Revolutionary Measures

Does Apple Pay spell the end for banks?

There aren’t many people that actively like their bank. In the wake of the credit crunch and subsequent bail-out, bankers became the focus of people’s anger, being accused of recklessness at best, and outright fraud at worst.English: ATM Bank Albilad, Riyadh Saudi Arabia...

At the same time the rise of technology has eroded the central position retail banks have in people’s lives. The majority of us do most of our banking online, with the main physical interaction happening through the screen of an ATM. We don’t know who our bank manager is – and they probably don’t have any leeway to get us a better deal on our mortgage.

So, it is unsurprising that new entrants have been looking at the sector. PayPal has grown to be the de facto way of paying for goods on eBay, and has now spread to lots of other sites. Its smartphone app now makes it easy for people to pay for goods on the high street as well. Bitcoin goes further, not just marginalising banks but the entire idea of a national currency.

However the real threat to banks is from brands coming into the market and pushing them into the background. The launch of Apple Pay in the US this week is a prime example of what might happen. By using your iPhone 6 (or Apple Watch) and Near Field Communications (NFC) you can simply pay by waving your device close to the payment reader. The built-in fingerprint sensor in the iPhone provides security (unlike traditional contactless cards), and the money is automatically debited from your bank account.

Of course, the money paying for the things you buy still comes from your traditional bank account. But in an era of low interest rates, essentially it turns the bank into a safety deposit box which stores your money, with the front-end, customer facing activity controlled and branded by Apple. That is partially down to the stringent regulations you need to meet to become a bank, and also down to where the highest margins are within the transaction.

So what can banks do to out-innovate the likes of Apple? And can they change a culture still built on retail, branch-based banking to reflect a modern, mobile-first lifestyle? Barclays has launched a service called Pingit which lets you send money to friends or family and pay bills, even if you are not a customer of the bank. Since launch in 2012 the Pingit app has been downloaded 2.5 million times and £350m has been sent through the service. But this is small change in the overall scheme of things.

Apple’s biggest competition may well come from Zapp, a service run by payments processor VocaLink that uses your existing mobile phone banking app and account for payments. Scheduled for launch in 2015 it has two big advantages over Apple and Pingit – it runs on all smartphones (unlike Apple Pay) and is seen as independent from an individual bank, although it is not yet supported by all of them.

The battle to control payments and the front end to banking promises to be fascinating. Will Apple’s brand triumph, despite (or even because of) its exclusivity or will Zapp’s wider approach succeed? How can both companies market themselves to overcome security fears and gain traction with a wider market beyond early adopters. Add to this that Google is rumoured to be buying PayPal to give it a foothold in the market, as well as other innovations yet to launch, and 2015 promises to be a busy year in the battle to replace your wallet.

 

October 15, 2014 Posted by | Creative, Marketing, Startup | , , , , , , , , , , , | Leave a comment

What’s the right size for a tech company?

The news that HP is splitting itself in two (ironically a few years after a previous CEO lost his job for proposing the same idea) made me think about the size and structure of tech companies. Some companies invest in growing rapidly and aim to be biggest in their field, others focus on niches, while a third group aim to be a jack of multiple trades, spanning diverse sectors.

HP was previously in the jack of all trades camp, with its fingers in lots of different pies, from enterprise software and services, through servers and networking equipment, to consumer PCs and printers. It will now become two companies, one focused on the enterprise and the other on PCs and printers. Sadly, it haEnglish: This sign welcomes visitors to the he...s missed the chance to name one H and the other P, going instead for the more prosaic Hewlett Packard Enterprise and HP Inc.

While the two companies will be smaller, they will still each have over $50bn in revenues, and are likely to be hard to disentangle. At the same time eBay has announced it will divest its PayPal subsidiary, following pressure from shareholders and the entrance of Apple into the payments market. I must admit to being cynical about efforts by many tech titans to refocus themselves – it can look suspiciously like a random throw of the dice that keeps investors happy but has no real long term strategy behind it. After all, the world’s most valuable tech company, Apple provides software, hardware (mobile and desktop) and music and video content, alongside payments, maps and health data. And no-one has yet pressured it to split.

However there are definitely optimum size and types of company, depending on the maturity of the market they are in. Emerging sectors, such as the Internet of Things, change fast, so a company needs to be flexible and focused, with the ability to pivot quickly and respond to market conditions. It stands to reason that smaller players will be able to do this faster than legacy behemoths.

Mature markets run less on innovation, with much tighter margins. You are selling a replacement piece of software/hardware and any new features are likely to be incremental not transformative. Consequently the bigger you are the greater the economies of scale when dealing with suppliers and customers. The car industry is a perfect example outside the tech industry, where you need to be big to have a chance of profitability.

The tech industry is going through a rapid wave of change, driven by the move to the cloud and the rise of mobile devices. Previous shifts (such as from the mainframe to the minicomputer and then the server) have led to market leaders falling by the wayside – does anyone remember the likes of Data General for example? In fact HP has done well to survive so long, with a heritage that dates back to 1939. What will be interesting to see is if can make it to its 80th birthday in 2019, or whether it will be carved into even smaller chunks before then………..

 

October 8, 2014 Posted by | Cambridge, Marketing, Startup | , , , , , , , , , | Leave a comment

Selling out too early

Cambridge is rightly highlighted as one of Europe’s biggest innovation hubs, particularly when it comes to commercialising ideas that began in the research lab. This has spawned a huge biotech sector, and helped create a series of billion dollar tech companies that lead their industries, such as ARM and Cambridge Silicon Radio (CSR).

The University of Cambridge has the largest un...

The Internet of Things (IoT) has been identified by many commentators as a key emerging market – and one where Cambridge has the ecosystem, experience and ideas to play a major role. So the news that IoT pioneer Neul has been sold to Chinese telecoms equipment behemoth Huawei depressed me. Not for nationalistic reasons, but simply due to the low reported purchase price ($25m) and the fact that the company has cashed out so early in the growth process. While there was a fair amount of PR spin around Neul’s progress to date, I genuinely believed it could join the billion dollar Cambridge club by developing its technology and building alliances and routes to market.

At the same time, Cambridge Silicon Radio is mulling a multi-billion pound sale to US firm Microchip Technology, reducing the number of major, independent, quoted Cambridge companies. Obviously investors and founders do look to realise their profits at some point, but it is important to balance this by looking longer term. While those that put money into Neul no doubt got a decent return, think how much more they’d have received if the company had been allowed to grow and exploit its market position.

I’m not alone in taking this stance. Cambridge Innovation Capital (CIC), the University of Cambridge-backed VC fund, recently warned its portfolio companies against selling out too early and promised to provide long term, founder friendly, capital to help grow the next ARMs and CSRs.

So what we need is the support, both financial and in terms of time, that gives companies the ability to achieve their potential. Not all of them will make it, and many will be niche players that logically fit better within bigger companies – but at least they’ll have had the ability to aim for the stars before finding their real place in the world. Otherwise Cambridge (and other parts of the UK tech scene), will simply act as incubators that turn bright ideas into viable businesses that can be snapped up and digested by tech giants looking for the newest innovation. It is much better for both the local and national economy that some of these startups make it the stock market as fully fledged businesses, creating ecosystems that generate new sectors and jobs. This requires longer term thinking from everyone involved – otherwise the number of billion dollar Cambridge companies will shrink even further.

October 1, 2014 Posted by | Cambridge, Marketing, Startup | , , , , , , , , , , , , , | 2 Comments

Smartphones will eat the world

Commentators are full of predictions that software will eat the world, with jobs, industries and traditional means to doing things swept away by the rise of technology. From automated journalism to connected cars, the claim is that we’re undergoing a transformation in how we work, live and play.

While Apple has not listened to my complaints ...

Software is revolutionising the world around us, but I’d contend that there’s a much more disruptive factor impacting our lives – the smartphone. It essentially provides an always-on, easy to use, ubiquitous interface with all of the software around us. Without it we wouldn’t be able to access the power of technology. So, rather than software eating the world, I’d pinpoint 9 ways that smartphones are making a meal of it:

1. Health
Smartphones have the ability to monitor our vital signs and transmit information to doctors and medical staff in real-time. Whether it is using in-built or external, Bluetooth equipped sensors, smartphones will disrupt the health industry. Apple’s new focus on building a health ecosystem is just part of this trend, which can either be seen as a force for good or as allowing intrusive snooping on our most private moments. On the plus side patients can be monitored remotely, allowing them to remain at home rather than going into hospital for certain conditions, but confidentiality of data remains a worry. What if your insurance company could access your health data and amend your premiums accordingly?

2. Taxis and transport
Companies such as Uber and Lyft are radically changing the taxi market by removing the overhead (justified or otherwise) of traditional operators. Anyone can become a taxi driver – all they need is a car and a smartphone (which can also serve as your GPS, so you don’t need the Knowledge to direct you to the right place). This does raise potential issues about safety, vetting and insurance, hence the bitter battles being fought between traditional cab drivers and the new upstarts.

3. Marketing
At no point in human history has so much data been available about individuals. The combination of ‘free’ services such as Google and Facebook that hoover up our personal information and preferences, with the geolocation data from a smartphone mean that companies have the ability to understand more about their consumers than ever before. The challenge for marketers is twofold – they need to ensure that they have real, informed consent from consumers when handling their private data, but at the same time have to evolve the skills to sift through this big data to deliver personalised marketing that drives engagement. The traditional model of campaigns that take months to plan and implement is rapidly going out of the window – if marketers can’t adapt they risk being sidelined by ever cleverer algorithms.

4. Payments
There is something impressive about a pile of cash – even if it is just one pence pieces. But carrying it around is another story. Replacing pounds and pence with the ability to tap to pay even the smallest amount with your phone promises to turn us into a cashless society. And it also removes the need for a wallet full of credit, debit or loyalty cards. All you’ll need to do is select how you want to pay on your phone and the software will handle the transfer. Could we see traditional banks and financial services companies replaced by Apple Money – or even currencies swept aside by electronic dosh? It is certainly possible, hence Apple’s move into the sector with the iPhone 6.

5. Telephones
It may be difficult to remember, but when they began, mobile phones were for making phone calls or sending text messages (and playing Snake if you had a Nokia). Now the number of calls made and received is a fraction of before, as people move to messaging, email and free voice over IP services such as Skype. Many of us already pay more for our smartphone data plans than for calls and texts – meaning that mobile phone (and landline) operators will need to evolve new services if they are to be part of the smartphone future.

6. Toys
Growing up in an analogue world, toys and games were very straightforward. Now traditional toys are evolving to embrace both full on mobile gaming (think Angry Birds) and half way houses where the physical meets the virtual. Software such as Skylanders combines playing pieces containing electronic chips with fully fledged games to give a radically new experience. And this is just the beginning. As immersive technologies such as Google Glass and Oculus Rift gain traction we’ll find it difficult to tell reality and gaming apart. How long before people embed chips in themselves to become part of the latest smartphone game?

7. Utilities
Buying power is a necessary evil – and the battery life of smartphones does mean we’ll always need electricity to recharge them. Mobile devices, combined with sensors and the Internet of Things provide the ability to monitor and adjust how we use power. From turning smart thermostats up or down, to only switching on lights when the smartphone user is in the vicinity, they can change energy use. Taken a step further, consumers could cut out the energy company and use their smartphone to buy power directly from smaller producers, adding flexibility and potentially bringing down prices.

8. Insurance
The problem with insurance premiums is that they are based on averages, rather than knowledge of your individual circumstances. The data within a smartphone, either directly monitoring your movements, or linked to a sensor in your car, provides a deeper context around your behaviour and habits. Used properly this can help better judge the risks of insuring individuals – but again used incorrectly it will cause a privacy backlash.

9. Pub quizzes
As a Trivial Pursuit expert (and part of the reigning village quiz team champions) there’s nothing I like better than the chance to show off my knowledge. But how can pub quizzes survive in an era when Wikipedia can be accessed from your smartphone in milliseconds? Short of holding quizzes in exam conditions, with no toilet breaks where people can sneak off to check answers on the internet, cheating is going to become rife, making my carefully assembled general knowledge useless.

Research shows that the majority of us access the internet more through mobile devices than traditional PCs. And 20 per cent of young American adults admit to using their smartphones during sex. We look at our phones constantly, panic if they are out of sight for a minute and feel bereaved if they are lost or stolen. If it is true that software is eating the world, the smartphone is the knife, fork and plate responsible for the repast.

September 24, 2014 Posted by | Marketing, Startup | , , , , , , , , , , , , , | 1 Comment

The news – written by robots

The march of technology has radically changed many jobs. Factory work has become increasingly automated and roles that involved processing documents have been swept away. And as the cost of processing power falls, artificial intelligence improves dramatically and more and more information is available online, machines are becoming cleverer. From delivering online learning to scanning legal documents for relevant information or automated trading of shares, computer-based algorithms are increasingly capable of replacing people in more traditionally white collar roles.

Partial front page of the Los Angeles Times fo...

Partial front page of the Los Angeles Times for Monday, April 24, 1922, displaying coverage of a Ku Klux Klan raid in an L.A. suburb (Photo credit: Wikipedia)

Judging by recent stories, the next profession under attack is professional journalism. Already hit hard by the free model of the internet and the rise of citizen reporting, journalists now have to fight off robots with their eyes on their jobs. AP has just announced that it will use software from Automated Insights to produce 4,440 robot-written corporate earnings reports every quarter. The company argues that by letting the software write basic stories that essentially cover the financial details of the earnings announcement it frees up human reporters to write more detailed analysis pieces – and also ensures it can cover more companies without expanding its staff.

AP is not alone. An increasing number of news outlets are using software to write up reports of matches in minor sports which aren’t popular enough to justify the attention of a ‘real’ reporter. And in California, the LA Times uses a program to analyse data from the US Geological Survey to provide a first report on earthquakes. It is also using separate software to analyse incoming lists of arrests from the police to flag those that look newsworthy to reporters. This essentially works by thinking like a journalist and looking for potential signs of interest, such as particular names or occupations and high bail amounts that can then be followed up.

So, should journalists (and by extension, other writers such as PR people), be worried? There may be a lot of hand wringing about these developments, but I think there are three reasons that the human hack will survive, and even thrive.

1          Robot journalism is all about the facts
At present software is very good at searching for information, collating it and presenting it in a way that can be easily read. If you look at the AP or LA Times pieces they are never going to win any prizes for journalism, as they are basic stories that journalists would knock out because they had to, without really getting out of second gear. Software can do it much faster, freeing up their time for more interesting pieces.

2          Opinion and context is key to retain readers
We are bombarded by facts. What we crave are journalists who can put the facts in context, create a logical narrative, and most importantly add experience and opinion. While, technically, software could try and mimic this by analysing the complete works of Caitlin Moran and regurgitating it, it can’t get across personality in the same way. So real opinion will always beat computer journalism that stitches together opposing quotes when it comes to engaging the eyeballs of readers.

3          Investigative journalism is alive and well
Reporters continue to work tirelessly to expose scandals, often with very little official data to work with. Whether it is uncovering irregularities with the expenses of MPs or child abuse in care homes, a large number of nationally and internationally important stories have only been published because of long term research and work by journalists or newspapers. Computers may well have been used to help in analysis and getting to the truth, but they did not lead the investigation.

So, before reporters worry too much about R2D2 stealing their jobs, it is worth understanding what readers actually value in an article. Yes, they want the facts, but more to the point they want opinions, colour and context, especially if it is personal and random – and at the moment, this is beyond the scope of software.

September 17, 2014 Posted by | Creative, Marketing, PR | , , , , , , , , , , | 1 Comment

Wandering lonely as a smartphone

Can you remember life before the internet? While your response obviously depends on your age (I can recall fax machines, video recorders and black and white TVs), the number of people in the world with analogue memories is dropping. For example, just comparing my time at university twenty years ago (no mobile phones, no email, handwritten essays) with students today demonstrates a real gap in experiences.

English: Daffodil Daffodil.

English: Daffodil Daffodil. (Photo credit: Wikipedia)

This sobering question is the basis of a new book by Canadian journalist Michael Harris. In “The End of Absence: Reclaiming what we’ve lost in a world of constant connection,” he starts from the premise that soon, nobody will remember life before the internet. It is easy to point to what we have gained in terms of access to unrivalled amounts of information, available instantly at the push of a button or a swipe of our smartphone screen.

However, as Harris points out, we’ve also lost out in multiple areas. We experience our world through technology, with a screen or camera between us and the real world. This combines with the ability to meet all our wants much more easily and faster than ever before. We can buy things quickly, communicate instantly and indulge our wants without having to wait or often make much effort. And this has a knock on effect – we should be satisfied, but we don’t have time as we’re onto the next thing. The risk, as Harris says, is that we believe that things matter less, simply because they are easy to achieve.

The other impact of the internet, and in particular mobile devices, is that we don’t have the opportunity to be bored or to appreciate the world around us. We lose our sense of wonder, as rather than studying a bird building a nest while we wait for the bus, we’re checking our email. Rather than writing about wandering lonely as a cloud, would Wordsworth today be taking selfies of himself with daffodils and posting it on Instagram? We’re always connected and continually worried that we’re going to miss out on the Next Big Thing.

On the positive side, I think Harris isn’t alone in understanding the need to disconnect. I see an increasing number of people running, cycling or walking, and while they use technology to show where they are, listen to music and see the speed they are going, they are at least unhooked from the broader internet for a few minutes at least. But what we need are more opportunities for solitude and day dreaming. When was the last time you did nothing without worrying about what you are missing out on?

It is easy to come across as a Luddite when it comes to being concerned about the impact of technology – after all I’m typing this blog on a PC, posting it online and then shouting about it on social media. However, as Harris’s book argues, it is probably time to take a hard look at what we risk losing with the onward march of technology and to take action (or should that be inaction) to reclaim solitude, human to human interaction and a bit of plain idleness.

September 10, 2014 Posted by | Marketing, Social Media | , , , , , , , , , , , , , | Leave a comment

Sting, Simon and Sex – 20 years of the Smartphone

It seems like 1994 was a busy year – not only did it see the first ecommerce transaction (a foolish purchase of an overpriced and overrated Sting album), but also the launch of the very first smartphone. And interestingly it wasn’t produced by a traditional handset vendor, but created by IBM, thus adding to the long list of inventions, such as the PC, that it pioneered but then failed to commercialise.

English: The first smartphone "The Simon&...

English: The first smartphone “The Simon” by IBM and Bellsouth (AT&T) (Photo credit: Wikipedia)

The oddly named Simon went on sale to the US public on 16 August 1994, and had a calendar, could take notes and send emails and messages as well as make and receive calls. Aimed at the busy executive it could be linked to a fax machine in order to handle all your communication needs. However it failed to take off, only selling 50,000 units. As curator of the Science Museum’s Information Age gallery, Charlotte Connelly, drily puts its “It only had an hour’s battery, it was $899 and there was no mobile internet at the time. So it wasn’t very successful.” Personally I’m not convinced the name helped either – “Sent from my Simon” doesn’t have the same kudos as “Sent from my iPhone” at the bottom of an email.

We’re now seeing mobile and ecommerce (as opposed to Sting and Simon) converging, and driving innovation in technology. As this nifty but messy Google Public Data graphic shows, the majority of us now use smartphones as our primary method of internet access, and, aside from reading this blog, watching cute kittens and moaning on Facebook, one of our primary occupations is buying stuff. According to Goldman Sachs, global mobile commerce will hit $638 billion by 2018 – the same amount spent via PCs in 2013. While the majority will be on tablets, smartphones are an integral part of the customer journey and will make up a direct $20-30 billion of the total.

The smartphone has changed how we interact, shop and spend our free time. We are no longer ever idle – why gaze into space at the bus stop and notice the world around you when you can play Candy Crush instead? In many ways mobile technology has outstripped our capacity to adapt, leaving humans scrambling to change their behaviour to fit in with their apps, rather than the other way around. 20 per cent of young American adults (and 10 per cent of the total population) use smartphones during sex, though mercifully the research doesn’t go into any more detail than that.

So, what does this mean for startups and marketers? The smartphone is essentially our most relied upon device, and the one we keep closest to us at all times. You can link it to sensors, watches and the world around us, through Bluetooth and technology such as beacons. It really does provide a window into our lives, which has both a positive and negative impact. Speaking personally spam text messages or calls annoy me more on my mobile than their equivalents on landline or email. It is a delicate balancing act, with the consequences for misjudging privacy or security potentially extremely damaging. But get it right with your app and you can generate big profits or deliver your message right to the heart of your target markets.

The last twenty years has seen the smartphone change the world – as well as the wider device market. It has shrunk from the 500g brick sized Simon to thinner, more pocket sized smartphones (though ironically the trend is now for larger and larger devices), with increased usability and a wider range of apps aimed at consumers as well as businesses. One thing hasn’t changed though – the Simon’s battery lasted an hour, and while I get a bit longer from my iPhone, it still can’t survive a busy day without needing a recharge……..

August 20, 2014 Posted by | Creative, Marketing, Startup | , , , , , , , , , , | 1 Comment

The end of old media?

Ofcom’s annual study into the UK’s viewing, listening, internet and communications habits is always worth a read. This year’s tome is no different, with a headline finding that we now spend an average of 20 minutes more every day using technology devices than sleeping. Apparently the average night’s sleep is 8 hours and 21 minutes – which seems an incredibly long time to me, but then I’ve got three kids and a noisy cat.

A landline telephone

A landline telephone (Photo credit: Wikipedia)

There is positive news on broadband – there are now 6.1 million superfast connections across the country, making up over a quarter of broadband subscriptions. Given the huge amount of money invested by the taxpayer to push superfast broadband to rural areas, this is promising, but the UK still lags behind other countries on targets and speeds. For example, Finland defines superfast as 100 Mbps, while the UK target is just 24 Mbps. And my new shiny rural fibre broadband doesn’t even achieve that, measuring just 21.6 Mbps according to my ISP (when working).

TV viewing is less than 4 hours a day for the first time since 2010, at 3hr 52 minutes. But before broadcasters start panicking, bear in mind that this is more than the combined time spent on mobiles, landlines and the internet. The vast majority of programmes are still watched live, despite the rise of catch-up services.

As always the Ofcom findings are being used to predict the death of various communication channels by analysing the behaviour of 12-15 year olds and making assumptions for the future. For example, only 8% of this group said they used email and 3% communicated through landline phones, leading to experts to point out the imminent demise of these channels. I can think of three reasons why this is tosh:

1. Demographics
People are living longer, so we actually have a growing proportion of silver surfers (complete with landlines), balancing out the younger generation. If they were cutting the cord and just communicating using WhatsApp things would be different, but no sign of that yet.

2. Why would a 12 year old use email?
In many ways email is a horrible communication channel – complex, clunky and not real-time. The reason most people use it is essentially for work or to do with boring stuff like complaining at utilities/banks. So, unsurprisingly, most 12 year olds aren’t spending their time slaving at the corporate coalface or moaning at companies.

3. Privacy
One thing teenagers have always valued is privacy. I remember having to shoo away parents and siblings when making landline telephone calls at that age – now lucky kids don’t need to as they can just use their mobiles. So, again, why would they use landlines when they can call from their bedrooms?

So, taken altogether the Ofcom findings show that there isn’t radical change happening in how we communicate – a third of people had sent a personal letter in the last month for example. The only sector to worry should be physical newspapers and magazines, with just 2% saying they’d feel their absence. And even then, this seems a little difficult to believe seeing the number of free papers handed out in London for example.

For entrepreneurs looking to set up a business or marketers aiming to launch a new product, the lesson is don’t neglect the old channels in favour of the shiny new ones. Think laterally and improve the experience and you might well be onto a winner.

August 13, 2014 Posted by | Creative, Marketing, Startup | , , , , , , , | Leave a comment

Tech startups are booming – or are they?

The tech market across Europe is on a roll. According to Dow Jones VentureSource European startups raised €2.1 billion (over $2.8 billion) in Q2 2014 from VCs, the highest amount since 2010. The average size of the 365 deals was €2.2 million, up from €1.5 million in Q3 2013. Essentially that means every day of the quarter four startups got funding from VCs.

European Union flag

European Union flag (Photo credit: YanniKouts)

At the other end of the company journey, Tech.eu counted 92 tech exits in Q2 2014, up 70% from Q1 2014. 10 of these were IPOs, showing a healthy move back to the stock market for tech companies. And while deal size was undisclosed in 72% of cases, 15 were for over €100 million.

So, does this mean that everything is rosy in the tech market and your startup will receive its deserved funding in a heartbeat? Unfortunately not, and there are three worrying points behind the figures:

1          What is a tech company?
I’ve always been suspicious/puritanical on what makes a startup ‘tech’ rather than part of any other sector. Taking a look through both the Tech.eu list of exits and its corresponding index of EU tech funding rounds so far in 2014, I don’t see that many companies I’d class as technology. IPOs and exits included:

  • Takeaway platform Just-Eat (food)
  • Zoopla (property)
  • Markit (financial information)
  • Oldford Group (gambling)
  • M and M Direct and Game Digital (retail)
  • eDreams Odigeo (travel)
  • Jobsite (recruitment)

Companies that received the largest amounts of funding mirrored this list – Delivery Hero, which has raised $285 million to date, is an online food ordering platform, while Ozon ($150 million) is an online Russian retailer.

There are what I’d consider genuine tech companies receiving funding (Klarna is a payments provider, Tradeshift is B2B software and Elasticsearch is a search and analytics engine). And looking at the IPOs, Zendesk (customer service software) also fits into my narrow definition of proper tech.

Obviously consumer facing companies need large amounts of funding – they have to market themselves and launch into competitive marketing which takes cash. But my complaint is that technology is part of every business, so just because you sell via the web, that doesn’t make you a tech company. After all, in the early days of the telephone, no-one created a new category for businesses built on the communications power of the phone. By lumping these companies into ‘tech’, investors and commentators overlook the genuine technology companies making software and hardware in favour of more glamourous consumer businesses. It was exactly the same issue in the dotcom boom, with anything that had a website being lauded to the skies as a tech pioneer.

2          Europe lagging the US
The European figures for funding look strong, but in the US private tech companies raised $13.8 billion in the same period. We’re talking about a similar size market in terms of people, yet nearly five times the investment. No wonder that many EU tech firms are crossing the pond to tap into US funding. Zendesk is a good case in point. While founded in Denmark, its successful IPO was on NASDAQ, where it has seen its share price nearly double from $9 to around $17.97 currently.

Clearly, there are structural and funding issues that need to be addressed to convince European companies that this is where they need to build their startups if we are to build a vibrant tech sector across the EU.

3          Selling out too soon?
Some companies are never going to have the scale to survive on their own and fit better as part of a larger entity. So, trade sales are a vital part of the tech ecosystem – investors get their money back (hopefully), enabling them to invest elsewhere, while founders and management teams are able to move on to the next big idea.

But looking through the crop of acquisitions the largest amount (37%) were by US companies. Facebook and TripAdvisor made two European acquisitions, and the likes of Cisco and Intel bought one business each. The risk is that too many smart European tech businesses don’t turn into long term, billion dollar companies with their own ecosystems around them, as they don’t get the chance to grow before being snapped up for their technology or market position. That holds back the wider European tech economy and reinforces US dominance. It would be good to see longer term backing for European tech, with more IPOs and acquisitions by local companies, rather than selling out to US giants.

I don’t want to come across solely as a whingeing naysayer, as it is great news that funding is up for tech businesses across Europe. But I think there needs to be a narrower focus on what tech actually is amongst the media and investors, and a longer term attitude if Europe is ever to come close to building a sustainable tech economy across the continent.

 

 

August 6, 2014 Posted by | Cambridge, Startup | , , , , , , , , , , , , , , , , , , , , | Leave a comment

Big Brother is manipulating you?

As anyone that has read George Orwell’s 1984 knows, the ability to rewrite history and manipulate information is at the heart of controlling behaviour. As communist Russia showed, people could simply be airbrushed from the official account and would vanish from the public consciousness. 1984

Of course, in the age of social media, the web, and 24 hour global media, this ability to control news should have disappeared. If a government blocks a site or a mobile phone network, there are ways around it that spread information quickly, bypassing attempted censorship.

However, I’d argue that the reverse has happened and that Big Brother can operate stealthily in two ways. Firstly, rumours can start and spread unchecked, with the majority of us not taking the time to get to the original source, instead believing something that has been retweeted or shared on Facebook. I’ve had people swear blind to me that a major incident took place ‘because I saw it on Facebook’ – though I can’t believe they’d be as credulous if a random stranger told them the same story down the pub. By the time the truth is out, immeasurable damage can be done – to a company’s brand or share price or a person’s reputation.

Secondly, we believe what our computers tell us, and act accordingly, particularly when it chimes with our own preconceptions. Essentially we think that the complex algorithms that control what appears on our screens are unbiased, rather than reflecting what the site owner has determined in some way.

This leaves us open to manipulation, whether by marketers trying to sell us things or more sinister experiments. Facebook received justified criticism for running an experiment where it tampered with the stories in people’s timelines, seeing what the impact would be on what users themselves wrote. Unsurprisingly the percentage of negative or positive posts had a direct link to the tone and language people used in their own posts.

Now dating site OKCupid has admitted that it experimented on its users. This included deliberately pairing up unsuitable couples and telling them that they were a perfect match to see what would happen. Now, there’s nothing wrong with a little serendipity, but deliberate meddling risks breaking the trust between a site and its users. Throwing in a wildcard of “here’s someone completely unlike you, but why not see what happens if you meet?” is one thing if it is advertised, but quite another if it is hidden behind the veil of computer processing.

Some might argue that this is just a next step in techniques such as Nudge, where choices are ordered in a way to drive particular outcomes. These are supposedly for the greater good. For example, if diners come to the salad bar first in a cafeteria they eat more healthy stuff and if you automatically enrol people in pensions, they tend not to take the opportunity to opt out. But I’d say it goes much further than this, and is about trust.

In many ways breaches of trust are similar to security breaches – something that the user relied upon unthinkingly has been removed, calling into question the entire relationship they have with a company. And like trust in any relationship, it is a time-consuming and difficult process to rebuild it.

So, anyone involved in marketing, media or technology does have a responsibility to be as open and transparent as they can be. At the very least there are legal safeguards (such as the Data Protection Act) that need to be obeyed, but I think companies need to go further than that. We live in a world where people want to have a genuine relationship with brands that they respect and trust, rather than the transactional, one-sided versions of the past. Therefore organisations need to think first about the consequences of experimenting on their users before playing Big Brother with their lives.

July 30, 2014 Posted by | Marketing, Social Media, Startup | , , , , , , , , | Leave a comment

Follow

Get every new post delivered to your Inbox.

Join 60 other followers