Tag: startups

Validating your market

Sometimes your competitors are your greatest marketing assets.

Last week I interviewed Anthony Foy, CEO of Workshare about his business and the growth in the online sharing and collaboration markets.

When researching Workshare the obvious message is the business can be best described as a Dropbox for enterprises.

It always pays to be cautious when comparing a business to a competitor as often the managers or founders don’t like mentioning marketplace rivals.

Frequently, it turns out the rival in the market helps you define what your service delivers.

A good example of this was a gay and lesbian dating service run by a pair of acquaintances.

Naturally the obvious comparison was with the Grindr app but the two founders – who we’ll call George and John – had completely different views about this.

George’s view was “don’t mention the G word” as Grindr was the feared rival while John’s view was that their opposition validated their market and actually made it easier for them to explain their business.

John’s view turns out to be that of Anthony Foy’s – that Dropbox actually makes it easier for Workshare to articulate its business.

Investors, customers and staff understand what Dropbox does so there’s no need to for Workshare to convince people there’s a demand for what they do or to explain exactly what their service does.

This has proved true for many successful businesses. Facebook needed Friendster and Myspace to prove the market for social media existed while Google had Yahoo! and Altavista to show there was a need for an online search engine.

Just because you aren’t first to the market doesn’t mean you won’t be successful. Sometimes your competitors are your greatest asset in helping the rest of the industry understand exactly what you do.

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Lessons in crowdfunding from an unsuccessful Kickstarter campaign

Crowdfunding is in its early days and Moore’s Cloud founder Mark Pesce explains some of the lessons we have to learn about this new way of raising capital.

“I’d rather eat a bullet than do a Kickstarter campaign again,” says Moore’s Cloud founder Mark Pesce in the latest Decoding The New Economy video when asked about crowdfunding his project.

Moore’s cloud is an internet of things company that focuses on lighting, “we think it’s interesting and something that expresses emotion” Mark says.

With their first project, Moore’s Cloud looked to raise $700,000 to build their first project but fell well short of their target.

Falling short lead to Mark and his team executing a classic business pivot from a static lights to Holiday, a system of intelligent fairy lights.

“We took exactly the same technology and put it into a different form factor,” said Mark. “It’s as if we took the light and unwound it.”

The failure of the Kickstarter campaign gave the Moore’s Cloud founders an education on how crowdfunding works.

Customer focused from day one

An important aspect of crowdfunding is it’s very customer focused. From day one of the campaign, the venture has to devote resources on relations with those who’ve pledged a contribution.

Most startups don’t have those resources, or the time and skills, to deal with those relations.

“People say it’s a better way of getting investors. I would have to say ‘it’s not better, it’s different.'” Mark says about crowdfunding.

The psychology of investors

One of the differences is the psychology of investors. Mark was urged by the CEO of Indiegogo, Slava Rubin, to set a low target as participants like to back successful campaigns.

“There’s a whole bunch of psychology I didn’t understand going in,” says Mark. “If we’d had a goal of $200,000 we probably would have filled it in the first two weeks.”

“Once a campaign is fully funded, it tends to get overfunded.”

A truism of business is that banks will only lend to you when you don’t need the money and it strangely appears the same thing applies to crowdfunding.

We’re in the early days of crowdfunding and there’s more to be learned about the way it works and for which ventures the fund raising technique works best.

The experience of campaigns like Moore’s Cloud are part of how we’ll discover the nuances of crowdfunding and the psychology of the crowds that contribute.

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Finding the smart money

Can events like Sydney’s AngelEd and London’s City Meets Tech help those cities become global startup centres?

Around the world startup communities are working to connect with local investors, in Sydney and London two groups are showing how it is done.

“We’re looking at turning idle money into start money,” is the aim of Sydney AngelEd says one of its founders, Ian Gardner.

Fitting startup companies’ capital needs into the established criteria of investment managers is an ongoing problem that AngelEd’s founders want to resolve. “We see startups becoming an asset class,” says Gardiner.

AngelEd, to be held on November 7, aims to educate high wealth investors and asset managers on understand the risk, benefits and hype around angel investment, particularly in tech companies.

The global search for funds

Startups around the world are struggling to engage with investors – in London, the local tech community has set up City Meets Tech to introduce British investors to high growth companies.

London should have an advantage in this field given its leading role in the global finance industry, however the challenge for the tech community is to find financiers who are prepared to accept higher levels of risk than mainstream investments.

“The City is generally risk adverse and doesn’t understand tech and tech start-ups,” says the City Meets Tech website, “though really it’s about understanding the business and managing risk though unfortunately innovation requires at least some risk.”

Australia’s trillion dollar superannuation system should similarly give Sydney an opportunity that to become a global centre however it suffers from a similar, if not worse, conservative investment culture to London’s.

Turning Sydney into a global finance centre has been an objective successive state and Federal governments for twenty years but the sleepy, comfortable and risk averse culture of Australian fund managers offers little to attract foreign investors or companies.

Much of Australia’s is problem is the insular nature of local fund managers with all but a tiny part of the nation’s retirement savings being put into the top local stocks, listed property funds or domestic infrastructure projects that are notable for their lousy returns and extortionate management fees.

Breaking that mentality is going to be the key to both AngelEd and the Sydney’s success as a financial centre.’

Competing with the world

While London and Sydney are struggling with the challenges of encouraging investors into the high growth sectors, cities like Singapore and New York are developing investor communities that are attracting entrepreneurs to their cities.

Many governments dream of being the next Silicon Valley and while it isn’t likely anyone can recreate the circumstances that led to Northern California becoming the computer industry’s world centre , a vibrant and accessible capital market will be necessary for any place hoping to be a global cnetre.

For Sydney and London, the success of initiatives like AngelEd and City Meets Tech may be critical for both centres’ future in the global digital economy.

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Venture capital investors as mentors

Early investors bring more than money to a young business

LinkedIn founder Reid Hoffman has a wonderful post on his blog detailing what he wished he knew when he first pitched his business to investors.

His seven myths of pitching are well worth reading whether you’re seeking capital from Silicon Valley venture capital firms, a sceptical bank manager or your mum and dad.

The first point is the most pertinent — a successful financing process results in a partnership that delivers benefits beyond just money.

Raising investor funds is only a step in the journey of creating a successful business, it is by no means the end point.

Hoffman’s point is something every business founder needs to keep in mind, those early investors are important mentors and their advice could prove to be more valuable than the money they bring to a venture.

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Do business awards help companies?

Winning business awards are great for helping a company focus on its operations, but they aren’t necessarily great for growing an organisation.

The latest clip on The Decoding the New Economy YouTube channel is an interview of Cameron Wall of Melbourne’s C3 Business Solutions about business intelligence, data analytics and whether winning awards helps a company.

Cameron’s business has been a successful enterprise having grown to over a hundred employees since being founded seven years ago.

As a high growth business, the company was listed in the 2010 BRW Fast Starters list, interestingly though Cameron didn’t see a great deal of benefit from winning the accolade.

“I look at it as being a credential, just because you get the credentials it doesn’t necessarily mean you can charge a premium in the marketplace,” Cameron says. “It all helps in terms of recognition, but we haven’t been thrown anything as a result of the award.”

On the other hand the company has won the BRW Best Australian workplace three years in a row and Cameron has found this improved the business’ recruitment.

“Being in a service company you often hear ‘people are our greatest asset’, basically they are our only asset.” Cameron says, “Having a great place to work is really important for us.”

Cameron found that after winning the great place to work that the flow of resumes increased. “Some of the benefits of that were a lot of people applied to join C3 and it makes the recruitment process a lot easier.”

How business awards do help companies is in reviewing their operations and practices as Cameron explained, “using the great place to work process is a great way to understand if we’re trending upward, downward and where we’re going.”

“It was a difficult award to win, as you get probed by every angle.”

With the growth in data science, business analytics and Big Data companies like C3 are going to need good employees in the global race for talent. Having a reputation as fine place to work is a good way of winning the global race for talent.

Trophy image by RoyM through sxc.hu

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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.

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.

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.

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Bringing social networking to life

One startup project shows how different technologies are coming together to change our business world.

One of the highlights of the 2013 Australian Microsoft TechEd was a startup panel featuring local startups CoOpRating, Project Tripod and Nubis.

All three startups are interesting projects and Nubis in particular illustrated how various internet and smartphone technologies which are coming together.

Nubis is an Augmented Reality platform that projects social media onto the viewer of a smartphone’s camera. By pointing the camera at someone, the idea is a user can bring up details about a person.

“We’re bringing social networking to life,” says founder Uzi Bar-On.

As part of their Alphega project, Nubis has teamed with Glass Up, an Italian startup attempting to create a Google Glass competitor, the aim is to create a wearable computer that feeds social media information to the wearer.

While it’s not clear what the benefits will be of that – or whether Glass Up, Nubis or Alphega will be successful – the project is interesting as it brings together Augmented Reality, geolocation, wearable technologies and social media.

Over the next few years we’ll be seeing more products like Alphega tying together different technologies and using the Internet of Everything to talk to each other.

It’s these sort of projects that will show us how our businesses and lives are going to change over the next decade as smart people figure out the ways to mash together these technologies.

Paul travelled to Microsoft TechEd 2013 courtesy of Microsoft Australia

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