founders | Paul Wallbank - Communications Professional

Trapped in orbit – the founder’s dilemma

Walking away from a business is not always a simple task as Bill Gates is finding

Earlier this week Microsoft co-founder Paul Allen celebrated his Seattle Hawks winning the Super Bowl while his former business partner, Bill Gates, still struggles to escape the clutches of the software giant they founded forty years ago.

After a long drawn out process, software giant Microsoft has finally chosen its replacement for CEO Steve Ballmer however founder Bill Gates finds himself firmly trapped in the company’s orbit.

Hoodie wearing Satya Nadella‘s ascension to Microsoft CEO was probably the poorest held secret in the tech industry having been openly reported for several weeks.

Nadella has a massive task ahead of him as the industry that’s been so lucrative for Microsoft over the past thirty years evolves to deal with the post-PC era.

How Nadella manages Microsoft’s transition will define his business career and tenure at the top job, it will also determine the company’s position in a marketplace where PCs running Windows are no longer relevant.

The biggest news from Microsoft’s announcement though was that Bill Gates will step down as Chairman of the Board and take a new position as ‘founder and technology advisor’.

Microsoft also announced that Bill Gates, previously Chairman of the Board of Directors, will assume a new role on the Board as Founder and Technology Advisor, and will devote more time to the company, supporting Nadella in shaping technology and product direction. John Thompson, lead independent director for the Board of Directors, will assume the role of Chairman of the Board of Directors and remain an independent director on the Board.

Despite leaving the CEO role over a decade ago, Gates finds himself back in a hands on role at the company.

The value of Bill Gates

It’s questionable what value Gates is going to add in the role of ‘Technology Advisor’ as Microsoft’s markets are very different to those the company was founded in and came to dominate in the 1980s and 90s.

For Nadella, it’s not exactly a vote of confidence from the board in appointing the company’s founder to hover over his shoulder offering helpful advice.

On a personal level this must be disappointing for the founder and former CEO as well in that his mind is on far greater topics such as eliminating malaria through the Bill and Melinda Gates Foundation.

Trapped by Microsoft’s gravity

Gates’ situation though is a classic example of a business founder who’s never been able to get out of the orbit of their business. Despite their best efforts, they keep being dragged back to give a helping hand.

At least though Gates has at least been able to step away to some degree, many baby boomers with smaller businesses are going to be locked into their companies as GenX or Y entrepreneurs don’t have the funds to pay what the proprietors need to retire.

Those boomer entrepreneurs are going to work in their businesses until either they or their venture is put to rest.

Bill Gates’ dilemma though shows how tough it is for business founders to escape the gravitational pull of their creations, even when it’s as big a business as Microsoft.

Paul Allen showed how to step away from a business and is enjoying life, Bill Gates’ story though is much more typical for business founders trapped in the enterprises they built.

Startup economics

The failure of Everpix is a good lesson for any business founder.

Business advisor Ivan Plenty’s in-depth study of the viability of failed photo sharing startup Everpix with some useful lessons for business owners in any industry.

Everpix shut down last November having run out of money despite getting favourable reviews from the tech press and in an unusual move, the founders put the company’s financials up on GitHub.

As Plenty points out in his analysis of Everpix’s finances, the company was unlikely to ever break even and it’s a lesson to every business owner on the importance of keeping an eye on cashflow and understanding where the venture’s break eve points are.

One of the key take-aways from Plenty’s analysis was that the base costs of the business were too high and even in the best circumstances it was unlikely that venture would have succeeded.

A good business plan would have helped the founders understand this problem and it illustrates why rigorously developed cashflow forecast is a great tool for a manager or proprietor.

The Silicon Valley investment model

The ultimate objectives of a company’s management are always important when considering the success or failure of a business; what objective is the business working towards?

In Everpix’s case, it may well have been the Silicon Valley Greater Fool model was a likely end, with good software and a growing customer base the company could have been attractive to a buyer.

Were that the objective of Everpix’s founders, the company was under-capitalised as management couldn’t afford either the burn out or the PR and marketing team essential for raising the venture’s profile with key investors.

Under-capitalisation is one of the greatest problems for any new business and its clear that Everpix didn’t have the equity to scale the way it needed.

Capital on its own though isn’t a panacea, from Ivan Plenty’s analysis the indications are that Everpix’s fate would have been the same, but more drawn out.

Everpix’s failure and the numbers behind it are a good lesson for anybody thinking about starting a business — numbers matter and businesses live and die by them.

A swarm of electronic dragonflies

A Spanish startup shows how the internet of machines is changing the business world having installed their sensors into everything from space ships to koala bears.

“Libelium comes from Libelula which means dragonfly,” says Alicia Asin, of the sensor company she co-founded with David Gascón. “The company was named after a swarming insect.”

“We try to solve the problem of dealing with a lot of different sensors and a lot of different protocols and different information systems so we created a hardware platform that sends any information using any communication protocol to any computer system.”

Bootstrapping a global business

Particularly impressive about Libelium is the business has grown to a global brand employing 40 people since 2007 when Alicia and David founded their business on their meagre savings.

“We started with literally wïth nothing, just 3,000 euros which is all you have when you are twenty-four” says Alicia.

After raising funds through some grants and investors, the company got on with selling their products.

“We never wanted to be a company where it’s comfortable for three years without making money so we shipped a product in seven months.”

“We realise now how smart that was.”

Agriculture and smart cities

Connected cites and agriculture are the sectors Alicia sees as being the greatest opportunities for the company.

“I think that cities are very interesting, not because of the technology but what it really means,” says Alicia. “If you are able to have a dashboard of the city’s performance and governments are willing to apply open data then you are really promoting transparency.

“That’s the best legacy of the Internet of Things.”

In Agriculture Alicia sees opportunities in high value crops like vineyards, “we can reduce the amount of fertilisers, we can prevent illnesses in vines and you can even design the type of wine as you can control the amount of sugar in the grapes.”

For Spain, companies like Libelium represent the future of the nation’s industry. “We really need to re-invent the country,” says Alicia.

“I’m always saying that Spain is becoming the Silicon Valley of Europe when it comes to smart cities. Not only in Barcelona but you also have Santander, you have Malaga, Madrid and Zarazoga.”

So it may be that along with a swarm of Libelium sensors, Spain also has a swarm of smart cities. It may be enough to re-invent the country along with the agriculture industry and local governments.

With more bootstrapped startups like Libelium, Spain may even build its own version of Silicon Valley.

The truth is in the data

One of the big challenges facing all organisation is using Big Data to understand their customers better, Emma LoRusso and Digivizer are part of the new wage of businesses and entrepreneurs providing the tools to help managers make better decisions.

Emma LoRusso founder of Sydney based social analytics service Digivizer believes the truth in a company’s data will challenge many managment and marketing beliefs.

In a somewhat poorly recorded interview as part of the Decoding the New Economy YouTube channel, Emma described how analysing social media trends and tying them into an organisation’s Customer Relationship Management (CRM) platform can help improve a business’ marketing and customer satisfaction.

The Truth is in the data

“A lot of marketing in the past has not been data driven,” says Emma. “There’s still this gap between people saying ‘this is what we think’, ‘this is what we’ve always done’ and ‘this is what they’ve found’ – we’ll come behind that and say ‘let’s let the data tell the truth.'”

That data is powerful due to the context Emma believes Digivizer adds, “because we can map people to the social web based on their profiles – who are they, what they talk about, who they are engaged with and what’s important to them.”

“We let data become the truth and we push back on the hypothesis that might have been unsubstantiated previously in the organisation,” Emma says.

Fighting the average

For some organisations, this truth can be challenging. “The ones who resist it are those with a fixed position who have built a career of playing to the averages,” states Emma. “We get massive returns, say 39 to one, whereas they were getting maybe seven to one or twelve to one.”

“Again, data can be the truth in this story.”

One advantage of real time social media monitoring is marketers can now track how consumers changing lives unfold are affecting their buying habits and desires as people get married, become single, have children, move houses or just simply change tastes.

Hearing the consumer

A key part of modern marketing is letting customers know their voices have been heard, as modern consumers know they have a voice and expect companies to acknowledge what they’re saying.

Emma sees a lot of lip service has been paid in companies to the ‘single customer view’ where businesses need to know their customers better.

“I actually think it’s customers that are driving that,” says Emma. “Their expectation is ‘I’ve interacted with you a lot of times, you’re asking me to engage with you digitally and now I expect you to serve me better.'”

“Now if you plug that data into organisations you can start to offer more meaningful – the right message at the right time.”

Emma believes that makes customers happier as they now feel they’ve been heard and understood. “That’s the beauty in the data,” she says.

While there’s some risks with paying close attention to customers’ online behaviour – as we saw with the famous Target pregnant girl mailout – the benefits for businesses listening to their clients is obvious. It’s another example of how the slow to adapt businesses will be crushed in the changing economy.

Navigating the future of accounting and business with the cloud

Cloud computing is changing the accounting profession and many other businesses with it says Steph Hinds of Growthwise accounting

Steph Hinds of Newcastle accounting firm Growthwise is one of the new breed of business advisers using cloud and mobile technologies to change her profession.

At the recent Sydney Xero Conference I had the opportunity to speak to her about some of the ways her business is changing.

The interview with Steph as part of the Decoding the New Economy YouTube channel covers how the accounting profession is changing, what industries are being the most affected and where she sees the growth opportunities for her businesses.

Like many other professional services industries, the big change Steph sees is how accounting is moving from being based upon client transactions to requiring much deeper relationships with clients.

“The transactional model has been commodified completely,” says Steph. ” I started as a trainee accountant and we had those big ledger books and I was coding things and I’d go through cheque butts to enter them into the system.”

“Now all of that work is done for you.”

Like Xero founder and CEO Rod Drury, Steph doesn’t see this change as being generation based with older accountants adopting technologies as quickly as their younger counterparts.

However legacy systems do hobble existing businesses with both Xero and Growthwise finding 40% of their clients are new, startup businesses.

“We’re finding a lot of new businesses are starting up now,” says Steph. “it is so easy to setup in business, we’ve advised a lot of accountants that rather than spending five hundred thousand dollars to buy into a practice, you can spend ten thousand dollars on licenses and a laptop and all of a sudden you’re really in business.”

Changing the building industry

Steph sees the opportunities being in retail, hospitality and trades where being are struggling with paperwork and need fast responses in a customer driven market. The building trades are one of the big areas Steph sees for growth.

“Guys not having to drive to the office to get their instructions and their things for the day, not having to drop off timesheets, getting paid on the spot and billing on the spot.”

“We see traditionally see trades, particularly in the building industry as having cashflow issues and people go bust,” says Steph. “I think this is a huge opportunity to change things.”

Having information is at managers’ and proprietors’ fingertips is one of the benefits of cloud services and Steph also sees the app ecosystem, providing plugins like mobile job management are very powerful.

“The big data angle, for benchmarking – we have real time access to our clients’ data and how they are doing against industry benchmarks and being able to help clients,” says Steph.

Steph Hinds and Growthwise are examples of how the business world undergoing a dramatic change as the information and systems that were once only available to big business can now be accessed by anyone.

The real digital divide lies between the business who are prepared to grab the opportunities and those who are happy doing things the way they’re done today.