where the hosts were gushing over 25 year old Wyatt Roy, the Federal Assistant Minister for Innovation, last week.

There’s a lot to like about Wyatt Roy, he’s an intelligent and articulate minister with a self depreciating sense of humour and a touch of humility – qualities generally not associated with Australian politicians – though the old guard gushing over his youth and the achievements of his two months in office can be embarrassing.

In many ways the fawning over Wyatt Roy is emblematic of the general sense of relief in Australian business now the Turnbull government has left behind the nightmare of the vindictive and petty middle aged adolescents who made up the Abbot administration while also being a world away from the backward looking grey Liberal Party stalwarts of the Howard era and the self interested suburban Labor apparatchiks of the Rudd and Gillard years.

The question though is whether the hopes pinned on Turnbull and Roy can be realised which is why there are so many hopes being pinned on this week’s expected release of the government’s Innovation Statement laying out a policy framework for the nation’s economic pivot.

For Australia the stakes are high, the resource sector is collapsing and the property market – the real key to the nation’s suburban prosperity – is looking brittle. Policies that encourage new businesses and industries are now essential to maintain the country’s living standards.

To date Canberra’s policy makers have not managed the economic changes well; the Intergenerational Report earlier this year blithely ignored the effects of technology on the future workforce and its implications to incomes, jobs and government budgets, while three years after the Gillard government’s Australia in the Asian Century report it’s remarkable how dated the document with its underlying assumption of never ending resources demand now looks.

So the Innovation Statement matters in laying out a strong view for the future of Australia however even if it does prove to be a strong, forward looking document, the Turnbull government will need to follow up with substantial actions.

The real risk with all the talk of innovation is that it will be siloed, along with IT, as “something the geeks and young kids” do. For the this week’s announcement to be anything more than more fine words from the Innovation Bureaucracy then it has to be backed by strong reform to taxation, social security, immigration and corporate governance regulations.

While the canonisation of Wyatt Roy and Malcolm Turnbull may well be premature many Australians, including this one, are hoping those hopes are well founded. This week’s Innovation Statement will be the first test.

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Ending the banking era

As technology changes the finance industry we could be seeing the end of a powerful banking sector

The industry that benefited most from the economic reforms of the last twenty years of the 20th Century was the banking industry.

With the elections of Margaret Thatcher and Ronald Reagan three decades of good times began for the banking sector.

Now the good times are drawing to a close warns former Barclays boss Antony Jenkins who told a London audience how the banking industry faces an ‘Uber moment’.

While Jenkins focused on the fortunes of branches and frontline staff, the technological change facing almost all aspects of banking from tellers to risk analysts and upper management are all facing massive changes as artificial intelligence moves into fields that a few years ago most believed couldn’t be automated.

For the incumbent banks shareholders this is mixed news, on one hand it makes their existing operations vastly more profitable – the One Percent become the .001%.

On the other hand for the incumbents, the market is opening up new competitors and as Jenkins points out some of these disruptors will be the banks of the future. At the moment though established banks will do all they can to interfere with new entrants.

While interference will only go so far, the real challenge is to get ahead of the changes which is why financial technologies (fintech) has become such a hot topic in the last three years with major banks sponsoring or opening their own incubators, accelerators and hackathons.

Another important aspect in a changing environment is that of regulation and with the banks winning from the deregulations of the 1980s and 90s it may well be that we’re going to see a tightening on their powers as technology changes the playing field.

One thing is for sure, bankers are about to find times as exciting and challenging as many of the industries they displaced late in the Twentieth Century.

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Israel and the long term tech view

A unique combination of factors coupled with a long term view is what’s driven Israel’s tech successes. Other places could learn from the taking that longer perspective.

 

Things are going crazy in the Israeli startup scene as investors and multinationals and startup pile into the country’s tech sector.

In order to understand what’s happening I spent the morning at The Bridge, an Israel Australia Investment Summit staged by the Israeli Trade Commission and Invest in Israel.

Of the morning sessions, the two panel segments gave the most insight into what’s driving the Israeli tech sector with Nimrod Kolovski of Jerusalem Venture Partners emphasising the industry-g0vernment-academia collaboration, military spending and tight personal networks.

“In Israel we can make two phone calls – to someone who was with them in the army and to someone who they worked with at the last company. You don’t get a chance to repair your reputation in Israel,” says Kolovski of those tight personal networks.

Kolovski also highlighted an important part of venture capital culture – just as much in the US as Israel  – is the willingness to admit failure, “if you don’t then you’ll lose credibility”.

 

The broad message from the morning’s sessions is that the Israeli tech sector happens to have the combination of factors that aligns with the Silicon Valley and US corporate view of the world coupled with a strong underpinning of high level, defense led research and personal networks forged to a large degree during National Service.

For a long time I’ve been skeptical of the Israeli and Silicon Valley model being replicable in other countries, particularly Australia, and the morning’s sessions only confirm that view. There is more to this which I intend to explore in some future blog posts.

The lesson for other countries though is that personal networks, research and access to capital matter in creating new industry hubs. The challenge for each country or region is to find the combination that plays to their society’s and industry’s strength.

For Israel, it’s hard to see how their tech sector isn’t going to continue to thrive in the current climate however it’s the result of long term focused investments, research and policies. Taking the long view is probably the most important lesson of all.

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