Paul Wallbank – Brilliant Communications

Tag: startups

  • Stripe joins the unicorns

    Stripe joins the unicorns

    Payment service Stripe joins the unicorn club as credit card company Visa becomes the latest investor reports the Re/Code website.

    Two years ago this site interviewed John Collison, one of the Irish twins who founded Stripe about their mission to bring the payments industry in the 21st Century.

    With the Visa investment it now means two of the world’s three major credit card companies are investors in Stripe, the other being American Express, and this shows the incumbent players are acutely aware of the changes happening in the payments world.

    That credit card companies are investing in the businesses that threaten to disrupt their industry indicates the incumbents’ savvy management; while there are cultural and ethical barriers in trying to undercut the existing profitable products, having a stake in the new competitors gives companies like Visa and AmEx to remain relevant in a post credit card world.

    For Stripe, investment from what could have been their major competitors not only takes some of the pressure off the the business but also opens opportunities for technology sharing and access to bigger markets.

    Probably the most important thing for Strip with the Amex and Visa investments is they legitimise the business and the entire payments startup sector. It’s an important vote of confidence in the technologies and market.

    For the Collison twins it also helps build better businesses, as John told Decoding the New Economy two years ago, “if we just building a business to take transactions from PayPal and get them onto Stripe, that’s not that interesting. What is interesting is if we can create new types of transactions that would not have existed otherwise.”

    “By providing better infrastructure for anyone to build a global business. That will change the kind of things people will build.”

    Now more people will be looking at what they can build on these payment platforms.

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  • Five basic software tools for a new business

    Five basic software tools for a new business

    Last week I was asked by someone considering starting a business what I’d recommend in the way of software for a new company.

    That’s a good question as cloud services have completely changed what a business should buy over the past five years when the answer back then would have been to buy a new PC with Microsoft Office preloaded along with a boxed accounting package.

    More importantly for a cash strapped business, whether it’s a tech startup or a more conventional business, today’s cloud based tools don’t need new computers and most have free versions that suffice for those early days before a venture has established a cash flow or its viability. That radically changes the economics of setting up a new business.

    Google Docs

    This is the basic essential tool for a new business giving a basic word processing, spreadsheet and presentation package. The free version of Google Docs is technically only available to educational or home users, but then you are running your new business from home aren’t you?

    Paid versions of Google Apps are either five dollars or ten dollars per user per month depending on the features or storage you want. Again for most small business the cheaper version will usually suffice.

    For power users, Microsoft Office is often unavoidable as the spreadsheet and wordprocessing features of Excel and Word are far more extensive than Google’s.

    Email and calendar functions

    Once upon a time your choice of email tool mattered, today it doesn’t as there’s no shortage of free cloud based tools or, if you’re a Mac user, Apple Mail. For most small businesses it’s easiest just to choose Google’s Gmail or Microsoft’s Outlook.com. If you’ve chosen Microsoft’s Office 365 package than Outlook is part of the business bundle.

    Also in the past having an online, shareable calendar was a nice to have but often expensive feature that required a server. Now almost all systems come standards with calendars although Google has the edge in terms of sharing calendars between workgroups.

    Storage

    Being able to store and share files into the cloud has been a boon for small businesses which in the past needed to have an expensive and clumsy inhouse server if they want to share information or even just to access it on the road.

    Microsoft give unlimited storage for Office 365 subscribers while Google offer 15Gb for the free Docs service, 30Gb for the $5 Apps Plan and unlimited space for the $10 Apps plan if you have more than five users. Apple’s pricing is more complex with five different tiers although iCloud is a much more elegant solution for backing up iOS and OS X devices.

    Two third party storage providers such as Box and Dropbox are also worth considering with both offering advanced tools and integration with other cloud services. Dropbox offers a free version with 2Gb of data, a Pro version including a Terabyte of space and a business version that is unlimited at $17 per month.

    Accounting

    One of the biggest mistakes a new business makes is skimping on accounting software. This is one of those areas where cutting corners early can be expensive later. The most popular cloud accounting service for small business is Xero which does a great job in integrating with other online platforms including Office 365 and Google Apps for $25 a month.

    Xero though is not alone in this field with MYOB, Reckon, Quicken and others fighting for marketshare. It’s best to talk to your accountant and find what they work with as this will save problems when you come to do your books.

    Website

    Every business needs a web presence. If your new company is a local service, retail or hospitality outlet then you have to be listed on Google My Business which literally puts your company on the map. Listings on Facebook and signing up with all the main social media services is a must do as well.

    The cornerstone though of an online presence though is a website and the easiest, quickest and no-cost way is to set up a website on Google’s Blogger platform. Once your business gets up and running then having your own web server running WordPress is the best long term solution but in those early days Blogger will suffice and the upgrade path between the two is surprisingly painless.

    Every business though is unique and your business might need more than these five basic tools. If you’re in hospitality and retail you’ll need a Point of Sale solution while if you’re a tech startup products like Slack and Basecamp may be needed as well.

    The five basics though are common to all businesses regardless of the industries they’re in and regardless of the aspirations of the owners. The fact you can set up a business for almost nothing is one of the reasons why it’s worth giving it a go.

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  • Taiwan enters the startups race

    Taiwan enters the startups race

    Battered by a declining Chinese market for its manufacturing goods, Taiwan is having to look elsewhere for its economic growth.

    Startups are one idea report Reuters News describing how the Taiwanese National Development Council set up HeadStart a year ago to create an tech entrepreneur ecosystem by relaxing regulations for registering start-ups, matching funds invested into projects and creating tech hubs.

    So far HeadStart has attracted around $US 438 million in funds and now Alibaba founder Jack Ma says he wanted to set up a $300 million fund to support Taiwanese entrepreneurs.

    While the Reuters piece focuses on the ecosystem built around fading smartphone maker HTC and the major computer chip fabricators, Taiwan’s strength may well lie in its small business roots as much of the island’s industrial strength has been built, like Japan’s, on its army of small family firms supplying the larger companies.

    That Taiwan needs to diversify its economy is a warning to other less advanced economies that depending on a narrow band of exports leaves a nation open to external risks. It might be time for others to be looking at how to encourage their entrepreneurs.

    Image of Taiwanese bronze buddha by Shirley B through freeimages.com

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  • Are startups like 19th Century railway companies

    Are startups like 19th Century railway companies

    Are today’s tech unicorns like the 19th Century railway companies? Massive consumers of capital and ultimately transformative technologies but never in themselves particularly profitable?

    In the 1840s Britain was gripped by a railway investment mania which saw 10,000km of railroads built in 1846 alone, the current network extends 18,000km.

    Eventually the bubble popped after the Bank of England raised interest rates, something that should focus the minds of many of today’s investors.

    The UK railway boom left a legacy of valuable infrastructure across Britain, Europe and the Americas, perhaps we’ll see a similar legacy from today’s boom.

     

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  • Getting fat on venture capital

    Getting fat on venture capital

    “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.

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