Paul Wallbank – Communications Professional
Comms, journalism and writing
MakerBot’s story shows the development of new industries is never smooth
Vice’s Motherboard details the remaking of MakerBot, the rescue of an early leader of 3D printing industry.
The story is great long read for any business owner or want to be startup founder and a reminder that the development of new industries is never smooth sailing.
Increasingly the Internet of Things is going to be split into different fields
One thing that’s becoming clear in researching and writing on the Internet of Things is how three distinct strands of the concept exist due to the different needs of industry and the marketplace.
This is articulated best by Bill Ruh, the Vice President of GEs Global Software Center, who in an interview this week – which I’ll post later – suggested the IoT is best divided into the industrial internet, the enterprise internet and the consumer internet.
At the base level the consumer internet includes the bulk of startups and the devices that get most of the publicity; the Apple Watches, Nest thermostats and smart door locks.
Largely operating on a ‘best effort’ basis, consumer IoT vendors don’t guarantee service and security is often an afterthought. This is going to present a few challenges for both consumers and retailers as the inevitable problems arise.
The IT industry vendors are at the next level, the Enterprise internet, where companies like Microsoft, Cisco and VMWear are adapting their businesses to the cloud and Internet of Things.
At this level, which Cisco calls the Internet of Everything, the security and reliability challenges are understood and the practices of the IT and communications industry lend themselves to the widespread transmission of data from smart devices.
Similarly most of the telcos with their machine to machine (M2M) technologies fall into the enterprise internet camp.
While the enterprise vendors are providing robust systems, the IT industry levels of service don’t quite meet the needs of mission – and often life – critical applications found in jet engines, precision manufacturing and most industrial processes.
Providing that level of security, precision, reliability and low latency is where the industrial internet is applied. This is where the companies such as GE and the other big engineering companies come in.
At the industrial internet level it’s far harder for startups to disrupt the existing players as it requires both specialist knowledge of their industry sectors and deep pockets to provide the necessary capital for product development.
However the existing industrial conglomerates don’t have all the skills in house and that’s an opportunity for smaller companies and startups to enter the industry.
The long product times are another aspect of the industrial internet, as Rue points out, GE are still supporting equipment that is over eighty years old. While that equipment will probably never be connected to the internet, the machines being designed today will be expected to have similar lifespans.
While the three different IoTs have their own characteristics, and in many instances overlap, all three are opportunities for savvy developers and entrepreneurs.
The difficulty some businesses, both as vendors and customers, will face with the IoT is applying the wrong technology set to their problems and industry.
Starting a business making IoT hardware is a tough challenge
Yesterday Internet of Things startup Ninja Blocks announced it was shuttering its doors after three years of operations, two successful Kickstarter campaigns and three successful fundraising campaigns that netted $2.4 million.
Ninja blocks aimed to become the centre of the smarthome with its simple controllable device but, as many other startups have found out, the costs and complexities of designing, manufacturing and shipping hardware are not trivial.
Last year I spoke to Ninja Blocks and a similar IoT startup which also failed, Moore’s Cloud, about their opportunities and challenges. In the light of both companies failing they are worth watching again.
Daniel Friedman, CEO of Ninja Blocks outlined the company’s plans along with the limits of crowdfunding.
The CEO of Moore’s Cloud, Mark Pesce, had much stronger views on crowdfunding and its limits.
From the Moore’s Cloud and Ninja Blocks story it would be tempting to conclude that pure IoT hardware startup plays are doomed to failure, however the lessons of companies like Fitbit and the Pebble watch show otherwise.
A very good example of success is Spanish IoT company Libelium whose founder and CEO Alicia Asin told Decoding The New Economy two years ago how the company had started under the shadow of the 2009 economic crisis and thrived since.
The failure of Ninja Blocks and Moore’s Cloud really tell us we’re in the early days of the IoT and the business models and technologies are not certain. It’s also a commentary on the risks involved in startup businesses, as investor Dave McClure says, “not every one will be a unicorn.”
As the markets grow and the technologies evolve we’ll be seeing many more IoT startups, few will become billion dollar unicorns and many will fail. That’s the nature of new industries.
Zendesk CEO Mikkel Svane’s book Startupland describes the challenges faced by most business founders and business owners.
Startupland is a magical, mythical place where the unicorns roam free and much of the advice dished out to nascent entrepreneurs has more in common with a romantic fantasy novel than the hard work of building a business.
Mikkel Svane’s Startupland is not one of those books. Svane, the co-founder and CEO of cloud based customer business Zendesk, is instead a tough description of the challenges and personal costs of venturing into business for yourself and the harsh, demanding realities of the Silicon Valley statup model.
“No-one tells you how little you get paid,” warns Svane as he charts his own journey from developing and selling through Stockholm’s computer shops of the mid 1990s a basic program that created 3D optical illusions through to floating Zendesk on the NASDAQ in 2014.
During Zendesk’s journey Svane and his business partners experienced the entire range of challenges that a business founder could face ranging from managing high growth, laying off staff in the face of a downturn, the inevitable pivots and, sadly, the passing of a valued employee.
“Startups are fragile” warns Svane and observes how he nearly fell for the trap all business owners have been tempted by in doing consulting work to provide cash for the business. Invariably the side job comes to dominate and the new venture withers due to lack of attention.
For those starting out in business, whether it’s a tech startup or something a big more mundane, the observations and tips on working for home are worthwhile in themselves, if you find you’re one of the type that “sits at home and eats toasts and masturbates” then it’s probably best to find an office or coworking space.
Having had the opportunity to interview Svane a number of times, his own passion and character comes clearly out of the book including his view that seemingly boring things like customer support is sexy, citing how Marilyn Monroe fell for Arthur Miller (although that didn’t end well).
The ‘boring is sexy’ mantra is one Svane repeats throughout the book, and his contention is seemingly mudane areas like customer support are where the real business opportunities lie.
Ultimate Svane sees business as being about relationships; between customers, staff and investors. His view on accepting investor’s money is an important lesson from the book.
“Great investors have unique relationships with their founders, and they are dedicated to growing the company,” writes Svane. “Mediocre and bad investors work around founders, and the company ends in disaster.”
In telling the brutal truth about starting a business Svane gives anyone considering the idea of ditching the cubicle a realistic view of the challenges ahead. That advice alone will save many families from the stresses and costs of self employment and startup land.
Those considering entering the world of startups, small business or self-employment should read Startupland. If you’ve already started that journey, then Svane’s story is worth reading to show you aren’t alone in your daily challenges.
Singapore’s Prime Minister stakes out the country’s place in the new economy.
This blog has written a lot about Singapore in the past, this speech by the country’s Prime Minister sums it up.
For other nations, particularly Australia, it’s time to stay paying attention to how the global economy is changing.
Singapore may not have all the answers and its government’s authoritarian tendencies may work against its ambitions to be a global tech and creative centre, but at least the government is staking a position in the new economy.
Twitter’s decision to restrict access to its data has cost them dearly
It’s been a bad week for the social media service Twitter with its stock pounded after the leak of poorer than expected results.
Writer Matthew Ingham says Twitter lost its way five years ago when it started closing down access to third party developers, a move that hurt the service’s growth and user adoption.
Twitter’s move was greeted with disappointment at the time and many developers gave up working on the company’s APIs.
With the growth of third party applications stunted, there was little reason for new users to come on board and so Twitter is now disappointing the market with its results.
Basically Twitter CEO Dick Costolo and his team reaped what they sowed in restricting access; they kept control of their data but it’s cost them users and hurt their share value.
Twitter’s woes show that the economics of cloud and social media services reward business that share data. While there may be some commercial and legal limits to what information can be shared, the default position should be to make data available.
In an information rich society, those who contribute the most get the rewards. This is the point Twitter’s management missed.
Science, Technology, Engineering and Mathematics studies are essential to the future economy a PwC study shows.
When discussing how industries are changing, the constant question is ‘what will happen to today’s jobs?’
Even in the Future Proofing Your Business webinar earlier this week this question was asked by a number of the small business owning listeners.
That concern forms the basis of the “A smart move: Future-proofing Australia’s workforce by growing skills in science, technology, engineering and maths” report released by accounting firm PwC yesterday in Sydney.
PwC’s report warns 44 per cent of current Australian jobs are at high risk of being affected by computerisation and technology over the next 20 years.
The report highlights that Science, Technology, Engineering and Maths (STEM) subjects are critical in the jobs that are going to benefit, or be created, by that technological change.
Sadly for Australia, and most of the western world, STEM courses are deeply out of fashion with students preferring to study in business related courses such as accounting, commerce and law.
As PwC flag, those industries are at risk with accounting at the top of the list for job losses.
On the other hand, PwC forecasts professions in health, education, personal care and – worryingly – public relations will be in increased demand. Something that may underestimate the effects of technology on those industries.
PwC’s main contention is that economies which want to compete in the new economy are going to need more STEM graduates.
The shift to STEM education is something the OECD highlighted in its recent report, OECD report How is the Global Talent Pool Changing?
In their report the organisation forecast that the number of students studying around the world would increase from 130 million today to 300 million by 2030 with all of that growth being in Chinese and Indian STEM courses.
Already that science and engineering emphasis is clear in today’s numbers.
To counter the drift away from STEM courses among students, PwC suggests a campaign to engage young people while they are still at junior school.
Sadly, that’s unlikely to work in Australia given the nation’s economy is built upon property speculation driven by the wealth effect of rising real estate prices.
Two nights before the PwC report one of the highest rating shows on Australian television came to its 2015 finale. The Block, which features couples renovating and flipping properties, finished its season the apartments being sold at auction at record prices and the contestants pocketing between 600 and 800,000 dollars for a few month’s work.
For young Australians the message from their parents and society is clear; don’t innovate, don’t create, just buy as much property as you can afford.
In the US on the other hand, the business heroes are the builders of new enterprises; people like Steve Jobs, Elon Musk, Bill Gates, Mark Zuckerberg and the founders of Google.
Other countries like Israel, India and China, are aspiring to be the next generation of tech leaders. That’s what’s necessary to build a dynamic economy.
As the PwC report claims, “the jobs most likely to endure over the next couple of decades are ones that require high levels of social intelligence, technical ability and creative intelligence”
Harnessing that combination of social, creative and technical intelligence is going to be one of the challenges for all economies in a decade of change.
Getting the supply of STEM skills right will be essential for success for all countries at a time when digital technologies will drive most industries.
Telstra opens its Muru-D incubator program into Singapore as the company expands its Asian ambitions
Today Aussie incumbent telco Muru-D opening in Singapore.
Muru-D is loosely based on Telefonica’s Wayra incubators that the Spanish telco has set up across Europe and Latin America.
Wayra’s fortunes have been mixed recently with the incubators coming off badly in the company’s restructure last year and it’s interesting that Telstra are copying the model of opening in strategic neighbouring markets.
Complicating matters is Telstra’s Singapore based rival Singtel has its own chain of incubators Singtel Innov8. Singtel’s model is different in that they sponsor incubators, Sydney’s Fishburners for example, rather than set up their own Wayra or Muru-D style operations.
So Telstra’s moving into Singapore could be seen as another move by the Aussie incumbent to take on Singtel on it’s own home ground, something that will be assisted by the recent acquisition of PacNet.
Also notable is the Singaporean government’s support for Telstra’s with Kiren Kumar, Director of Infocomms & Media at the Singapore Economic Development Board, welcoming the launch as enhancing the city’s repuation as “the innovation capital of Asia”.
Telstra’s move is another showing how telcos are trying to move out of being utilities along with Telstra’s need to grow out of the domestic Australian market it now dominates.
For Telstra both moves are well outside the company’s historical expertise, it will be interesting to see how successful they are.
How New Zealand’s capital is becoming a centre of the new economy
It bills itself as ‘the coolest little capital in the world’ however something is going on in Wellington, New Zealand’s capital city, as its technology sector takes off.
Last week I was in Wellington, partly to attend the Open Source, Open Society conference and also to have a look at how the city is doing so well as one of the leading startup cities.
While I’ll have a number of posts about the city, startup scene and conference over the next couple of weeks, it’s worthwhile noting some basic impressions that came from the visit.
The size of the city, Wellington is a small town with a population of 200,000, brings both advantages and negatives for the business and startup communities.
One of the advantages of being so small is the business community is relatively accessible, a number of entrepreneurs told me how easy it is for them to find the specialists they need given there’s usually two degrees or less separation between everyone.
Normally having a small business community means it gets insular, particularly in a capital city where the business of government can create a bubble effect. What’s notable about Wellington is most of the businesses are looking outward towards the US, Australia and East Asia.
The city’s intimate business environment also improves trust within the community as one Aussie expat told me, “if you rip off anyone in this town pretty well everyone knows about it by the end of the weekend. It keeps everyone honest.”
Being small, the city makes it easy to walk around which compounds the business networking opportunities. A businesswoman, who is also a lifelong Wellingtonian, observed how she allows an extra 15 minutes to walk anywhere as she finds herself stopping for conversations.
Having three successful businesses in the city – TradeMe, Xero and Weta – has both its upsides and disadvantages with the bigger players tending to dominate the employment market and funding opportunities.
Of the three businesses, TradeMe is the most domestically focused while Xero is growing in the tech sector and Weta is the most diverse with its range of special effects and movie production services.
With Weta, the business is exposed to the vagaries of the global film industry as Statistic New Zealand survey of movie production shows.
The film industry is one of Wellington’s important employers with the sector supporting around two thousand businesses in the city, although I didn’t get time to explore how much of an overlap there is between the tech and film industries.
TradeMe is largely a domestic focused business that provides a steady work and skills base for the local workforce. While it’s the least internationally exposed business of the three, it’s probably also the most consistent.
Xero, like Weta, is a globally expanding business and its success is attracting investors and expats from North America and Australia. While its the smallest of the three it’s probably the business that has done the most raise Wellington’s profile in the tech industry.
What’s particularly notable are the number of coworking spaces in Wellington ranging from the straightforward Bizdojo startup space and Creative HQ through to the quirky Enspiral coworking space.
The availability of shared spaces makes the city attractive to startups and adds to the vibrancy of the local tech community which links into hipster pursuits such as craft beer.
Communities like Enspiral also add another dimension to the local startup and creative industries environment by connecting entrepreneurs with their peers and service providers.
One aspect I didn’t get to explore while in Wellington was the relationship between the city’s business community and educational institutions, particularly Victoria University.
Similarly I didn’t get the opportunity to discover how much of a role local and national governments have had in the development of Wellington’s tech scene. It seems to be relatively hands off although some government agencies have supported Weta with co-investment funds.
What I did meet though were plenty of immigrants; from Croatia, Denmark, Holland, the US and, most of all, Australia.
Talking to some of the US and Australian expats it was clear that lifestyle combined with opportunity with lifestyle, as one Aussie emigre told me “I couldn’t get the water views, access to the city and be able to walk to work back home like I can here.”
While these are superficial thoughts that I’ll expand on over the next week as I decipher notes and listen to interviews, there’s no doubt that Wellington is carving a position as one of the global centres of the new economy. How big it becomes will depend on how many other businesses grow to the size of Xero or Weta.
A new breed of social media analytics is finding gold in online data.
Today social media analytics startup Vintank announced their acquisition by the W2O Group, a network of data driven marketing and communications firms.
W2O’s acquisition shows how data analytics and visualisation is increasingly an important tool for management in a world where businesses are drowning in information.
Last year Vintank co-founder Paul Mabray spoke to Decoding the New Economy about the company and how social media data is a valuable tool for the wine industry.
“The wine industry is last industry to have been changed by internet,” Mabray says. One reason for this in his view is how that the sector hasn’t had a disruptive startup like Yelp or Open Table to drive change and upset incumbents.
Despite the wine industry’s reluctance to adopt digital technologies, social media and the disruption of established media channels is having a profound effect on the sector’s marketing and sales.
“In the old days there was a playbook originating with Robert Mondavi in the 1970s which is create amazing wine, you get amazing reviews and you go find wholesalers who bring this wine to the market,” Mabray told Decoding the New Economy during a visit to Australia in 2014.
Mabray also flags the massive growth in the wine industry as being one of Vintank’s driving forces, “the global proliferation of brands the increase of awareness and consumption patterns where people like wine more, those playbooks didn’t work in 2009 when the crisis started.”
A proliferation of new competitors coupled with disrupted communications channels isn’t unique to the wine industry, the attraction Vintank has to the w2O Group’s president Bob Pearson; “VinTank provides us with a way to create agile audience engines for a brand, where we can learn what an audience is doing online, understand what content they like.”
For many businesses social media is a both an opportunity and a mystery; while customers are telling the world what they’re buying through services like Facebook and Twitter capturing, managing and using that information remains a challenge.
As Robyn Lewis of Visit Vineyards whose database holds details on over 30,000 Australian wineries and associated tourism business says, “the gold is in the data.”
Panning for that gold is Emma LoRusso of Sydney social analytics startup Digivizer who told Decoding The New Economy two years ago “the truth is in data”. Services like Vintank, Salesforce’s Radian6, Klout and startups like Digivizer attempt to add context to that data.
Another aspect of Vintank’s technology is the ‘geofencing’ of information, creating a virtual geographic perimeter so only data relevant in that region is flagged. As well as reducing noise, this increases the value to local wineries and tourist operations.
In some respects the geofencing is possibly the most powerful part of services like Vintank as it allows regional operators to focus on visitors and customers to their districts rather than worrying about national or global activity.
W2O’s acquisition gives Vintank access to a broader market outside the wine industry as well as deeper data analytics capabilities. For W20 the purchase adds to the social media tools the company can offer.
The Vintank deal with W2O shows how the marketing and advertising industries are increasingly becoming data driven. For other business functions this is true as well.
For businesses of all types, understanding the data pouring into their companies is going to be the difference between success and failure in an increasingly digital world. Providing those tools to do so is one of the great opportunities in today’s economy.
Square enters the small business lending space, will be they successful in a very competitive field?
Banking has always been a data driven business, understanding borrowers and the risks they present is one of the essential skills in making money from lending.
The new wave of payment startups present a new way for lenders to analyse risks; with real time data aggregated across businesses and regions, lenders can quickly decide wether a borrower is likely to able to pay the money back with the conditions asked for.
Payments company Square in its latest pivot has partnered with Victory Park Capital and claims to have extended more than $100 million in capital to more than 20,000 merchants writes the New York Times.
Like other payment companies that have entered this market, Square uses their own deep understanding of their customers’ incomes to be able to make a data based decision on the creditworthiness of applicants.
Square also offers ancillary data-driven products created for small businesses. The new instant deposit product, which is still in testing and will be fully available in the spring, will give businesses faster access to money they put into a debit account. And the company’s new charge-back protection service will cover some disputes between consumers and merchants.
Those products also rely on data that Square has collected. They will be available only to small businesses that have a solid financial track record, based on a history of accepting payments with Square.
Square is by no means the first business to do this, last year we wrote of PayPal’s move into small business lending and Point of Sale hardware manufacturer Verifone retreated from the market two years ago calling it ‘fundamentally unprofitable.’
The competition in the space and the fact assessing financial risks isn’t exactly a core competence of Silicon Valley start ups indicate Square’s and other companies may find small business lending a tough business as well.
Despite that, small business lending is a field that is overdue for disruption. With companies like Apple, Google and Amazon all offering payment services, the logical expansion is into evaluating risk and profit.
It may not be Square, Verifone or PayPal who ultimately redefines the sector, but it will be one of today’s tech businesses that does.
Is the Silicon Valley funding model creating a bubble in tech investments
Staying private sucks if you’re a tech company writes Felix Salmon in Fusion magazine.
If you’re giving away stock in lieu of wages to employees or taking early stage funding for equity, then listing, or selling to a larger business, makes sense as staff and investors need to see a return. It’s the unspoken truth of the Silicon Valley funding model.
The Silicon Valley model though doesn’t come without risks, investor Mark Cuban warns a valuation bubble greater than that of the Dot Com Boom has developed as angel investors and early stage venture capital firms have thrown money at startups after Facebook’s massive buyouts of Instagram and WhatsApp.
While Silicon Valley and the US tech market might have plenty of opportunities for buyouts and IPOs, most other places around the world don’t have the deep financial markets and the cashed up software companies to make similar exits possible for local startup businesses.
Again that difficulty in successfully funding exits shows that simply trying to copy the US tech industry model is probably not going to work for most places tying to building their own Silicon Valleys, although it seems China is about to try.
The other message is that the IPO or buyout route is not necessarily the right path for every business, as Salmon says: “Maybe the best solution is not to take any outside funding at all, and not to try to grow too fast.”
“Some family companies have been around for hundreds of years: if you own your own business, and you don’t get greedy, you can build a very pleasant life for yourself. You just won’t end up on any list of young billionaires.”
