Archive for the ‘Business’ Category

What Investors Want to Know

Everyone seems to have a different idea about how to introduce a business to investors.  Scientists want to deliver full detail about the science as well as their products   Most others just want to describe their products in some detail.  But what is it investors want?

We asked three investors at a recent meeting about life sciences companies, and they made clear that they’re evaluating investment value – not the product, not the business, the investment potential.  Here’s what they said:

Investor No. 1:

I want to know five things about a new company:

  1. What is the novel invention?  What’s different?
  2. What is the need for this?
  3. What is the rationale why your technology will work for this purpose?
  4. What is the regulatory pathway?
  5. What’s the ask amount and what is the next value inflection point?

Note:  The same investor also asked for the net income/loss figure instead of EBITDA.  “You have no history, no track record, to justify EBITDA” was the explanation.  To this I would add that EBITDA is a measure of profits and hardly appropriate when there are none.

Investor No. 2:

Five minutes is better than twenty minutes.  Two minutes is ideal.  You can raise money in an elevator!  Think of this as being like a resume, which you write to get a meeting.  A one-page executive summary is the most investors will read.  Staff members do the rest.  Get them excited about investing in your company.

Hit things home without talking to doctors – “if you invest, you’ll make a lot of money” – that’s what I want to know.

Get the investor’s interest right away and then keep their interest. You’re talking to guys that have seen hundreds of business plans.

The growth rate needs to increase for the first three years.

How much will they need altogether?  I’m not looking to get my money back right away, and I don’t want them to be always raising money.  I want to triple my money in six to nine months and then another triple in six months.  I want to get in and out at the right price.

Two things matter to me:  the potential to grow big – so I can make 10X to 100X – and management.

I’m in the business to make a killing.

Investor No. 3

  1.  A big market
  2. What’s the basis for their competing –   their differentiation and competitive advantage?
  3. The financials – what’s the inflection point?  How effectively are they controlling expenses?  How can they avoid a down round?
  4. What’s the exit plan?  Who will the strategics be?  Why?  How long will it take?  What will it cost to get there?  What are the comparables?

The Next New New Thing

In 1999 Michael Lewis told the story of “the new new thing” in terms of a single individual, Jim Clark, a “new-capitalist adventurer” in the words of the NY Times reviewer.  It was an exciting story but as we approach 2015, it seems dated, even quaint – dated because the new new things were individual companies – Silicon Graphics, Netscape, myCFO and Healtheon.

Today new new things are explosions of companies that seem to come in waves – waves such as cloud computing, Big Data and now what Shivon Zilis, of Bloomberg Beta, calls machine intelligence.  One wave often drives another, or at least enables it.  Machine Intelligence, perhaps the newest new thing, depends on massive data sets, so Big Data had to come first.

Shivon has done us all a service by scouring the startup world for artificial intelligence, machine learning and data-related technologies and created a landscape that puts them all in context.  Her diagram of the Machine Intelligence Landscape – she’s using “machine intelligence” as a unifying term for machine learning and AI – has five categories, each with multiple subcategories that suggest some of the areas where they will transform the way we work and multiple companies already implementing them (www.shivonzilis.com/machineintelligence):

  • Core Technologies

o   Artificial Intelligence – Deep Learning – Machine Learning – NLP Platforms – Predictive APIs – Image Recognition – Speech Recognition

  • Rethinking Enterprise

o   Sales – Security/Authentication – Fraud Detection – HR/Recruiting – Marketing _ Personal Assistant – Intelligence Tools

  • Rethinking Industries

o   AdTech – Agriculture – Education – Finance – Legal – Manufacturing – Medical – Oil and Gas – Media/Content – Consumer Finance – Philanthropies – Automotive – Diagnostics – Retail

  • Rethinking Humans/HCI (human-computer interaction)

o   Augmented Reality, Gestural Computing, Robotics, Emotional Recognition

  • Supporting Technologies

o   Hardware – Data Prep – Data Collection

Shivon recommends we focus on her core technology category for innovations at the heart of machine intelligence and suggests using the landscape to package some of the technologies into a new new industry application for those of us looking to build a company.  So spot the market opportunities, and you have an amazing map for innovation!  Even Harry Potter didn’t have one of these!

Making Sense of Change

We all live in perpetual information overload and a swirl of new technologies.  Continuous learning is no longer an option.  Learn or be  lost.  Keeping track of it all, fitting pieces together, is a challenge that seems to become increasingly impenetrable.  Now Brian Solis of Altimeter has given us a structure to help us sort through the emerging digital universe.  Thank you, Brian!

Cloud-based social, mobile and real-time technologies are the hub of the Brian Solis Wheel of Disruption.

In the first circle around the three core themes are the following seven emergent technologies and sectors:

  • Big Data
  • Apps
  • Ephemeral (content that disappears in a short time)
  • Geo-location
  • Messaging
  • Gamification
  • 2d Screen

The second circle contains seven more:

  • Wearables
  • Makers
  • Beacons
  • Internet of Things
  • Sharing
  • Virtual AI – AR (Artificial Intelligence & Augmented Reality)
  • Payments

Alongside the wheel are six themes implemented by these technologies::

  • Platforms
  • Alternative Currencies
  • Mass Personalization
  • Crowd Funding/Lending (and I would add, Sourcing)
  • Anonymous/Private web
  • Instant Gratification

Here’s Brian’s marvelous infographic: http://www.briansolis.com/2014/12/digital-transformation-year-review/

My head already feels clearer!  I hope yours will as well!

Innovation within the Enterprise:  GE

 

I heard Steve Liguori tell an amazing story about industrial innovation at GE the other day.  He was speaking at a Work-Bench event about disruptive innovation – something we’ve all heard a lot about.  And he had a new take on the subject in the context of rethinking how to run a big company.  How?  “Learn to beg,” advised Steve.  “Try disrupting your culture.”

The first step is a full-time person – a passionate advocate with consummate skills in marketing, persuasion – calling on key decision-makers, finding the ones with a big problem for GE customers and an open mind about how to solve it. That’s the begging part.

Steve at the time was Executive Director of Global Innovation and New Models at GE.  The problem he found was a seriously overweight jet engine part – the engine bracket – and as there are many of them, their weight has serious implications for fuel use.

Steve must have mastered the art of persuasion during the years when he headed marketing at blue-chip consumer goods companies.  I marvel at the heights to which he’s taken this to have done what he did.  He got GE management to agree to go outside the company to crowd source redesign of the jet engine bracket!

Collaborating with GrabCAD, a Cambridge startup, GE sent a challenge with heavy duty specs for blueprints to GrabCAD’s global community of more than a million engineers.  From this, GE received nearly 700 ideas, picked and tested the top ten thoroughly, and announced the winner – a design that cut the weight by 84 percent – from 4.48 lbs. to 0.72 lbs.  Who did it?    An engineering student in Jakarta with zero aerospace experience!

Imagine trusting GE’s brand for industrial innovation to engineers outside the company!  Imagine finding a solution beyond GE’s ability from a student in Indonesia.  It’s audacious!  It’s brave!  And I suspect crowd sourcing will be increasingly important in the future!

Media Heads Up for 2015: 12 Takeaways

Media visionaries looked to the future at the Gotham Media’s Digital Breakfast at Frankfurt Kurnit Klein & Selz and made some predictions about social, mobile, TV and more for 2015 and beyond. Here are some highlights:

1. Ever-faster change – new things rise higher faster and fall faster.

2. Sensors all around that are passively aware of you. All cell phones have omnipresent computing.

3. Mobile payments. Apple’s entry will determine whether they make a difference. Most are safer than plastic, says John Abell, Senior editor, LinkedIn.

4. Continued migration of devices to mobile – even Facebook and video on mobile. Increasing importance of the second screen, though it’s still primitive. Monitors are losing to individual devices. “When the first screen gets boring, people go to the 2d screen,” reports Paul Berry, RebelMouse Founder and CEO

5. The steady growth of Facebook and mobile pose a challenge of how many pages per person can be sustained on your site.

6. Niche social networks will be big – a space for passionate sharing. (ED: Vertical networks were lumped into discussion of the category.) Niche networks will be combined with the 2d screen in the future – but with more than Twitter’s limited characters, predicts Berry.

7. People talking in a real voice as opposed to the institutional voice of mainstream media so that you hear individuals.

8. Infinite choice in content. “The quality level has been raised,” said Lockhart Steele, Editorial Director of Vox Media. “Now you have to do great stuff to get attention because there’s so much choice. . . The biggest challenge to media is the conversion to mobile. A lot of journalists are still writing in newspaper style.”

9. “Content is still king. It’s entirely defined by great talent,” according to Eric Wattenberg, Co- Head of Alternative Television at CAA.

10.“Traditional ads aren’t working. Only bots click. Millennials don’t even see the ads,” says Berry. At Vox, an in-house creative agency helps advertisers create native advertising. “The agency relationship is broken,” adds Steele. Every company has the opportunity and responsibility to be a media company, continues Berry. You need a product to be worth someone’s obsessing about it. Then put your money behind them. How do you measure social media effectiveness? Do viewers click? Share?

11 “But then we still don’t know how to measure TV,” Abell reminds us. “Yet, I don’t see how anything can supplant anything as unifying as TV.”

12.“The challenge for TV is how to get and keep an audience and grow it. It may be a combination of traditional TV with live elements in other forms of entertainment so that every week you’ll have to tune in and it’ll be fun and exciting to see what happens,” speculates Wattenberg.

Provenance: Gotham Media’s Digital Breakfast at Frankfurt Kurnit Klein & Selz 12.9.14. Alan Sacks, moderator – Counsel, Frankfurt Kurnit Klein I& Selz PC Panelists: John Abell, Sr. Editor, LinkedIn Paul Berry, Founder and CEO, RebelMouse; Lockhart Steele, editorial Director, Vox Media, and Eric Wattenberg, Co-Head of Alternative television, CAA

Deriving Big Value from Big Data

What is Big Data and what does it do to how we do business?  Ask the people doing it.  That’s what Matt Turck, of FirstMark Capital, did at the 28th Data Driven Meetup, which he organizes.  He gave four Big Data stars the mike – two entrepreneurs, a data scientist and a VC who used to be an entrepreneur.  Robbie Allen of Automated Insights, and Joe Hellerstein, of Trifacta, were the entrepreneurs; Rachel Schutt, of Newscorp, was the data scientist, and Chris Lynch, of Atlas Venture, was the VC.

So what are these companies doing?

  • Delivering automated narrative reports of quantifiable data in real time that are designed for individual user groups.
  • Enabling users to easily transform raw, complex data into clean and structured formats for analysis so that analysts can have direct access to Big Data and both analysts and data scientists can be significantly more productive in delivering business decisions.
  • Building a corporate data culture led by a cross-functional team headed by the CTO that combines data science, IT and product management in order to help journalists tell stories and develop a sustainable content/publishing/media company business model.
  • Using lessons learned from running a Big Data pioneer to help new Big Data companies understand the importance of simple messaging that dummies can understand, ease of use, security and designing the business to connect directly to user value in order to optimize monetization, even using someone else’s Big Data platform to achieve this.

Robbie Allen, CEO & Founder, Automated Insights (robbie@automatedinsights.com)

His theme:  Let Your Data Tell Its Story.  His company has developed a patented platform, called Wordsmith, that writes insightful, personalized reports from client data – reports comparable to an expert talking in plain English to each user.  Its cloud software turns raw data into compelling content customized for specific users and groups of users.  It delivers automated insights as narrative content at scale, in real time, on any device.

Visualizations require mental gymnastics to translate.  They also suffer from the baseline effect – small changes are imperceptible, which renders most dashboards useless.  But pictures don’t tell stories.  Words tell stories.  Data density can obscure meaning.  A single word can sometimes do the job best.

Media companies are the target customers for the Wordsmith platform, which creates reports from quantifiable data.

  • The data can come from anywhere – external databases, real-time data, proprietary data, and historical data.
  • The platform creates algorithms that create facts and lists of facts.
  • It then describes those facts as narrative.
  • Creates tweets and other messages

Examples:

  • Yahoo fantasy football grades users on their drafts – using any tone desired, including snarky.
  • InvestCorp – portfolio recap.  (Ultimately data scientists will be replaced b automated processes.)
  • Samsung – fitness update – “quantified self.”
  • Honda – sales reporting

Wordsmith Marketing can generate fully automated personalized websites and performance reports that replace Google Analytics.

Rachel Schutt, Chief Data Scientist, Newscorp

Newscorp owns multiple major news media.  The parent company has begun leveraging all its companies instead of acting as a holding company in order to create new business models based on their content.

Data is at the heart of its future.

Schutt, who has a PhD in statistics, reports to the CTO.  Her two peers are people who head the platform and the product. The goal is to build a data culture, investing in people rather than tools.  They build cross-functional teams, and everyone codes.

Examples of data science in action:  churn models.  Propensity analysis.  User behavior modeling.

The plan is to make data-based decisions to help journalists tell a story and to make sound business decisions that can build a longer term sustainable media business model.

Chris Lynch, Partner, Atlas Venture

Vertica was the first new database in 3 years.  Chris, previously a sales and marketing business entrepreneur, was CEO.  The engineers couldn’t communicate except to data scientists.  He had to simplify the message so it scaled.  Vertica was a real-time analytics database that was faster than others and delivered actionable insights in time to make decisions It was sold to HP for several hundred million dollars.  But Zynga was sold for billions.  Zynga was an analytics company that masqueraded as a gaming company.  It used Vertica’s real-time database to analyze user behavior and target sales of virtual products.  Vertica was disintermediated.  You need to be close to the customer for monetization – to connect directly to customer value.

Chris has been a VC for two years.  His thesis is that big data can be transformational if democratized so that it talks to dummies, not the 1 percent.  Scale, security and simplicity are issues.  Individuals will own their own digital footprints.  Simplicity means ease of use so the magic is behind the curtain and users have an intuitive interface.

Think about monetizing someone else’s platform.  Disintermediate those guys.  Leverage the apps an platforms you can put under a problem.  What’s the problem you’re solving? Moving up the stack creates more value for the customer.

What he looks for in a company is people with courage, character and conviction – people with a soul.   You need people to build stuff.

The venture model is broken.  Too much money in the market (Lazy VCs).  Too few good ideas.  Chris takes pride in being a company builder.

Joe Hellerstein, Founder & CEO, Trifacta

Trifacta has developed a platform designed to “transform the way the world works with data.”  It is designed to make it easy for analysts to have direct access to Big Data and to increase productivity for both analysts and data scientists.  They asked analysts what they did and how long it took and found that 80 percent of the work on data is cleaning data.  So, Trifacta takes raw logs and transforms them for immediate analysis.  Joe demonstrated this, transforming a typical log of restaurant violations in minutes into a straightforward list of where not to eat in San Francisco!

Brave New Business World!

“Build from what the customer wants to buy, not what you do well.”

“Always work backwards from where you want to be, not forward to where you want to go.”

“Successfully sell your offering before it is finalized – when it’s just barely useful – and get customer feedback.”

“You are in the relationship business. Build what customers think is worth having. The product is merely the method to build marketable relationships with customers.”

Marketing words of wisdom from serial entrepreneur Tony Grass, currently founder & President of a new kind of service that help clients find customers worth having – e-Market Intelligence – at last evening’s NYTECH event on “Long-Range Planning for the Successful Sale of a Company.”

Excellent insights were also provided by moderator, Paul Ellis, principal of the Paul Ellis Law Group, and co-founder of NYTECH, and his knowledgeable panelists, all focused on today’s new new exit environment and the importance of building towards an exit from the company’s early days in order to assure a smooth process when the time comes.

What factors build value in the last couple of years before exit? The two most important:
• Reputation, credentials, brand – the brand will be worth 30% of the exit value.
• Recurring revenue – based on distribution for product sales and on recurring need for services from delivering a unique bottom line advantage to B2B customers, “enjoyable value” to B2C customers.

I was especially struck by just how different today’s exit environment has become.

  • The traditional discounted cash flow (DCF) value is not that useful anymore because of accelerated change. Today a lot of value derives from possibilities a company’s assets can lead to in time – the future use potential.
  • Even the traditional structured auction is no longer typical because the same technology has different uses and values for different buyers. It’s all about the individual value proposition.

And because the environment is getting more and more complex, professional advisors have grown enormously in importance – investments bankers familiar with complexities of a company’s industry as well as accountants and attorneys specialized in specific areas of relevance. (Say goodbye to your husband’s best friend who’s a generalist lawyer!)
To begin at the beginning today means knowing the end game from the outset. As the Cheshire cat said to Alice, where you want to go depends a good deal on where you want to get to. If you don’t know where you’re going, it doesn’t matter which way you go.

Secrets of Mobile App Success

With 1.6 million apps in two app stores alone, how can yours be discovered? Once discovered, how can yours get someone to use it? To download it? To keep coming back? What types of apps are out there? Where’s the future opportunity? How can you make money from an app when 80 percent are free?

The title of PluggedIn’s March 27th roundtable was App Engagement, but one question led to another and soon a virtual primer on the business of mobile apps took shape.

Discovery. A huge issue, but, truly, it’s fundamentally Marketing 101. People are not looking for apps. Apps have to go to users by understanding user DNA. (80% of apps are games.) Deliver real value for a specific user. Deliver sufficient value for users to want to talk about and share it – word of mouth is key. Facebook is good for this. Cross-promote your game through others with appeal to similar audiences. Most push notification is annoying, but intelligent push notification that respects boundaries can work.

Usage and Download. It’s all about delivering real value. What constitutes value depends on the purpose of the app. Is the purpose utility – to help someone achieve a task? Media – to help someone get information they want? Entertainment – a third of the time people spend on their phones is spent playing games? To get beyond one-time use to download requires meeting the No. 1 requirement: focus on doing one or two things superbly. Start by talking/messaging with your first users personally and get feedback. Turn them into passionate advocates. Without perceived value, you’re just adding to clutter. (40 apps is typical for most phones today.)

Repeat Usage. Here’s where engagement comes in with a vengeance. It’s about getting an app to become a habit. It happens when the app helps a customer accomplish a task – when the user finds what the app offers to be valuable enough to share. Gamification – i.e., rewards – is necessary on all apps to get people coming back. Marketing automation – such as that offered by Appboy – can make a big difference. In advertising, engagement is about loyalty to a brand. It’s a different use case for apps – satisfying a need. App engagement is also different from website engagement – and 98 percent of apps do not lead back to a website. The mobile app is in the context of the user’s life, and the user is multitasking, hard to engage, pops in and out of the app.

Types of Apps. Utility (Yelp). Media. Entertainment – video, Kindle, games (Candy Crush). Loss aversion (Whisper).

What’s the Future? Location – location – location. It’s unique to mobile app. It has huge potential and has yet to bloom

Revenue Models. In the beginning, 80 percent of apps were paid. Today, only 20 percent of Apple apps are paid, and all Android apps are free. The model is freemium – start free, then add paid features. Keepy, which helps families share memories, will generate revenue long-term through subscriptions. But the first step is user engagement, the second monetization through ads and partners. Then they can advertise payable features. Appboy sells “picks and shovels,” i.e., infrastructure, to app developers. Insticator, which lets viewers predict TV show events, will sell licenses to TV show producers.

Words from the Wise. Message your first users personally to get feedback and turn them into passionate advocates. Start small and gradually build the product to get more people on there. Go both small and international – two-thirds of the market is international. Focus on 1-2 things that work and do them well to get the data you need to learn. Keep functions atomic – no app is for everyone – take a focused approach to distribution and discovery. Measure things like time and frequency to assess and build engagement. Keep the app transparent so it allows user to do what they want but doesn’t get in the way.

Innovation from Within: Google

The very name Google denotes innovation.  Thousands of engineers are at play at Google Labs, with a steady outflow of amazing experiments.  But what if innovation is about more than engineering?  What if it is also about the human dynamic of technology?  That’s where Abigail Posner comes in – not an engineer but a social anthropology practitioner who’s changing how Google innovates – in subtle ways.

Her major at Harvard, where she took honors, was social anthropology, the study of human culture and society.  It turned out to be right on for account planning at global agencies like Publicis and DDB. She joined Google in 2011 after a 16-year career in advertising and management consulting.  Her title is Head of Strategic Planning, Agency Development.  What’s planning?  Insight and strategy, she explains.

Google knew they needed her but could not define exactly in what ways, she reported at a recent Women Innovate Mobile event.  She had to use whatever processes it took to get political and emotional sponsorship and to build her practice.  And so progressing in her role became not about moving up but about moving out, spreading her impact in many directions, probing for feedback.  “And then they all help each other as opposed to doing only one thing well,” she said.

Her first job is to help clients – marketing agencies – develop ideas.  Her role is not to make sense of data but to help creatives come up with creative ideas that inspire people.  To do this means understanding the symbolic value of brands and products.  Her second responsibility is to develop insights using Google tools and anthropological research; her third is training.  She developed a course on insight development for internal marketers; then clients asked for it..

According to Abigail:  “Because people spend so much time with digital media, we need to get value to them.  It’s not about screens but points of contact and communication.  We need to leverage those.  We’re all social strategists.  Everything we do is social.  The social platform space is unlimited.  What does it mean to be social?  Mobile?  Search?  Everything will be social and mobile.  How can technology amplify this?  Are we getting that fulfilled?

“Place making, a fundamental insight of social anthropology, is an innate desire to make sense of places, to constantly remind us of who we are.  Cell phones allow us to make places like crazy.  We find information on a restaurant as we pass by.  Then we find a dish we like and photograph and share it.  All this creates value.  Being connected is an opportunity to leverage place making.

“Mobile phones allow us to tap into deep-seated needs and desires.  What’s new is the interest in understanding the human dynamic of technology.  How can we use this to elevate our lives?”

How might understanding the human dynamic of technology relate to product development?  Product development used to be largely engineering, she responds, with some usage research.  She hopes in time to have more input into product development.  What a thought:  products designed with the human dynamic as important as the technology or usage!  That sounds to me like the true basis for a great user experience.

More About Brains Than Bucks

By Eleanor Haas

Customer service may well be the secret sauce to a sustainable competitive edge, and Andy Sernovitz gives great examples in his 12.26.13 newsletter “I Wish I’d Thought of That.” My three favorites are about e-commerce but the strategy and mindset behind them can be applied to any business.

1. Help them make room

IKEA knows that one of the biggest reasons people don’t buy new furniture is the hassle of getting rid of their old furniture. So the company offered to sell it for them. For their Second Hand campaign, IKEA featured their customers’ actual names, numbers, and old furniture in their ads. Then, they opened their Facebook page for other customers to sell their stuff online in a “virtual flea market” on Sundays.

The lesson: That’s doing much more than just making room for a new couch — it’s creating an amazing customer service story for everyone who sells something through IKEA.

2. Help them make a decision

It’s a pain to exchange a treadmill. So when you buy one, you want to make sure it’s exactly what you want. At Fitness in Motion in Austin, they don’t think the couple minutes you typically spend testing out a machine at other stores is enough to help you make a decision. So they tell potential customers to use their store like a gym: Come by whenever, do their normal workout, and find the machine that works for them before they buy it.

The lesson: This helps customers feel better about their purchase. But more importantly, it gives Fitness in Motion a chance to build relationships and trust with the customers coming in day after day.

3. Help give them peace of mind

If you’ve ever bought a prom dress (disclosure: I’ve bought zero), you know that showing up to prom with the same dress as someone else is a big fear. At some formal wear shops, they help girls avoid this high school nightmare by asking each customer which event they’re wearing the dress to and checking their database for repeats. That way, their customers can be much more confident about pulling the trigger and buying the dress.

The lesson: You already keep a lot of data about your customers for market research, product development, and ordering — why not use it to help them too?